EXHIBIT 13

  Acadiana Bancshares, Inc 1999 Annual Report

  Letter to shareholders                                                      2
  Selected consolidated financial information                                 4
  Management's discussion and analysis                                        5
  Independent auditors' report                                               18
  Consolidated balance sheets                                                19
  Consolidated    income statements                                          20
  Consolidated statements of stockholders' equity                            21
  Consolidated statements of cash flows                                      22
  Notes to consolidated financial statements                                 23
  About the company                                                          43



                                       1
<PAGE>


Dear Fellow Shareholders:

On behalf of the directors,  management and staff of our Company, we are pleased
to provide you with our 1999 Annual Report.  During 1999, we made great progress
in our on-going  commitment  to expand our  traditional  thrift  institution  by
increasing  our  offerings  of  commercial  bank  products  and  services  while
remaining  dedicated to the principles of community banking.  Overall,  1999 was
another  successful  year as we continued  to grow both loan and deposit  market
share.  We successfully  diversified our asset mix while  continuing to leverage
our capital  structure,  which  resulted in a 33% increase in basic earnings per
share.

CAPITAL LEVERAGING

We are pleased to report that during 1999 our Company  successfully  repurchased
an  additional  325,969  shares of Company  common stock in an effort to enhance
earnings per share and return on equity to our shareholders.  Since going public
in July of 1996, our Company has  repurchased  45.3% of the original shares sold
in connection  with our initial  public  offering at an average price of 104% of
book value. We believe this capital  investment has enhanced  shareholder  value
and effectively increased the ownership stake for all our current stockholders.

MORTGAGE LENDING

Our average  mortgage loan assets remained stable during 1999. We maintained our
position as the dominant mortgage lender within our local market. We continue to
be committed to providing  financing to support the housing  needs of the people
of Acadiana.  Our  strategic  goal is to leverage our mortgage  customer base by
cross-selling additional products and services to enhance profitability.

TECHNOLOGY

During 1999,  our  technology  efforts were focused on continuing to upgrade our
operating  systems while  successfully  meeting the demands of the Y2K operating
environment.  We are  pleased to report we  experienced  no  disruptions  in our
operations during this technologically  challenging time. In addition,  our Bank
expanded   into  the   internet   via  our   newly   established   web  site  at
www.lbabank.com. We expect that our web site will serve as a platform for future
development of products and services.

COMMERCIAL BANKING

We are pleased to report a 32.2%  increase in average  commercial  loan fundings
during 1999.  We are  confident  that our focus on  delivering  quality  service
supported  by  local  decision  making  will  continue  to  enhance  our  growth
objectives  within  the  commercial  market  sector.  This  growth  is a logical
extension  of our  strategy to  diversify  our balance  sheet mix and reduce our
historic dependence on residential mortgage lending assets.

RETAIL BANKING

The average interest-bearing demand deposit balances in the Bank increased 39.7%
during the past year. Our retail Banking division also achieved a 24.4% increase
in average  consumer loan fundings  during 1999.  This growth was due in part to
our on-going commitment to cross-selling additional products and services to new
and existing customers.  We are confident we can continue our growth in consumer
loans and demand deposit market share by providing exceptional customer service.

ASSET QUALITY

Our asset quality  indicators  continued to improve  during 1999 as evidenced by
our  non-performing  assets to total  loans  ratio of 0.04%,  the  lowest in our
history as a public Company. We are optimistic that continued improvement in oil
and gas commodity prices will provide a stable economic  environment in which to
operate  during the year 2000. We will  continue to be committed to  maintaining
prudent underwriting  standards in managing the credit risks associated with our
lending activities.

                                       2
<PAGE>

THE YEAR AHEAD

The coming year holds much  excitement  and  anticipation  for our Company as we
begin our  Centennial  year of  operation.  Today our Company is the largest and
strongest financial institution  headquartered in Lafayette,  Louisiana. We have
met the  challenges  of our first  hundred years and we look forward to our next
century of commitment to community banking.

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

Sincerely,

/s/ L. Gankendorff                       /s/ Jerry Reaux

L. Gankendorff                           Jerry Reaux
Chairman                                 President and Chief Executive Officer


                                       3
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands, except per share data)                                   At December 31,
                                                 --------------------------------------------------------------------------------
                                                    1999          1998            1997                 1996             1995
                                                 ------------  ------------    ------------        -------------     ------------
<S>                                              <C>           <C>             <C>                 <C>               <C>
Selected Financial Condition Data:
          Total assets                              $305,696      $282,089        $277,066             $264,374         $225,574
          Cash and cash equivalents                   11,922         7,578          14,157               19,784           16,481
          Loans receivable, net                      244,996       225,752         212,840              182,724          157,691
          Trading securities                             285           575             826                    -                -
          Investment securities                       37,981        38,764          41,696               55,192           43,544
          Deposit accounts                           213,212       201,654         195,043              194,192          207,126
          Borrowings                                  63,850        47,228          36,628               22,250              250
          Equity                                      27,750        32,174          44,562               47,091           17,697

                                                                                     Year Ended December 31,
                                                 ----------------------------------------------------------------------------------
                                                    1999           1998             1997                 1996              1995
                                                 ------------  ------------     ------------        -------------      ------------
Selected Operating Data:
          Interest income                           $ 21,407      $ 21,553        $ 20,464             $ 18,860         $ 17,094
          Interest expense                            12,195        11,935          10,860               10,762           10,134
                                                 ------------  ------------     ------------        -------------      ------------
          Net interest income                          9,212         9,618           9,604                8,098            6,960
          Provision for loan losses                        -            90             180                  355            1,274
                                                 ------------  ------------     ------------        -------------      ------------
          Net interest income after provision
            for loan losses                            9,212         9,528           9,424                7,743            5,686
          Non-interest income                            994         1,059           1,033                  797              683
          Non-interest expense (1)                    (6,771)       (6,655)         (5,878)              (7,301)          (7,812)
                                                 ------------  ------------     ------------        -------------      ------------
          Income (loss) before taxes                   3,435         3,932           4,579                1,239           (1,443)
          Income tax expense (benefit)                 1,229         1,427           1,632                  439             (477)
                                                 ------------  ------------     ------------        -------------      ------------
          Net income (loss)                            2,206         2,505           2,947                  800             (966)
                                                 ============  ============     ============        =============      ===========
          Earnings per share - basic (2)              $ 1.60        $ 1.20          $ 1.22               $ 0.07              N/A
          Earnings per share - diluted (2)            $ 1.55        $ 1.17          $ 1.20               $ 0.07              N/A
          Dividends declared per share                $ 0.52        $ 0.44          $ 0.38               $ 0.18              N/A
          Dividend payout ratio                       33.27%         37.05%          31.76%              267.46%             N/A

                                                                        At or For the Year Ended December 31,
                                                 ---------------------------------------------------------------------------------
                                                    1999             1998           1997                    1996            1995
                                                 ------------    ------------   ------------           -------------    ------------
Other Data:
 Profitability:
      Return (loss) on average assets                   0.76%         0.87%           1.10%                0.32%           (0.43%)
      Return (loss) on average equity                   7.57          6.05            6.38                 2.55            (5.23)
      Interest rate spread for period (3)               0.03          0.03            0.03                 2.75             2.86
      Net interest margin (4)                           0.03          0.03            0.04                 3.40             3.22
      Efficiency ratio (5)                             66.34         62.33           55.26                82.08            88.45
      Other expenses to average assets                  2.33          2.31            2.19                 2.95             3.49
 Capital Ratios:
      Average equity to average assets                 10.03         14.35           17.23                12.71             8.25
      Total capital to risk-weighted assets            17.51         20.86           31.39                36.69            16.20
 Asset Quality:
      Non-performing assets to total assets (6)         0.03          0.07            0.22                 0.36             0.70
      Allowance for loan losses to total loans          1.08          1.16            1.25                 1.35             1.41
      Allowance for loan losses to non-performing
          loans and troubled debt restructuring       496.75        396.80          297.09               183.96           143.94
</TABLE>


(1)      With  respect to 1997,  includes  $436,000  recovery of net  foreclosed
         assets;  with respect to 1996, includes $1.3 million for a special SAIF
         assessment;  with respect to 1995, includes $1.1 million of write-downs
         and  expenses of  foreclosed  assets and $1.1  million of expenses of a
         previously contemplated merger/conversion.

(2)      1996 earnings per share is for the six months ended  December 31, 1996,
         because of the  Bank's  conversion  from  mutual to stock form in July,
         1996.

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

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

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

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


                                       4
<PAGE>

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

The  following  discussion  and  analysis  is  intended  to  assist  readers  in
understanding  the  financial  condition  and results of  operations of Acadiana
Bancshares,  Inc.  (the  "Company")  and its  subsidiary,  LBA Savings Bank (the
"Bank") for the years ended  December 31, 1997 through 1999.  This review should
be read in  conjunction  with the  audited  consolidated  financial  statements,
accompanying footnotes and supplemental financial data included herein.

FINANCIAL CONDITION

ASSETS

General - Total assets of the Company  increased  $23.6 million,  or 8.4%,  from
$282.1 million at December 31, 1998, to $305.7 million at December 31, 1999. Net
loans  receivable of the Company  increased $19.2 million,  or 8.5%, from $225.8
million at December 31, 1998, to $245.0  million at December 31, 1999.  Cash and
cash equivalents increased $4.3 million, from $7.6 million at December 31, 1998,
to $11.9  million at  December  31,  1999.  The growth in assets was funded by a
$16.6 million net increase in advances from the Federal Home Loan Bank of Dallas
(the  "FHLB"),  together  with an $11.6  million net increase in  deposits.  The
Company repurchased $6.0 million of its common stock, on the open market, during
the year ended December 31, 1999,  increasing its common shares held in treasury
from  910,758 at December 31,  1998,  to 1,236,727  shares at December 31, 1999.
Retained  earnings  increased  $1.5  million,  or 7.0%,  from  $20.9  million at
December 31, 1998, to $22.4 million at December 31, 1999.

Cash  and  Cash  Equivalents  - Cash  and cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing  demand  deposits  and  cash on hand,
increased  by $4.3  million,  or 57.3%,  to $11.9  million at December 31, 1999,
compared to $7.6  million at December  31,  1998.  The increase in cash and cash
equivalents  occurred primarily during the fourth quarter of 1999,  intended for
meeting  anticipated  increased  demands for cash by customers of the Bank at or
near year-end.  At December 31, 1999, cash and cash equivalents amounted to 3.9%
of total assets.

Trading  Securities - At December 31, 1999,  the Company held equity  securities
for trading of $285,000,  compared to $575,000 at December 31, 1998. The Company
has no intention to increase its trading securities portfolio significantly.

Securities  Available  for  Sale  -  Securities  available  for  sale  decreased
$344,000,  or 1.3%,  to $26.1  million at December 31,  1999,  compared to $26.4
million at  December  31,  1998.  Securities  available  for sale  include  U.S.
Treasury  notes and bonds,  federal  agency  bonds,  mortgage-backed  securities
issued by the Government  National Mortgage  Association  ("GNMA"),  the Federal
National  Mortgage  Association   ("FNMA"),   the  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC"),  and triple A rated private issuers,  and certain equity
securities.  Unrealized  gains and losses on  securities  available for sale are
excluded from earnings and reported,  net of applicable  income taxes,  as other
comprehensive  income.  At December  31,  1999,  securities  available  for sale
amounted  to  8.5%  of  total  assets.  Note  3 to  the  Consolidated  Financial
Statements  provides  further  information  regarding the  Company's  securities
available for sale.

Securities Held to Maturity - Securities held to maturity decreased $439,000, or
3.6%,  to $11.9  million at December  31,  1999,  compared  to $12.4  million at
December  31,  1998.   Securities  held  to  maturity  include   mortgage-backed
securities  issued by GNMA,  FNMA, and FHLMC.  At December 31, 1999,  securities
held to maturity  amounted to 3.9% of total assets.  Note 3 to the  Consolidated
Financial  Statements  provides  further  information  regarding  the  Company's
securities held to maturity.

                                       5
<PAGE>

Federal Home Loan Bank Stock - Federal Home Loan Bank stock represents an equity
interest in the FHLB that does not have a readily  determinable  fair value (for
purposes of Federal  Accounting  Standards  Board Statement No. 115) because its
ownership is restricted  and it lacks a market.  It can be sold only to the FHLB
or to another  member  institution.  It is carried at cost.  Both cash and stock
dividends  are  received  on FHLB stock and are  reported  as income.  The stock
dividends are redeemable at par value.  At December 31, 1999,  Federal Home Loan
Bank stock amounted to 1.2% of total assets.

