SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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


                   For the fiscal year ended December 31, 2001

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


                        For the transition period from to

                         Commission File Number: 0-20911

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

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

#1 Westbank Expressway, New Orleans, Louisiana                     70114
(Address of principal executive offices)                         (Zip Code)

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

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

                                      None

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

                     Common Stock (par value $.01 per share)

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

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

Issuer's revenues for the fiscal year ended December 31, 2001 were $3.9 million.

As of March 14, 2002, the aggregate market value of the 430,375 shares of Common
Stock of the Issuer held by non-affiliates, which excludes 76,148 shares held by
all directors, executive officers and employee benefit plans of the Issuer, was
approximately $3.7 million. This figure is based on the average of the bid and
asked prices of $8.55 per share of the Issuer's Common Stock on March 14, 2002.

Number of shares of Common Stock outstanding on March 14, 2002: 506,523

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the 2002 Annual Meeting of
Stockholders have been incorporated into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (check one):    Yes       No  X
                                                                 -----    -----


<PAGE>
                              ALGIERS BANCORP, INC.
                        Annual Report on Form 10-KSB for
                     the Fiscal Year Ended December 31, 2001
<TABLE>
<CAPTION>


                                                  TABLE OF CONTENTS

                                                                                                           Page
                                                                                                           ----

PART I

<S>  <C>                                                                                                     <C>
Item 1.  Description of Business........................................................................     1
Item 2.  Description of Properties......................................................................    29
Item 3.  Legal Proceedings..............................................................................    30
Item 4.  Submission of Matters to a Vote of Security Holders............................................    30

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.......................................    30
Item 6.  Management's Discussion and Analysis or Plan of Operation......................................    30
Item 7.  Financial Statements...........................................................................    39
Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........    76

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act.......................................................................    76
Item 10. Executive Compensation.........................................................................    76
Item 11. Security Ownership of Certain Beneficial Owners and Management.................................    76
Item 12. Certain Relationships and Related Transactions.................................................    76
Item 13. Exhibits and Reports on Form 8-K...............................................................    76
</TABLE>

                                       (i)
<PAGE>

PART I.

Item 1. Description of Business.
--------------------------------

General

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

The Bank is a Louisiana-chartered stock savings and loan association that was
originally formed in 1926. The Bank currently conducts business from its main
office in New Orleans, Louisiana, a branch office in Terrytown, Louisiana, and a
third branch in New Orleans, Louisiana that was opened during the first quarter
of 1999. At December 31, 2001, the Company had $51.9 million of total assets,
$45.1 million of total liabilities, including $44.9 million of deposits, and
$6.8 million of total stockholders' equity (representing 13.0% of total assets).

The Bank is primarily engaged in attracting deposits from the general public
through its branches and using those and other available sources of funds to
originate loans throughout the Greater New Orleans, Louisiana metropolitan area.
The Bank originates commercial, construction, home improvement, consumer and
one-to-four family residential mortgage loans. The Bank sells the majority of
its fixed rate residential mortgage loans in the secondary market. At December
31, 2001, the Company's net loans receivable totaled $28.1 million or 54.2% of
the Company's total assets. Conventional first mortgage, one- to four-family
residential loans (excluding construction loans) amounted to $11.7 million or
40.8% of the Company's total loan portfolio at December 31, 2001. The Company
had $14.4 million of mortgage-backed securities at December 31, 2001,
representing 27.7% of the Company's total assets. The Company had $367,000 of
investment securities (excluding FHLB stock) at December 31, 2001, representing
..7% of total assets.

The Bank is a community-oriented financial institution which emphasizes customer
service and convenience. It generally has sought to enhance its net income by,
among other things, maintaining strong asset quality. In pursuit of these goals,
the Bank has adopted a new business strategy that emphasizes lending and deposit
products and services traditionally offered by commercial banks, and is less
reliant on purchasing mortgage-backed securities. The start-up costs associated
with this new strategy are reflected in the loss briefly noted below.

Capital Position. As of December 31, 2001, the Bank had total stockholder's
equity of $6.4 million and exceeded all of its regulatory capital requirements,
with tangible, core and risk-based capital ratios of 12.5%, 12.5% and 24.8%,
respectively, as compared to the minimum requirements of 1.5%, 3.0% and 8.0%,
respectively.

Profitability. The Company had a net loss for the years ended December 31, 2001,
2000 and 1999. Net loss decreased from $568,000 in 2000 to a net loss of
$548,000 in 2001, including a net loss of $402,000 sustained by the Company's
subsidiary, Algiers Bank and Trust and a $95,000 loss sustained by the Company's
subsidiary Algiers.Com. Net loss increased from $367,000 in 1999 to a net loss
of $568,000 in 2000. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

                                       1
<PAGE>

Asset Quality. Management believes that good asset quality is important to the
Company's long-term profitability. The Company's total non-performing assets,
which consist of non-accruing loans and net real estate owned ("REO"), together
with troubled debt restructurings, amounted to $318,000 or .6% of total assets
at December 31, 2001, compared to $462,000 or .9% of total assets at December
31, 2000. See "-Asset Quality-Classified Assets." At December 31, 2001, the
Company's allowance for loan losses amounted to $415,000 or 1.5% of the total
loan portfolio.

Interest Rate Risk. The Company attempts to manage its exposure to interest rate
risk by maintaining a high percentage of its assets in variable-rate loans,
shorter term fixed rate loans, and adjustable-rate mortgage-backed securities.
At December 31, 2001, variable-rate loans amounted to $12.7 million or 44.3% of
the total loan portfolio. In addition, of the $14.4 million of mortgage-backed
securities at December 31, 2001, $10.1 million or 70.2% have adjustable interest
rates.

Community Orientation. The Bank is committed to meeting the financial needs of
the communities in which it operates. Management believes the Bank is large
enough to provide a full range of financial services, yet small enough to be
able to provide services on a personalized and efficient basis. At December 31,
2001, most of the Bank's loans were located in its primary market area. The Bank
intends to continue its practice of investing in loans in its primary market
area in accordance with its underwriting standards, subject to economic
conditions and the availability of reasonable investment alternatives.

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

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

Market Area

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

Lending Activities

Loan Portfolio Composition. At December 31, 2001, the Company's net loan
portfolio totaled $28.1 million, representing approximately 54.2% of the
Company's $51.9 million of total assets at that date. The majority of lending
activity had been the origination of one-to-four family residential mortgage
loans. A greater emphasis is now being placed on the origination of construction
loans, commercial loans, home improvement loans, and consumer loans. At December
31, 2001, conventional first mortgage, one- to four-family residential loans

                                       2
<PAGE>

(excluding construction loans) amounted to $11.7 million or 40.8% of the total
loan portfolio, before net items. In addition, the Company originates
construction loans, commercial real estate loans, commercial non-mortgage loans
and consumer loans. At December 31, 2001, there were $2.2 million in
construction loans amounting to 7.7% of the total loan portfolio, commercial
real estate loans totaled $11.7 million or 40.8% of the total loan portfolio,
commercial non-mortgage loans totaled $1.1 million or 3.8% of the total loan
portfolio and consumer loans amounted to $1.9 million or 6.7% of the total loan
portfolio, in each case before net items.

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

                                     December 31,
                                        2001                         2000                        1999
                                       Amount           %           Amount           %          Amount            %
                                      -------        -------       -------        -------       -------        -------
                                                                (Dollars in Thousands)
<S>                                  <C>                <C>       <C>                <C>        <C>               <C>
Real Estate Loans:
     Residential:
        Conventional                 $ 11,697           40.8%     $  8,719           49.5%      $ 8,492           84.0%
        FHA and VA                         --           --              --           --              13            0.1
        Construction                    2,217            7.7         1,302            7.4           117            1.2
     Commercial Real Estate            11,701           40.8         5,740           32.6           200            2.0
                                      -------        -------       -------        -------       -------        -------
        Total Real Estate Loans        25,615           89.4        15,761           89.5         8,822           87.3

Commercial - Other                      1,098            3.8            --           --              --           --

Consumer Loans:
     Second Mortgage                      239            0.8           351            2.0           338            3.3
     Other Consumer Loans                 902            3.1           859            4.9           356            3.5
     Loans on Deposits                    792            2.8           638            3.6           594            5.9
                                      -------        -------       -------        -------       -------        -------
        Total Consumer Loans            1,933            6.7         1,848           10.5         1,288           12.7

            Total Loans                28,646          100.0%       17,609          100.0%       10,110          100.0%
                                      =======        =======       =======        =======       =======        =======

Less:
     Unearned Interest                     20                           22                           10
     Deferred Loan Fees                    99                          101                          882
     Allowance for Loan Losses            415                          262                          230
                                      -------                      -------                      -------
            Net Loans                $ 28,112                     $ 17,224                      $ 9,788
                                      =======                      =======                      =======
</TABLE>

Contractual Terms to Final Maturities. The following table sets forth certain
information as of December 31, 2001 regarding the dollar amount of loans
maturing in the Bank's portfolio, based on the contractual date of the loan's
final maturity, before giving effect to net items. Demand loans and loans having
no stated schedule of repayments and no stated maturity are reported as due in
one year or less. The amounts shown below do not reflect normal principal
amortization; rather, the balance of each loan outstanding at December 31, 2001
is shown in the appropriate year of the loan's final maturity.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                                                                          Commercial
                                                                              Real      Commercial
                                                  Residential Construction   Estate        Other      Consumer       Total
                                                   -------      -------      -------      -------      -------      -------
                                                                           (Dollars in Thousands)
<S>                                                <C>          <C>          <C>          <C>          <C>          <C>
Amounts Due After December 31, 2001 in:
     One year or less                              $ 7,892      $ 2,217      $ 3,915      $   808      $   318      $15,150
     After one year through two years                   --           --           --           --            3            3
     After two years through three years                --           --           --           --           --           --
     After three years through five years               --           --        1,357           39          242        1,638
     After five years through ten years                915           --        2,193           53          311        3,472
     After ten years through fifteen years             790           --        1,927          147          544        3,408
     After fifteen years                             2,100           --        2,309           51          515        4,975
                                                   -------      -------      -------      -------      -------      -------

         Total (1)                                 $11,697      $ 2,217      $11,701      $ 1,098      $ 1,933      $28,646
                                                   =======      =======      =======      =======      =======      =======
</TABLE>
------------------------------------
(1)      Gross of loans in process, deferred loan fees, unearned discounts and
         interest, and allowance for loan losses.

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

         The following table sets forth the dollar amount of all loans, before
net items, due after one year from December 31, 2001 as shown in the preceding
table, which have fixed interest rates or which have floating or adjustable
interest rates.

                                                         Floating or
                                             Fixed-      Adjustable
                                             Rate          Rate           Total
                                           -------        -------        -------
                                                  (Dollars in Thousands)

Residential                                $ 6,102        $ 5,595        $11,697
Commercial Real Estate                       6,822          4,879         11,701
Commercial - Other                             748            349          1,097
Construction                                   522          1,695          2,217
Consumer                                     1,763            171          1,934
                                           -------        -------        -------
      Total                                $15,957        $12,689        $28,646
                                           =======        =======        =======

         Scheduled contractual maturities of loans do not necessarily reflect
the actual term of the Company's loan portfolio. The average life of mortgage
loans is substantially less than their average contractual terms because of loan
prepayments and enforcement of due-on-sale clauses, which give the Company the
right to declare a loan immediately due and payable in the event, among other
things, that the borrower sells the real property subject to the mortgage and
the loan is not repaid. The average life of mortgage loans tends to increase,
however, when current mortgage loan rates substantially exceed rates on existing
mortgage loans and, conversely, decrease when rates on existing mortgage loans
substantially exceed current mortgage loan rates.

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

         Under the Bank's real estate lending policy, either a title opinion
signed by an approved attorney or a title insurance policy must be obtained for
each real estate loan. The Bank also requires fire and extended coverage

                                       4
<PAGE>

casualty insurance, in order to protect the properties securing its real estate
loans. Borrowers must also obtain flood insurance policies when the property is
in a flood hazard area as designated by the Department of Housing and Urban
Development. Borrowers may be required to advance funds on a monthly basis
together with each payment of principal and interest to a mortgage loan account
from which the Bank makes disbursements for items such as real estate taxes,
hazard insurance premiums and private mortgage insurance premiums as they become
due.

         The Bank's loan approval process is intended to assess the borrower's
ability to repay the loan, the viability of the loan and the adequacy of the
value of the property that will secure the loan. The Bank's lending policies
require that most loans to be originated by the Bank be approved in advance by
the Board of Directors or the Loan Committee.

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

                                                   Year Ended December 31,
                                             2001          2000          1999
                                           --------      --------      --------
                                                      (In Thousands)
Loan Originations:
     Residential                           $  1,983      $  1,364      $  2,760
     Construction                             4,651         3,003           218
     Commercial Real Estate                  12,794         6,002            40
     Commercial - Other                       1,215            --            --
     Consumer                                 1,418         1,468           119
                                           --------      --------      --------

         Total Originations                  22,061        11,837         3,137

Loan Principal Payments                     (11,322)       (4,464)       (2,601)
Other Increases, Net (1)                        149            63           206
                                           --------      --------      --------
Net Increase in Loan Portfolio             $ 10,888      $  7,436      $    742
                                           ========      ========      ========
------------------------------------

(1)      Other items consist of loans in process, deferred loan fees, unearned
         discounts and interest, and allowance for loan losses.

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

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

         An institution's lending policy must address certain lending
considerations set forth in the Guidelines, including loan-to-value ("LTV")
limits, loan administration procedures, underwriting standards, portfolio
diversification standards, and documentation, approval and reporting
requirements. The policy must also be appropriate to the size of the institution
and the nature and scope of its operations, and must be reviewed and approved by
the institution's board of directors at least annually. The LTV ratio framework,
with the LTV ratio being the total amount of credit to be extended divided by
the appraised value or purchase price of the property at the time the credit is
originated, must be established for each category of real estate loans. If a
loan is not secured by a first lien, the lender must combine all senior liens
when calculating this ratio. The Guidelines, among other things, establish the

                                       5
<PAGE>

following supervisory LTV limits: raw land (65%); land development (75%);
construction (commercial, multi-family and nonresidential) (80%); improved
property and one- to four-family residential construction (85%); and one- to
four-family (owner occupied) and home equity (no maximum ratio; however, any LTV
ratio in excess of 90% should require appropriate insurance or readily
marketable collateral).

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

         The Bank is in compliance with the above standards.

         Although Louisiana laws and regulations permit state-chartered savings
institutions, such as the Bank, to originate and purchase loans secured by real
estate located throughout the United States, the Bank's present lending is done
primarily within its primary market area, which consists of Orleans, Jefferson,
Plaquemines, St. Bernard, St. Tammany, St. Charles, and St. John Parishes in
Louisiana. Subject to the Bank's loans-to-one borrower limitation, the Bank is
permitted to invest without limitation in residential mortgage loans and up to
400% of its capital in loans secured by non-residential or commercial real
estate. The Bank may also invest in secured and unsecured consumer loans in an
amount not exceeding 35% of the Bank's total assets. This 35% limitation may be
exceeded for certain types of consumer loans, such as home equity and property
improvement loans secured by residential real property. In addition, the Bank
may invest up to 10% of its total assets in secured and unsecured loans for
commercial, corporate, business or agricultural purposes. At December 31, 2001,
the Bank was well within each of the above lending limits.

         A savings institution generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities. At December 31, 2001, the Bank's limit on
loans-to-one borrower was $500,000 and its five largest loans or groups of
loans-to-one borrower, including persons or entities related to the borrower,
amounted to $500,000, $494,000, $492,000, $487,000 and $483,000, respectively,
at such date. All of these loans were current at December 31, 2001.

         Loans on Existing Residential and Commercial Properties. The primary
real estate lending activity of the Company is the origination of loans secured
by first mortgage liens on residential and commercial property. At December 31,
2001, $23.4 million or 81.6% of the Company's total loan portfolio, before net
items, consisted of first mortgage real estate loans (excluding construction
loans).

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

         Various legislative and regulatory changes have given the Bank the
authority to originate and purchase mortgage loans which provide for periodic
interest rate adjustments subject to certain limitations. The Bank has been

                                       6
<PAGE>

actively marketing ARMs in order to decrease the vulnerability of its operations
to changes in interest rates. At December 31, 2001, one-to-four family
residential ARMs represented $5.6 million or 19.5% of the total loan portfolio,
before net items.

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

         The Bank qualifies borrowers based on the initial interest rate on the
ARM rather than the fully indexed rate. In a rising interest rate environment,
the interest rate on the ARM will increase on the next adjustment date,
resulting in an increase in the borrower's monthly payment. To the extent the
increased rate adversely affects the borrower's ability to repay his loan, the
Bank is exposed to increased credit risk. As of December 31, 2001, the Bank's
non-accruing loans were $115,000. See "Asset Quality."

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

         The Bank is an approved FHA/VA Lender. This designation authorizes the
Bank to make certain types of government loans for sale in the secondary market.
In addition, the Bank offers FHA Title I home improvement loans. As of December
31, 2001, the Bank had three lending officers on its staff. Loans which meet the
Bank's underwriting criteria will be kept in the Bank's loan portfolio. Loans
may be sold in the secondary market as determined by management.

         Construction Loans. Construction lending is generally considered to
involve a higher degree of risk of loss than long-term financing on improved,
owner-occupied real estate because of the uncertainties of construction,
including the possibility of costs exceeding the initial estimates and the need
to obtain a tenant or purchaser if the property will not be owner-occupied. The
Company generally attempts to mitigate the risks associated with construction
lending by, among other things, lending primarily in its market area, using
conservative underwriting guidelines, and closely monitoring the construction
process. There were 23 construction loans in the Bank's portfolio at December
31, 2001 totaling $2.2 million or 7.7% of the total portfolio.

         Commercial Real Estate Loans. The Company's commercial real estate loan
portfolio primarily consists of loans secured by office buildings, retail
establishments, churches and multi-family dwellings located within the Company's
primary market area. Commercial real estate loans amounted to $11.7 million or
40.8% of the total loan portfolio at December 31, 2001. The largest commercial
real estate loan at December 31, 2001 was $500,000 and the remaining commercial
real estate loan portfolio at December 31, 2001 consisted of 26 loans with an
average balance of $431,000.

         Nonresidential real estate loans may have terms up to 30 years and
generally have adjustable rates of interest. As part of its commitment to loan
quality, the Company's senior management reviews each nonresidential loan prior
to approval by the Board of Directors. All loans are based on the appraised
value of the secured property and loans are generally not made in amounts in
excess of 70% of the appraised value of the secured property. All appraisals are
performed by an independent appraiser designated by the Company and are reviewed
by management. In originating nonresidential loans, the Company considers the
quality of the property, the credit of the borrower, the historical and
projected cash flow of the project, the location of the real estate and the
quality of the property management. The Company originated $2,174,000 and
purchased participations totaling $9,762,000 in commercial real estate loans in
2001 and originated $1,019,000 and purchased participations totaling $4,551,000
in commercial real estate loans in 2000.


                                       7
<PAGE>

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

         Commercial - Other. The Company's other commercial loan portfolio
primarily consists of loans secured by receivables and equipment. Other
commercial loans amounted to $1.1 million or 3.8% of the total loan portfolio at
December 31, 2001. The largest other commercial loan not secured by real estate
at December 31, 2001 was $349,000 and the remaining other commercial loan
portfolio at December 31, 2001 consisted of 24 loans with an average balance of
$31,000.

         Consumer Loans. The Company's consumer loans consist of loans on
deposits, boat, automobile and second mortgage loans. At December 31, 2001,
loans on deposits amounted to $792,000, representing 41.0% of total consumer
loans and 2.8% of the total loan portfolio, before net items. Loans secured by
deposit accounts are generally offered with an interest rate equal to 2% above
the rate on the deposit account.

         The Company's second mortgage loans amounted to $239,000 or .8% of the
total loan portfolio at December 31, 2001. The second mortgages are secured by
one-to-four family residences, are for a fixed amount and a fixed term, and are
made to individuals for a variety of purposes.

         The Company's other consumer loans consisted of 102 loans in the
aggregate amount of $902,000 or 3.1% of the total loan portfolio at December 31,
2001. The largest of these loans, in the amount of $29,000 or .1% of the total
loan portfolio at December 31, 2001, is secured by an automobile.

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

         Loan origination fees or "points" are a percentage of the principal
amount of the mortgage loan and are charged to the borrower in connection with
the origination of the loan. The Company's loan origination fees are offset
against direct loan origination costs, and the resulting net amount is deferred
and amortized as interest income over the contractual life of the related loans
as an adjustment to the yield of such loans. At December 31, 2001, the Company
had approximately $99,000 of loan fees which had been deferred. The deferred
loan fees are being recognized as income over the lives of the related loans.


                                       8
<PAGE>


Asset Quality

         Delinquent Loans. The following table sets forth information concerning
delinquent loans at December 31, 2001, in dollar amounts and as a percentage of
the Company's total loan portfolio. The amounts presented represent the total
outstanding principal balances of the related loans, rather than the actual
payment amounts which are past due.
<TABLE>
<CAPTION>

                                                              December 31, 2001
                                     -----------------------------------------------------------------------
                                            30 - 59                  60 - 89               90 or More
                                         Days Overdue              Days Overdue           Days Overdue
                                                 Percent                   Percent                  Percent
                                                 of Total                  of Total                 of Total
                                     Amount       Loans         Amount       Loans      Amount       Loans
                                     ------      --------       ------     --------     ------      --------
<S>                                   <C>                        <C>          <C>        <C>         <C>
Residential                           $ --           --%         $240         1.36%      $428        2.43%
Commercial Real Estate                  --           --            --           --        316        1.79
Commercial - Other                      23         0.13            --           --         --          --
Construction                            --           --           178         1.01         78        0.44
Consumer                               162         0.92             4         0.02         78        0.44
                                      ----         ----          ----         ----       ----       -----

     Total Delinquent Loans           $185         1.05%         $422         2.40%      $900        5.11%
                                      ====         ====          ====         ====       ====        ====
</TABLE>

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

         If foreclosure is effected, the property is sold at a sheriff's sale.
If the Company is the successful bidder, the acquired real estate property is
then included in the Company's "real estate owned" account until it is sold. The
Bank is permitted under applicable regulations to finance sales of real estate
owned by "loans to facilitate" which may involve more favorable interest rates
and terms than generally would be granted under the Bank's underwriting
guidelines. At December 31, 2001, the Bank had one loan to facilitate.

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

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

                                       9
<PAGE>
                                                           December 31,
                                                   2001       2000       1999
                                                   ----       ----       ----
                                                      (Dollars in Thousands)
Nonperforming Assets:
     Non-Accruing Loans                            $115       $211       $177
     Real Estate Owned, Net (1)                     203        251        251
                                                   ----       ----       ----

         Total Nonperforming Assets                $318       $462       $428
                                                   ====       ====       ====
Troubled Debt Restructurings                       $ --       $ --       $ --
                                                   ====       ====       ====
Total Nonperforming Loans and
     Troubled Debt Restructurings
     as a Percent of Total Loans                   0.40%      1.20%      1.75%

Total Nonperforming Assets and
     Troubled Debt Restructurings
     as a Percent of Total Assets                  0.61%      0.94%      0.92%

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

         (1) Net of related loss allowances as of each date shown, which
allowances at December 31, 2001, 2000 and 1999 amounted to $272,000, $312,000
and $312,000, respectively, for real estate owned.

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

         The $115,000 of non-accruing loans at December 31, 2001 consisted of
two one-to four-family residential loans for $32,000, five consumer loans for
$33,000, and one construction loan for $50,000. The largest non-accruing loan at
December 31, 2001 consisted of a $50,000 fixed-rate construction loan secured by
a residence.

         The Company's real estate owned at December 31, 2001 consisted of a
former furniture store and warehouse and a one-to-four family residential
property. The $203,000 of real estate owned at December 31, 2001 is net of a
$272,000 allowance for loss. See Note G of Notes to Consolidated Financial
Statements.

         Classified Assets. All loans are reviewed on a regular basis under the
Company's asset classification policy. The Company's total classified assets at
December 31, 2001 (excluding loss assets specifically reserved for) amounted to
$1.2 million, of which $0 was classified as special mention and $1.2 million was
classified as substandard. The largest classified asset at December 31, 2001
consisted of other real estate totaling $464,000. The Company has established
reserves of $261,000 on this former furniture store and warehouse. See "Asset
Quality-Classified Assets."

         The remaining $982,000 of substandard assets at December 31, 2001
consisted of (1) residential mortgage loans totaling $513,000, of which the
largest loan had a balance of $189,000 at December 31, 2001, (2) other real
estate property with a balance of $11,000 which is fully reserved, (3)
commercial real estate loans totaling $316,000, of which the largest loan had a
balance of $300,000 at December 31, 2001, (4) construction loans totaling
$78,000 and (5) consumer loans totaling $77,000. The $300,000 substandard
commercial real estate loan is secured by land and the $189,000 residential
mortgage loan is secured by a one-to-four family residence. See "Regulation -
The Bank - Classified Assets."

         Allowance for Loan Losses. At December 31, 2001, the Company's
allowance for loan losses amounted to $415,000 or 1.5% of the total loan
portfolio. The Company's loan portfolio consists of one-to-four family
residential loans, commercial real estate loans, commercial non-mortgage loans,
construction loans, home improvement loans and consumer loans. The loan loss
allowance is maintained by management at a level considered adequate to cover
possible losses that are currently anticipated based on prior loan loss
experience, known and inherent risks in the portfolio, adverse situations that

                                       10
<PAGE>

may affect the borrower's ability to repay, the estimated value of any
underlying collateral, general economic conditions, and other factors and
estimates which are subject to change over time. Although management believes
that it uses the best information available to make such determinations, future
adjustments to allowances may be necessary, and net income could be
significantly affected, if circumstances differ substantially from the
assumptions used in making the initial determinations.

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

                                           At or for the Year Ended December 31,
                                              2001        2000        1999
                                            --------    --------    --------
                                                  (Dollars in Thousands)

Total Loans Outstanding                     $ 28,646    $ 17,609    $ 10,110

Allowance for Loan Losses
     Beginning Balance                      $    262    $    230    $    506
     Provision (Credit) for Loan Losses          167          39          --
     Loans (Charged-Off) Recovered               (14)         (7)       (276)
                                            --------    --------    --------

     Ending Balance                         $    415    $    262    $    230
                                            ========    ========    ========


Allowance for Loan Losses as a Percent of
     Total Loans Outstanding                    1.45 %      1.49 %      2.27 %

Allowance for Loan Losses as a Percent of
     Nonperforming Loans and Troubled
     Debt Restructurings                      360.87 %    124.17 %    129.94 %


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

                                                                      December 31,
                                 ----------------------------------------------------------------------------
                                         2001                       2000                        1999
                                 --------------------        --------------------      ----------------------
                                                Loan                       Loan                        Loan
                                              Category                   Category                    Category
                                 Amount       as a % of     Amount       as a % of     Amount        as a % of
                                   of           Total         of           Total         of            Total
                                Allowance       Loans      Allowance       Loans      Allowance        Loans
                                --------      ---------    ---------     --------     ---------      --------
<S>                              <C>             <C>         <C>             <C>         <C>             <C>
Residential                      $207            49.9%       $177            67.6%       $200            87.0%
Construction                        4             1.0          --              --          --              --
Commercial Real Estate            131            31.6          70            26.7          --              --
Commercial - Other                 11             2.7          --              --          --              --
Consumer                           62            14.9          15             5.7          30            13.0
                                 ----           -----        ----           -----        ----           -----

     Total                       $415           100.0%       $262           100.0%       $230           100.0%
                                 ====           =====        ====           =====        ====           =====
</TABLE>

                                       11
<PAGE>


Mortgage-Backed Securities

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

        The $14.4 million of mortgage-backed securities at December 31, 2001
were accounted for as available for sale and are thus carried at market value.
For additional information relating to the Company's mortgage-backed securities,
see Note E of Notes to Consolidated Financial Statements.

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

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

                                                 December 31,
                                  -----------------------------------------
                                    2001            2000             1999
                                  -------          -------          -------
                                               (In Thousands)
         Mortgage-Backed Securities
           Available for Sale:
         FNMA                     $10,390          $12,840          $14,284
         FHLMC                      2,576            3,366            5,052
         GNMA                       1,395            5,820            6,718
                                  -------          -------          -------
             Total                $14,361          $22,026          $26,054
                                  =======          =======          =======

         Information regarding the contractual maturities and weighted average
yield of the Company's mortgage-backed securities portfolio at December 31, 2001
is presented below. Due to repayments of the underlying loans, the actual
maturities of mortgage-backed securities generally are substantially less than
the scheduled maturities.


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                           Amounts at December 31, 2001 Which Mature in
                                    -------------------------------------------------------------------------------
                                    One Year        After One to     After Five to       Over 10
                                    Or Less          Five Years         10 Years          Years              Total
                                    -------           -------           -------           -------           -------
                                                                  (Dollars In Thousands)
<S>                                 <C>               <C>               <C>               <C>               <C>
Available for Sale:
     FNMA                           $ 1,184           $ 2,602           $ 2,402           $ 4,202           $10,390
     FHLMC                              654               953               508               461             2,576
     GNMA                               298               651               305               141             1,395
                                    -------           -------           -------           -------           -------
         Total                      $ 2,136           $ 4,206           $ 3,215           $ 4,804           $14,361
                                    =======           =======           =======           =======           =======
Weighted Average Yield                 4.84%             5.47%             5.69%             5.84%             5.56%
                                    =======           =======           =======           =======           =======
</TABLE>

         The following table sets forth the purchases, sales and principal
repayments of the Company's mortgage-backed securities during the periods
indicated.

                                                       At or For the
                                                    Year Ended December 31,
                                           ------------------------------------
                                             2001           2000         1999
                                           --------      --------      --------
                                               (Dollars in Thousands)
Mortgage- Backed Securities at
      Beginning of Period                  $ 22,026      $ 26,054      $ 27,392
Purchases                                     3,762         2,773         6,003
Repayments                                   (3,356)       (4,156)       (6,195)
Sales                                        (8,305)       (3,071)           --
Mark to Market Adjustments                      284           459        (1,054)
Amortizations of Premiums and
      Discounts, Net                            (50)          (33)          (92)
                                           --------      --------      --------
Mortgage- Backed Securities at
      End of Period                        $ 14,361      $ 22,026      $ 26,054
                                           ========      ========      ========

Weighted Average Yield at
      End of Period                            5.56%         6.56%         5.74%
                                           ========      ========      ========

Investment Securities

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

         Investment securities (excluding FHLB stock) totaled $367,000 or .7% of
total assets at December 31, 2001. All $367,000 of investment securities, which
consists of U.S. Government and agency securities, are accounted for as
available for sale and are carried at market value. Of the $367,000 of
investment securities, $102,000 or 27.8% mature within five years of December
31, 2001.


                                       13
<PAGE>

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

                                                                      December 31,
                                ---------------------------------------------------------------------------------
                                         2001                         2000                          1999
                                ---------------------         ---------------------        ----------------------
                                Carrying       Market        Carrying        Market       Carrying         Market
                                 Value         Value           Value         Value          Value          Value
                                ------         ------         ------         ------         ------         ------
                                                                  (In Thousands)
<S>                             <C>            <C>            <C>            <C>            <C>            <C>
Available for Sale:
     FHLB Notes                 $   --         $   --         $2,699         $2,699         $2,591         $2,591
     FNMA Notes                     --             --            263            263            216            216
     FHLMC Notes                    --             --          1,428          1,428          1,372          1,372
     SBA                           367            367            507            507            983            983
     Other                          --             --            286            286            348            348
                                ------         ------         ------         ------         ------         ------

Total Available for Sale           367            367          5,183          5,183          5,510          5,510
                                ------         ------         ------         ------         ------         ------
Held to Maturity
     FHLB Stock                    609            609            585            585            541            541
                                ------         ------         ------         ------         ------         ------
Total Held to Maturity             609            609            585            585            541            541
                                ------         ------         ------         ------         ------         ------
     Total                      $  976         $  976         $5,768         $5,768         $6,051         $6,051
                                ======         ======         ======         ======         ======         ======
</TABLE>

     The following table sets forth the amount of investment securities which
mature during each of the periods indicated and the weighted average yields for
each range of maturities at December 31, 2001. No tax-exempt yields have been
adjusted to a tax-equivalent basis.
<TABLE>
<CAPTION>

                                                           Amounts at December 31, 2001 Which Mature in
                                         --------------------------------------------------------------------------
                                         One Year    After One to      After Five to     Over 10
                                         Or Less      Five Years         10 Years         Years               Total
                                         -------      ----------       ------------       ------             -------
                                                                   (Dollars In Thousands)
<S>                                      <C>             <C>             <C>              <C>               <C>
Bonds and Other Debt Securities
     Available for Sale:
    SBA                                  $ 19            $ 83            $ 126            $ 139             $   367
                                         ====            ====            =====            =====             =======

Weighted Average Yield                   3.99%           3.99%            3.99%            3.99%               3.99%
                                         ====            ====            =====            =====             =======

Equity Securities:
    FHLB Stock (1)                       $ --            $ --            $  --            $ 609             $   609
                                         ====            ====            =====            =====             =======

Weighted Average Yield                     --%             --%              --%            4.13%               4.13%
                                         ====            ====            =====            =====             =======
</TABLE>


         (1) As a member of the FHLB of Dallas, the Bank is required to maintain
its investment in FHLB stock, which has no stated maturity.

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


                                       14
<PAGE>

Sources of Funds

     General. Deposits are the primary source of the Company's funds for lending
and other investment purposes. In addition to deposits, the Company derives
funds from principal and interest payments on loans and securities. Loan
repayments are a relatively stable source of funds, while deposit inflows and
outflows are significantly influenced by general interest rates and money market
conditions. Borrowings may be used on a short-term basis to compensate for
reductions in the availability of funds from other sources. They may also be
used on a longer-term basis for general business purposes.

     Deposits. The Company's deposits are attracted principally from within the
Company's primary market area through the offering of a broad selection of
deposit instruments, including non-interest bearing demand deposits, negotiable
order of withdrawal ("NOW") accounts, money market deposit accounts ("MMDA's"),
regular savings accounts, and term certificate accounts. Included among these
deposit products are individual retirement account certificates of approximately
$3.8 million or 8.5% of total deposits at December 31, 2001. Deposit account
terms vary, with the principal differences being the minimum balance required,
the time periods the funds must remain on deposit and the interest rate.

     The large variety of deposit accounts offered by the Bank has increased the
Bank's ability to retain deposits and allowed it to be more competitive in
obtaining new funds, but has not eliminated the threat of disintermediation (the
flow of funds away from savings institutions into direct investment vehicles
such as government and corporate securities). During periods of high interest
rates, deposit accounts that have adjustable interest rates have been more
costly than traditional passbook accounts. In addition, the Bank is subject to
short-term fluctuations in deposit flows because funds in transaction accounts
can be withdrawn at any time and because 72.0% of the certificates of deposit at
December 31, 2001 mature in one year or less. The Bank's ability to attract and
maintain deposits is affected by the rate consciousness of its customers and
their willingness to move funds into higher-yielding accounts. The Bank's cost
of funds has been, and will continue to be, affected by money market conditions.

     The following table shows the distribution of, and certain other
information relating to, the Company's deposits by type of deposit, as of the
dates indicated.
<TABLE>
<CAPTION>
                                                               December 31,
                                    -------------------------------------------------------------
                                           2001                   2000                  1999
                                    -----------------      ----------------      ----------------
                                                         (Dollars in Thousands)
                                     Amount      %          Amount      %        Amount       %
                                    --------   -----       -------    -----      -------    -----
<S>                                 <C>         <C>        <C>                   <C>          <C>
Certificate Accounts:
    2.00% - 2.99%                   $  5,368    12.0 %     $    --        - %    $    22      0.1 %
    3.00% - 3.99%                      2,252     5.0            --        -            9      0.0
    4.00% - 4.99%                      8,577    19.1         1,334      3.4        7,738     20.2
    5.00% - 5.99%                      6,178    13.8         6,456     16.7       17,844     46.5
    6.00% - 6.99%                     12,284    27.4        21,589     55.7        4,255     11.1
    7.00% - 7.99%                        488     2.3           571      2.3          882      2.3
    8.00% or more                         --      --            --       --           --       --
                                    --------   -----       -------    -----      -------    -----

       Total Certificate Accounts     35,147    78.3        29,950     77.3       30,750     80.1
                                    --------   -----       -------    -----      -------    -----
Transaction Accounts:
    Savings                            4,155     9.3         4,178     10.8        4,680     12.2
    MMDAs                              2,388     5.3         2,312      6.0          693      1.8
    Demand and NOW Accounts            3,171     7.1         2,290      5.9        2,245      5.9
                                    --------   -----       -------    -----      -------    -----
       Total Transaction Accounts      9,714    21.7         8,780     22.7        7,618     19.9
                                    --------   -----       -------    -----      -------    -----

Total Deposits                      $ 44,861   100.0 %     $38,730    100.0 %    $38,368    100.0 %
                                    ========   =====       =======    =====      =======    =====
</TABLE>


                                       15
<PAGE>


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

                                                           Year Ended December 31,
                                     --------------------------------------------------------------
                                            2001                    2000                   1999
                                    ------------------      -----------------      -----------------
                                                Average                 Average                Average
                                    Average      Rate       Average      Rate      Average      Rate
                                    Balance      Paid       Balance      Paid      Balance      Paid
                                    -------      -----      --------     ----      --------     ----
                                                          (Dollars in Thousands)

<S>                                 <C>           <C>        <C>         <C>        <C>         <C>
Savings Accounts                    $  4,046      2.50 %     $ 4,454     2.69 %     $ 4,689     2.62 %
Demand and NOW Accounts                2,604      1.81         1,888     1.75         1,624     1.85
MMDAs                                  2,366      3.80         1,194     2.35           717     2.55
Certificates of Deposit               33,728      5.65        29,860     5.80        34,857     5.37
                                    -------      -----      --------     ----      --------     ----

   Total Interest-Bearing Deposit   $ 42,744      4.91 %    $ 37,396     5.11 %    $ 41,887     4.88 %
                                    ========      ====      ========     ====      ========     ====
</TABLE>

      The following table sets forth the savings flows of the Company during the
periods indicated.
                                                       Year Ended December 31,
                                                   ----------------------------
                                                     2001      2000       1999
                                                   -------   -------    -------
                                                    (In Thousands)

Increase (Decrease) Before Interest Credited (1)   $ 3,993   $(1,581)   $(2,990)
Interest Credited                                    2,138     1,943      1,863
                                                   -------   -------    -------

     Net Increase (Decrease) in Deposits           $ 6,131   $   362    $(1,127)
                                                   =======   =======    =======


         (1) The information provided is net of deposits and withdrawals because
the gross amount of deposits and withdrawals is not readily available.