Loans Receivable, Net - Loans receivable, net, increased $19.2 million, or 8.5%,
to $245.0  million at December 31, 1999,  compared to $225.8 million at December
31, 1998. Single-family  residential loans increased $9.7 million, or 5.8%, from
$169.4  million at December  31, 1998,  to $179.1  million at December 31, 1999.
Construction  loans  remained  stable at $12.6 million.  Commercial  real estate
loans increased $1.9 million, or 11.3%, from $16.9 million at December 31, 1998,
to $18.8  million at December 31, 1999.  Equity lines of credit  increased  $1.4
million,  or 67.0%,  from $2.0 million at December 31, 1998,  to $3.4 million at
December 31, 1999.  Commercial  business loans increased $4.3 million, or 30.9%,
from $13.9  million at December 31, 1998, to $18.1 million at December 31, 1999.
Consumer loans increased $2.5 million,  or 12.7%, from $19.3 million at December
31, 1998,  to $21.8  million at December 31, 1999.  Total gross loans  increased
$19.7  million,  or 8.4%,  from $234.6  million at December 31, 1998,  to $254.3
million at December 31, 1999. Loans receivable,  net, amounted to 80.1% of total
assets at December 31,  1999,  compared to 80.0% of total assets at December 31,
1998.  Note  4  to  the  Consolidated   Financial  Statements  provides  further
information regarding the Company's loans.

LIABILITIES AND STOCKHOLDERS' EQUITY

General - The Company's  primary funding sources  include  deposits,  borrowings
from the FHLB and stockholders'  equity.  The discussion that follows focuses on
the major changes in this mix during 1999.

Deposits - The Company's deposits increased by $11.6 million, or 5.7%, to $213.2
million at December 31, 1999,  compared to $201.7  million at December 31, 1998.
Interest bearing deposits  increased $13.7 million,  or 7.2% while  non-interest
bearing  deposits  decreased $2.1 million,  or 17.1%.  Certificates  of deposit,
comprising the largest portion of interest-bearing deposits,  amounted to $151.6
million at December 31,  1999.  Total  deposits  funded 69.7% of total assets at
December  31,  1999,  compared  to  71.5%  at  December  31,  1998.   Additional
information  regarding  deposits  is  provided  in  Note 8 to  the  Consolidated
Financial Statements.

Borrowings  -  The  Company's  borrowings  include  both  short-term  borrowings
(amounts maturing in one year or less from date of inception) and long-term debt
(amounts  maturing  more  than  one year  from  date of  inception).  Short-term
borrowings  decreased $1.5 million,  or 20.0%, from $7.5 million at December 31,
1998,  to $6.0 million at December  31, 1999.  Long-term  debt  increased  $18.1
million,  or 45.6%, from $39.7 million at December 31, 1998, to $57.9 million at
December  31, 1999.  Total  borrowings  are composed of advances  from the FHLB,
which increased $16.6 million,  or 35.2%, to $63.9 million at December 31, 1999,
compared to $47.2 million at December 31, 1998. Borrowings at December 31, 1999,
funded  20.9% of total assets  compared to 16.7% at December 31, 1998.  Advances
from the FHLB have been, and are expected to continue to be, an important source
of funding for both existing assets and new asset growth. Additional information
regarding  borrowings  is  provided  in  Note  9 to the  Consolidated  Financial
Statements.

                                       6
<PAGE>

Stockholders'  Equity -  Stockholders'  equity  provides  a source of  permanent
funding,  allows for future  growth,  and provides the Company with a cushion to
withstand unforeseen,  adverse developments. At December 31, 1999, stockholders'
equity totaled $27.8 million, a decrease of $4.4 million, or 13.8%,  compared to
$32.2 million at December 31, 1998. The decrease was primarily  attributable  to
$6.0  million  of  repurchases  of common  stock for the  treasury,  a  $622,000
decrease in  unrealized  gain (loss) on securities  available  for sale,  net of
deferred  taxes,  together with $734,000 of dividends  declared on the Company's
common stock, all of which was partially offset by net income for the year ended
December 31, 1999,  of $2.2  million,  common  stock  released by the  Company's
employee stock  ownership plan (the "ESOP") trust of $408,000,  and common stock
earned by  participants in the Company's  recognition  plan (the "RRP") trust of
$290,000.  Stockholders'  equity  funded  9.1% of assets at December  31,  1999,
compared  to  11.4% at  December  31,  1998.  Additional  information  regarding
stockholders' equity is included in the Consolidated Statements of Stockholders'
Equity and Note 12 to the Consolidated Financial Statements.

Federal  regulations  impose  minimum  regulatory  capital  requirements  on all
financial  institutions  with deposits insured by the Federal Deposit  Insurance
Corporation (the "FDIC"), which requirements directly affect the minimum capital
levels at the Bank.  The Board of Governors of the Federal  Reserve  System (the
"FRB") also imposes  minimum  regulatory  capital  requirements,  which directly
affect the minimum  capital  levels at the Company.  At December  31, 1999,  the
capital  of the  Bank  and the  capital  of the  Company  exceeded  all  minimum
regulatory  requirements  as  shown  in  Note 12 to the  Consolidated  Financial
Statements.

RESULTS OF OPERATIONS

General - The Company does not operate in more than one segment of business - it
operates  within the  financial  services  industry.  The  Company is  primarily
engaged in residential mortgage lending, and commercial and consumer banking.

The Company  reported net income of $2.2 million,  $2.5 million and $2.9 million
for the years ended December 31, 1999, 1998 and 1997, respectively. The $299,000
decrease in net income in 1999  compared to 1998 was due primarily to a decrease
in net  interest  income of  $406,000,  a  decrease  in  non-interest  income of
$65,000, and an increase in non-interest expense of $116,000,  all of which were
partially  offset by a decrease in provision  for loan losses of $90,000,  and a
decrease  in income tax  expense of  $198,000.  The  decline of  $406,000 in net
interest income is attributed to narrower  interest rate margins during 1999, as
compared to 1998; the declining net interest margin is influenced  partly by the
effect of changes in market interest rates throughout much of 1999 and partly by
the  increased  leverage of the  Company's  assets.  The Company  increased  its
leverage by increasing  liabilities  (deposits and  borrowings)  and, during the
same  periods,   decreasing   stockholders'   equity.   The  Company's   average
interest-bearing  liabilities  increased  from $212.1 million for the year ended
December 31, 1997, to $235.8  million for the year ended  December 31, 1998, and
to  $249.0  million  for  the  year  ended  December  31,  1999,  while  average
stockholders'  equity decreased from $46.2 million,  to $41.4 million,  to $29.1
million at December 31, 1997, 1998, and 1999, respectively.

The $442,000  decrease in net income in 1998  compared to 1997 was due primarily
to an increase in non-interest  expense of $777,000,  which was partially offset
by an increase in net interest  income of $14,000,  an increase in  non-interest
income of $26,000,  a decrease in  provision  for loan losses of $90,000,  and a
decrease in income tax expense of $205,000.

Net Interest Income - Net interest income is determined by the combined  effects
of interest  rate spread  (i.e.,  the  difference  between the yields  earned on
interest-earning assets and the rates paid on interest-bearing  liabilities) and
changes in the average amounts of interest-earning  assets and  interest-bearing
liabilities.  The Company's  average interest rate spread was 2.72%,  2.59%, and
2.69%,  during the years ended December 31, 1999, 1998, and 1997,  respectively.
Both  rates  (average  yield on  interest-bearing  assets  and  average  cost of
interest-bearing   liabilities)   and   volumes   (the   average   balances   on
interest-bearing  assets and average balances of  interest-bearing  liabilities)
influence net interest  margin.  The Company's  interest rate margin (i.e.,  the
difference  between interest income and interest  expense  multiplied by average
earning assets) was 3.28%, 3.41%, and 3.66%, during the years ended December 31,
1999,  1998, and 1997,  respectively.  The declining net interest margin in 1999
compared to 1998 was  primarily  the result of  decreased  yields  earned on the
Company's loans and increases in the average balances of certificates of deposit
and borrowings,  which were partially offset by increases in the average balance
of loans  outstanding  and  decreases in the average  rates paid on deposits and
borrowings.  The Company's net interest  income  decreased  $406,000,  from $9.6
million for the year ended December 31, 1998, to $9.2 million for the year ended
December 31, 1999.  Net changes in rates,  primarily  reflecting  the effects of
changes in market interest rates,  accounted for $188,000 of such decrease,  and
net changes in volume, reflecting changes in the Company's leveraging, accounted
for  $249,000  of such  decrease,  both of which  were  partially  offset  by an
increase in net  interest  income  related to changes in both rate and volume of
$31,000.  The  Company's  net  interest  income  increased  slightly by $14,000,
remaining  relatively  stable at $9.6  million for the years ended  December 31,
1998, and 1997;  however,  changes in the volume component caused an increase in
net  interest  income of  $410,000,  while  changes in rate  component  caused a
decrease of $423,000 in net interest  income,  and changes in the combined  rate
and volume component caused an increase of $27,000 in net interest income.

                                       7
<PAGE>

The Company's largest group of interest-earning  assets is residential  mortgage
loans,  comprising 61.0% of total average  interest-earning  assets for the year
ended December 31, 1999. Market rates on residential  mortgage loans are heavily
influenced  by  competition  and on the rates of  interest  on longer  term U.S.
Treasury Bonds,  such as the 10-year and 30-year bonds.  Significant  changes in
longer term U.S.  Government  Treasury  Bond rates  likely  translate to similar
changes in offering rates for residential  mortgage loans. The Company's largest
source of funds is certificates of deposit,  which funded 58.5% of total average
interest-bearing  liabilities for the year ended December 31, 1999. Market rates
on certificates of deposit are heavily  influenced by competition and by shorter
term U.S.  Government Notes and Bonds.  Significant changes in shorter term U.S.
Government  Notes and Bonds may  translate  into  somewhat  similar  changes  in
offering  rates for  certificates  of deposit.  If longer  term U.S.  Government
Treasury  Bond rates fall,  and during the same time  period,  shorter term U.S.
Government Treasury Notes and Bond rates rise, the Company's net interest margin
will likely decrease.

Interest  and  Dividend  Income - Interest and  dividend  income  totaled  $21.4
million for the year ended December 31, 1999,  compared to $21.6 million for the
year ended December 31, 1998, a decrease of $146,000, or 0.7%. This decrease was
mainly due to a decrease in the  Company's  average  interest-earning  assets of
$652,000,  or 0.2%,  together  with a three basis  point (with 100 basis  points
being  equal to 1%)  decrease  in the  yield  earned.  Interest  earned on loans
increased $571,000,  or 3.2%, from $17.7 million for the year ended December 31,
1998, to $18.3 million for the year ended  December 31, 1999.  This increase was
due to an increase in the Company's  average balance of loans for the year ended
December 31, 1999, of $11.7 million, or 5.3%, which was partially offset by a 16
basis point  decrease in the yield  earned.  Interest  and  dividends  earned on
investment  securities decreased $56,000, or 2.1%, remaining at $2.7 million for
the years ended  December 31, 1998 and December 31, 1999.  This decrease was due
to a 16 basis  point  decrease  in the  Company's  yield  earned  on  investment
securities for the year ended December 31, 1999,  which was partially  offset by
an  increase  in the  Company's  average  balance of  investment  securities  of
$117,000.  Interest earned on other earning assets decreased $661,000, or 59.4%,
from $1.1 million for the year ended December 31, 1998, to $452,000 for the year
ended  December 31, 1999.  This  decrease was due to a decrease in the Company's
average balance of other earning assets of $12.4 million,  or 56.3%,  from $22.1
million for the year ended  December 31,  1998,  to $9.6 million at December 31,
1999;  it was also due to a 36 basis  point  decrease in the  Company's  average
yield earned on other earning assets.

                                       8
<PAGE>

Interest and dividend  income  totaled $21.6 million for the year ended December
31, 1998,  compared to $20.5  million for the year ended  December 31, 1997,  an
increase of $1.1 million,  or 5.3%.  This increase was mainly due to an increase
in the Company's average balance of interest-earning assets of $19.8 million, or
7.6%,  which was  partially  offset by a 16 basis point  decrease in the average
yield earned.  Interest earned on loans increased $1.7 million,  or 10.4%,  from
$16.1  million for the year ended  December 31, 1997,  to $17.7  million for the
year ended  December  31,  1998.  This  increase  was due to an  increase in the
Company's  average  balance of loans for the year ended  December 31,  1998,  of
$23.6 million, or 12.1%, which was partially offset by a 13 basis point decrease
in the  average  yield  earned.  Interest  and  dividends  earned on  investment
securities  decreased  $1.1  million,  or 29.1%,  from $3.8 million for the year
ended  December 31, 1997, to $2.7 million for the year ended  December 31, 1998.
This  decrease  was due to a $13.8  million  decrease in the  Company's  average
balance of investment  securities for the year ended December 31, 1998, together
with a 35  basis  point  decrease  in the  Company's  average  yield  earned  on
investment  securities.  Interest  earned  on  other  earning  assets  increased
$539,000,  or 93.9%, from $574,000 for the year ended December 31, 1997, to $1.1
million  for the year ended  December  31,  1998.  This  increase  was due to an
increase in the Company's  average other earning assets of $10.1  million,  from
$12.0  million for the year ended  December 31, 1997,  to $22.1  million for the
year ended  December  31, 1998  together  with a 27 basis point  increase in the
Company's average yield earned on other earning assets.