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

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

         The principal methods used by the Bank to attract deposits include an
aggressive officer call program, new marketing strategies, and the offering of a
wide variety of services and accounts, competitive interest rates and convenient
office locations.

         The Bank does not advertise for deposits outside of its primary market
area. At December 31, 2001, the Bank had no deposits that were obtained through
deposit brokers. The Bank does not actively solicit broker deposits and does not
pay fees to such brokers.

         The following table presents, by various interest rate categories, the
amount of certificates of deposit at December 31, 2001 which mature during the
periods indicated.


                                       16
<PAGE>

                                           Balance at December 31, 2001
                                  Maturing in the 12 Months Ending December 31,
                                 -----------------------------------------------
                                  2002       2003      2004  Thereafter   Total
                                 -------   -------   -------   -------   -------
Certificates of Deposit                 (In Thousands)
2.00% - 2.99%                    $ 5,287   $    81   $    --   $    --   $ 5,368
3.00% - 3.99%                      1,346       389       498        19     2,252
4.00% - 4.99%                      7,172       793       609         3     8,577
5.00% - 5.99%                      4,865       661       504       148     6,178
6.00% - 6.99%                      6,406     4,293       661       924    12,284
7.00% - 7.99%                        245       134       109        --       488
                                 -------   -------   -------   -------   -------

Total Certificate Accounts       $25,321   $ 6,351   $ 2,381   $ 1,094   $35,147
                                 =======   =======   =======   =======   =======

         The following table sets forth the maturities of the Company's
certificates of deposit of $100,000 or more at December 31, 2001 by time
remaining to maturity.

Maturing During Quarter Ending                                 Amounts
------------------------------                                 ------
                                                            (In Thousands)

March 31, 2002                                                 $  402
June 30, 2002                                                     312
September 30, 2002                                              1,323
December 31, 2002                                               1,408
After December 31, 2002                                         1,697
                                                               ------
     Total Certificates of Deposit With
     Balances of $100,000 or More                              $5,142
                                                               ======

Borrowings

         The Bank may obtain advances from the FHLB of Dallas upon the security
of the common stock it owns in that bank and certain of its residential mortgage
loans, investment securities and mortgage-backed securities, provided certain
standards related to credit worthiness have been met. See "Regulation - The Bank
- Federal Home Loan Bank System." Such advances are made pursuant to several
credit programs, each of which has its own interest rate and range of
maturities. Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending. At December 1,
2001, the Bank had no advances from the FHLB. At December 31, 2000, outstanding
advances from FHLB totaled $3,000,000, at 6.598%, which matured February 20,
2001, collateralized by mortgage-backed securities.

Subsidiaries

         The Bank is a wholly-owned subsidiary of the Company. At December 31,
2001, the Bank had no subsidiaries. Under Louisiana law, a state-chartered
association may invest up to 10% of its assets in service organizations or
corporations.

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


                                       17
<PAGE>

         On December 31, 2001, the Company entered into an agreement to sell its
interest in Planet Mortgage, Inc. for $10,000 cash by June 30, 2002. The
transaction will result in a gain, which will be included in operations during
the second quarter of 2002.

Competition

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

Employees

         The Company and its subsidiaries had 24 full-time employees at December
31, 2001. None of these employees are represented by a collective bargaining
agent, and the Company believes that it enjoys good relations with its
personnel.

                                   REGULATION

The Company

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

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

         If the Company were to acquire control of another savings institution,
other than through merger or other business combination with the Bank, the
Company would thereupon become a multiple savings and loan holding company.
Except where such acquisition is pursuant to the authority to approve emergency


                                       18
<PAGE>

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

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

         In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer and
to a greater than 10% stockholder of a savings institution, and certain
affiliated interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the savings
institution's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus). Section 22(h) also requires that
loans to directors, executive officers and principal stockholders be made on
terms substantially the same as offered in comparable transactions to other
persons and also requires prior board approval for certain loans. In addition,
the aggregate amount of extensions of credit by a savings institution to all
insiders cannot exceed the institution's unimpaired capital and surplus.
Furthermore, Section 22(g) places additional restrictions on loans to executive
officers. At December 31, 2001, the Bank was in compliance with the above
restrictions.

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

         The Director of the OTS may only approve acquisitions resulting in the
formation of a multiple savings and loan holding company which controls savings
institutions in more than one state if (i) the multiple savings and loan holding
company involved controls a savings institution which operated a home or branch
office located in the state of the institution to be acquired as of March 5,
1987; (ii) the acquirer is authorized to acquire control of the savings
institution pursuant to the emergency acquisition provisions of the Federal

                                       19
<PAGE>

Deposit Insurance Act ("FDIA"); or (iii) the statutes of the state in which the
institution to be acquired is located specifically permit institutions to be
acquired by the state-chartered institutions or savings and loan holding
companies located in the state where the acquiring entity is located (or by a
holding company that controls such state-chartered savings institutions).

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

The Bank

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

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

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

         Under current FDIC regulations, institutions are assigned to one of
three capital groups which are based solely on the level of an institution's
capital--"well capitalized," "adequately capitalized," and
"undercapitalized"--which are defined in the same manner as the regulations
establishing the prompt corrective action system discussed below. These three
groups are then divided into three subgroups which reflect varying levels of
supervisory concern, from those which are considered to be healthy to those
which are considered to be of substantial supervisory concern.

         The deposits of the Bank are currently insured by the SAIF. Both the
SAIF and the BIF, the federal deposit insurance fund that covers commercial bank
deposits, are required by law to attain and thereafter maintain a reserve ratio
of 1.25% of insured deposits.

         In the fourth quarter of 1996, the FDIC lowered the assessment rates
for SAIF members to reduce the disparity in the assessment rates paid by BIF and
SAIF members. Beginning October 1, 1996, effective SAIF rates generally range
from zero basis points to 27 basis points. From 1998 through 1999, SAIF members
will pay 6.4 basis points to fund the FICO, while BIF member institutions will
pay approximately 1.3 basis points. The Bank's insurance premiums, which had
amounted to 23 basis points, were thus reduced to 6.4 basis points effective
January 1, 1998.

                                       20
<PAGE>

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

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

         Current OTS capital standards require savings institutions to satisfy
three different capital requirements. Under these standards, savings
institutions must maintain "tangible" capital equal to at least 1.5% of adjusted
total assets, "core" capital equal to at least 3.0% of adjusted total assets and
"total" capital (a combination of core and "supplementary" capital) equal to at
least 8.0% of "risk-weighted" assets. For purposes of the regulation, core
capital generally consists of common stockholders' equity (including retained
earnings). Tangible capital is given the same definition as core capital but is
reduced by the amount of all the savings institution's intangible assets, with
only a limited exception for purchased mortgage servicing rights. At December
31, 2001, the Bank had no intangible assets which are deducted in computing its
tangible capital. Both core and tangible capital are further reduced by an
amount equal to a savings institution's debt and equity investments in
subsidiaries engaged in activities not permissible to national banks (other than
subsidiaries engaged in activities undertaken as agent for customers or in
mortgage banking activities and subsidiary depository institutions or their
holding companies). At December 31, 2001, the Bank had no subsidiaries.

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

         In August 1993, the OTS adopted a final rule incorporating an
interest-rate risk component into the risk-based capital regulation. Under the
rule, an institution with a greater than "normal" level of interest rate risk
will be subject to a deduction of its interest rate risk component from total
capital for purposes of calculating its risk-based capital. As a result, such an
institution will be required to maintain additional capital in order to comply
with the risk-based capital requirement. An institution with a greater than
"normal" interest rate risk is defined as an institution that would suffer a
loss of net portfolio value exceeding 2.0% of the estimated economic value of
its assets in the event of a 200 basis point increase or decrease (with certain
minor exceptions) in interest rates. The interest rate risk component will be
calculated, on a quarterly basis, as one-half of the difference between an
institution's measured interest rate risk and 2.0%, multiplied by the economic

                                       21
<PAGE>

value of its assets. The rule also authorizes the Director of the OTS, or his
designee, to waive or defer an institution's interest rate risk component on a
case-by-case basis. The final rule was originally effective as of January 1,
1994, subject however to a two quarter "lag" time between the reporting date of
the data used to calculate an institution's interest rate risk and the effective
date of each quarter's interest rate risk component. However, in October 1994
the Director of the OTS indicated that it would waive the capital deductions for
institutions with a greater than "normal" risk until the OTS published an
appeals process. On August 21, 1995, the OTS released Thrift Bulletin 67 which
established (i) an appeals process to handle "requests for adjustments" to the
interest rate risk component and (ii) a process by which "well-capitalized"
institutions may obtain authorization to use their own interest rate risk model
to determine their interest rate risk component. The Director of the OTS
indicated, concurrent with the release of Thrift Bulletin 67, that the OTS will
continue to delay the implementation of the capital deduction for interest rate
risk pending the testing of the appeals process set forth in Thrift Bulletin 67.

         At December 31, 2001, the Bank exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of 12.5%, 12.5%
and 24.8%, respectively. The following table sets forth the Bank's compliance
with each of the above-described capital requirements as of December 31, 2001.
<TABLE>
<CAPTION>
                                                         Tangible          Core          Risk-Based
                                                         Capital         Capital (1)      Capital (2)
                                                         --------         ------          ------
                                                                     (Dollars in Thousands)
<S>                                                      <C>              <C>             <C>
Capital Under GAAP                                       $  6,448         $ 6,448         $ 6,448
Additional Capital Items:
     General Valuation Allowances (3)                          --              --             343
     Net Realized Loss on Securities
        Available for Sale                                     25              25              25
                                                         --------         ------          ------
Regualtory Capital                                          6,473           6,473           6,816
Minimum Required Regulatory Capital (4)                       776           1,552           2,195
                                                         --------          ------         -------

Excess Regulatory Capital                                $  5,697         $ 4,921         $ 4,621
                                                         ========         =======         =======

Regulatory Capital as a Percentage                          12.51 %         12.51 %         24.84 %
Minimum Capital Required as a Percentage (4)                 1.50            3.00            8.00
                                                         --------         -------         -------

Regulatory Capital as a Percentage
     in Excess of Requirements                              11.01 %          9.51  %        16.84  %
                                                         ========         =======         =======
</TABLE>


(1)      Does not reflect the 4.0% requirement to be met in order for an
         institution to be "adequately capitalized." See "Prompt Corrective
         Action."

(2)      Does not reflect the interest-rate risk component in the risk-based
         capital requirement, the effective date of which has been postponed as
         discussed above.

(3)      General valuation allowances are only used in the calculation of
         risk-based capital. Such allowances are limited to 1.25% of
         risk-weighted assets.

(4)      Tangible and core capital are computed as a percentage of adjusted
         total assets of $51.7 million. Risk-based capital is computed as a
         percentage of adjusted risk-weighted assets of $27.4 million.

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

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

                                       22
<PAGE>

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

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

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

         At December 31, 2001, the Bank was deemed a well capitalized
institution for purposes of the above regulations and as such is not subject to
the above mentioned restrictions.

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

         Liquidity Requirements. All savings institutions are required to
maintain an average daily balance of liquid assets in accordance with
management's policy. The average daily balance is based on a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time depending upon economic conditions and savings flows of the savings
institution. At December 31, 2001, the Bank's liquidity ratio was 50.8%.

         Capital Distributions. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt and

                                       23
<PAGE>

other transactions charged to the capital account of a savings institution to
make capital distributions. Generally, the regulation creates a safe harbor for
specified levels of capital distributions from institutions meeting at least
their minimum capital requirements, so long as such institutions notify the OTS
and receive no objection to the distribution from the OTS. Savings institutions
and distributions that do not qualify for the safe harbor are required to obtain
prior OTS approval before making any capital distributions.

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

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

         At December 31, 2001, the Bank was a Tier 1 institution for purposes of
this regulation.

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

         Classified Assets. Federal regulations require that each insured
savings institution classify its assets on a regular basis. In addition, in
connection with examinations of insured institutions, federal examiners have
authority to identify problem assets and, if appropriate, classify them. There
are three classifications for problem assets: "substandard," "doubtful" and
"loss." Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets, with the additional characteristic that
the weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
possibility of loss. An asset classified loss is considered uncollectible and of
such little value that continuance as an asset of the institution is not
warranted. Another category designated "special mention" also must be
established and maintained for assets which do not currently expose an insured
institution to a sufficient degree of risk to warrant classification as
substandard, doubtful or loss. Assets classified as substandard or doubtful
require the institution to establish general allowances for loan losses. If an
asset or portion thereof is classified loss, the insured institution must either
establish specific allowances for loan losses in the amount of 100% of the
portion of the asset classified loss, or charge-off such amount. General loss
allowances established to cover possible losses related to assets classified
substandard or doubtful may be included in determining an institution's
regulatory capital up to certain amounts, while specific valuation allowances
for loan losses do not qualify as regulatory capital. Federal examiners may
disagree with an insured institution's classifications and amounts reserved. See
"Business - Asset Quality - Classified Assets."

         Branching by Federal Savings Institutions. OTS policy permits
interstate branching to the full extent permitted by statute (which is
essentially unlimited). Generally, federal law prohibits federal savings
institutions from establishing, retaining or operating a branch outside the
state in which the federal institution has its home office unless the
institution meets the Internal Revenue Service's domestic building and loan test
(generally, 60% of a thrift's assets must be housing-related) ("IRS Test"). The
IRS Test requirement does not apply if: (i) the branch(es) result(s) from an
emergency acquisition of a troubled savings institution (however, if the
troubled savings institution is acquired by a bank holding company, does not

                                       24
<PAGE>

have its home office in the state of the bank holding company bank subsidiary
and does not qualify under the IRS Test, its branching is limited to the
branching laws for state-chartered banks in the state where the savings
institution is located); (ii) the law of the state where the branch would be
located would permit the branch to be established if the federal savings
institution were chartered by the state in which its home office is located; or
(iii) the branch was operated lawfully as a branch under state law prior to the
savings institution's conversion to a federal charter.

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

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

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

         Currently, the prong of the QTL test that is not based on the Code
requires that 65% of an institution's "portfolio assets" (as defined) consist of
certain housing and consumer-related assets on a monthly average basis in nine
out of every 12 months. Assets that qualify without limit for inclusion as part
of the 65% requirement are loans made to purchase, refinance, construct, improve
or repair domestic residential housing and manufactured housing; home equity
loans; mortgage-backed securities (where the mortgages are secured by domestic
residential housing or manufactured housing); stock issued by the FHLB of
Dallas; and direct or indirect obligations of the FDIC. In addition, the
following assets, among others, may be included in meeting the test subject to
an overall limit of 20% of the savings institution's portfolio assets: 50% of
residential mortgage loans originated and sold within 90 days of origination;
100% of consumer and educational loans (limited to 10% of total portfolio
assets); and stock issued by the FHLMC or the FNMA. Portfolio assets consist of
total assets minus the sum of (i) goodwill and other intangible assets, (ii)
property used by the savings institution to conduct its business, and (iii)
liquid assets up to 20% of the institution's total assets. At December 31, 2001,
the qualified thrift investments of the Bank were approximately 86.3% of its
portfolio assets.

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

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of Dallas in an amount equal to at least 1% of its aggregate unpaid
residential mortgage loans, home purchase contracts or similar obligations at


                                       25
<PAGE>

the beginning of each year. At December 31, 2001, the Bank had $609,000 in FHLB
stock, which was in compliance with this requirement.

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

         Federal Reserve System. The FRB requires all depository institutions to
maintain reserves against their transaction accounts (primarily NOW and Super
NOW checking accounts) and non-personal time deposits. As of December 31, 2001,
no reserves were required to be maintained on the first $5.7 million of
transaction accounts, reserves of 3% were required to be maintained against the
next $35.6 million of net transaction accounts (with such dollar amounts subject
to adjustment by the FRB), and a reserve of 10% (which is subject to adjustment
by the FRB to a level between 8% and 14%), is required against all remaining net
transaction accounts. Because required reserves must be maintained in the form
of vault cash or a non-interest-bearing account at a Federal Reserve Bank, the
effect of this reserve requirement is to reduce an institution's earning assets.

Louisiana Regulation

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

         The Bank is required by Louisiana law and regulations to comply with
certain reserve and capital requirements. At December 31, 2001, the Bank was in
compliance with all applicable reserve and capital requirements.

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

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


                                       26
<PAGE>

         The investment authority of Louisiana-chartered savings associations is
broader in many respects than that of federally-chartered savings and loan
associations. However, state-chartered savings associations, such as the Bank,
are generally prohibited from acquiring or retaining any equity investment,
other than certain investments in service corporations, of a type or in an
amount that is not permitted for a federally-chartered savings association. This
prohibition applies to equity investments in real estate, investments in equity
securities and any other investment or transaction that is in substance an
equity investment, even if the transaction is nominally a loan or other
permissible transaction. At December 31, 2001, the Bank was in compliance with
such provisions.

         Furthermore, effective January 1, 1990, a state-chartered savings
association may not engage as principal in any activity not permitted for
federal associations unless the FDIC has determined that such activity would
pose no significant risk to the affected deposit insurance fund and the Bank is
in compliance with the fully phased-in capital standards prescribed under
FIRREA. When certain activities are permissible for a federal association, the
state association may engage in the activity in a higher amount if the FDIC has
not determined that such activity would pose a significant risk of loss to the
affected deposit insurance fund and the Bank meets the fully phased-in capital
requirements. This increased investment authority does not apply to investments
in nonresidential real estate loans. At December 31, 2001, the Bank had no
investments which were affected by the foregoing limitations.

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

         As previously reported in the Company's Form 10-QSB for the quarterly
period ended September 30, 2000, on October 4, 2000, the Office of Thrift
Supervision (OTS) issued an order to "Cease and Desist" (the "Order") to the
Bank. The Order was issued by the OTS as a result of their examination of the
Bank as of April 10, 2000. The Order is an arrangement between the Bank and the
OTS in which the Bank agrees to perform, among other things, the following
within specified time periods:

         (a)      the Bank shall appoint a permanent compliance officer;
         (b)      the Bank shall develop written policies and procedures for
                  compliance in consumer lending, and for training lending
                  personnel in these policies and procedures and in consumer
                  compliance laws;
         (c)      the Bank shall establish a plan for internal controls and
                  procedures to ensure compliance with compliance regulations,
                  and provide an ongoing monitoring program to assess the
                  effectiveness and progress of compliance controls;
         (d)      the Bank shall review all outstanding loans made since the
                  last OTS compliance examination, dated June 23, 1997 to
                  determine certain compliance matters for reporting to the OTS.

         As previously reported in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999, on March 1, 2000 the Office of
Thrift Supervision (OTS) and the Office of Financial Institutions (OFI) issued a
preliminary supervisory agreement (the "Agreement") as a result of their
examination of the Bank as of November 29, 1999. On April 17, 2000 the Company
signed the Agreement, which, among other things, calls for the following actions
to be taken within specified time periods:

         (a)      the Bank shall appoint a new Chief Executive Officer, two new
                  directors and a compliance officer;
         (b)      the Bank must formulate a revised three year business plan;
         (c)      the Bank must adopt written policy and procedures for non-real
                  estate commercial and consumer lending;
                                       and
         (d)      the Bank must obtain written approval from the regional
                  director for any contractual arrangements with employees or
                  third parties outside of the normal course of business and for
                  any capital distributions.


                                       27
<PAGE>

            Management believes it has taken affirmative action toward complying
with the provisions of the Order and the Agreement.

                                    TAXATION

Federal Taxation

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

         Year. The Company and the Bank file federal income tax returns on the
basis of a calendar year ending on December 31. For 2001 and 2000, the Company
and the Bank intend to file a consolidated tax return.

        Bad Debt Reserves. In August 1966, legislation was enacted that repeals
the reserve method of accounting (including the percentage of taxable income
method) previously used by many savings institutions to calculate their bad debt
reserve for federal income tax purposes. Savings institutions with $500 million
or less in assets may, however, continue to use the experience method. As a
result, the Bank must recapture that portion of its reserve which exceeds the
amount that could have been taken under the experience method for post-1987 tax
years. At December 31, 2001, the Bank's post -1987 excess reserves amounted to
approximately $445,000. The recapture will occur over a six-year period, the
commencement of which was delayed until the first taxable year beginning after
December 31, 1998, since the Bank met certain residential lending requirements.
The legislation also requires savings institutions to account for bad debts for
federal income tax purposes on the same basis as commercial banks for tax years
beginning after December 31, 1995. This change in accounting method and reversal
and excess bad debt reserves is adequately provided for in the Bank's deferred
tax liability.

         At December 31, 2001, the federal income tax reserves of the Bank
included $1.3 million for which no federal income tax has been provided. Because
of these federal income tax reserves and the liquidation account established for
the benefit of certain depositors of the Bank in connection with the conversion
of the Bank to stock form, the retained earnings of the Bank are substantially
restricted.

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

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

                                       28
<PAGE>

         Net Operating Loss Carryovers. A financial institution may carry back
net operating losses ("NOLs") to the preceding three taxable years and forward
to the succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At December 31, 2001, the Company had $1.7
million in NOL carryforwards for federal income tax purposes.

         Capital Gains and Corporate Dividends-Received Deduction. Corporate net
capital gains are taxed at a maximum rate of 35%. The corporate
dividends-received deduction is 80% in the case of dividends received from
corporations with which a corporate recipient does not file a consolidated tax
return, and corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received or accrued on
their behalf. However, a corporation may deduct 100% of dividends from a member
of the same affiliated group of corporations.

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

         The Company's federal income tax returns for the tax years ended
December 31, 1998 forward are open under the statute of limitations and are
subject to review by the IRS.

State Taxation

         The Company is subject to the Louisiana Corporation Income Tax based on
its Louisiana taxable income, as well as franchise taxes. The Corporation Income
Tax applies at graduated rates from 4% upon the first $25,000 of Louisiana
taxable income to 8% on all Louisiana taxable income in excess of $200,000. For
these purposes, "Louisiana taxable income" means net income which is earned
within or derived from sources within the State of Louisiana, after adjustments
permitted under Louisiana law, including a federal income tax deduction and an
allowance for net operating losses, if any. In addition, beginning in 1998, the
Bank is subject to the Louisiana Shares Tax, which is imposed on the assessed
value of its stock. The formula for deriving the assessed value is to calculate
15% of the sum of (a) 20% of the company's capitalized earnings, plus (b) 80% of
the company's taxable stockholders' equity, and to subtract from that figure 50%
of the company's real and personal property assessment. Various items may also
be subtracted in calculating a company's capitalized earnings.

Item 2. Description of Property.
--------------------------------

         At December 31, 2001, the Company and the Bank conducted their business
from the Bank's main office and two branch offices in the New Orleans, Louisiana
area. The following table sets forth the net book value (including furnishings
and equipment) and certain other information with respect to the offices and
other properties of the Company at December 31, 2001.



                                       29
<PAGE>

                                                                Net Book Value
Description/Address                     Leased/Owned             of Property
-------------------                     ------------             -----------

Main Office:
     #1 Westbank Expressway
     New Orleans, LA  70114                Leased                   $ 172

Branch Offices:
     2021 Carol Sue Ave.
     Terrytown, LA  70056                  Owned                      352

     3008 Holiday Drive
     New Orleans, LA  70131                Leased                     166
                                                                    -----
         Total                                                      $ 690
                                                                    =====

Item 3. Legal Proceedings.
--------------------------

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

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

         None.

PART II.

Item 5. Market for Common Equity and Related Stockholder Matters.
-------------------------------------------------------------------

         The Company's stock is not listed on any security exchange. Therefore,
the Company does not have exchange data that provides high and low stock prices.
The most recent sale of the Company's stock was on March 14, 2002 at $8.55 per
share.

         The payment of dividends on the common stock is subject to
determination and declaration by the Board of Directors of the Company. The
Board of Directors had previously adopted a policy of paying quarterly cash
dividends at a rate of $0.05 per share since the Company's first dividend paid
in January 1997.

         The Board of Directors, responding to regulatory requirements, has
elected to suspend the payment of quarterly dividends effective the third
quarter of 2000. The payment of future dividends will be subject to the
requirements of applicable law and the determination by the Board of Directors
that the Company's net income, capital and financial condition, banking industry
trends and general economic conditions justify the payment of dividends, and it
cannot be assured that dividends will continue to be paid by the Company in the
future.

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
of Operation
--------------------------------------------------------------------------------

Forward-Looking Statements

         The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission and its reports to stockholders. Statements

                                       30
<PAGE>

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

General

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

Asset and Liability Management

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

         The Bank attempts to manage its interest rate risk by maintaining a
high percentage of its assets in adjustable-rate mortgage-backed securities and
in variable-rate loans and shorter term fixed rate loans. From 1985 to 1995, the
only residential mortgages originated by the Bank were ARMs. During 1996, the
Bank started offering fixed rate mortgage loans. It was the opinion of
management that a mix of fixed rate and adjustable-rate mortgage products would
better insulate the Bank from periods of rate fluctuation. At December 31, 2001,
the Bank's fixed-rate mortgage-backed securities amounted to $4.3 million or
8.3% of total assets, its variable rate loans amounted to $12.7 million or 24.5%
of total assets and its adjustable-rate mortgage-backed securities amounted to
$10.1 million or 19.4% of total assets. The interest rates on the variable rate
loans and on a portion of the adjustable-rate mortgage-backed securities,
however, adjust no more frequently than once a year, with the amount of the
change subject to annual limitations, whereas the interest rates on deposits can
change more frequently and are not subject to annual limitations. A portion of
the Bank's adjustable-rate mortgage-backed securities have interest rates which
adjust monthly or semi-annually with limitations on the amount of the increase.


                                       31
<PAGE>

         Management also monitors and evaluates the potential impact of interest
rate changes upon the market value of the Company's portfolio equity on a
quarterly basis, in an attempt to ensure that interest rate risk is maintained
within limits established by the Board of Directors. In August 1993 the OTS
adopted a final rule incorporating an interest rate risk component into the
risk-based capital rules. Under the rule, an institution with a greater than
"normal" level of interest rate risk will be subject to a deduction of its
interest rate risk component from total capital for purposes of calculating the
risk-based capital requirement. An institution with a greater than "normal"
interest rate risk is defined as an institution that would suffer a loss of net
portfolio value ("NPV") exceeding 2.0% of the estimated market value of its
assets in the event of a 200 basis point increase or decrease in interest rates.
NPV is the difference between incoming and outgoing discounted cash flows from
assets, liabilities, and off-balance sheet contracts. A resulting change in NPV
of more than 2% of the estimated market value of an institution's assets will
require the institution to deduct 50% of that excess change. The rule provides
that the OTS will calculate the interest rate risk component quarterly for each
institution. The OTS has recently indicated that no institution will be required
to deduct capital for interest rate risk until further notice. Because a 200
basis point increase in interest rates would have decreased the Company's NPV by
less than 2% as a percentage of the estimated market value of it assets at
December 31, 2001, the Company would not have been subject to any capital
deduction as of December 31, 2001 if the regulation had been effective as of
such date. The following table presents the Company's NPV as of December 31,
2001, as calculated by the OTS, based on information provided to the OTS by the
Bank.
<TABLE>
<CAPTION>

    Change in                                                          NPV as % of          Change in
  Interest Rates                                                        Portfolio          NPV as % of
 in Basis Points         Net Portfolio Value                            Value of         Portfolio Value
   (Rate Shock)         Amount        $ Change        % Change         Assets (1)           of Assets
-------------------   ------------   ------------    ------------    ----------------    -----------------
                                             (Dollars in Thousands)
<S>     <C>               <C>            <C>                 <C>               <C>                  <C>
        400               $     -        $     -               - %                 - %                  - %
        300                 4,629         (1,272)            (22)%              9.35 %              (2.08)%
        200                 5,045           (857)            (15)%             10.05 %              (1.38)%
        100                 5,456           (445)             (8)%             10.72 %              (0.71)%
      Static                5,901              -               - %             11.43 %                  - %
       (100)                6,302            401               7 %             12.04 %               0.61 %
       (200)                    -              -               - %                 - %                  - %
       (300)                    -              -               - %                 - %                  - %
       (400)                    -              -               - %                 - %                  - %
</TABLE>

         (1) Based on the portfolio value of the Company's assets assuming no
change in interest rates.

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

Changes in Financial Condition

         Assets. Total assets increased to $51.9 million at December 31, 2001
from $48.9 million at December 31, 2000.

         Mortgage-backed securities as a percentage of total assets decreased to
27.7% at December 31, 2001 from 45.0% at December 31, 2000. All of the Company's
mortgage-backed securities are either insured or guaranteed by the Federal Home
Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
(FNMA") or the Government National Mortgage Association ("GNMA").
Mortgage-backed securities increase the quality of the Company's assets by
virtue of the guarantees that support them, require fewer personnel and overhead
costs than individual residential mortgage loans, are more liquid than
individual mortgage loans and may be used to collateralize borrowings or other
obligations of Algiers. However, mortgage-backed securities typically yield less
than individual residential mortgage loans.


                                       32
<PAGE>

         At December 31, 2001, net loans receivable totaled $28.1 million or
54.2% of total assets. Of the total loan portfolio, $11.7 million or 40.8%
consisted of residential mortgage loans. Consumer loans accounted for $1.9
million or 6.7% of the total loan portfolio. Commercial real estate loans
accounted for $11.7 million or 40.8% of the portfolio and commercial
non-mortgage loans accounted for $1.1 million or 3.8% of the portfolio.

         Mortgage-backed securities and investment securities were 27.7% and .7%
of total assets, respectively, at December 31, 2001. Of such amount, $2.2
million or 4.2% of total assets mature within one year of December 31, 2001. See
Notes B and E to the Consolidated Financial Statements. Cash and cash
equivalents amounted to 12.4% of total assets at such date.

         Non-performing assets have decreased to .6% at December 31, 2001 from
..9% of total assets at December 31, 2000. Non-accruing single-family residential
loans represented 10.1% of the $318,000 of total non-performing assets at
December 31, 2001. The balance of non-performing assets included one
construction loan accounting for 15.7%, consumer loans accounting for 10.4% and
other real estate for 63.8%. At December 31, 2001, the Company's allowance for
loan losses equaled $415,000 or 1.5% of total loans outstanding.

         The Company's total deposits increased during 2001 to $44.9 million at
December 31, 2001 from $38.7 million at December 31, 2000. Certificates accounts
increased by $5.2 million or 17.35% from December 31, 2000 to December 31, 2001,
while transaction accounts increased by $934,000 or 10.6% during the period.

         Total stockholders' equity was $6.8 million at December 31, 2001, a
decrease of $237,000 from December 31, 2000. The decrease was due to a net loss
for the year of $548,000, partially offset by a $261,000 increase in Accumulated
Other Comprehensive Income, a $43,000 allocation to the Employee Stock Ownership
Plan, and a $7,000 allocation to the Management Retention Plan Trust.

Results of Operations

         Net income. The Company's net income increased by $20,000 or 3.5% in
2001 and decreased by $201,000 or 54.8% in 2000. The decrease in 2001 is
attributable to an increase of $312,000 in non-interest expenses, a decrease in
minority interest in loss of a subsidiary of $5,000, and an increase in the
provision for loan losses of $128,000, partially offset by an increase of
$186,000 in net interest income, an increase of $271,000 in non-interest income,
and an increase in income taxes benefit of $8,000.

         Net Interest Income. The primary source of earnings is net interest
income, which is the difference between income generated from interest-earning
assets and interest expense from interest-bearing liabilities. Net interest
income increased by $186,000 or 17.6% in 2001, and decreased $21,000 or 1.9% in
2000. The increase in 2001 was due to an increase in the interest rate spread
and to a lesser extent the decrease in the ratio of average interest-earning
assets to average interest-bearing liabilities. Interest rate spread is the
yield on interest-earning assets minus the costs of interest-bearing
liabilities.

         The Company's average interest rate spread increased to 2.13% for 2001
from 1.74% for 2000 after decreasing from 1.86% for 1999. In addition, its ratio
of average interest-earning assets to average interest-bearing liabilities
decreased to 111.33% for 2001 from 113.32% for 2000, which represented a
decrease from the 114.25% for 1999. The increase in the average interest rate
spread was due to the average rate paid on interest-bearing liabilities
decreasing, while the average yield on interest-earning assets increased.

         Average Balances, Net Interest Income, and Yields Earned and Rates
Paid. The following table presents for the periods indicated the total dollar
amount of interest income from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates, and the net interest margin. Tax-exempt
income and yields have not been adjusted to a tax-equivalent basis. All average
balances are based on monthly balances.


                                       33
<PAGE>
<TABLE>
<CAPTION>

                                                                      Year Ended December 31,
                                       ------------------------------------------------------------------------------------
                                                   2001                         2000                       1999
                                        -------------------------    -------------------------    -------------------------
                                                           Average                      Average                      Average
                                        Average             Yield/   Average             Yield/   Average             Yield/
                                        Balance Interest    Rate     Balance Interest     Rate    Balance Interest     Rate
                                        -------  -------     ----    -------  -------     ----    -------  -------     ----
<S>                                     <C>      <C>         <C>    <C>       <C>         <C>     <C>      <C>         <C>
Interest- Earning Assets:
   Loans Receivable (1)                 $22,962  $ 2,060     8.97%  $ 13,424  $ 1,111     8.28%   $ 9,543  $   881     9.23%
   Mortgage-Backed Securities            14,325      873     6.09     24,314    1,576     6.48     26,723    1,595     5.97
   Investment Securities (2)              2,921      191     6.54      5,425      364     6.71      5,407      327     6.05
   Other Interest-Earning Asset           6,729      269     4.00      1,765       80     4.53      1,931      137     7.09
                                        -------  -------     ----    -------  -------     ----    -------  -------     ----

     Total Interest-Earning As           46,937    3,393     7.23%    44,928    3,131     6.97%    43,604    2,940     6.74%
                                        -------  -------     ----    -------  -------     ----    -------  -------     ----

Non-Interest Earning Assets               3,707                        2,443                        4,088
                                        -------                      -------                      -------
     Total Assets                       $50,644                     $ 47,371                      $47,691
                                        =======                     ========                      =======

Interest-Bearing Liabilities:
   Passbook, NOW and Money
     Market Accounts                    $ 8,014    $ 220     2.75%   $ 7,536    $ 182     2.42%   $ 7,215    $ 181     2.51%
   Certificates of Deposit               33,728    1,904     5.65     29,860    1,731     5.80     30,783    1,675     5.44
                                        -------  -------     ----    -------  -------     ----    -------  -------     ----
     Total Deposits                      41,742    2,124     5.09     37,396    1,913     5.12     37,997    1,856     4.88

   FHLB Advances                            419       27     6.44      2,318      162     6.99        167        7     4.19
                                        -------  -------     ----    -------  -------     ----    -------  -------     ----

     Total Interest-Bearing Liabilities  42,161    2,151     5.10%    39,714    2,075     5.22%    38,164    1,863     4.88%
                                        -------  -------     ----    -------  -------     ----    -------  -------     ----

Non-Interest Bearing Liabilities          1,613                          740                        1,678
                                        -------                      -------                      -------

     Total Liabilities                   43,774                       40,454                       39,842

Stockholders' Equity                      6,870                        6,917                        7,849
                                        -------                      -------                      -------

     Total Liabilities and
       Stockholders' Equity             $50,644                     $ 47,371                      $47,691
                                        =======                     ========                      =======

Net Interest-Earning Assets             $ 4,776                     $ 5,214                       $ 5,440
                                        =======                     ========                      =======

Net Interest Income; Average
   Interest Rate Spread                          $ 1,242     2.13%             $1,056     1.74%             $1,077     1.86%
                                                 =======     ----              ======     ----              ======     ----

Net Interest Margin (4)                                      2.65%                        2.35%                        2.47%
                                                             ====                         ====                         ====
Average Interest-Earning Assets
   to Average Interest-Bearing
   Liabilities                                             111.33%                      113.13%                      114.25%
                                                           ======                       ======                       ======
</TABLE>

(1)      Includes nonaccrual loans during the respective periods. Calculated net
         of deferred fees and discount, loans in process and allowance for loan
         losses.