Interest  Expense - Interest  expense  increased  $260,000,  or 2.2%, from $11.9
million for the year ended  December  31,  1998,  to $12.2  million for the year
ended  December  31,  1999.  This  increase was mainly due to an increase in the
average interest-bearing balance of liabilities, which was partially offset by a
decrease   in  the  cost  of  such   liabilities.   The   average   balance   of
interest-bearing  liabilities  increased  $13.2  million,  or 5.6%,  from $235.8
million for the year ended  December  31, 1998,  to $249.0  million for the year
ended  December 31, 1999,  while the cost of such  interest-bearing  liabilities
decreased 16 basis points.

Interest expense on deposits increased  $83,000,  or 0.9%, from $9.4 million for
the year ended  December 31, 1998,  to $9.5 million for the year ended  December
31, 1999.  The increase was primarily due to an increase in the average  balance
of  interest-bearing  deposits,  which was partially offset by a decrease in the
cost  of  such  deposits.  The  average  balance  of  interest-bearing  deposits
increased  $8.1 million,  or 4.2%,  from $189.5 million at December 31, 1998, to
$197.6 million at December 31, 1999, while the cost of interest-bearing deposits
decreased 16 basis points.  Interest expense on advances from the FHLB increased
$177,000,  or 7.0%,  from $2.5 million for the year ended  December 31, 1998, to
$2.7 million for the year ended  December 31, 1999.  The primary  reason for the
increase was a $5.2 million  increase in the average  balance of FHLB  advances,
which was partially  offset by a decrease in the cost of obtaining such advances
of 21 basis points.

Interest  expense  increased $1.1 million,  or 9.9%,  from $10.9 million for the
year ended  December 31, 1997, to $11.9 million for the year ended  December 31,
1998.  This  increase  was mainly due to an increase  in the average  balance of
interest-bearing  liabilities,  which was partially  offset by a decrease in the
cost of such liabilities.  The average balance of  interest-bearing  liabilities
increased  $23.7  million,  or 11.2%,  from  $212.1  million  for the year ended
December 31, 1997, to $235.8 million for the year ended December 31, 1998, while
the cost of such interest-bearing liabilities decreased six basis points.

                                       9
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                  1999                        1998                            1997
                                          ---------------------------- ------------------------------   ----------------------------

                                                               Average                          Average                      Average
                                           Average              Yield/   Average                 Yield/  Average              Yield/
                                           Balance   Interest    Cost    Balance    Interest     Cost    Balance   Interest   Cost
                                           -------   --------  -------   -------    --------    -------  -------   --------  -------
Interest-earning assets:
  Loans receivable:
<S>                                       <C>        <C>         <C>    <C>         <C>          <C>    <C>        <C>         <C>
     Residential mortgage loans           $ 171,516  $ 12,976    7.57%  $ 173,161   $ 13,436     7.76%  $ 158,169  $ 12,452    7.87%
     Commercial business loans               36,220     3,168    8.75      27,388      2,501     9.13      21,295     2,068    9.71
     Consumer and other loans                22,792     2,144    9.41      18,325      1,780     9.71      15,974     1,531    9.58
                                          ---------  --------           ---------   --------            ---------  --------
       Total loans                          230,528    18,288    7.93     218,874     17,717     8.09     195,438    16,051    8.21
     Mortgage-backed securities              28,903     1,948    6.74      27,478      1,910     6.74      32,711     2,329    6.74
     Investment securities (1)               12,034       719    5.97      13,342        813     5.97      21,958     1,510    5.97
     Investment securities (1)               40,937     2,667    6.51      40,820      2,723     6.67      54,669     3,839    7.02
     Other earning assets                     9,634       452    4.69      22,057      1,113     5.05      12,002       574    4.78
                                          ---------  --------  ------   ---------   --------   ------   ---------  --------
       Total interest-earning assets        281,099    21,407    7.62     281,751     21,553     7.65     262,109    20,464    7.81
                                                     --------                       --------
Noninterest-earning assets                    9,375                         6,691                           5,975
                                          ---------                     ---------                       ---------
       Total Assets                       $ 290,474                     $ 288,442                       $ 268,084
                                          =========                     =========                       =========
Interest-bearing liabilities:
  Deposits:
    Demand deposits                       $  34,777     1,198    3.44   $  24,891        790     3.17   $  14,033       273    1.95
    Savings deposits                         17,207       300    1.74      21,529        453     2.10      23,539       510    2.17
    Certificates of deposit                 145,613     7,990    5.49     143,122      8,162     5.70     144,921     8,396    5.79
                                          ---------  --------  ------   ---------   --------   ------   ---------
      Total deposits                        197,597     9,488    4.80     189,542      9,405     4.96     182,493     9,179    5.03
    Borrowings                               51,430     2,707    5.26      46,277      2,530     5.47      29,648     1,681    5.67
                                          ---------  --------  ------   ---------   --------   ------   ---------
      Total interest-bearing liabilities    249,027    12,195    4.90     235,819     11,935     5.06     212,141    10,860    5.12
                                                                        ---------   --------                       --------
Noninterest-bearing demand deposits          10,677                         9,688                           8,168
Other noninterest-bearing liabilities         1,627                         1,556                           1,585
                                          ---------                     ---------                       ---------
  Total liabilities                         261,331                       247,063                         221,894
Stockholders' equity                         29,143                        41,379                          46,190
                                          ---------                     ---------                       ---------
  Total liabilities and stockholders'
    equity                                $ 290,474                     $ 288,442                       $ 268,084
                                          =========                     =========                       =========
Net interest-earning assets               $  32,072                     $  45,932                       $ 49,968
                                          =========                     =========                       =========
Net interest income/interest rate spread             $  9,212    2.72%              $  9,618     2.59%              $ 9,604    2.69%
                                                     ========  ======               ========   ======              ========  ======
Net interest margin                                              3.28%                           3.41%                         3.66%
                                                               ======                          ======                        ======
Ratio of average interest-earning assets
  to average interest-bearing liabilities              112.88%             119.48%                                   123.55%
                                                     ========           =========                                  ========

(1) Includes FHLB stock.

</TABLE>

                                       10
<PAGE>

Rate/Volume  Analysis.  The  following  table sets forth the effects of changing
rates and volumes on net interest income of the Company. Information is provided
with respect to (i) effects on interest income attributable to changes in volume
(changes in volume  multiplied by prior rate);  (ii) effects on interest  income
attributable  to changes in rate (changes in rate  multiplied by prior  volume);
and  (iii)  changes  in  rate/volume  (change  in rate  multiplied  by change in
volume).

<TABLE>
<CAPTION>
       (Dollars in thousands)                                                   Year Ended December 31,
                                             ---------------------------------------------------------------------------------------
                                                         1999 compared to 1998                       1998 compared to 1997
                                             --------------------------------------------  ---------------------------------------
                                                      Increase (decrease) due to                  Increase (decrease) due to
                                             --------------------------------------------  ---------------------------------------
                                                                                Total                                       Total
                                                                     Rate/     Increase                          Rate/     Increase
                                              Volume       Rate      Volume   (Decrease)   Volume      Rate      Volume   (Decrease)
                                             ---------  ---------   --------  ----------  --------  ---------  ---------  ---------

Interest-earning assets:
<S>                                             <C>       <C>         <C>         <C>     <C>         <C>         <C>      <C>
       Loans receivable                         $ 943     $ (354)     $ (18)      $ 571   $ 1,925     $ (231)     $ (28)   $ 1,666
       Investment securities                        8        (64)         -         (56)     (973)      (192)        49     (1,116)
       Other earning assets                      (627)       (78)        44        (661)      481         32         26        539
                                             ---------  ---------   --------  ----------  --------  ---------  ---------  ---------
         Total net change in income on
           Interest-earning asset                 324       (496)        26        (146)    1,433       (391)        47      1,089
                                             ---------  ---------   --------  ----------  --------  ---------  ---------  ---------


Interest-bearing liabilities:
       Interest-bearing deposits
            Demand and savings deposits           149         95         11         255       184        223         53        460
            Certificates of deposit               142       (309)        (5)       (172)     (104)      (131)         1       (234)
       Advance from FHLB                          282        (94)       (11)        177       943        (60)       (34)       849
                                             ---------  ---------   --------  ----------  --------  ---------  ---------  ---------
            Total net change in expense on
                Interest-bearing liabilities      573       (308)        (5)        260     1,023         32         20      1,075
                                             ---------  ---------   --------  ----------  --------  ---------  ---------  ---------

       Net change in net interest income       $ (249)    $ (188)      $ 31      $ (406)    $ 410     $ (423)      $ 27       $ 14
                                             =========  =========   ========   ==========  ========  =========  =========  =========
</TABLE>

Provision  for Loan Losses - Provisions  for loan losses are charged to earnings
in order to bring  the total  allowance  for loan  losses to a level  considered
appropriate by management based on methodology implemented by the Company, which
is designed to assess, among other things, historical loan loss experience,  the
volume and type of lending conducted by the Company, the amount of the Company's
classified  assets,  the status of past due  principal  and  interest  payments,
loan-to-value  ratios of loans in the portfolio,  general  economic  conditions,
particularly as they relate to the Company's  market area, and any other factors
related to the collectibility of the Company's loan portfolio. Management of the
Company assesses the allowance for loan losses on at least a quarterly basis and
makes provisions for loan losses as deemed  appropriate in order to maintain the
adequacy of the  allowance  for loan losses.  The Company made no provision  for
loan losses in 1999, compared to a provision of $90,000 in 1998, and $180,000 in
1997.

                                       11
<PAGE>

At December 31, 1999, the Company's  allowance for loan losses  amounted to $2.7
million, or 1.1% of total loans and 496.7% of non-performing  loans and troubled
debt  restructurings.  At December 31, 1998,  the  Company's  allowance for loan
losses  amounted  to  $2.7  million,  or 1.2%  of  total  loans  and  400.9%  of
non-performing loans and troubled debt restructurings. At December 31, 1997, the
Company's  allowance for loan losses amounted to $2.8 million, or 1.3%, of total
loans and 297.1% of non-performing loans and troubled debt restructurings.

Non-Interest Income - For the year ended December 31, 1999, the Company reported
non-interest  income of $994,000,  a decrease of $65,000 from 1998.  The primary
reasons  for the  decrease  were a decrease in net gains on the sale of loans of
$144,000,  and an increase in the loss from  investment  in a limited  liability
company of $121,000.  These  decreases were  partially  offset by an increase in
customer service fees of $82,000,  an increase in loan servicing fees of $3,000,
an increase in other income of $12,000, and a decrease in trading account losses
of $103,000.

For  the  years  ended  December  31,  1998,  and  1997,  the  Company  reported
non-interest income of $1.1 million and $1.0 million, respectively. During 1998,
the Company  reported  increases  in  customer  service  fees of $83,000,  and a
$234,000  increase  in gains on the sale of loans,  all of which were  partially
offset by a decrease  in loan  servicing  fees of $7,000,  a net  difference  in
trading  gains and losses of $248,000,  a loss from an  investment  in a limited
liability company of $34,000, and decrease in other income of $2,000.

Non-Interest  Expense -  Non-interest  expense  includes  salaries  and employee
benefits,  occupancy,  depreciation,  data  processing,  net  costs  related  to
foreclosed assets, deposit insurance premiums,  advertising and marketing,  bank
shares and franchise tax, and other expense items.

Non-interest  expense  amounted to $6.8 million for the year ended  December 31,
1999,  an increase of  $116,000,  or 1.7%  compared to $6.7 million for the year
ended  December 31, 1998. The primary  reasons for the $116,000  increase were a
$183,000,  or 5.5%,  increase in salaries and employee benefits,  a $57,000,  or
20.4%,  increase in occupancy expenses,  an $82,000, or 49.7%,  increase in data
processing expenses, an $18,000 increase in the net cost of foreclosed assets, a
$2,000 increase in deposit  insurance  premiums,  and a $7,000 increase in other
expenses.  All of such increases were partially  offset by a decrease of $28,000
in  depreciation,  a decrease of $124,000 in advertising  and  marketing,  and a
decrease of $81,000 in bank shares and franchise tax expense.