(2)      Includes non-accruing investment securities during the respective
         periods.

(3)      Includes non-interest-bearing deposits.

(4)      Net interest margin is net interest income divided by average
         interest-earning assets.

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

                                       34
<PAGE>

         Rate/Volume Analysis. The following table describes the extent to which
changes in interest rates and changes in volume of interest-related assets and
liabilities have affected Algiers' interest income and expense during the
periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in rate (change in rate multiplied by current year volume), (ii)
changes in volume (change in volume multiplied by prior year rate), and (iii)
total change in rate and volume. The combined effect of changes in both rate and
volume has been allocated proportionately to the change due to rate and the
change due to volume.
<TABLE>
<CAPTION>
                                                   2001 vs. 2000                         2000 vs. 1999
                                       ---------------------------------        ----------------------------------
                                           Increase (Decrease) Due to              Increase (Decrease) Due to
                                       ---------------------------------       -----------------------------------
                                                                  Total                                    Total
                                                                 Increase                                 Increase
                                        Rate        Volume      (Decrease)       Rate         Volume      (Decrease)
                                       -----        ------      ---------        -----        ------      ---------
                                                 (In Thousands)                            (In Thousands)
<S>                                    <C>           <C>           <C>           <C>           <C>           <C>
Interest Income:
     Loans Receivable                  $ 160         $ 789         $ 949         $(128)        $ 358         $ 230
     Mortgage- Backed Securities         (56)         (647)         (703)          125          (144)          (19)
     Investment Securities                (5)         (168)         (173)           36             1            37
     Other Interest-Earning Assets       (36)          225           189           (45)          (12)          (57)
                                       -----         -----         -----         -----         -----         -----

        Total Interest Income             63           199           262           (13)          204           191
                                       -----         -----         -----         -----         -----         -----
Interest Expense:
     Passbook, NOW and Money
        Market Accounts                   26            11            37            (7)            7            --
     Certificates of Deposit             (51)          225           174           106           (49)           57
                                       -----         -----         -----         -----         -----         -----

        Total Deposits                   (25)          236           211            99           (42)           57
     FHLB Advances                        (2)         (133)         (135)           65            90           155
                                       -----         -----         -----         -----         -----         -----

        Total Interest Expense           (27)          103            76           164            48           212
                                       -----         -----         -----         -----         -----         -----
Increase (Decrease) in Net
     Interest Income                   $  90         $  96         $ 186         $(177)        $ 156         $ (21)
                                       =====         =====         =====         =====         =====         =====
</TABLE>

                                       35
<PAGE>


         Interest Income. Interest on loans increased $949,000 or 84.4% in 2001
due to an increase in the average outstanding balances of $9.5 million and an
increase in the weighted average yields on loans receivable to 8.97% from 8.28%.
A substantial portion of the loans have adjustable interest rates, and the
change in the average yields reflects the general change in market interest
rates.

         Interest on mortgage-backed securities decreased by $703,000 or 44.6%
in 2001 from 2000, due to a $10.0 million or 41.1% decrease in the average
balance and a decrease in the average yield to 6.09% in 2001 from 6.48% in 2000.
The average balance decreased as $8.3 million of mortgage-backed securities were
sold, partially offset by a market value adjustment for unrealized losses
decrease of $284,000 in 2001 from a $459,000 loss adjustment in 2000. The
decreased yield was due to the interest rate on a large portion of the
adjustable-rate mortgage-backed securities adjusting downward in 2001.

         Interest on investment securities decreased by $173,000 or 47.5% in
2001 from 2000, due to a decrease in the average balance of $2.5 million from
2000 and a decrease in the average rate to 6.54% in 2001 from 6.71% in 2000.

         Other interest income, which consists of dividends on FHLB stock and
interest on overnight deposits at the FHLB, increased by $189,000 or 236.3% in
2001 from 2000, due to an increase in the average balance of $5.0 million,
partially offset by a decrease in the average yield to 4.00% in 2001 from 4.53%
in 2000.

         Total interest income increased by $262,000 or 8.4% in 2001 from 2000,
due to a $2.0 million or 4.5% increase in the average balance of total
interest-earning assets and an increase in the average yield to 7.23% in 2001
from 6.97% in 2000.

         Interest Expense. Interest on deposits increased by $211,000 or 11.0%
in 2001 over 2000, due to a $4.3 million or 11.6% increase in the average
balance, partially offset a decrease in the average rate to 5.09% in 2001 from
5.12% in 2000. The increase in the average balance was primarily due to an
increase in the average balance of certificates of deposit. The average rate
paid on certificates of deposit decreased to 5.65% in 2001 from 5.80% in 2000,
which decrease was partially offset by an increase in the average rate paid by
the Company on its transaction accounts to 2.75% in 2001 from 2.42% in 2000.

         Interest on FHLB advances decreased by $135,000 or 83.3% in 2001 from
2000, primarily due to a decrease in the average balance of FHLB advances of
$1.9 million in 2001.

         Total interest expense increased by $76,000 or 3.7% in 2001 over 2000,
primarily due to the increase in the average balance of deposits.

         Provision (Credit) for Loan Losses. The Company provided $167,000,
$39,000 and $0 of its allowance for loan losses in 2001, 2000 and 1999,
respectively. The allowance for loan losses amounted to $415,000 or 1.5% of the
total loan portfolio at December 31, 2001.

                                       36
<PAGE>

         Non-Interest Income. Service charges and fees, which primarily consist
of fees collected on loans sold in the secondary market and charges for ATM
usage, checking accounts, overdrafts and late payments, increased by $219,000 or
111.2% in 2001 from 2000. This increase was primarily due to an increase in fees
collected on loans sold in the secondary market.

         Other non-interest income amounted to $102,000 and $50,000 in 2001 and
2000, respectively. Included in other non-interest income for 2001 are $46,000
in gains from the sale of other real estate owned.

         Total non-interest income increased by $271,000 or 109.7% in 2001 from
2000, primarily due to an increase of $219,000 in service charges and fees, an
increase of $46,000 in gains on the sale of other real estate owned, and an
increase in other income of $6,000.

         Non-Interest Expense. Compensation and benefits increased by $348,000
or 34.1% in 2001 over 2000, due to an increase in the Company's workforce
related to the increase in lending.

         Occupancy and equipment expenses decreased by $16,000 or 3.7% in 2001
over 2000, primarily due to a decrease in the office expenses related to the
subsidiary, Algiers.Com.

         Federal insurance premiums decreased by $6,000 or 46.2% in 2001 from
2000.

         In 2001 the Company sold $8.3 million of mortgage-backed securities and
$298,000 of investment securities which were part of the available for sale
portfolio and which resulted in a loss of $7,000. In 2000 the Company sold $3.1
million of mortgage-backed securities and $71,000 of investment securities which
were part of the available for sale portfolio and which resulted in a loss of
$3,000.

         Computer expenses increased by $16,000 or 31.4% in 2001 from 2000,
primarily due to technical support for the computer system and internet banking.

         Professional services decreased $106,000 or 38.5% in 2001 from 2000,
due to a decrease in consulting fees.

         Bank service charge expense decreased $3,000 or 23.1% in 2001 from
2000.

         The Bank's real estate owned expense, net decreased by $39,000 in 2001
from 2000, primarily due to less repairs necessary on a large real estate owned
property and maintenance work being performed by a rental tenant that was
previously paid by the bank. The real estate owned at December 31, 2001
consisted of a former furniture store and warehouse and a one-to-four family
residential property.

                                       37
<PAGE>

         Other non-interest expense, which primarily consists of insurance and
bond premiums, postage and supplies, and other operating expenses increased by
$102,000 or 25.6% in 2001 from 2000. The increase was primarily due to an
increase in other expenses related to the subsidiary, Algiers.Com.

         Total non-interest expense increased by $312,000 or 13.9% in 2001 from
2000, primarily due to increases of $348,000 in compensation and benefits,
$16,000 of computer expenses, $102,000 in other expenses, and a $4,000 loss on
sale of investments, and $6,000 in SAIF assessment and insurance premiums,
partially offset by decreases of $16,000 in occupancy and equipment, $106,000 in
professional services, $3,000 in bank services charges, and $39,000 in real
estate owned expenses. Total non-interest expense as a percent of average assets
was 5.06% in 2001 compared to 4.75% in 2000.

         Federal Income Tax Expense(Benefit). The Company's federal income tax
benefit increased by $8,000 or 2.8% in 2001 from 2000. The effective tax rate
for 2001, 2000 and 1999 was 34.9%, 33.5% and 36.4%, respectively

         The Company had a deferred tax valuation reserve of $194,000, $199,000
and $184,000 at December 31, 2001, 2000 and 1999, respectively. Other components
of the valuation reserve consist of allowances for loan losses and real estate
owned losses. For additional information, see Note I of Notes to Consolidated
Financial Statements.

Liquidity and Capital Resources

         Algiers is required to maintain specified levels of "liquid"
investments in qualifying types of U.S. Government, federal agency and other
investments having maturities of five years or less in accordance with
management's policy. At December 31, 2001, Algiers' liquidity was 50.8%.

         Cash was used in Algiers' operating activities during 2001 and 2000
primarily as a result of the net loss for the periods. The adjustments to
reconcile net income to net cash provided by operations during the periods
presented consisted primarily of the provision for depreciation and
amortization, accretion of the premiums on investments, recovery of loan losses,
gains and losses on the sale of assets, and increases or decreases in various
receivable and payable accounts. The primary investing activities of Algiers are
the purchase of mortgage-backed securities and the origination of loans, which
are primarily funded with the proceeds from repayments and prepayments on
existing loans, investments and mortgage-backed securities and the maturity of
mortgage-backed securities and investments. Investing activities provided net
cash in 2001 primarily because the amount of mortgage-backed securities and
investments maturing and sold exceeded the amount of purchases of mortgaged back
securities and increases in loans. Investing activities used net cash in 2000
primarily due to the net increase in loans exceeding maturities and sales of
mortgage backed securities. Financing activities provided net cash in 2001
primarily due to increases in deposits of $6.1 million, partially offset by
repayment of FHLB advances of $3.0 million. Finance activities provided net cash
in 2000 primarily due to advances from FHLB exceeding repayments and an increase
in deposits of $362,000, partially offset by $75,000 in dividends paid. Total
cash and cash equivalents amounted to $4.4 million at December 31, 2001. See the
Consolidated Statements of Cash Flows in the Consolidated Financial Statements.


                                       38
<PAGE>

         At December 31, 2001, Algiers had outstanding commitments to originate
$3.4 million of commercial and one-to four-family residential loans (including
undisbursed construction loans). At the same date, the total amount of
certificates of deposit which were scheduled to mature in the following 12
months was $25.3 million. Algiers believes that it has adequate resources to
fund all of its commitments and that it can adjust the rate on certificates of
deposit to retain deposits to the extent desired. If Algiers requires funds
beyond its internal funding capabilities, advances from the FHLB of Dallas are
available as an additional source of funds.

         Algiers is required to maintain regulatory capital sufficient to meet
tangible, core and risk-based capital ratios of 1.5%, 3.0% and 8.0%
respectively. At December 31, 2001, Algiers exceeded each of its capital
requirements, with tangible, core and risk-based capital ratios of 12.5%, 12.5%
and 24.8%, respectively. See Note N of Notes to Consolidated Financial
Statements.

Impact of Inflation and Changing Prices

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

Item 7.  Financial Statements.
------------------------------


                                       39
<PAGE>


                              ALGIERS BANCORP, INC.
                                 & SUBSIDIARIES

                                December 31, 2001













                         Audits of Financial Statements

                                December 31, 2001
                                       and
                                December 31, 2000






<PAGE>


                                 C O N T E N T S
<TABLE>
<CAPTION>



<S>                                                                                                            <C>
Independent Auditor's Report                                                                                   41

Consolidated Statements of Financial Condition                                                            41 - 43

Consolidated Statements of Operations                                                                     44 - 45

Consolidated Statements of Comprehensive Income (Loss)                                                         46

Consolidated Statements of Changes in Stockholders' Equity                                                     47

Consolidated Statements of Cash Flows                                                                     48 - 49

Notes to Consolidated Financial Statements                                                                50 - 75
</TABLE>


                                       40
<PAGE>



The Board of Directors
Algiers Bancorp, Inc. & Subsidiaries

                          Independent Auditor's Report
                          ----------------------------

         We have audited the accompanying consolidated statements of financial
condition of ALGIERS BANCORP, INC. & SUBSIDIARIES, as of December 31, 2001 and
2000, and the related consolidated statements of operations, comprehensive
income (loss), changes in stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ALGIERS
BANCORP, INC. & SUBSIDIARIES as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.


                                           /S/ LaPorte, Sehrt, Romig and Hand

                                           A Professional Accounting Corporation

February 15, 2002
Metairie, Louisiana


                                       41
<PAGE>

                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             (Dollars in Thousands)

                                     ASSETS

                                                                 December 31,
                                                             -------------------
                                                               2001        2000
                                                             -------     -------

Cash and Amounts Due from Depository Institutions            $ 1,964     $   615
Interest-Bearing Deposits in Other Banks                       4,473       1,428
Investments Available-for-Sale, at Fair Value                    367       5,183
Loans Receivable - Net                                        28,112      17,224
Mortgage-Backed Securities - Available-for-Sale,
    at Fair Value                                             14,361      22,026
Stock in Federal Home Loan Bank                                  609         585
Accrued Interest Receivable                                      251         346
Real Estate Owned - Net                                          203         251
Office Property and Equipment, (Net
    of Depreciation and Amortization)                            690         717
Prepaid Expenses                                                  40          31
Deferred Taxes                                                   623         463
Income Tax Receivable                                             --          54
Other Assets                                                     199           9
                                                             -------     -------

         Total Assets                                        $51,892     $48,932
                                                             =======     =======




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


                                       42
<PAGE>


                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                              December 31,
                                                                          --------------------
                                                                            2001        2000
                                                                          --------    --------
<S>                                                                       <C>         <C>
LIABILITIES
    Deposits:
       Interest Bearing                                                   $ 43,411    $ 37,819
       Non-Interest Bearing                                                  1,450         911
    Advance Payments from Borrowers for
       Insurance and Taxes                                                      57          75
    FHLB Advances                                                               --       3,000
    Accrued Interest Payable on Depositors' Accounts                             9          13
    Due to Affiliates                                                          345         141
    Other Liabilities                                                           79          68
                                                                          --------    --------

                                                                            45,351      42,027
                                                                          --------    --------
    Minority Interest in Subsidiary                                           (210)        (83)
                                                                          --------    --------

         Total Liabilities                                                  45,141      41,944
                                                                          --------    --------
STOCKHOLDERS' EQUITY
    Preferred Stock - Par Value $.01
       5,000,000 Shares Authorized; 0 Shares
       Issued and Outstanding                                                   --          --
    Common Stock - Par Value $.01
       648,025 Shares Issued - 506,523 Outstanding at December 31, 2001
       506,348 Outstanding at December 31, 2000                                  6           6
    Additional Paid-in Capital                                               6,108       6,118
    Unearned ESOP Shares                                                      (214)       (267)
    Unearned MRP Shares                                                        (19)        (24)
    Retained Earnings                                                        2,716       3,264
    Treasury Stock - 141,502 Shares in 2001 and
       141,677 Shares in 2000, at Cost                                      (1,821)     (1,823)
    Accumulated Other Comprehensive Loss                                       (25)       (286)
                                                                          --------    --------

         Total Stockholders' Equity                                          6,751       6,988
                                                                          --------    --------
         Total Liabilities and Stockholders' Equity                       $ 51,892    $ 48,932
                                                                          ========    ========
</TABLE>

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


                                       43
<PAGE>


                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)


                                                       For the Years Ended
                                                           December 31,
                                                 -------------------------------
                                                   2001        2000        1999
                                                 -------     -------     -------

INTEREST INCOME
    Loans                                        $ 2,060     $ 1,111     $   881
    Mortgage-Backed Securities                       873       1,576       1,595
    Investment Securities                            191         364         327
    Other Interest-Earning Assets                    269          80         137
                                                 -------     -------     -------

           Total Interest Income                   3,393       3,131       2,940
                                                 -------     -------     -------

INTEREST EXPENSE
    Deposits                                       2,124       1,913       1,856
    FHLB Advances                                     27         162           7
                                                 -------     -------     -------

           Total Interest Expense                  2,151       2,075       1,863
                                                 -------     -------     -------

NET INTEREST INCOME                                1,242       1,056       1,077

PROVISION FOR LOAN LOSSES                           (167)        (39)         --
                                                 -------     -------     -------

NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                      1,075       1,017       1,077
                                                 -------     -------     -------

NON-INTEREST INCOME
    Service Charges and Fees                         416         197         100
    Recapture of Allowance on GIC Bonds               --          --          10
    Gain on Sale of Real Estate Owned                 46          --           2
    Other Income                                      56          50          21
                                                 -------     -------     -------

           Total Non-Interest Income                 518         247         133
                                                 -------     -------     -------


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


                                       44
<PAGE>

                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
                             (Dollars in Thousands)


                                                     For the Years Ended
                                                         December 31,
                                              ---------------------------------
                                                2001         2000        1999
                                              -------      -------      -------
NON-INTEREST EXPENSES
    Compensation and Benefits                   1,370        1,022          669
    Occupancy and Equipment                       417          433          403
    Computer                                       67           51           77
    Professional Services                         169          275          266
    Loss on Sale of Investments                     7            3           --
    Real Estate Owned Expense - Net                 2           41           13
    Other                                         529          424          382
                                              -------      -------      -------

                                                2,561        2,249        1,810
                                              -------      -------      -------

LOSS BEFORE INCOME TAXES
     AND MINORITY INTEREST                       (968)        (985)        (600)

INCOME TAX BENEFIT                               (294)        (286)        (194)
                                              -------      -------      -------

NET LOSS BEFORE MINORITY
    INTEREST IN SUBSIDIARY                       (674)        (699)        (406)

MINORITY INTEREST IN SUBSIDIARY                   126          131           39
                                              -------      -------      -------

NET LOSS                                      $  (548)     $  (568)     $  (367)
                                              -------      -------      -------