Non-interest  expense  amounted to $6.7 million for the year ended  December 31,
1998, an increase of $777,000,  or 13.2%,  compared to $5.9 million for the year
ended December 31, 1997. The primary reasons for the $777,000  increase were the
net cost of foreclosed assets of $8,000,  compared to a net recovery of $436,000
in 1997,  together with a $194,000,  or 6.2%,  increase in salaries and employee
benefits, a $22,000, or 15.4%, increase in data processing, a $71,000, or 22.0%,
increase  in  depreciation,  a $79,000,  or 22.5%,  increase  in bank shares and
franchise  tax,  and a  $30,000,  or  1.9%,  increase  in other  expenses.  Such
increases were partially offset by a decrease of $28,000,  or 9.1%, in occupancy
expenses,  a $31,000,  or 9.5%,  decrease in advertising  and  marketing,  and a
$4,000, or 3.3%, decrease in deposit insurance premiums.

Income  Taxes - For the years ended  December  31,  1999,  1998,  and 1997,  the
Company  incurred  income tax expense of $1.2 million,  $1.4  million,  and $1.6
million,  respectively.  The  Company's  effective  tax rate  amounted to 35.8%,
36.3%,  and 35.6% during 1999,  1998,  and 1997,  respectively.  The  difference
between the effective  rate and the  statutory tax rate is primarily  related to
variances  in the items  that are  either  non-taxable  or  non-deductible,  and
because state income tax is included on the Company's  income,  exclusive of the
income  derived from the Bank. For more  information  on income taxes,  refer to
Note 10 of the Consolidated Financial Statements.

                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary liquidity,  represented by cash and cash equivalents, is a
product of its operating,  investing and financing activities.  Excess liquidity
includes the Company's  securities  available for sale portfolio.  The Company's
primary sources of funds are deposits, borrowings,  proceeds from sale of stock,
and  amortization,  prepayments  and maturities  from its loan portfolio and its
securities held to maturity portfolio, and other funds provided from operations.
While  scheduled  payments from the  amortization  of loans and  securities  and
maturing  investment  securities  are relatively  predictable  sources of funds,
deposit  flows,  loan  prepayments,   and  securities  prepayments  are  greatly
influenced by general interest rates,  economic conditions and competition.  The
Company has the ability to borrow up to  approximately  $125.9  million from the
FHLB through its subsidiary Bank.

Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.  The  Company  uses  its  primary  liquidity  to  meet  its  ongoing
commitments,  to pay maturing  certificates of deposit and deposit  withdrawals,
and to fund loan  commitments.  The  Company's  excess  liquidity  and borrowing
capacity  provide added  readiness to meet ongoing  commitments  and growth.  At
December 31, 1999, the total approved  commitments to extend credit  amounted to
$25.2 million.  Certificates of deposit  scheduled to mature in one year or less
at the same date totaled $64.4 million.  Management  believes that a significant
portion  of  maturing  deposits  will  remain  with  the  Company.  The  Company
anticipates  it will continue to have  sufficient  funds together with available
borrowings to meet its current commitments.

IMPACT OF INFLATION AND CHANGING PRICES

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

MARKET RISK

Market risk is the risk of loss in a financial  instrument  arising from adverse
changes in market  rates or prices  such as  interest  rates,  foreign  currency
exchange  rates,  commodity  prices,  and equity prices.  The Company's  primary
market  risk  exposure  is  interest  rate  risk.  The  ongoing  monitoring  and
management   of  this  risk  is  an  important   component   of  the   Company's
asset/liability  management process which is governed by policies established by
its Board of Directors  that are reviewed and approved  annually.  The Company's
actions  with  respect  to  interest  rate  risk  and  its  asset/liability  gap
management  are taken under  guidance of the Finance  Committee  of the Board of
Directors  of the Bank,  which is composed  of Messrs.  O'Rourke,  Beacham,  and
Ortego, and the Asset/Liability Management Committee ("ALCO"), which is composed
of six officers of the Bank. The Finance  Committee meets jointly with the ALCO,
quarterly to set interest  rate risk  targets and review the  Company's  current
composition of assets and  liabilities in light of the prevailing  interest rate
environment.  The committee assesses its interest rate risk strategy  quarterly,
which is then  reviewed by the full Board of  Directors.  The Board of Directors
delegates  responsibility  for  carrying  out  the  asset/liability   management
policies  to the  ALCO.  In its  capacity,  the  ALCO  develops  guidelines  and
strategies affecting the Company's asset/liability management related activities
based upon estimated market risk sensitivity,  policy limits, and overall market
interest rate levels and trends.

                                       13
<PAGE>

INTEREST RATE RISK

Interest rate risk  represents the  sensitivity of earnings to changes in market
interest  rates.  As interest  rates  change,  the interest  income and interest
expense streams associated with the Company's financial instruments also change,
thereby affecting net interest income ("NII"), which is the primary component of
the Company's earnings.

The  ability to  maximize  net  interest  income is largely  dependent  upon the
achievement  of a positive  interest-rate  spread that can be  sustained  during
fluctuations  of interest rates.  Interest rate  sensitivity is a measure of the
difference  between  amounts of  interest-earning  assets  and  interest-bearing
liabilities that either reprice or mature within a given period. The difference,
or the interest rate  repricing  "gap,"  provides an indication of the extent to
which an  institution's  interest  rate  spread  will be  affected by changes in
interest  rates. A gap is considered  positive when the amount of  interest-rate
sensitive assets exceeds the amount of interest-rate sensitive liabilities,  and
is considered  negative when the amount of interest-rate  sensitive  liabilities
exceeds  the  amount  of  interest-rate  sensitive  assets,  in a given  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. During a period of falling interest rates, a negative gap within shorter
maturities  would result in an increase in net interest  income while a positive
gap within shorter maturities would have the opposite effect. As of December 31,
1999, the amount of the Company's interest-sensitive assets which were estimated
to mature or reprice  within one year exceeded the Company's  interest-sensitive
liabilities  with the same  characteristics  by $24.7  million,  or 8.1%, of the
Company's  total  assets.   The  following  table   summarizes  the  anticipated
maturities  or repricing of the  Company's  interest-rate  sensitive  assets and
interest-rate  sensitive  liabilities  as of December 31,  1999,  based upon the
information and assumptions set forth below:

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                            More Than                 More Than
                                           Three Months  More Than   Three Years
                              Within Three  to Twelve   One Year to    to Five    Over Five
                                 Months      Months     Three Years     Years       Years      Total
                                ---------  ----------  ------------  -----------  ---------  ---------
                                                       (Dollars in Thousands)
Interest-sensitive assets(1):
<S>                             <C>         <C>           <C>          <C>        <C>        <C>
    Loans receivable(2)         $ 35,935    $ 51,284      $ 70,224     $ 32,324   $ 55,229   $ 244,996
    Investment securities(3)      11,936           -             -       10,493         79     22,508
    Mortgage-backed securities(4) 12,166       2,282         2,335        1,604      9,314     27,701
                                ---------  ----------  ------------  -----------  ---------  ---------
        Total                     60,037      53,566        72,559       44,421     64,622    295,205
                                ---------  ----------  ------------  -----------  ---------  ---------
Interest-sensitive liabilities:
Deposits:
    Demand accounts(5)                 -           -             -            -     18,354     18,354
    Savings accounts(5)                -          30             -            -     14,334     14,364
    Money market deposit accounts(18,491           -             -            -          -     18,491
    Certificates of deposit       20,015      44,417        79,630        6,528      1,031    151,621
Advances from FHLB                 6,000           -         2,500        3,100     52,250     63,850
                                ---------  ----------  ------------  -----------  ---------  ---------
        Total                     44,506      44,447        82,130        9,628     85,969    266,680
                                ---------  ----------  ------------  -----------  ---------  ---------

Excess (deficiency) of interest-
  sensitive assets over
  interest-bearing              $l15,531     $ 9,119      $ (9,571)    $ 34,793   $ (21,347) $ 28,525
                                =========  ==========  ============  ===========  =========  =========
Cumulative excess of
    interest-sensitive assets
    over interest-sensitive
    liabilities                 $ 15,531    $ 24,650      $ 15,079     $ 49,872   $ 28,525
                                =========  ==========  ============  ===========  =========
Cumulative excess of
    interest-sensitive assets
    over interest-sensitive
    liabilities as a percent of
    total assets                   5.08%       8.06%         4.93%       16.31%      9.33%
                                =========  ==========  ============  ===========  =========
</TABLE>

(1)      Adjustable-rate  assets are  included  in the period in which  interest
         rates are next  scheduled to adjust  rather than in the period in which
         they are due,  and  fixed-rate  assets are  included  in the periods in
         which they are scheduled to be repaid, based on scheduled amortization,
         in each case as adjusted to take into  account  estimated  prepayments.
         The Company has estimated the prepayments  based upon its experience in
         the interest rate environment prevailing during 1999.

(2)      Balances have been reduced for non-performing  loans, which amounted to
         $100,000 at December 31, 1999.

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

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

(5)      Although  the  Company's  demand  accounts  and  savings  accounts  are
         generally  subject  to  immediate   withdrawal,   management  considers
         substantially   all  of  such  accounts  to  be  core  deposits  having
         significantly  longer effective  maturities.  The Company generally has
         retained a relatively  consistent  amount of such deposits under widely
         varying  interest rate  environments.  If all of the  Company's  demand
         accounts  and  savings  accounts  had been  assumed  to be  subject  to
         repricing  within  one year,  interest-bearing  liabilities  which were
         estimated  to mature or reprice  within  one year  would have  exceeded
         interest-sensitive  assets  with  comparable  characteristics  by  $8.0
         million, or 2.63% of total assets.

The ALCO  utilizes  the results of a detailed  and dynamic  simulation  model to
quantify the estimated exposure to NII to sustained interest rate changes. While
the ALCO routinely  monitors  simulated NII sensitivity  over a rolling two-year
horizon, it also utilizes additional tools to monitor potential longer-term rate
risk.

The  simulation  model  captures  the impact of changing  interest  rates on the
interest  income  received  and the  interest  expense  paid on all  assets  and
liabilities reflected on the Company's statement of condition.  This sensitivity
analysis is compared to ALCO policy  limits  which  specify a maximum  tolerance
level for NII  exposure  over a one-year  horizon,  assuming  no  balance  sheet
growth,  given both a 200 basis  point  upward and  downward  shift in  interest
rates. A parallel and pro rata shift in rates over a 12-month period is assumed.
The following reflects the Company's NII sensitivity analysis as of December 31,
1999:

                                       15
<PAGE>

                                                   Estimated NII
                Rate Change                         Sensitivity
                ------------------                 ------------
                + 200 basis points                   - 0.11%
                - 200 basis points                   + 0.82%

The preceding  sensitivity  analysis  does not represent a Company  forecast and
should not be relied upon as being  indicative  of expected  operating  results.
These hypothetical estimates are based upon numerous assumptions including,  but
not limited  to, the nature and timing of  interest  rate levels and yield curve
shapes,  prepayments  on loans and  securities,  deposit  decay  rates,  pricing
decisions on loans and deposits,  and  reinvestment and replacement of asset and
liability  cash flows.  While  assumptions  are developed  based upon  perceived
current  economic  and local  market  conditions,  the  Company  cannot make any
assurances  as to the  predictive  nature  of these  assumptions  including  how
customer preferences or competitor influences might change.

Also, as market conditions vary from those assumed in the sensitivity  analysis,
actual results will also differ due to prepayment and refinancing  levels likely
deviating from those assumed, the varying impact of interest rate change caps or
floors on adjustable rate assets,  the potential effect of changing debt service
levels on customers with adjustable rate loans,  depositor early withdrawals and
product   preference   changes  and  other  internal  and  external   variables.
Furthermore,  the  sensitivity  analysis does not reflect  actions that the ALCO
might take in responding to or anticipating changes in interest rates.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS 133,  Accounting  for Derivative  Instruments
and Hedging  Activities.  The  statement  establishes  accounting  and reporting
standards for derivative  instruments,  including certain derivative instruments
imbedded in other contracts. It requires that entities recognize all derivatives
as either  assets or  liabilities  in the  statement of  financial  position and
measure those  instruments at fair value. The accounting for changes in the fair
value of derivatives  (that is, gains and losses) depends on the intended use of
the derivative and the resulting designation.  The statement was to be effective
for fiscal years  beginning  after June 15, 1999. In June 1999,  the FASB issued
SFAS 137,  Accounting  for  Derivative  Instruments  and  Hedging  Activities  -
Deferral of the Effective Date of FASB Statement No. 133, which amended SFAS 133
to delay the effective date until all fiscal quarters for fiscal years beginning
after June 15, 2000. The Company  currently has no derivatives and does not have
any hedging activities.  The Company has not adopted SFAS 133 as of December 31,
1999. The adoption of this  statement is not expected to have a material  effect
on financial position and results of operations.