 LOSS PER SHARE                               $ (1.14)     $ (1.20)     $ (0.79)
                                              -------      -------      -------


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


                                       45
<PAGE>

                      ALGIERS BANCORP, INC. & SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                             (Dollars in Thousands)
<TABLE>
<CAPTION>


                                                           For The Years Ended
                                                              December 31,
                                                       -------    -------    -------
                                                         2001       2000       1999
                                                       -------    -------    -------
<S>                                                    <C>        <C>        <C>
NET LOSS                                               $  (548)   $  (568)   $  (367)

OTHER COMPREHENSIVE INCOME (LOSS),
    NET OF TAX:
       Unrealized Holding Gains (Losses) Arising
          During the Period                                266        436       (911)

       Reclassification Adjustment for Gains
          (Losses) Included in Net Income                   (5)        (2)        --
                                                       -------    -------    -------
             Total Other Comprehensive Income (Loss)       261        434       (911)
                                                       -------    -------    -------

COMPREHENSIVE LOSS                                     $  (287)   $  (134)   $(1,278)
                                                       =======    =======    =======
</TABLE>





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


                                       46
<PAGE>

                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                                                                              Accumulated   Total
                                                        Additional  Unearned    Unearned             Compre-     Other      Stock-
                                                Common    Paid-in     ESOP         MRP     Retained  hensive    Treasury    holders'
                                                 Stock    Capital    Shares      Shares    Earnings Income (Loss) Stock     Equity
                                                -------   -------    -------    -------    -------    -------    -------    -------
<S>                                             <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>
BALANCE - December 31, 1998                     $     6   $ 6,137    $  (376)   $   (48)   $ 4,344    $   191    $(1,675)   $ 8,579

Net Loss                                             --        --         --         --       (367)        --         --       (367)
Dividends Declared ($.20 Per Share)                  --        --         --         --        (95)        --         --        (95)
Common Stock Released by MRP Trust                   --        --         --         12         --         --         --         12
ESOP Shares Released for Allocation                  --        (5)        54         --         --         --         --         49
Purchase of Treasury Stock                           --        --         --         --         --         --       (148)      (148)
Other Comprehensive Income (Loss) Net
    of Applicable Deferred Income Taxes              --        --         --         --         --       (911)        --       (911)
                                                -------   -------    -------    -------    -------    -------    -------    -------

BALANCE - December 31, 1999                           6     6,132       (322)       (36)     3,882       (720)    (1,823)     7,119

Net Loss                                             --        --         --         --       (568)        --         --       (568)
Dividends Declared ($.10 Per Share)                  --        --         --         --        (50)        --         --        (50)
Common Stock Released by MRP Trust                   --        --         --         12         --         --         --         12
ESOP Shares Released for Allocation                  --       (14)        55         --         --         --         --         41
Other Comprehensive Income (Loss) Net
    of Applicable Deferred Income Taxes              --        --         --         --         --        434         --        434
                                                -------   -------    -------    -------    -------    -------    -------    -------

BALANCE - December 31, 2000                           6     6,118       (267)       (24)     3,264       (286)    (1,823)     6,988

Net Loss                                             --        --         --         --       (548)        --         --       (548)
Common Stock Released by MRP Trust                   --        --         --          5         --         --         --          5
ESOP Shares Released for Allocation                  --       (10)        53         --         --         --         --         43
Treasury Shares Acquired for MRP Trust               --        --         --         --         --         --          2          2
Other Comprehensive Income (Loss) Net
    of Applicable Deferred Income Taxes              --        --         --         --         --        261         --        261
                                                -------   -------    -------    -------    -------    -------    -------    -------

BALANCE - December 31, 2001                     $     6   $ 6,108    $  (214)   $   (19)   $ 2,716    $   (25)   $(1,821)   $ 6,751
                                                -------   -------    -------    -------    -------    -------    -------    -------
</TABLE>


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

                                       47

<PAGE>

                   ALGIERS BANCORP, INC. & SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                                                    For the Years Ended
                                                                                         December 31,
                                                                        ------------------------------------------
                                                                           2001            2000             1999
                                                                        --------         --------         --------
<S>                                                                     <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                                            $   (548)        $   (568)        $   (367)
    Adjustments to Reconcile Net Loss to Net
      Cash (Used in) Operating Activities:
         Depreciation and Amortization                                       192              212              170
         Provision for Loan Losses                                           167               39               --
         Premium Amortization Net of Discount Accretion                       34               19               47
         Gain on Sale of Real Estate Owned                                   (46)              --               (2)
         Gain on Sale of Mortgage-Backed Securities                          (17)              (9)              --
         Loss on Sale of Investment Securities                                24               12               --
         ESOP and MRP Expense                                                 46               53               61
         (Increase) Decrease in Accrued Interest Receivable                   95              (22)              45
         (Increase) Decrease in Prepaid Expenses                              (9)              15               41
         (Increase) Decrease in Prepaid Income Taxes                          54               51              (77)
         Originations of Loans Held-for-Sale                                  --             (138)          (2,165)
         Proceeds from Sale of Loans Held-for-Sale                            --              268            2,035
         (Increase) Decrease in Other Assets                                (174)              (2)              25
         Decrease in Accrued Interest Payable                                 (4)              (3)              (7)
         Increase (Decrease) in Other Liabilities                             11              (36)              20
         Increase in Due to Affiliates                                       204              141               --
         Decrease in Minority Interest                                      (127)            (131)             (39)
         Increase in Deferred Income Taxes                                  (294)            (314)            (116)
                                                                        --------         --------         --------

           Net Cash Used in Operating Activities                            (392)            (413)            (329)
                                                                        --------         --------         --------
CASH FLOWS FROM INVESTING ACTIVITIES
    Purchases of Investment Securities - Available-for-Sale                   --               --           (1,009)
    Maturities of Investment Securities - Available-for-Sale               4,623              470              520
    Proceeds From Sale of Investment Securities - Available
      for-Sale                                                               298               59               --
    Purchases of Mortgage-Backed Securities - Available-for-Sale          (3,762)          (2,773)          (6,003)
    Maturities of Mortgage-Backed Securities - Available-for-Sale          3,356            4,156            6,195
    Proceeds From Sale of Mortgage-Backed Securities - Available
      for-Sale                                                             8,322            3,080               --
    Net Increase in Loans                                                (11,136)          (7,475)            (742)
    Non-Cash Dividend - FHLB                                                 (24)             (44)             (29)
    Purchase of Office Properties and Equipment                             (165)            (134)            (302)
    Proceeds from Sales of Real Estate Owned                                 161               --               64
                                                                        --------         --------         --------

           Net Cash Provided by (Used in) Investing Activities             1,673           (2,661)          (1,306)
                                                                        --------         --------         --------
</TABLE>


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

                                       48
<PAGE>

                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                        For the Years Ended
                                                                            December 31,
                                                                 --------------------------------
                                                                   2001        2000        1999
                                                                 --------    --------    --------
<S>                                                                 <C>           <C>      <C>
CASH FLOWS FROM FINANCING ACTIVITIES
    Net Increase (Decrease) in Deposits                             6,131         362      (1,127)
    Net Decrease in Advances from Borrowers
      for Taxes and Insurance                                         (18)         (9)        (30)
    Proceeds from Federal Home Loan Bank Advance                     --        12,750       1,000
    Repayment of Federal Home Loan Bank Advance                    (3,000)    (10,750)       --
    Dividends Paid                                                   --           (75)       (102)
    Purchase of Treasury Stock                                       --          --          (148)
                                                                 --------    --------    --------

           Net Cash Provided by (Used in) Financing Activities      3,113       2,278        (407)
                                                                 --------    --------    --------

NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                                4,394        (796)     (2,042)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                       2,043       2,839       4,881
                                                                 --------    --------    --------

CASH AND CASH EQUIVALENTS - END OF YEAR                          $  6,437    $  2,043    $  2,839
                                                                 --------    --------    --------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION
      Cash Paid During the Year for:
         Interest                                                $  2,155    $  2,078    $  1,870

SUPPLEMENTAL DISCLOSURE OF NON-CASH
    TRANSACTIONS
      Dividends Declared                                         $   --      $   --      $     25
      Real Estate Owned Acquired Through Foreclosure             $     67    $   --      $    251
      Repossessed Assets                                         $     14    $   --      $   --
</TABLE>



                                       49
<PAGE>


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

NOTE A

         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE OF OPERATIONS

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

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

         PRINCIPLES OF CONSOLIDATION

                  The accompanying consolidated financial statements include the
         accounts of the Company and its wholly-owned subsidiaries, Algiers Bank
         and Trust and Algiers.Com, Inc. In consolidation, significant
         inter-company accounts, transactions, and profits have been eliminated.

         INVESTMENT SECURITIES

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

         MORTGAGE-BACKED SECURITIES

                  Mortgage-backed securities represent participating interests
         in pools of first mortgage loans originated and serviced by issuers of
         the securities. Unrealized gains and losses on mortgage-backed
         securities are recognized as direct increases or decreases in
         comprehensive income. The cost of securities sold is recognized using
         the specific identification method. Premiums and discounts are being
         amortized over the life of the securities as a yield adjustment.



                                       50
<PAGE>

NOTE A

         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         LOANS

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

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

                  Loans are placed on non-accrual when management determines
         that the collection of interest is unlikely. Any unpaid interest
         previously accrued on those loans is reversed from income, and
         thereafter, interest is recognized only to the extent of payments
         received.

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

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

         FORECLOSED REAL ESTATE

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

         OFFICE PROPERTY AND EQUIPMENT

                  Land is carried at cost; office property and equipment are
         carried at cost less accumulated depreciation. Depreciation is computed
         using straight-line and accelerated methods. The depreciation under
         these methods does not differ materially from that calculated in
         accordance with generally accepted accounting principles.

                                       51
<PAGE>

NOTE A

         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         OFFICE PROPERTY AND EQUIPMENT (Continued)

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

         INCOME TAXES

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

                  The Bank is exempt from Louisiana income tax.

         CASH EQUIVALENTS

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

                  Cash and cash equivalents at December 31, 2001 and 2000
         included the following (in thousands):

                                                        2001           2000
                                                    ----------      ----------

                  Cash                              $    1,964      $      615
                  Interest-Bearing Deposits
                      in Other Institutions              4,473           1,428
                                                    ----------      ----------

                                                    $    6,437      $    2,043
                                                    ==========      ==========

         NON-DIRECT RESPONSE ADVERTISING

                  The Corporation expenses advertising costs as incurred.
         Advertising for 2001, 2000 and 1999 was $60,000, $60,000 and $11,000,
         respectively.

         LOANS HELD FOR SALE

                  Mortgage loans originated and intended for sale in the
         secondary market are carried at the lower of cost or estimated market
         value in the aggregate. Net unrealized losses are recognized through a
         valuation allowance by charges to income.


                                       52
<PAGE>


NOTE A

         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         USE OF ESTIMATES

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

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

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

         ACCOUNTING STANDARDS NOT YET ADOPTED

                  Statement of Financial Accounting Standards No. 140 (SFAS
         140), "Accounting for Transfers and Servicing of Financial Assets and
         Extinguishments of Liabilities", a replacement of SFAS 125. This
         statement provides accounting and reporting standards for transfers and
         servicing of financial assets and extinguishments of liabilities. Those
         standards are based on consistent application of a financial-components
         approach that focuses on control. Under this approach, after a transfer
         of financial assets, an entity recognizes the financial and servicing
         assets it controls and the liabilities it has incurred, derecognizes
         financial assets when control has been surrendered, and derecognizes
         liabilities when extinguished. This statement provides consistent
         standards for distinguishing transfers of financial assets that are
         sales from transfers that are secured borrowings. This statement is
         effective for transfers and servicing of financial assets and
         extinguishments of liabilities occurring after March 31, 2001 and for
         recognition and reclassification of collateral and for disclosures
         relating to securitization transactions and collateral for years ending
         after December 15, 2000. The adoption of this pronouncement had no
         effect on the financial position and results of operations of the Bank.


                                       53
<PAGE>

NOTE A

         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         ACCOUNTING STANDARDS NOT YET ADOPTED (Continued)

                  Statement of Financial Accounting Standards No. 141 (SFAS
         141), "Business Combinations" supersedes APB Opinion 16 and FASB 38.
         This statement provides accounting for business combinations using the
         purchase method and eliminating the pooling of interest method. The
         adoption of this pronouncement had no effect on the financial position
         and results of operations of the Bank.

                  Statement of Financial Accounting Standards No. 142 (SFAS
         142), "Goodwill and Other Intangible Assets" supersedes APB Opinion 17.
         This statement provides accounting and reporting standards for
         intangible assets that are acquired individually or with a group of
         other assets (but not those acquired in a business combination). The
         adoption of this pronouncement had no effect on the financial position
         and results of operations of the Bank.

                  Statement of Financial Accounting Standards No. 144 (SFAS
         144), "Accounting for the Impairment of Disposal of Long-Lived Assets"
         a replacement of SFAS 121. This statement provides accounting and
         reporting standards for the recognition and measurement of the
         impairment of long-lived assets to be held and used and the measurement
         of long-lived assets to be disposed of by abandonment or sale. This
         statement requires that long-lived assets (excluding goodwill) to be
         held and used by an entity be reviewed for impairment whenever events
         or changes in circumstances indicate that the carrying amount of an
         asset may not be recoverable and requires a probability-weighted cash
         flow estimation approach, and introduces a "primary-asset" approach to
         determine the cash flow estimation period. In addition, this statement
         requires that long-lived assets to be disposed of be reported at the
         lower of carrying amount or fair value less cost to sell, and includes
         accounting guidance for disposal of a segment of a business that is
         considered a discontinued operation. This statement is effective for
         financial statements issued for fiscal years beginning after December
         15, 2001. The adoption of this pronouncement had no effect on the
         financial position and results of operations of the Bank.


NOTE B

         INVESTMENT SECURITIES AVAILABLE-FOR-SALE

                  Investment securities available-for-sale at December 31, 2001
         consist of the following (in thousands):

                                               Gross        Gross
                                Amortized    Unrealized   Unrealized       Fair
                                  Cost         Gains        Losses         Value
                                  ----         -----        ------         -----

                    SBA          $ 370          $--          $  3          $ 367
                                 -----          ---          ----          -----

                                 $ 370          $--          $  3          $ 367
                                 =====          ===          ====          =====


                                       54
<PAGE>

NOTE B

         INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Continued)

                  Investment securities available-for-sale at December 31, 2000
         consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                                        Gross          Gross
                                                    Amortized        Unrealized      Unrealized           Fair
                                                      Cost              Gains          Losses             Value
                                                   ------------       ----------      ----------     --------------
<S>                                                <C>                <C>             <C>            <C>
                  FNMA Medium Term
                     Callable Note                 $        271       $   --          $        8     $          263
                  FHLMC Callable Note                     1,444           --                  16              1,428
                  FHLB Callable Notes                     2,749           --                  50              2,699
                  SBA                                       513           --                   6                507
                  Other Securities                          322           --                  36                286
                                                   ------------       ----------      ----------     --------------

                                                   $      5,299       $   --          $      116     $        5,183
                                                   ============       ==========      ==========     ==============
</TABLE>


                  The following is a summary of contractual maturities of
         investment securities available-for-sale as of December 31, 2001 (in
         thousands):

                                                     Amortized          Fair
                                                       Cost             Value
                                                    ----------      -----------

                  Due in One Year or Less           $       19      $        19
                  Due from One to Five Years                84               83
                  Due from Five to Ten Years               127              126
                  Due After Ten Years                      140              139
                                                    ----------      -----------

                                                    $      370      $       367
                                                    ==========      ===========


                  During 2001, the Company sold investment securities for
         approximately $298,000 resulting in realized losses of $24,000. During
         2000, the Company sold investment securities for approximately $59,000
         resulting in realized losses of $12,000. There were no sales of
         investment securities during 1999.

                  Investment in stock of the Federal Home Loan Bank is carried
         at cost, which approximates market. The carrying value of this
         investment at December 31, 2001 and 2000 was $609,000 and $585,000,
         respectively, with no provision for unrealized losses necessary.


NOTE C

         COMMITMENTS

                  On December 31, 2001 the Company entered into an agreement to
         sell its interest in Planet Mortgage, Inc. for $10,000 cash by June 30,
         2002. The transaction will result in a gain, which will be included in
         operations during the second quarter of 2002.


                                       55
<PAGE>

NOTE D

         LOANS RECEIVABLE

                  Loans receivable consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                       2001                2000
                                                                                    -----------         -----------
<S>                                                                                 <C>                 <C>
                  Loans Secured by First Mortgages on Real Estate:
                     Family Residential                                             $    11,697         $     8,719
                     Commercial                                                          11,701               5,740
                     Construction Loans - 1-4 Family                                      2,217               1,302
                                                                                    -----------         -----------

                         Total Real Estate Loans                                         25,615              15,761
                                                                                    -----------         -----------

                  Commercial - Non Mortgage                                               1,098                 --
                                                                                    -----------         -----------

                  Consumer Loans:
                     Second Mortgage Loans - 1-4 Family                                     239                 351
                     Consumer Loans                                                         902                 859
                     Share Loans                                                            792                 638
                                                                                    -----------         -----------

                         Total Consumer Loans                                             1,933               1,848
                                                                                    -----------         -----------

                                                                                         28,646              17,609
                                                                                    -----------         -----------
                  Less:
                     Allowance for Losses                                                   415                 262
                     Unearned Interest on Mortgage Loans                                     20                  22
                     Net Deferred Loan Origination Fees                                      99                 101
                                                                                    -----------         -----------

                                                                                            534                 385
                                                                                    -----------         -----------

                                                                                    $    28,112         $    17,224
                                                                                    ===========         ===========
</TABLE>


                  An approximate schedule of loan maturities or repricing
         opportunities at December 31, 2001 is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                 Variable             Fixed
                      Maturities                                   Rate               Rate              Total
                  --------------------                         -----------         -----------      ------------

<S>                                                            <C>                 <C>              <C>
                  Three Months or Less                         $     1,520         $     1,073      $      2,593
                  Three Months - One Year                            1,653               2,388             4,041
                  One Year - Five Years                                112               5,441             5,553
                  Over Five Years                                    9,404               7,055            16,459
                                                               -----------         -----------      ------------

                                                               $    12,689         $    15,957      $     28,646
                                                               ===========         ===========      ============
</TABLE>


                                       56
<PAGE>

NOTE D

         LOANS RECEIVABLE (Continued)

                  Activity in the allowance for loan losses is summarized as
         follows for the years ended December 31, 2001, 2000 and 1999 (in
         thousands):
<TABLE>
<CAPTION>

                                                                   2001               2000              1999
                                                               -----------         -----------      ------------

<S>                                                            <C>                 <C>              <C>
                  Balance at Beginning of Year                 $       262         $       230      $        506
                  Charge-Offs                                          (14)                 (7)             (276)
                  Recoveries                                          --                  --                --
                  Provision (Credit) for Loan Losses                   167                  39              --
                                                               -----------         -----------      ------------

                  Balance at End of Year                       $       415         $       262      $        230
                                                               ===========         ===========      ============
</TABLE>


                  At December 31, 2001 and 2000, the Bank had loans totaling
         approximately $881,158 and $245,728, respectively, for which impairment
         had been recognized. The allowance for loan losses related to these
         loans totaled $107,253 and $49,603 at December 31, 2001 and 2000,
         respectively.