                                       16
<PAGE>

PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

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

                                       17
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

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

We have  audited  the  accompanying  consolidated  balance  sheets  of  Acadiana
Bancshares,  Inc.,  and  Subsidiary  as of December  31, 1999 and 1998,  and the
related consolidated income statements, stockholders' equity, and cash flows for
each  of  the  three  years  in  the  period  ended  December  31,  1999.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Acadiana Bancshares,
Inc.,  and Subsidiary as of December 31, 1999 and 1998, and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.

/s/ Castaing, Hussey, Lolan & Dauterive, L L P

New Iberia, Louisiana
February 1, 2000

                                       18
<PAGE>

                    ACADIANA BANCSHARES, INC., AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998

                        (In Thousands, except share data)

     Assets

<TABLE>
<CAPTION>
                                                                                                  1999           1998
                                                                                            --------------  --------------

Cash and Cash Equivalents:
<S>                                                                                         <C>             <C>
      Cash and Amounts Due from Banks                                                       $       3,668   $         844
      Interest Bearing Demand Deposits                                                              8,254           6,734
                                                                                            --------------  --------------
          Total Cash and Cash Equivalents                                                          11,922           7,578
Trading Securities                                                                                    285             575
Securities Available for Sale, at Fair Value                                                       26,060          26,404
Securities Held to Maturity (Fair Value of $11,958 and $12,694, respectively)                      11,921          12,360
Federal Home Loan Bank Stock, at Cost                                                               3,689           2,920
Loans Receivable, Net of Allowance for Loan Losses of $2,747
      and $2,726, respectively                                                                    244,996         225,752
Investment in Limited Liability Company                                                               811             966
Premises and Equipment, Net                                                                         2,657           2,777
Accrued Interest Receivable                                                                         1,543           1,367
Other Assets                                                                                        1,812           1,390
                                                                                            --------------  --------------

Total Assets                                                                                $     305,696   $     282,089
                                                                                            ==============  ==============

  Liabilities and Stockholders' Equity

Deposits:
      Non-interest Bearing                                                                  $      10,382   $      12,518
      Interest Bearing                                                                            202,830         189,136
                                                                                               -----------     -----------
           Total Deposits                                                                         213,212         201,654
Short-Term Borrowings                                                                               6,000           7,500
Accrued Interest Payable                                                                              345             304
Long-Term Debt                                                                                     57,850          39,728
Accrued and Other Liabilities                                                                         539             729
                                                                                            --------------  --------------
Total Liabilities                                                                                 277,946         249,915
                                                                                            --------------  --------------

Commitments and Contingencies (Notes 14 and 15)

Stockholders' Equity:

Preferred Stock of $.01 Par Value; 5,000,000 shares authorized,
      -0- shares issued or outstanding                                                                  -               -
Common Stock of $.01 Par Value; 20,000,000 shares authorized,
      2,731,250 shares issued                                                                          27              27
Additional Paid-in Capital                                                                         32,322          32,192
Retained Earnings                                                                                  22,404          20,932
Unearned Common Stock Held by ESOP Trust                                                           (1,703)         (1,965)
Unearned Common Stock Held by RRP Trust                                                            (1,048)         (1,335)
Accumulated Other Comprehensive Income                                                               (364)            258
Treasury Stock, at Cost; 1,236,727 and 910,758 Shares, respectively                               (23,888)        (17,935)
                                                                                            --------------  --------------

Total Stockholders' Equity                                                                         27,750          32,174
                                                                                            --------------  --------------
Total Liabilities and Stockholders' Equity                                                  $     305,696   $     282,089
                                                                                            ==============  ==============
</TABLE>

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

                                       19
<PAGE>

                    ACADIANA BANCSHARES, INC., AND SUBSIDIARY

                         CONSOLIDATED INCOME STATEMENTS
                  Years Ended December 31, 1999, 1998 and 1997
                      (In Thousands, except per share data)

<TABLE>
                                                               1999           1998            1997
                                                          -------------  --------------  -------------
Interest and Dividend Income:
<S>                                                       <C>            <C>             <C>
     Loans, including fees                                $     18,288   $      17,717   $     16,051
     Debt Securities                                             2,491           2,558          3,725
     Dividends                                                     167             154            109
     Trading Account Securities                                      9              11              5
     Interest Bearing Deposits                                     452           1,113            574
                                                          -------------  --------------  -------------
Total Interest and Dividend Income                              21,407          21,553         20,464
                                                          -------------  --------------  -------------
Interest Expense:
     Deposits                                                    9,488           9,405          9,179
     Borrowings                                                  2,707           2,530          1,681
                                                          -------------  --------------  -------------
Total Interest Expense                                          12,195          11,935         10,860
                                                          -------------  --------------  -------------
Net Interest Income                                              9,212           9,618          9,604
Provision for Loan Losses                                            -              90            180
                                                          -------------  --------------  -------------
Net Interest Income After Provision for
     Loan Losses                                                 9,212           9,528          9,424
                                                          -------------  --------------  -------------
Non-Interest Income:
     Customer Service Fees                                         914             832            749
     Loan Servicing Fees                                            58              55             62
     Gain (Loss) on Sale of Loans, Net                              89             233             (1)
     Trading Account (Losses) Gains, Net                            (8)           (111)           137
     Loss from Investment in Limited Liability
          Company                                                 (155)            (34)             -
     Other                                                          96              84             86
                                                          -------------  --------------  -------------
Total Non-Interest Income                                          994           1,059          1,033
                                                          -------------  --------------  -------------
Non-Interest Expense:
     Salaries and Employee Benefits                              3,521           3,338          3,144
     Occupancy                                                     337             280            308
     Depreciation                                                  365             393            322
     Data Processing                                               247             165            143
     Foreclosed Assets, net                                         26               8           (436)
     Deposit Insurance Premium                                     120             118            122
     Advertising                                                   173             297            328
     Bank Shares and Franchise Tax Expense                         349             430            351
     Other                                                       1,633           1,626          1,596
                                                          -------------  --------------  -------------
Total Non-Interest Expense                                       6,771           6,655          5,878
                                                          -------------  --------------  -------------
Income Before Income Taxes                                       3,435           3,932          4,579
Income Tax Expense                                               1,229           1,427          1,632
                                                          -------------  --------------  -------------
Net Income                                                $      2,206   $       2,505   $      2,947
                                                          =============  ==============  =============
Earnings Per Share - basic                                $       1.60   $        1.20   $       1.22
                                                          =============  ==============  =============
Earnings Per Share - diluted                              $       1.55   $        1.17   $       1.20
                                                          =============  ==============  =============
</TABLE>

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

                                       20
<PAGE>

                   ACADIANA BANCSHARES, INC., AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years Ended December 31, 1999, 1998 and 1997
                        (In Thousands, except share data)

<TABLE>
<CAPTION>
                                                                              Unearned  Unearned
                                                                               Common    Common    Accumulated               Total
                                                        Additional           Stock Held   Stock       Other                  Stock-
                                             Common      Paid-In   Retained   By ESOP    Held By  Comprehensive   Treasury  holder's
                                              Stock      Capital   Earnings    Trust    RRP Trust    Income        Stock     Equity
                                            --------   ----------  --------  --------- ---------- -------------  --------- ---------

<S>               <C>                          <C>      <C>        <C>       <C>        <C>         <C>          <C>      <C>
 Balance, January 1, 1997                      $ 27     $ 31,827   $17,344   $ (2,490)  $               $ 383    $        $ 47,091
 Comprehensive Income:
       Net Income                                                    2,947                                                   2,947
       Change in Unrealized Gain (Loss) on
           Securities Available for Sale, Net of

           Deferred Taxes                                                                                  67                   67
                                                                                                                          ---------
                                                                                                                          ---------
 Total Comprehensive Income                                                                                                  3,014
 Common Stock Released by ESOP Trust                         178                  262                                          440
 Common Stock Acquired by Recognition
       and Retention Plan Trust                                                           (1,829)                           (1,829)
 Common Stock Earned by Participants of
       Recognition and Retention Plan Trust                                                  227                               227
 Purchase of Treasury Stock (150,000 shares)                                                                      (3,445)   (3,445)
 Cash Dividends Declared ($.38 per share)                             (936)                                                   (936)
                                            --------   ----------  --------  --------- ----------  -----------  --------- ---------
 Balance, December 31, 1997                      27       32,005    19,355     (2,228)    (1,602)         450     (3,445)   44,562
 Comprehensive Income:
       Net Income                                                    2,505                                                   2,505
       Change in Unrealized Gain (Loss) on
           Securities Available for Sale, Net of

           Deferred Taxes                                                                                (192)                (192)
                                                                                                                          ---------
                                                                                                                          ---------
 Total Comprehensive Income                                                                                                  2,313
 Common Stock Released by ESOP Trust                         192                  263                                          455
 Common Stock Earned by Participants of
       Recognition and Retention Plan Trust                   (5)                            267                               262
 Purchase of Treasury Stock (760,758 shares)                                                                     (14,490)  (14,490)
 Cash Dividends Declared ($.44 per share)                             (928)                                                   (928)
                                            --------   ----------  --------  --------- ----------  -----------  --------- ---------
 Balance, December 31, 1998                      27       32,192    20,932     (1,965)    (1,335)         258    (17,935)   32,174
 Comprehensive Income:
       Net Income                                                    2,206                                                   2,206
       Change in Unrealized Gain (Loss) on
           Securities Available for Sale, Net of

           Deferred Taxes                                                                                (622)                (622)
                                                                                                                          ---------
                                                                                                                          ---------
 Total Comprehensive Income                                                                                                  1,584
 Common Stock Released by ESOP Trust                         146                  262                                          408
 Common Stock Earned by Participants of
       Recognition and Retention Plan Trust                    3                             287                               290
 Common Stock Issued (2,000 shares)                          (19)                                                     39        20
 Purchase of Treasury Stock (327,969 shares)                                                                      (5,992)   (5,992)
 Cash Dividends Declared ($.52 per share)                             (734)                                                   (734)
                                            --------   ----------  --------  --------- ----------  -----------  --------- ---------
 Balance, December 31, 1999                    $ 27     $ 32,322   $ 22,404  $ (1,703)  $ (1,048)      $ (364)  $ (23,888)$ 27,750
                                            ========   ==========  ========  ========= ==========  ===========  ========= =========
</TABLE>

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

                                       21
<PAGE>

                    ACADIANA BANCSHARES, INC., AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended
                        December 31, 1999, 1998 and 1997
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                            1999           1998            1997
                                                                                        ------------   ------------   -------------
                                                                                        ------------   ------------   -------------
 Cash Flows from Operating Activities:

 Net Income                                                                                 $ 2,206        $ 2,505         $ 2,947
                                                                                        ------------   ------------   -------------
                                                                                        ------------   ------------   -------------
<S>                                                                                         <C>               <C>            <C>
 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
       Depreciation and Amortization                                                            387            410             328
       Provision for Deferred Income Taxes                                                       52            (17)              2
       Provision for Losses on Loans                                                              -             90             180
       Compensation Expense Recognized on RRP                                                   271            232             227
       ESOP Contribution                                                                        408            455             440
       Other Gains and Losses, Net                                                              (40)           (19)           (427)
       Net Change in Securities Classified as Trading                                           290            251            (826)
       Loss from Investment in Limited Liability Company                                        155             34               -
       Accretion of Discounts, Net of Premium Amortization on Securities                         (7)           (42)            (63)
       Amortization of Deferred Revenues and Unearned Income on Loans                           116            (13)            (60)
       FHLB Stock Dividend Received                                                            (166)          (153)           (109)
       Changes in Assets and Liabilities:
                (Increase) Decrease in Accrued Interest Receivable                             (176)            49             135
                (Increase) Decrease in Other Assets                                            (164)           (21)            167
                (Decrease) Increase in Accounts Payable and Accrued Expenses                   (142)           102             (42)
                                                                                        ------------   ------------   -------------
 Total Adjustments                                                                              984          1,358             (48)
                                                                                        ------------   ------------   -------------

 Net Cash Provided by Operating Activities                                                  $ 3,190        $ 3,863         $ 2,899
                                                                                        ------------   ------------   -------------