                  At December 31, 2001 and 2000, the Bank had non-performing
         loans of approximately $115,000 and $211,000, respectively. The amount
         of interest foregone for the years ended December 31, 2001, 2000 and
         1999 was approximately $7,000, $23,000 and $62,000, respectively.

                  The Bank does not service any loans for others.

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

                                                       2001            2000
                                                    -----------     -----------

                  Balance at Beginning of Year      $       106     $        74
                     Additions                               36              76
                     Payments and Renewals                   (9)            (44)
                                                    -----------     -----------

                  Balance at End of Year            $       133     $       106
                                                    ===========     ===========


                                       57
<PAGE>


NOTE E

         MORTGAGE-BACKED SECURITIES

                  Fixed and variable rate mortgage-backed securities
         available-for-sale at December 31, 2001 are summarized as follows (in
         thousands):
<TABLE>
<CAPTION>

                                                                         December 31, 2001
                                                   ----------------------------------------------------------------
                                                                        Gross           Gross
                                                   Amortized         Unrealized      Unrealized           Fair
                                                      Cost              Gains          Losses             Value
                                                   ------------       ----------      ----------     --------------

<S>                                                <C>                <C>             <C>            <C>
                  GNMA Certificates                $      1,391       $        8      $        4     $        1,395
                  FNMA Certificates                      10,412               43              65             10,390
                  FHLMC Certificates                      2,592                2              18              2,576
                                                   ------------       ----------      ----------     --------------

                                                   $     14,395       $       53      $       87     $       14,361
                                                   ============       ==========      ==========     ==============
</TABLE>


                  Fixed and variable rate mortgage-backed securities
         available-for-sale at December 31, 2000 are summarized as follows (in
         thousands):
<TABLE>
<CAPTION>

                                                                         December 31, 2000
                                                   ----------------------------------------------------------------
                                                                        Gross           Gross
                                                   Amortized         Unrealized      Unrealized           Fair
                                                      Cost              Gains          Losses             Value
                                                   ------------       ----------      ----------     --------------

<S>                                                <C>                <C>             <C>            <C>
                  GNMA Certificates                $      5,868       $        4      $       52     $        5,820
                  FNMA Certificates                      13,038               45             243             12,840
                  FHLMC Certificates                      3,438                2              74              3,366
                                                   ------------       ----------      ----------     --------------

                                                   $     22,344       $       51      $      369     $       22,026
                                                   ============       ==========      ==========     ==============
</TABLE>


                  The amortized cost and fair value of mortgage-backed
         securities at December 31, 2001, by contractual maturity, are shown
         below (in thousands). Expected maturities will differ from contractual
         maturities because borrowers may have the right to call or prepay
         obligations without call or prepayment penalties.
<TABLE>
<CAPTION>

                                                                              Amortized                   Fair
                                                                                Cost                      Value
                                                                           -------------             --------------
<S>                                                                        <C>                       <C>
                  Mortgage-Backed Securities Maturing:
                     Less than One Year                                    $       2,145             $        2,136
                     Due After One Year Thru Five Years                            4,220                      4,206
                     Due After Five Years Thru Ten Years                           3,221                      3,215
                     Due After Ten Years                                           4,809                      4,804
                                                                           -------------             --------------

                                                                           $      14,395             $       14,361
                                                                           =============             ==============
</TABLE>

                                       58
<PAGE>

NOTE E

         MORTGAGE-BACKED SECURITIES (Continued)

                  During 2001 and 2000, the Company sold mortgage-backed
         securities for approximately $8,322,000 and $3,080,000, respectively.
         These sales resulted in realized gains of $17,000 and $9,000 during
         2001 and 2000, respectively. There were no sales of mortgage-backed
         securities during 1999.


NOTE F

         INTEREST RECEIVABLE

                  Interest receivable at December 31, 2001 and 2000 is
         summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                        2001                 2000
                                                      ----------          ----------

<S>                                                   <C>                 <C>
                  Loans                               $      165          $      118
                  Mortgage-Backed Securities                  83                 144
                  Investment Securities                        3                  84
                                                      ----------          ----------

                                                      $      251          $      346
                                                      ==========          ==========
</TABLE>

NOTE G
                                                              REAL ESTATE OWNED
         A summary of real estate owned at December 31, 2001 and 2000 is as
follows (in thousands):
<TABLE>
<CAPTION>

                                                          2001                 2000
                                                        ----------          ----------

<S>                                                     <C>                 <C>
                  Real Estate Acquired in Settlement    $      475          $      563
                  Less:  Allowances for Losses                 272                 312
                                                        ----------          ----------

                                                        $      203          $      251
                                                        ==========          ==========
</TABLE>


                  Activity in the allowance for losses for other real estate
                  owned for years ended December 31, 2001, 2000 and 1999 is as
                  follows (in thousands):
<TABLE>
<CAPTION>

                                                          2001              2000                1999
                                                      -----------        -----------         -----------

<S>                                                   <C>                <C>                  <C>
                  Balance at Beginning of Year        $       312        $       312          $       35
                  Provision for REO Losses                      1                --                  277
                  Sale of REO                                 (41)               --                  --
                                                      ------------       -----------          ----------

                  Balance at End of Year              $       272        $       312          $      312
                                                      ===========        ===========          ==========
</TABLE>

                                       59
<PAGE>

NOTE H

         OFFICE PROPERTY AND EQUIPMENT

                  Office property and equipment consist of the following at
         December 31, 2001 and 2000 (in thousands):
<TABLE>
<CAPTION>

                                                                               2001                2000
                                                                            ----------          ----------

<S>                                                                         <C>                 <C>
                  Land                                                      $       30          $       30
                  Building                                                         188                 188
                  Furniture, Fixtures and Equipment                              1,048                 947
                  Leasehold Improvements                                           255                 193
                                                                            ----------          ----------
                                                                                 1,521               1,358
                  Less:  Accumulated Depreciation and Amortization                 831                 641
                                                                            ----------          ----------

                                                                            $      690          $      717
                                                                            ==========          ==========
</TABLE>

                  Depreciation expense for the years ended December 31, 2001,
         2000 and 1999 was approximately $192,000, $212,000 and $170,000,
         respectively.

NOTE I

         DEPOSITS

                  Interest bearing deposits consist of the following at December
         31, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>

                                     Weighted                            Years Ended
                                  Average Rate at                        December 31,
                                 ------------------       ---------------------------------------------
                                    December 31,                2001                      2000
                                 ------------------       -------------------       -------------------
                                  2001        2000         Amount    Percent         Amount    Percent
                                  ----        ----         ------    -------         ------    -------
<S>                               <C>         <C>         <C>          <C>          <C>          <C>
Balance by Interest Rate:
   Regular Savings Accounts       2.50%       2.69%       $ 4,155      9.57%        $ 4,178      11.05%
   NOW Accounts                   1.50%       1.75%         1,721       3.96          1,379       3.65
   Money Fund Accounts            2.55%       2.35%         2,388       5.50          2,312       6.11
   Certificate of Deposit         4.92%       5.80%        35,147      80.96         29,950      79.19
                                                          -------     ------        -------     ------

                                                          $43,411     100.00%       $37,819     100.00%
                                                          =======     ======        =======     ======

Certificate Accounts Maturing
    Under 12 months                                       $25,321      72.04%       $17,472      58.34%
    12 months to 24 months                                  6,351      18.07          7,616      25.43
    24 months to 36 months                                  2,381       6.77          3,576      11.94
    Due after 36 months                                     1,094       3.11          1,286       4.29
                                                          -------     ------        -------     ------

                                                          $35,147     100.00%       $29,950     100.00%
                                                          =======     ======        =======     ======
</TABLE>


                                       60
<PAGE>

NOTE I

         DEPOSITS (Continued)

                     The aggregate amount of short-term jumbo certificates of
         deposit with a minimum denomination of $100,000 was approximately
         $5,142,000 and $3,361,000 at December 31, 2001 and 2000, respectively.

                  Interest expense on deposits consisted of the following (in
         thousands):

<TABLE>
<CAPTION>

                                                               Years Ended
                                                               December 31,
                                                 -----------------------------------------
                                                     2001           2000           1999
                                                 ----------     ----------      ----------

<S>                                              <C>            <C>             <C>
                  Certificates                   $    1,904     $    1,739      $    1,675
                  Passbook Savings                      101            119             128
                  Money Fund Accounts                    90             22              19
                  NOW Accounts                           29             33              34
                                                 ----------     ----------      ----------

                                                 $    2,124     $    1,913      $    1,856
                                                 ==========     ==========      ==========
</TABLE>

                  In the normal course of business, the Bank accepts deposits
         from members of the Board of Directors and officers. As of December 31,
         2001 and 2000, these deposits totaled approximately $320,000 and
         $233,000, respectively.


NOTE J

         FEDERAL INCOME TAXES

                  The provision for income taxes for 2001, 2000 and 1999
         consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                     2001              2000                1999
                                                                 -----------        -----------         -----------

<S>                                                              <C>                <C>                  <C>
                  Current Federal Tax Expense (Benefit)          $      --          $      --            $      (78)
                  Deferred Federal Tax Expense (Benefit)                (294)              (286)               (116)
                                                                 -----------        -----------          -----------

                                                                 $      (294)       $      (286)         $     (194)
                                                                 ===========        ===========          ==========
</TABLE>

                  The provision (benefit) for federal income taxes differs from
         that computed by applying Federal statutory rates to income (loss)
         before Federal income tax expense, as indicated in the following
         analysis (in thousands):
<TABLE>
<CAPTION>

                                                                     2001              2000                1999
                                                                 -----------        -----------         -----------

<S>                                                              <C>                <C>                  <C>
                  Expected Tax Provision at 34% Rate             $      (287)       $      (290)         $     (204)
                  Employee Stock Ownership Plan                            3                  5                   2
                  Other                                                  (10)                (1)                  8
                                                                 -----------        ------------         ----------

                                                                 $      (294)       $      (286)         $     (194)
                                                                 ===========        ===========          ===========
</TABLE>

                                       61
<PAGE>

NOTE J

         FEDERAL INCOME TAXES (Continued)

                  At December 31, 2001, the Company had, for tax reporting
         purposes, operating loss carryforwards of approximately $1,658,682,
         which expire in 2019 through 2021.

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

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

                                                                                            2001           2000
                                                                                        -----------     -----------
<S>                                                                                     <C>              <C>
                  Deferred Tax Assets
                     Allowance for Loan Losses                                          $       141      $       89
                     Allowance for REO Losses                                                    93             106
                     Deferred Loan Fees                                                          34              34
                     Market Value Adjustment for Available-for-Sale Securities                   13             148
                     Net Operating Loss Carryforward                                            564             346
                     Other                                                                       49              31
                                                                                        -----------      ----------

                         Total Deferred Tax Assets                                              894             754
                                                                                        -----------      ----------
                  Deferred Tax Liabilities
                     Property and Equipment and Depreciation                                      3              26
                     FHLB Stock                                                                  74              66
                     Other                                                                      --              --
                                                                                        -----------      ----------

                         Total Deferred Tax Liabilities                                          77              92
                                                                                        -----------      ----------

                  Net Deferred Tax Assets (Liabilities)                                         817             662
                  Deferred Tax Valuation Reserve                                                194             199
                                                                                        -----------      ----------

                     Total Net Deferred Tax Asset (Liability)                           $       623      $      463
                                                                                        ===========      ==========
</TABLE>

                  Included in retained earnings at December 31, 2001 and 2000 is
         approximately $1,309,000 in bad debt reserves for, which no deferred
         Federal income tax liability has been recorded. These amounts represent
         allocations of income to bad debt deductions for tax purposes only.
         Reduction of these reserves for purposes other than tax bad-debt losses
         or adjustments arising from carryback of net operating losses would
         create income for tax purposes, which would be subject to the then
         current corporate income tax rate. The unrecorded deferred liability on
         these amounts was approximately $445,000 for December 31, 2001 and
         2000.

                                       62
<PAGE>

NOTE K

         COMPREHENSIVE INCOME

                  Comprehensive income was comprised of changes in the Company's
         unrealized holding gains or losses on securities available-for-sale
         during 2001, 2000 and 1999. The following represents the tax effects
         associated with the components of comprehensive income.
<TABLE>
<CAPTION>

                                                                                        Years Ended
                                                                                        December 31,
                                                                        -------------------------------------------
                                                                           2001            2000           1999
                                                                        ------------   ------------    ------------
<S>                                                                     <C>            <C>             <C>
                  Gross Unrealized Holding Gains (Losses)
                     Arising During the Period                          $        403   $        661    $     (1,381)
                  Tax (Expense) Benefit                                         (137)          (225)            470
                                                                        -------------  -------------   ------------

                                                                                 266            436            (911)
                                                                        ------------   ------------    -------------

                  Reclassification Adjustment for Gains
                     (Losses) Included in Net Income                              (7)            (3)           --
                  Tax (Expense) Benefit                                            2              1            --
                                                                        ------------   ------------    ------------

                                                                                  (5)            (2)           (911)
                                                                        -------------  -------------   ------------

                  Net Unrealized Holding Gains (Losses)
                     Arising During the Period                          $        261   $        434    $       (911)
                                                                        ============   ============    =============
</TABLE>

NOTE L

         ADVANCES FROM FEDERAL HOME LOAN BANK

                  Pursuant to collateral agreements with the Federal Home Loan
         Bank (FHLB), advances are secured by a blanket floating lien on
         mortgage backed securities held in safekeeping. Total interest expense
         recognized in 2001, 2000 and 1999, respectively, was $27,000, $162,000
         and $7,000.

                  There were no outstanding advances from the FHLB as of
         December 31, 2001. As of December 31, 2000, outstanding advances from
         the FHLB totaled $3,000,000 at 6.598%, maturing February 20, 2001.


NOTE M

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

                  FDICIA was signed into law on December 19, 1991. Regulations
         implementing the prompt corrective action provisions of FDICIA became
         effective on December 19, 1992. In addition to the prompt corrective
         action requirements, FDICIA includes significant changes to the legal
         and regulatory environment for insured depository institutions,
         including reductions in insurance coverage for certain kinds of
         deposits, increased supervision by the federal regulatory agencies,
         increased reporting requirements for insured institutions, and new
         regulations concerning internal controls, accounting and operations.

                                       63
<PAGE>

NOTE M

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

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

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

                  The following table sets out the Bank's various regulatory
         capital categories at December 31, 2001 and 2000.
<TABLE>
<CAPTION>

                                                            2001                                2000
                                               -----------------------------        ----------------------------
                                                  Dollars         Percentage           Dollars        Percentage
                                               ------------       ----------        -------------     ----------
                                                (thousands)                          (thousands)

<S>                                            <C>                  <C>              <C>                 <C>
         Tangible Capital                      $      6,473         12.51%           $      6,827        13.85%
         Tangible Equity                       $      6,473         12.51%           $      6,827        13.85%
         Core/Leverage Capital                 $      6,473         12.51%           $      6,827        13.85%
         Tier 1 Risk-Based Capital             $      6,473         23.59%           $      6,827        36.83%
         Total Risk-Based Capital              $      6,816         24.84%           $      7,065        38.12%
</TABLE>


                                       64
<PAGE>

NOTE N

         REGULATORY CAPITAL

                  The following is a reconciliation of generally accepted
         accounting principles (GAAP) net income and capital to regulatory
         capital for the Bank. The following reconciliation also compares the
         capital requirements as computed to the minimum capital requirements
         for the Bank (in thousands).
<TABLE>
<CAPTION>

                                                              Net Loss                            Capital
                                                             Year Ended                            as of
                                                          December 31, 2001                  December 31, 2001
                                                          -----------------                  -----------------

<S>                                                           <C>                                     <C>
                  Per GAAP                                    $   (402)                              $ 6,448
                                                              =========                              =======

                  Total Assets                                                                       $51,716
                                                                                                     =======

                  Capital Ratio                                                                        12.47%
</TABLE>
<TABLE>
<CAPTION>

                                                                       Core/          Tier 1              Total
                                      Tangible        Tangible       Leverage       Risk-Based         Risk-Based
                                       Capital         Equity         Equity          Capital            Capital
                                      ---------       --------       --------        ---------          ---------

<S>                                  <C>            <C>              <C>            <C>                <C>
         Per GAAP                    $    6,448     $    6,448       $   6,448      $    6,448         $   6,448
         Assets Required
             to be Added
               Unrealized Loss
                 on Securities
                 Available-
                 for-Sale                    25             25              25              25                25
               General Valuation
                 Allowance                 --             --              --              --                 343
                                     ----------     ----------       ---------      ----------         ---------

         Regulatory Capital
             Measure                 $    6,473     $    6,473       $   6,473      $    6,473         $   6,816
                                     ==========     ==========       =========      ==========         =========

         Adjusted Total
             Assets                  $   51,741     $   51,741       $  51,741
                                     ==========     ==========       =========

         Risk-Weighted
             Assets                                                                 $   27,436         $  27,436
                                                                                    ==========         =========

         Capital Ratio                    12.51%         12.51%          12.51%          23.59%            24.84%

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

         Required Capital            $      776                      $   1,552                         $   2,195
                                     ==========                      =========                         =========

         Excess Capital              $    5,697                      $   4,921                         $   4,621
                                     ==========                      =========                         =========
</TABLE>


                                       65
<PAGE>

NOTE O

         RELATED PARTY TRANSACTIONS

                  The Company leases its main office from one of its
         shareholders under an operating lease expiring April 1, 2006. The
         annual rental payment through April 1, 2002 is $51,000. The annual
         rental payment is adjusted by changes in the Consumer Price Index but
         in no case will be less than $45,000 per year.