 Cash Flows from Investing Activities:
 Activity in Available for Sale Securities:
      Proceeds from Calls, Maturities and Prepayments                                      $ 24,887       $ 46,161        $ 26,368
      Purchases                                                                             (25,470)       (43,917)        (12,998)
 Activity in Held to Maturity  Securities:
      Proceeds from Calls, Maturities and Prepayments                                           431            440             290
 Investment in Limited Liability Company                                                 .                  (1,000)              -
 Purchase of FHLB Stock                                                                        (603)          (880)              -
 Net Advances on Loans                                                                      (19,548)       (13,110)        (30,739)
 Purchase of Premises and Equipment                                                            (240)          (364)         (1,301)
 Proceeds from Sale of Foreclosed Assets                                                        238            350             801
 Capital Costs Incurred on Foreclosed Assets                                                     (8)           (13)              -
                                                                                        ------------   ------------   -------------

 Net Cash Used in  Investing Activities                                                   $ (20,313)     $ (12,333)      $ (17,579)
                                                                                        ------------   ------------   -------------
 Cash Flows from Financing Activities:
 Net Change in Deposits                                                                    $ 11,558        $ 6,611           $ 850
 Net Change in Short-term Borrowings                                                         (1,500)         7,500               -
 Proceeds from Long-term Debt                                                                37,500         30,100          14,378
 Payments on Long-term Debt                                                                 (19,378)       (27,000)              -
 Proceeds from Issuance of Common Stock                                                          20              -               -
 Dividends Paid to Shareholders                                                                (741)        (1,009)           (901)
 Acquisition of Common Stock by RRP Trust                                                         -              -          (1,829)
 Purchase of Treasury Stock                                                                  (5,992)       (14,311)         (3,445)
                                                                                        ------------   ------------   -------------
 Net Cash Provided by Financing Activities                                                 $ 21,467        $ 1,891         $ 9,053
                                                                                        ------------   ------------   -------------
 Net Increase (Decrease)  in Cash and Cash Equivalents                                      $ 4,344       $ (6,579)       $ (5,627)
 Cash and Cash Equivalents at Beginning of Year                                               7,578         14,157          19,784
                                                                                        ------------   ------------   -------------
 Cash and Cash Equivalents at End of Year                                                  $ 11,922        $ 7,578        $ 14,157
                                                                                        ============   ============   =============
 Supplemental Schedule of Noncash Activities:
       Acquisition of Foreclosed Assets in Settlement of Loans                                $ 188          $ 121           $ 503
 Supplemental Disclosures:
       Cash Paid For:
       Interest on Deposits and Borrowings                                                 $ 12,154       $ 11,861        $ 10,779
       Income Taxes                                                                         $ 1,203        $ 1,465         $ 1,541
</TABLE>

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

                                       22
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

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

Basis of Consolidation

The  consolidated   financial   statements  include  the  accounts  of  Acadiana
Bancshares, Inc. and its wholly owned subsidiary, LBA Savings Bank. All material
intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

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

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

Concentration of Credit Risk

All of the Company's loans,  commitments and letters of credit have been granted
to customers in the Company's  market area. The  concentration of credit by type
of loan is set forth in Note 4. The distribution of commitments to extend credit
approximates the distribution of loans outstanding.

A majority of the Company's loan portfolio consists of single-family residential
loans in the  Lafayette  area.  The  regional  economy  has  demonstrated  heavy
dependence on the oil and gas industry,  which was in severe economic decline in
the 1980's.  Real estate  prices in this  market were  substantially  depressed.
Future  downturns in the oil and gas industry  could result in an adverse impact
on the Company's real estate loans.

                                       23
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Cash and Cash Equivalents

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

Investment Securities

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

Mortgage-Backed   Securities,   or  MBSs,   owned  by  the   Company   represent
participating  interests in pools of underlying  long-term  first mortgage loans
issued by one of three agencies: GNMA, FNMA, and FHLMC.  Collateralized Mortgage
Obligations,  or CMOs, owned by the Company represent participating interests in
a  multiclass  security  that  is  secured  by one or  more  pools  of  mortgage
pass-through pools. The Company holds one private issue CMO.

The Bank is required,  as a member of the Federal  Home Loan Bank of Dallas,  to
maintain  an amount of stock  equal to the  greater of one percent of the Bank's
outstanding  home  mortgage-related  assets or five  percent of its  outstanding
advances  from the  FHLB.  Any  stock  held in excess  of  required  amounts  is
redeemable  at par. At December  31, 1999 and 1998,  the Bank held the  required
amount of stock.

Loans Held For Sale

Mortgage loans  originated and held for sale in the secondary market are carried
at the lower of cost or market  value  determined  on an  aggregate  basis.  Net
unrealized  losses are recognized in a valuation  allowance  through  charges to
income. Gains and losses on the sale of loans held for sale are determined using
the specific  identification  method. At December 31, 1999 and 1998, the Company
had no loans held for sale.

Loans Receivable

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

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

                                       24
<PAGE>

                    ACADIANA BANCSHARES, INC., AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

A loan is considered  impaired when, based on current information and events, it
is  probable  that the  Corporation  will be unable  to  collect  the  scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement.  Factors considered by management in determining  impairment
include  payment  status,  collateral  value,  and the probability of collecting
scheduled  principal  and  interest  payments  when due.  Loans that  experience
insignificant payment delays and payment shortfalls generally are not classified
as  impaired.  Management  determines  the  significance  of payment  delays and
payment shortfalls on a case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the
delay, the reasons for the delay,  the borrower's prior payment record,  and the
amount  of the  shortfall  in  relation  to the  principal  and  interest  owed.
Impairment is measured on a loan by loan basis for commercial  and  construction
loans by either the present  value of expected  future cash flows  discounted at
the loan's effective  interest rate, the loan's  obtainable market price, or the
fair value of the collateral if the loan is collateral  dependent.  Large groups
of smaller balance homogeneous loans are collectively  evaluated for impairment.
Accordingly,  the Corporation does not separately  identify  individual consumer
and residential loans for impairment disclosures.

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

Loan Servicing

Loan  servicing  rights are  recognized on loans sold when the  institution  has
retained  the  servicing  rights on the loan.  The cost of  servicing  rights is
amortized in  proportion  to, and over the period of,  estimated  net  servicing
revenues.  Impairment of servicing rights is assessed based on the fair value of
those rights.  Fair values are estimated using  discounted cash flows based on a
current market interest rate.

Premises and Equipment

Land is carried at cost.  Buildings  and  equipment  are  carried at cost,  less
accumulated   depreciation  computed  on  either  the  straight-line  method  or
declining  balance method.  Depreciation  is provided over the estimated  useful
lives of the respective  assets,  15 to 40 years for buildings and 3 to 15 years
for furniture, fixtures and equipment.

Foreclosed Assets

Assets acquired  through,  or in lieu of, loan foreclosure are held for sale and
are initially recorded at fair value at the date of foreclosure,  establishing a
new cost basis. Subsequent to foreclosure, valuations are periodically performed
by management and the assets are carried at the lower of carrying amount or fair
value less cost to sell.  Revenue and expense from operations and changes in the
valuation allowance are included in net expenses from foreclosed assets.

                                       25
<PAGE>

Income Taxes

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

Stock Compensation Plans

Statement of Financial  Accounting  Standards  ("SFAS") No. 123,  Accounting for
Stock-Based  Compensation,  encourages  all entities to adopt a fair value based
method of accounting for employee stock compensation plans, whereby compensation
cost is  measured  at the  grant  date  based on the  value of the  award and is
recognized  over the  service  period,  which is  usually  the  vesting  period.
However,  it also allows an entity to continue to measure  compensation cost for
those plans using the intrinsic  value based method of accounting  prescribed by
Accounting  Principles  Board  Opinion No. 25,  Accounting  for Stock  Issued to
Employees, whereby compensation cost is the excess, if any, of the quoted market
price of the stock at the grant date (or other measurement date) over the amount
an  employee  must pay to acquire  the stock.  Stock  options  issued  under the
Company's stock option plan have no intrinsic value at the grant date, and under
Opinion No. 25 no  compensation  cost is  recognized  for them.  The Company has
elected to continue with the accounting  methodology in Opinion No. 25 and, as a
result,  has provided proforma  disclosures of net income and earnings per share
and other disclosures,  as if the fair value based method of accounting had been
applied.

Earnings Per Share

Basic  earnings per share  represents  income  available to common  stockholders
divided by the weighted average number of common shares  outstanding  during the
period.  Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive  potential  common shares had been issued,  as
well as any  adjustment  to income that would result from the assumed  issuance.
Potential  common shares that may be issued by the Company relate to outstanding
stock  options and  unvested  restricted  stock,  and are  determined  using the
treasury stock method.

Effects of New Accounting Pronouncements

In June 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
130, Reporting  Comprehensive  Income. This statement  establishes standards for
reporting and disclosure of comprehensive  income and its components  (revenues,
expenses,  gains and losses).  This  statement  requires that all items that are
required  to  be  recognized  under   accounting   standards  as  components  of
comprehensive  income  (including,  for example,  unrealized  holding  gains and
losses on available for sale  securities)  be reported in a financial  statement
similar to the statement of income and

                                        26
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

retained income. The accumulated balance of other  comprehensive  income will be
disclosed separately from retained income in the shareholders' equity section of
the balance  sheet.  This  statement is  effective  for the Company for the year
beginning  January 1, 1998.  Adoption of this  statement did not have a material
impact on the financial  condition or results of operations because it addresses
reporting and disclosure issues.

In June 1997,  the FASB issued SFAS No. 131,  Disclosures  About  Segments of an
Enterprise and Related  Information.  This statement  established  standards for
reporting  information about a company's  operating segments using a "management
approach." The statement  requires that reportable  segments be identified based
upon those revenue-producing components for which separate financial information
is produced  internally  and are subject to  evaluation  by the chief  operating
decision maker in deciding how to allocate resources to segments. The provisions
of SFAS No. 131 were effective for 1998.

The  Company  has  applied  the  provisions  of SFAS No. 131 during 1999 and has
evaluated its potential operating segments against the criteria specified in the
statement.  Based upon that  evaluation,  the  Company  has  determined  that no
operating  segment  disclosures  are required in 1999 because of the aggregation
concepts specified in the statement.

In June 1998, the FASB issued SFAS 133,  Accounting  for Derivative  Instruments
and Hedging  Activities.  The  statement  establishes  accounting  and reporting
standards for derivative  instruments,  including certain derivative instruments
imbedded  in  other  contracts.   It  requires  that  an  entity  recognize  all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of  derivatives  (that is,  gains and  losses)  depends on the
intended use of the derivative and the resulting designation.  The statement was
to be effective  for fiscal years  beginning  after June 15, 1999. In June 1999,
the FASB issued SFAS 137,  Accounting  for  Derivative  Instruments  and Hedging
Activities - Deferral of the Effective  Date of FASB  Statement  No. 133,  which
amended  SFAS 133 to delay the  effective  date  until all fiscal  quarters  for
fiscal  years  beginning  after June 15,  2000.  The  Company  currently  has no
derivatives  and does  not have any  hedging  activities.  The  Company  has not
adopted SFAS 133 as of December 31, 1999.  The adoption of this statement is not
expected  to have a  material  effect  on  financial  position  and  results  of
operations.

Reclassifications

Certain  reclassifications  have  been  made to the 1997  and 1998  Consolidated
Financial  Statements  in order to conform to the  classifications  adopted  for
reporting in 1999.

NOTE 2 - CASH AND AMOUNTS DUE FROM BANKS:

The Company is required  by the  Federal  Reserve  Bank to maintain a reserve of
vault cash or cash on deposit based on a percentage  of deposits.  The amount of
the reserve  balance  required at December  31, 1999 and 1998 was  approximately
$423,000  and  $446,000,  respectively,  and the Company  satisfied  its reserve
requirements at both dates.

                                       27
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - INVESTMENT SECURITIES:

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

<TABLE>
<CAPTION>
                                      December 31, 1999                             December 31, 1998
                          ------------------------------------------    ------------------------------------------
                                       Gross      Gross                               Gross      Gross
                          Amortized  Unrealized Unrealized   Fair       Amortized  Unrealized Unrealized    Fair
                            Cost       Gains     Losses     Value          Cost       Gains      Losses     Value
Debt securities:
<S>                       <C>           <C>         <C>    <C>           <C>          <C>         <C>     <C>
  Commercial Paper        $       -     $    -      $   -  $     -       $  5,992     $    -      $   -   $ 5,992
  U.S. Government and
    Federal Agencies         10,493          -      (238)    10,255         8,949         25        (1)     8,973
  Mortgage-backed            16,114         99      (433)    15,780        11,067        345        (3)    11,409
                          ---------- ---------- ---------- ---------    ---------- ---------- ---------- ---------
    Total debt securities    26,607         99      (671)                  26,008        370        (4)    26,374
Marketable equity                 5         20          -        25             5         25          -        30
securities
                          ---------- ---------- ---------- ---------    ---------- ---------- ---------- ---------
Total                     $  26,612    $   119    $ (671)  $ 26,060      $ 26,013     $  395     $  (4)   $26,404
                          ========== ========== ========== =========    ========== ========== ========== =========
</TABLE>

Securities held to maturity consist of the following (in thousands):

<TABLE>
<CAPTION>
                                     December 31, 1999                             December 31, 1998
                          ----------------------------------------     ------------------------------------------
                                       Gross      Gross                             Gross      Gross
                          Amortized  Unrealized Unrealized  Fair       Amortized  Unrealized Unrealized   Fair
                            Cost       Gains     Losses    Value          Cost      Gains      Losses     Value

<S>                         <C>        <C>      <C>       <C>            <C>       <C>       <C>        <C>
  Mortgage-backed           $ 11,921   $   55   $   (18)  $ 11,958       $ 12,360  $   350   $   (16)   $ 12,694
                          ---------- ---------- ---------- -------     ---------- ---------- ---------- ---------

Total                       $ 11,921   $   55   $   (18)  $ 11,958       $ 12,360  $   350   $   (16)    $ 12,694
                          ========== ========== ========== =======     ========== ========== ========== =========
</TABLE>

The following is a summary of  maturities of debt  securities as of December 31,
1999 (in thousands):

<TABLE>
<CAPTION>
                                              Securities Available for Sale                  Held to Maturity
                                           ------------------------------------       --------------------------------
                                              Amortized              Fair               Amortized            Fair
                                                 Cost               Value                 Cost              Value
                                           -----------------    ---------------       --------------     -------------
Amounts maturing in:
<S>                                                 <C>                 <C>                <C>                <C>
One year or less                                    $    96             $   97             $  5,657           $ 5,698
After one year through five years                    16,852             16,623                1,264             1,260
After five years through ten years                    2,263              2,114                    -                 -
After ten years                                       7,396              7,201                5,000             5,000
                                           -----------------    ---------------       --------------     -------------

Total debt securities                             $  26,607           $ 26,035             $ 11,921          $ 11,958
                                           =================    ===============       ==============     =============
</TABLE>

Securities  other than  mortgage-backed  securities are classified  according to
their contractual maturity without consideration of call features.  Accordingly,
actual maturities may differ from contractual maturities. Maturity distributions
of  mortgage-backed  securities  are based on the average life at the  projected
speed.


During 1999,  1998 and 1997,  proceeds  from calls and  maturities of securities
available for sale were NOTES TO CONSOLIDATED FINANCIAL STATEMENTS approximately
$19,925,000, $39,925,000, and $22,498,000 respectively, resulting in no realized
gain or loss. During 1999, 1998 and 1997, no securities  available for sale were
sold.

                                       28
<PAGE>

Investment  securities  with a carrying  amount and fair value of  approximately
$5,433,000  and  $511,000 at  December  31,  1999 and 1998,  respectively,  were
pledged to secure  deposits  and for other  purposes as required or permitted by
law.

NOTE 4 - LOANS RECEIVABLE:

Loans  Receivable  at December 31, 1999 and 1998 are  summarized  as follows (in
thousands):

                                               1999                   1998
                                          --------------         ------------
Mortgage Loans:
         Single-Family Residential           $   179,109          $   169,362
         Construction                             12,612               12,588
         Multi-Family Residential                    425                  481
         Commercial Real Estate                   18,798               16,887
         Equity Lines of Credit                    3,406                2,040
                                           -------------       --------------
              Total Mortgage Loans               214,350              201,358

     Commercial Business Loans                    18,144               13,861
     Consumer Loans                               21,803               19,348
                                          --------------       ---------------
              Total Loans                        254,297              234,567

     Less:
         Allowance for Loan Losses                (2,747)              (2,726)
         Net Deferred Loan Fees                     (222)                (300)
         Unadvanced Loan Funds                    (6,332)              (5,789)
                                          --------------       --------------
              Loans, net                    $    244,996          $   225,752
                                          ==============       ==============


At  December  31,  1999  and  1998,  the  Company's   loan  portfolio   included
$106,767,000 and $113,691,000 in adjustable-rate loans, respectively.

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

<TABLE>
<CAPTION>
                                       1999               1998              1997
                                   ------------     -------------      -------------

<S>                                  <C>            <C>                 <C>
Balance, Beginning                  $    2,726      $     2,760         $     2,592
      Provision Charged to Income            -               90                 180
      Loans Charged Off                   (185)            (313)               (235)
      Loans Recovered                      206              189                 223
                                   -----------      ------------        -----------

Balance, Ending                     $    2,747      $     2,726         $     2,760
                                   ===========      ============        ===========
</TABLE>

                                       29
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - LOAN SERVICING:

Loans  serviced  for others are not  included in the  accompanying  consolidated
balance sheets.  The unpaid principal  balances of loans serviced for others was
$20,841,000  and  $23,346,000  at  December  31,  1999 and  1998,  respectively.
Custodial  escrow  balances  maintained  in connection  with the foregoing  loan
servicing  were  approximately  $207,000  and  $367,000 at December 31, 1999 and
1998, respectively. Loan servicing rights of $8,000 and $91,000 were capitalized
in 1999 and  1998,  respectively.  Amortization  of loan  servicing  rights  was
$22,000,  $17,000,  and  $6,000 in 1999,  1998 and 1997,  respectively,  and the
balance of loan  servicing  rights at December 31, 1999 and 1998 was $87,000 and
$101,000, respectively.

NOTE 6 - INVESTMENT IN LIMITED LIABILITY COMPANY:

The Company owns a 40 percent  investment in Cadence Holdings,  LLC ("Cadence"),
an affiliate in the financial  services  industry,  which is accounted for under
the equity method.  A limited  liability  company (LLC) is a legal form of doing
business that combines partnership and corporate attributes.

The Company is a guarantor in the amount of $400,000 for a $1,000,000  bank line
of credit to Cadence which is dated January 1999.

NOTE 7 - PREMISES AND EQUIPMENT:

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

                                              1999                  1998
                                        --------------         -------------

Land                                       $       930         $         929
Office Buildings                                 1,963                 1,832
Furniture, Fixtures and Equipment                3,311                 3,241
Transportation Equipment                           104                    95
                                       ---------------        --------------
                                                 6,308                 6,097
Accumulated Depreciation                        (3,651)               (3,320)
                                       ----------------       --------------

Premises and Equipment, Net               $      2,657          $      2,777
                                       ===============        ==============

NOTE 8 - DEPOSITS:

At December 31, 1999,  scheduled  maturities of certificates of deposit accounts
were as follows (in thousands):

                                                                Amount
                                                                ------

         2000                                                 $     64,432
         2001                                                       67,029
         2002                                                       12,601
         2003                                                        4,486
         2004                                                        2,042
         Thereafter                                                  1,031
                                                              ------------

Total Certificates of Deposit                                 $    151,621
                                                              ============

Certificates of deposit with a balance of $100,000 and over were $43,473,000 and
$37,492,000 at December 31, 1999 and 1998, respectively.

                                       30
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - LONG-TERM DEBT:

Federal  Home Loan Bank  advances  totaled  $63,850,000  and  $47,228,000  as of
December 31, 1999 and 1998,  respectively,  including $6,000,000 and $7,500,000,
respectively,  in  short-term  borrowings,  which are secured by mortgage  loans
under an existing  blanket  collateral  agreement and by FHLB stock. No payments
are  scheduled  prior to  maturity.  The Company has the ability to borrow total
advances up to  $125,850,000  from the FHLB,  which would also be secured by the
existing  blanket  collateral  agreement  and by FHLB stock.  Long-term  debt at
December 31, 1999 and 1998 is as follows (in thousands):

<TABLE>
<CAPTION>
     Interest Rate                                               1999             1998
     -------------                                           -------------   -------------

<S>                                                          <C>             <C>
       Variable rate - 5.05% to 5.45% at December 31, 1998   $        -      $       9,378
       Fixed rate - 4.93% to 8.70% at December 31, 1999          57,850             30,350
                                                             ------------    -------------

         Total Long-term Debt                                $     57,850    $      39,728
                                                             ============    =============
</TABLE>

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

               Year Ending December 31              Amount
               -----------------------              ------

                           2001                 $       2,500
                           2003                         3,100
                           2005                           250
                           2008                        17,000
                           2009                        35,000
                                                   ----------
                          Total                  $     57,850
                                                 ============

No payments are scheduled  prior to maturity;  however a significant  portion of
the advances  contain a quarterly call feature  beginning  between one and three
years after the date of issuance,  therefore,  actual repayments could vary from
contractual maturities.  Variable rates were indexed to LIBOR (London Inter-Bank
Offered Rate) and repriced either monthly or quarterly.

NOTE 10 - INCOME TAXES:

The provision for Income Tax Expense is as follows for the years ended  December
31 (in thousands):

                                       1999           1998            1996
                                    ----------     ----------     -----------
  Current:
        Federal                      $   1,196     $    1,431     $     1,623
        State                                -             13               7
  Deferred Tax Expense (Benefit)            33            (17)              2
                                    ----------     -----------    -----------

  Total Income Tax Expense          $    1,229     $    1,427     $     1,632
                                    ==========     ==========     ===========

There was an income tax receivable of $19,000 at December 31, 1999 and an income
tax payable of $12,000 at December 31, 1998.

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

                                       31
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - INCOME TAXES (Continued):

                                      1999              1998            1996
                                 ------------      ------------    -------------
  Current:
        Federal                   $     1,196      $      1,431   $        1,623
        State                               -                13                7
  Deferred Tax Expense (Benefit)           33               (17)               2
                                 ------------      ------------   --------------

  Total Income Tax Expense       $      1,229      $      1,427    $       1,632
                                 ============      ============    =============


There was an income tax receivable of $19,000 at December 31, 1999 and an income
tax payable of $12,000 at December 31, 1998.

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

                                             1999           1998           1997
                                         ------------   ------------   --------
Statutory Federal Income Tax Rate            34.0%          34.0%         34.0%
Increase in Taxes Resulting From:
  State Income Tax on Non-Bank Entities         -             .3           0.2
  Nondeductible ESOP                         1.5             1.6           1.3
  Other Items                                 .3             0.4           0.1
                                         ------------   ------------   ---------
  Effective Tax Rate                        35.8 %          36.3%         35.6%
                                         ============   ============   =========

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

                                                               1999         1998
                                                               ----         ----
Deferred Tax Assets:
 Deferred loan fees                                         $   69       $    86
 Book provision for losses on loans and foreclosed assets      948           939
 Depreciable property basis differences                         32            30
 ESOP and RRP expenses                                         156           141
 Unrealized losses on Trading Securities                        15            27
 Unrealized losses on Securities Available for Sale            187             -
 Other                                                          29            39
                                                             -----       -------
            Subtotal                                         1,436         1,262
                                                             -----       -------

Deferred Tax Liabilities:
 Discount Accretion on Investment Securities                     -            40
 FHLB stock                                                    394           338
 Unrealized gains on Securities Available for Sale               -           133
 Acquisition Costs                                               4             -
                                                             -----       -------
            Subtotal                                           398           511
                                                             -----       -------

      Net Deferred Tax Asset                                $1,038       $   751
                                                            ======       =======

The  likelihood of realization of the entire amount of the deferred tax asset is
considered  to be more likely than not;  therefore,  no valuation  allowance has
been provided for 1999 or 1998.

                                       32
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - INCOME TAXES (Continued):

Retained  earnings  at  December  31,  1999  and  1998,  included  approximately
$7,073,000  accumulated  prior to  January  1, 1987 for which no  provision  for
federal income taxes has been made. If this portion of retained earnings is used
in the future for any purpose  other than to absorb bad debts,  it will be added
to future taxable income.