NOTE P

         EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

                  During 1996, the Company sponsored an employee stock ownership
         plan that covers all employees of the Bank who have completed one year
         of service and have attained the age of 21. The Bank may contribute to
         the Plan such amount as shall be determined by the Bank. All dividends
         received by the ESOP are either used to pay debt service or credited to
         the participant accounts at the discretion of the administrator. The
         ESOP shares are pledged as collateral for its debt. As the debt is
         repaid, shares are released from collateral and allocated to active
         employees, based on the proportion of debt service paid in the year.
         The shares pledged as collateral are reported as unearned ESOP shares
         in the consolidated statements of financial condition. As shares are
         released from collateral, the Company reports compensation expense
         equal to the current market price of the shares, and the shares become
         outstanding for earnings per share computations. Dividends on allocated
         ESOP shares are recorded as a reduction of retained earnings. Dividends
         on unallocated ESOP shares are recorded as a reduction of debt and
         accrued interest. ESOP compensation expense was approximately $43,000,
         $38,000 and $49,000 for the years ended December 31, 2001, 2000 and
         1999, respectively. The ESOP shares as of December 31, 2001 and 2000
         were as follows:

                                                         2001            2000
                                                      -----------    -----------


                  Allocated Shares                         25,153         19,815
                  Shares Released for Allocation            5,338          5,338
                  Unreleased Shares                        21,351         26,689
                                                      -----------    -----------

                  Total ESOP Shares                        51,842         51,842
                                                      ===========    ===========

                  Fair Value of Unreleased Shares     $   184,000    $   204,000
                                                      ===========    ===========

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


                                       66
<PAGE>

NOTE Q

         RECOGNITION AND RETENTION PLAN

                  On July 18, 1997, the Company established a Recognition and
         Retention Plan as an incentive to retain personnel of experience and
         ability in key positions. The Bank approved a total of 25,921 shares of
         stock of the Company to be acquired for the Plan, of which 4,555 have
         been allocated for distribution to key employees and directors. As
         shares are acquired for the plan, the purchase price of these shares is
         recorded as unearned compensation, a contra equity account. As the
         shares are distributed, the contra equity account is reduced.

                  Plan share awards are earned by recipients at a rate of 20% of
         the aggregate number of shares covered by the plan over five years. If
         the employment of an employee or service as a non-employee director is
         terminated prior to the fifth anniversary of the date of grant of plan
         share award for any reason, the recipient shall forfeit the right to
         any shares subject to the award which have not been earned. The total
         cost associated with the plan is based on the market price of the stock
         as of the date on which the plan shares were granted. Compensation
         expense pertaining to the Recognition and Retention plan was $6,000 and
         $12,000 for the years ended December 31, 2001 and 2000, respectively.

                  A summary of the changes in restricted stock follows:

                                                      Unawarded       Awarded
                                                       Shares          Shares
                                                    -----------    ------------

                  Balance January 1, 2000                22,452           1,773
                  Forfeited                                --              --
                  Earned and Issued                        --              (871)
                                                    -----------    ------------

                  Balance December 31, 2000              22,452             902
                  Forfeited                                 280            (280)
                  Awarded                                  (350)            350
                  Earned and Issued                        --              (486)
                                                    -----------    ------------

                  Balance December 31, 2001              22,382             486
                                                    ===========    ============


NOTE R

         STOCK OPTION PLAN

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

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

                                       67
<PAGE>

NOTE R

         STOCK OPTION PLAN (Continued)

                  The following table summarizes the activity related to stock
         options:
<TABLE>
<CAPTION>

                                                 Exercise            Available            Options
                                                   Price             for Grant          Outstanding
                                                   -----             ---------          -----------

<S>                                              <C>                      <C>           <C>
                  At Inception                   $   --                   64,802                 --
                  Granted                                                    --                  --
                  Canceled                                                   --                  --
                  Exercised                                                  --                  --
                                                                    ------------         -----------

                  At December 31, 2001                                    64,802                 --
                                                                    ============         ===========
</TABLE>


NOTE S

         FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

                  In the normal course of business, various commitments and
         contingent liabilities are outstanding, such as commitments to extend
         credit and stand-by letters of credit which are not reflected on the
         Bank's financial statements. Management does not anticipate any
         material loss as a result of these transactions. Commitments to extend
         credit totaled approximately $3,357,000 and $3,395,000, and stand-by
         letters of credit totaled $-0- and $-0- at December 31, 2001 and 2000,
         respectively.

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

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

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

                                       68
<PAGE>

NOTE S

         FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Continued)

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


NOTE T

         DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The Company has adopted SFAS 107, "Disclosures about Fair
         Value of Financial Instruments," which requires the disclosure of fair
         value information about financial instruments, whether or not
         recognized in the statement of financial condition, for which it is
         practicable to estimate the value. Quoted market prices, when
         available, are used as the measure of fair value. In cases where quoted
         market prices are not available, fair values are based on present value
         estimates or other valuation techniques. These derived fair values are
         significantly affected by assumptions used, principally the timing of
         future cash flows and the discount rates. Because assumptions are
         inherently subjective in nature, the estimated fair values cannot be
         substantiated by comparison to independent market quotes and, in many
         cases, the estimated fair values would not necessarily be realized in
         an immediate sale or settlement of the instrument. The disclosure
         requirements of SFAS 107 exclude certain financial instruments and all
         nonfinancial instruments. Accordingly, the aggregate fair value amounts
         presented do not represent management's estimation of the underlying
         value of the Company.

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

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

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

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

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

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


                                       69
<PAGE>

NOTE T

         DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

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

<TABLE>
<CAPTION>

                                                                                         December 31, 2001
                                                                                -----------------------------------
                                                                                    Carrying             Fair
                                                                                     Amount              Value
                                                                                 ---------------   ----------------
<S>                                                                             <C>                <C>
                  Financial Assets
                    Cash and Short-Term Investment                              $         6,437    $          6,437
                    Investment Securities                                                   367                 367
                    Loans and Mortgage Backed Securities                                 42,473              41,602
                  Financial Liabilities
                    Deposits                                                    $        44,861    $         45,644
                  Commitments to Extend Credit                                  $         3,357    $          3,357
</TABLE>

<TABLE>
<CAPTION>

                                                                                         December 31, 2000
                                                                                -----------------------------------
                                                                                    Carrying             Fair
                                                                                     Amount              Value
                                                                                 ---------------   ----------------
<S>                                                                             <C>                <C>
                  Financial Assets
                    Cash and Short-Term Investment                              $         2,043    $          2,043
                    Investment Securities                                                 5,183               5,183
                    Loans and Mortgage Backed Securities                                 39,250              38,410
                  Financial Liabilities
                    Deposits                                                    $        38,730    $         39,043
                    Advances from FHLB                                                    3,000               3,000
                  Commitments to Extend Credit                                  $         3,395    $          3,395
</TABLE>


NOTE U

         CONCENTRATION OF CREDIT RISK

                  All of the Bank's loans and commitments have been granted to
         customers in the greater New Orleans area.

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


                                       70
<PAGE>

NOTE V

         LEASES

                  The Bank leases one of its branch locations from non-related
         parties. The lease is for a five-year term, with a monthly rental of
         $4,400. The lease provides for two five-year renewal options. Total
         minimum rental commitment at December 31, 2001 is as follows:

                December 31,

                     2002                       $       52,800
                     2003                               52,800
                     2004                               11,000
                                                --------------

                                                $      116,600
                                                ==============

                  For the years ended December 31, 2001, 2000 and 1999,
         $102,000, $100,000 and $87,000 was charged to rent expense,
         respectively.

                  The Bank is the lessor of an other real estate property under
         a non-cancelable lease expiring in July, 2002. Total minimum future
         rental income as of December 31, 2001 is $12,000.

NOTE W

         EARNINGS PER COMMON SHARE

                  Earnings per share are computed using the weighted average
         number of shares outstanding, which was 479,000 in 2001 and 472,707 in
         2000.

NOTE X

         REGULATORY MATTERS

                  On October 4, 2000, the Office of Thrift Supervision (OTS)
         issued an order to "Cease and Desist" (the Order) to the Bank. The
         Order was issued by the OTS as a result of their examination of the
         Bank as of April 10, 2000. The Order is an arrangement between the Bank
         and the OTS in which the Bank agrees to perform, among other things,
         the following within specified time periods:

                  (e)      the Bank shall appoint a permanent compliance
                           officer;
                  (f)      the Bank shall develop written policies and
                           procedures for compliance in consumer lending, and
                           for training lending personnel in these policies and
                           procedures and in consumer compliance laws;
                  (g)      the Bank shall establish a plan for internal controls
                           and procedures to ensure compliance with compliance
                           regulations, and provide an ongoing monitoring
                           program to assess the effectiveness and progress of
                           compliance controls;
                  (h)      the Bank shall review all outstanding loans made
                           since the last OTS compliance examination, dated June
                           23, 1997 to determine certain compliance matters for
                           reporting to the OTS.

                                       71
<PAGE>

NOTE X

         REGULATORY MATTERS (Continued)

                  On March 1, 2000, the Office of Thrift Supervision (OTS) and
         the Office of Financial Institutions (OFI) issued a preliminary
         supervisory agreement as a result of their examination of the Bank as
         of November 29, 1999, which, among other things, calls for the
         following within specified time periods:

                  a)       The Bank shall appoint a new Chief Executive Officer,
                           two new directors, and a compliance officer,
                  b)       The Bank must formulate a revised three-year business
                           plan,
                  c)       The Bank must adopt a written policy and procedures
                           for non-real estate commercial and consumer lending,
                  d)       The Bank must obtain written approval from the
                           regional director for any contractual arrangements
                           with employees or third parties, outside of the
                           normal course of business, and for any capital
                           distributions.

                  While no assurance can be given, the Bank's Board of Directors
         believes it has taken action toward complying with the provisions of
         the Order and the Agreement. It is not presently determinable what
         actions, if any, the regulators might take if requirements of the Order
         or the Agreement are not complied with in the specified time periods.


                                       72
<PAGE>

NOTE Y

         CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
<TABLE>
<CAPTION>


                                        ALGIERS BANCORP, INC.
                                       CONDENSED BALANCE SHEET
                                       (Dollars in Thousands)

                                               ASSETS

                                                                            December 31,
                                                                         -----------------
                                                                          2001       2000
                                                                         ------     ------

<S>                                                                      <C>        <C>
Cash and Cash Equivalents                                                $   16     $  135
Investments Available-for-Sale, at Fair Value                              --           51
Investment in Subsidiaries                                                6,334      6,536
ESOP Loan Receivable                                                        256        309
Receivable from Subsidiaries                                                 82        134
Income Tax Receivable                                                      --         --
Other Assets                                                                174        363
                                                                         ------     ------

           Total Assets                                                  $6,862     $7,528
                                                                         ======     ======


                                LIABILITIES AND STOCKHOLDERS' EQUITY

Due to Subsidiary                                                        $  105     $  534
Other Liabilities                                                             6          6

           Total Liabilities                                                111        540

Total Stockholders' Equity                                                6,751      6,988
                                                                         ------     ------

           Total Liabilities and Stockholders' Equity                    $6,862     $7,528
                                                                         ======     ======
</TABLE>


                                       73
<PAGE>

NOTE Y
         CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (Continued)
<TABLE>
<CAPTION>

                         ALGIERS BANCORP, INC.
                       STATEMENTS OF OPERATIONS
                        (Dollars in Thousands)


                                                               For The Years Ended
                                                                  December 31,
                                                          ---------------------------
                                                           2001       2000      1999
                                                          -----      -----      -----
<S>                                                       <C>        <C>        <C>
INTEREST INCOME
     Mortgage-Backed Securities                           $--        $--        $   1
     ESOP Loan                                               24         28         33
     Investment Securities                                    1          3          7
     Loans and Fees                                        --            1          9
                                                          -----      -----      -----
           Total Interest Income                             25         32         50
                                                          -----      -----      -----
INTEREST EXPENSE
     Bank Advances                                         --         --            5
                                                          -----      -----      -----
           Total Interest Expense                          --         --            5
                                                          -----      -----      -----
NET INTEREST INCOME                                          25         32         45

NON-INTEREST INCOME
     Income (Loss) in Subsidiary-Algiers Bank & Trust      (402)      (417)      (286)
     Loss in Subsidiary-Algiers.com, Inc.                   (95)      (100)       (37)
     Miscellaneous Income                                     5          1          4
                                                          -----      -----      -----
           Total Non-Interest Income (Loss)                (492)      (516)      (319)
                                                          -----      -----      -----
NON-INTEREST EXPENSES
     Loss on Sale of Investment Securities                   24         12       --
     General and Administrative                             107         82        116
                                                          -----      -----      -----
           Total Non-Interest Expenses                      131         94        116
                                                          -----      -----      -----
LOSS BEFORE FEDERAL
     INCOME TAX BENEFIT                                    (574)      (578)      (390)

FEDERAL INCOME TAX BENEFIT                                  (26)       (10)       (23)
                                                          -----      -----      -----
NET LOSS                                                  $(548)     $(568)     $(367)
                                                          =====      =====      =====
</TABLE>


                                       74
<PAGE>

NOTE Y

         CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (Continued)


<TABLE>
<CAPTION>

                              ALGIERS BANCORP, INC.
                            STATEMENTS OF CASH FLOWS

                                                                                 For The Years Ended
                                                                                    December 31,
                                                                          ---------------------------------
                                                                            2001        2000         1999
                                                                          -------      -------      -------
<S>                                                                       <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                                              $  (548)     $  (568)     $  (367)
    Adjustments to Reconcile Net Loss to Net
       Cash Used in Operating Activities:
          Increase (Decrease) in Due to Subsidiaries                         (429)         362         (572)
          Gain on Sale of Real Estate Owned                                  --           --             (2)
          Loss on Sale of Investment Securities - Available-for-Sale           23           12         --
          (Increase) Decrease in Income Tax Receivable                       --            105          (77)
          (Increase) Decrease in Other Assets                                 183         (255)         (61)
          Increase (Decrease) in Due from Subsidiaries                         52          (93)         (41)
          Increase (Decrease) in Other Liabilities                           --              3           (7)
                                                                          -------      -------      -------
             Net Cash Used in Operating Activities                           (719)        (434)      (1,127)
                                                                          -------      -------      -------
CASH FLOWS FROM INVESTING ACTIVITIES
    Decrease in Loans Receivable - Net                                       --           --            121
    Proceeds from Sales of Investment Securities - Available-for-Sale          48           59         --
    Maturities of Mortgage-Backed Securities - Available-for-Sale            --           --             67
    Proceeds from Sales of Real Estate Owned                                 --           --             64
    Investment in Subsidiaries                                                497          517          323
                                                                          -------      -------      -------
             Net Cash Provided by Investing Activities                        545          576          575
                                                                          -------      -------      -------
CASH FLOWS FROM FINANCING ACTIVITIES
    Contribution of Additional Paid-in Capital                               --           --             (5)
    Dividends Paid                                                           --            (75)        (102)
    MRP Trust Shares Aquired from Treasury                                      2         --           --
    Purchases of Treasury Stock                                              --           --           (148)
    Repayments of ESOP Loan                                                    53           49           46
                                                                          -------      -------      -------
             Net Cash Provided by (Used in) Financing Activities               55          (26)        (209)
                                                                          -------      -------      -------
NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                                         (119)         116         (761)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                                 135           19          780
                                                                          -------      -------      -------
CASH AND CASH EQUIVALENTS - END OF YEAR                                   $    16      $   135      $    19
                                                                          =======      =======      =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
       Cash Paid During the Year for Interest                             $  --        $  --        $     5
</TABLE>


                                       75
<PAGE>


Item 8.  Changes in and Disagreements With Accountants on Accounting and
-------------------------------------------------------------------------
         Financial Disclosure.
         ---------------------

         None.

PART III.

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
----------------------------------------------------------------------
         Compliance with Section 16(a) of the Exchange Act.
         --------------------------------------------------

         The information required by this item will be included in the Company's
definitive proxy statement in connection with its 2002 Annual Meeting of
Stockholders and is incorporated herein by reference.

Item 10. Executive Compensation.
--------------------------------

      The information required by this item will be included in the Company's
definitive proxy statement in connection with its 2002 Annual Meeting of
Stockholders and is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.
-------------------------------------------------------------------------

         The information required by this item will be included in the Company's
definitive proxy statement in connection with its 2002 Annual Meeting of
Stockholders and is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions.
---------------------------------------------------------

         The information required by this item will be included in the Company's
definitive proxy statement in connection with its 2002 Annual Meeting of
Stockholders and is incorporated herein by reference.

Item 13.  Exhibits, List and Reports on Form 8-K.
-------------------------------------------------

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

         (b)      Reports on Form 8-K. The Company did not file any reports on
                  Form 8-K during the fourth quarter of the year ended December
                  31, 2001.


                                       76
<PAGE>

                                   SIGNATURES

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


                                  ALGIERS BANCORP, INC.


                                  By:              /S/ Thomas L. Arnold, Sr.
                                        ----------------------------------------
                                                        Thomas L. Arnold, Sr.
                                                        Chairman of the Board


                                  Date:  March 27, 2002


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

<TABLE>
<CAPTION>

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

<S>                                               <C>                                        <C>
      /S/ Thomas L. Arnold, Sr.                   Chairman of the Board                       March 27, 2002
-----------------------------------------
         Thomas L. Arnold, Sr..


          /S/ Eugene J. Harris                    Acting President, Chief Financial Officer,
-----------------------------------------                and Director                         March 27, 2002
            Eugene J. Harris


              /S/ Thu Dang                        Director                                    March 27, 2002
-----------------------------------------
                Thu Dang


          /S/ John H. Gary, III                   Director                                    March 27, 2002
-----------------------------------------
            John H. Gary, III


          /S/ Francis M. Minor                    Executive Vice-President and Director       March 27, 2002
--------------------------------
            Francis M. Minor


            /S/ Janice H. Ray                     Corporate Secretary and Director            March 27, 2002
-----------------------------------------
              Janice H. Ray

</TABLE>


                                       77
<PAGE>



                                  EXHIBIT INDEX


2.1*     Plan of Conversion
3.1*     Articles of Incorporation of Algiers Bancorp, Inc.
3.2*     Bylaws of Algiers Bancorp, Inc.
4.1*     Stock Certificate of Algiers Bancorp, Inc.
10.1**   Supervisory Agreement dated April 17, 2000
10.2***  Order to Cease and Desist dated October 4, 2000
10.3*    Lease for main office building
21.1     Subsidiaries of the Registrant


(*)      Incorporated herein by reference to the Company's Form SB-2
         (Registration No. 333-2770) filed by the Company with the SEC on March
         26, 1996, as subsequently amended.
(**)     Incorporated herein by reference from the Company's Form 10QSB for the
         quarterly period ended June 30, 2000, filed by the Company with the SEC
         on August 14, 2000.
(***)    Incorporated herein by reference from the Company's Form 10QSB for the
         quarterly period ended September 30, 2000, filed by the Company with
         the SEC on November 14, 2000.




                                       E-1