NOTE 11 - EARNINGS PER SHARE:

Weighted  average shares of common stock  outstanding for basic EPS excludes the
weighted average shares unreleased by the Employee Stock Ownership Plan ("ESOP")
Trust (152,727, 174,618, and 196,578 shares at December 31, 1999, 1998, and 1997
respectively)  and the weighted  average  unvested shares in the Recognition and
Retention Plan ("RRP") Trust (80,109,  95,493, and 96,769 shares at December 31,
1999,  1998 and 1997,  respectively).  The effect on diluted EPS of stock option
shares  outstanding  and  unvested RRP shares is  calculated  using the treasury
stock method.  The following is a reconcilement of the numerator and denominator
for basic and diluted Earnings Per Share:

<TABLE>
<CAPTION>
                                                  For the Years Ended December 31,
                                                  --------------------------------
                                                  1999          1998          1997
                                                  ----          ----          ----

Numerator:

<S>                                            <C>           <C>           <C>
      Income Applicable to Common Shares       $2,206,000    $2,505,000    $2,947,000
                                               ==========    ==========    ==========

Denominator:
      Weighted Average Common Shares
            Outstanding                         1,377,635     2,088,775     2,408,779
      Effect of Dilutive Securities:
            Stock Options Outstanding              12,584        44,649        38,315
            RRP Grants                             32,336        15,800        15,932
                                                ---------     ---------     ---------
      Weighted Average Common Shares
            Outstanding Assuming Dilution       1,422,555     2,149,224     2,463,026
                                                =========     =========     =========
Earnings per Share                                  $1.60         $1.20         $1.22
                                                =========     =========     =========
Earnings per Share - Assuming Dilution              $1.55         $1.17         $1.20
                                                =========     =========     =========
</TABLE>

NOTE 12 - REGULATORY MATTERS:

The  Company  (on a  consolidated  basis)  and the Bank are  subject  to various
regulatory  capital  requirements  administered by the federal banking agencies.
Failure to meet minimum capital  requirements can initiate certain mandatory and
possibly  additional  discretionary  actions by regulators  that, if undertaken,
could  have a direct  material  effect on the  Company's  and  Bank's  financial
statements.  Under capital adequacy guidelines and the regulatory  framework for
prompt  corrective  action,  the Company and the Bank must meet specific capital
guidelines that involve quantitative  measures of their assets,  liabilities and
certain  off balance  sheet  items as  calculated  under  regulatory  accounting
practices.   The  capital  amounts  and   classification  are  also  subject  to
qualitative judgments by the regulators about components,  risk weightings,  and
other factors.

                                       33
<PAGE>

Prompt   corrective  action  provisions  are  not  applicable  to  bank  holding
companies.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Company  and the Bank to  maintain  minimum  amounts and ratios (set
forth in the  following  table) of total and Tier 1 capital  (as  defined in the
regulations)  to  risk-weighted  assets (as  defined)  and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, as of December 31,
1999  and  1998,  that  the  Company  and  the  Bank  met all  capital  adequacy
requirements to which they are subject.

As of December 31, 1999, the most recent  notification  from the Federal Deposit
Insurance  Corporation  categorized  the  Bank as  well  capitalized  under  the
regulatory  framework for prompt  corrective  action.  To be categorized as well
capitalized,  an  institution  must maintain  minimum total  risk-based,  Tier 1
risk-based  and Tier 1  leverage  ratios as set forth in the  following  tables.
There  are no  conditions  or  events  since the  notification  that  management
believes have changed the Bank's  category.  The Company's and the Bank's actual
capital  amounts and ratios as of December 31, 1999 and 1998 are also  presented
in the table.

<TABLE>
<CAPTION>
                                                                                             Minimum to be Well
                                                                         Minimum             Capitalized Under
                                                                         Capital             Prompt Corrective
                                               Actual                  Requirement           Action Provisions
                                         Amount     Ratio             Amount   Ratio          Amount      Ratio
                                         ------     -----             ------   -----          ------      -----
                                                (dollars in thousands)
December 31, 1999:
------------------
Total Capital to Risk Weighted Assets:
<S>                                       <C>        <C>             <C>        <C>           <C>          <C>
     Acadiana Bancshares, Inc.            $30,232    17.5%           $13,810    8.0%          $ N/A        N/A%
     LBA Savings Bank                      26,858    15.7%            13,687    8.0%          17,108       10.0%
Tier 1 Capital to Risk Weighted Assets:
     Acadiana Bancshares, Inc.             28,058    16.3%             6,905    4.0%             N/A       N/A%
     LBA Savings Bank                      24,703    14.4%             6,843    4.0%          10,265       6.0%
Tier 1 Capital to Average Assets:
     Acadiana Bancshares, Inc.             28,058     9.2%            12,144    4.0%             N/A       N/A%
     LBA Savings Bank                      24,703     8.2%            11,999    4.0%          14,999       5.0%

December 31, 1998:
------------------
Total Capital to Risk Weighted Assets:
     Acadiana Bancshares, Inc.             33,971    20.9%            13,026    8.0%             N/A       N/A%
     LBA Savings Bank                      26,082    16.8%            12,392    8.0%          15,490       10.0%
Tier 1 Capital to Risk Weighted Assets:
     Acadiana Bancshares, Inc.             31,916    19.6%             6,513    4.0%             N/A       N/A%
     LBA Savings Bank                      24,125    15.6%             6,196    4.0%          9,294        6.0%
Tier 1 Capital to Average Assets:
     Acadiana Bancshares, Inc.             31,916    11.3%            11,271    4.0%             N/A       N/A%
     LBA Savings Bank                      24,125     8.9%            10,839    4.0%          13,549       5.0%
</TABLE>

LBA Savings Bank is restricted under applicable laws in the payment of dividends
to an amount NOTES TO CONSOLIDATED  FINANCIAL  STATEMENTS  equal to current year
earnings plus undistributed  earnings for the immediately preceding year, unless
prior permission is received from the Commissioner of Financial Institutions for
the State of Louisiana. Dividends payable without permission by LBA Savings Bank
in 2000 will be limited to 2000 earnings plus an additional $182,000.

                                       34
<PAGE>

NOTE 13 - EMPLOYEE BENEFITS:

401(k) Plan

The  Company  maintains  a 401(k)  Profit  Sharing  Plan to  provide  retirement
benefits for substantially all employees. Eligible employees may defer up to ten
percent of compensation. All employees are eligible after completing one year of
service and attaining age 21.

Employee Stock Ownership Plan

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

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

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

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

Compensation cost of the ESOP for the year ended December 31, 1999, was $408,000
based on the release of 21,892  shares.  For the year ended  December  31, 1998,
compensation  cost of the  ESOP was  $455,000  based on the  release  of  21,892
shares. For the year ended December 31, 1997,  compensation cost of the ESOP was
$440,000  based on the release of 21,892 shares.  There were 73,423,  53,793 and
32,707 allocated and 141,878, 163,770 and 185,662 shares held in suspense by
the ESOP for the years ended December 31, 1999, 1998 and 1997, respectively. The
fair value of the unearned ESOP shares at December 31, 1999 and 1998,  using the
quoted  market  closing  price  per  share,  was  approximately  $2,784,000  and
$2,866,000, respectively.

                                       35
<PAGE>

Recognition and Retention Plan

The Company  established  the  Recognition  and  Retention  Plan (RRP) Trust for
certain  officers and  directors on January 22, 1997.  During 1997,  the Company
fully funded the trust with the purchase of 109,250 shares, or 4 percent, of the
Company's  common stock in the open market to be awarded in accordance  with the
provisions of the RRP. The cost of the shares of restricted  stock awarded under
these plans is recorded as unearned  compensation,  a contra equity account. The
fair  value  of the  shares  on the  date of  award  is  recognized  ratably  as
compensation  expense over the vesting period, which is five years. The grantees
of the restricted stock have the right to vote the shares awarded.  Dividends on
unvested shares are held in trust and distributed  when the related shares vest.
For the years ended  December  31,  1999,  1998 and 1997,  the  recognition  and
retention plan expense was $271,000,  $232,000 and $227,000,  respectively.  The
weighted-average grant-date fair value of the restricted stock granted under the
RRP during the years ended December 31, 1999,  1998 and 1997 was $20.50,  $17.36
and $15.50, respectively. A summary of the changes in restricted stock follows:

                                      Unawarded            Awarded
                                       Shares               Shares


Balance, January 1, 1997                    -                    -
Purchased by Plan                     109,250                    -
Granted                               (73,202)               73,202
Forfeited                                   -                    -
Earned and Issued                           -                    -
                                     --------             ---------
Balance, December 31, 1997             36,048                73,202
Granted                               (11,900)               11,900
Forfeited                               1,600                (1,600)
Earned and Issued                           -               (14,639)
                                     --------             ---------
Balance, December 31, 1998             25,748                68,863
Granted                                (7,000)                7,000
Forfeited                                   -                     -
Earned and Issued                           -               (17,223)
                                     --------             ---------
Balance, December 31, 1999             18,748                58,640
                                     ========             =========

Stock Option Plan

In 1997,  the Company  adopted a stock  option plan for the benefit of directors
and officers.  The number of shares of common stock  reserved for issuance under
the stock option plan was equal to 273,125 shares,  or 10 percent,  of the total
number of common shares sold in the  Company's  initial  public  offering of its
common stock upon the mutual-to-stock conversion of LBA Savings Bank. The option
exercise price cannot be less than the fair value of the underlying common stock
as of the date of the option grant and the maximum option term cannot exceed ten
years.  The stock  options  granted to directors  and officers are subject to 20
percent  vesting per year and are  exercisable  upon vesting.  Under APB No. 25,
because the exercise  price of the  Company's  stock  options  equals the market
price of the underlying  stock on the date of grant, no compensation  expense is
recognized by the Company.

                                       36
<PAGE>

The following table summarizes the activity related to stock options:

                                                                      Weighted-
                                      Available        Options        Average
                                      for Grant      Outstanding  Exercise Price

At inception - January 22, 1997         273,125             -
Granted                                (211,701)      211,701         $  15.50
Canceled     -                                -
Exercised                                     -             -
                                     ----------     ---------
At December 31, 1997                     61,424       211,701         $  15.50
Granted      (55,000)                    55,000      $  17.26
Canceled     8,000                       (8,000)     $  15.50
Exercised                                     -             -
                                     ----------     ---------
At December 31, 1998                     14,424       258,701         $  15.75
Granted      (10,000)                    10,000      $  20.05
Canceled     2,000                       (2,000)     $  15.50
Exercised                                    -         (7,000)        $  15.50
                                     ----------     ---------
At December 31, 1999                      6,424       259,701         $  16.05
                                     ==========     =========

Exercisable at December 31, 1997                            -
                                                    =========
Exercisable at December 31, 1998                       42,340         $  15.50
                                                    =========
Exercisable at December 31, 1999                       89,279         $  15.72
                                                    =========

The  weighted-average  remaining life of the outstanding options at December 31,
1999 is 7.5 years.

The  weighted-average  grant-date fair value of options granted during the years
ended December 31, 1999, 1998 and 1997 was $3.91, $5.66 and $4.32, respectively.

In October 1995, the FASB issued 123,  Accounting for Stock-Based  Compensation.
SFAS 123 requires disclosure of the compensation cost for stock-based incentives
granted after January 31, 1995 based on the fair value at grant date for awards.
Applying  SFAS 123 would  result in pro forma net income and  earnings per share
amounts as follows (in thousands, except per share data):

                                          1999        1998       1997
                                          ----        ----       ----

       Net income

         As reported                    $ 2,206     $  2,505   $  2,947
         Pro forma                      $ 2,003     $  2,344   $  2,804

       Earnings per share

         As reported     - Basic        $  1.60     $  1.20    $  1.22
                         - Diluted      $  1.55     $  1.17    $  1.20
         Pro forma       - Basic        $  1.45     $  1.12    $  1.16
                         - Diluted      $  1.41     $  1.09    $  1.14

                                       37
<PAGE>

The fair  value  of each  option  is  estimated  on the  date of grant  using an
option-pricing  model with the following  weighted-average  assumptions used for
1999,  1998 and 1997 grants:  dividend  yields of 2.79,  2.15 and 2.20  percent;
expected volatility of 11.26, 27.7 and 16.91 percent; risk-free interest rate of
5.90, 5.48 and 6.51 percent; and expected lives of 7.5 years for all options.

NOTE 14 - RELATED PARTY TRANSACTIONS:

In the  ordinary  course of  business,  the Bank has granted  loans to principal
officers and  directors and their  affiliates  amounting to $613,000 at December
31, 1999 and $506,000 at December 31, 1998.  During the year ended  December 31,
1999, total principal  additions were $296,000 and total principal payments were
$189,000.

Deposits from related  parties held by the Bank at December 31, 1999 amounted to
$1,690,000.

The Company has an employment  agreement  with an executive  officer under which
the  Company  agreed  to pay  compensation  of  $130,000  annually  (plus  merit
increases) through October 31, 2000. The Company has also entered into severance
agreements  with  seven  officers.  The total  commitments  under the  severance
agreements at December 31, 1999 was $992,000.

NOTE 15 - COMMITMENTS AND CONTINGENT LIABILITIES:

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

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

The Company is a party to financial instruments with  off-balance-sheet  risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These  financial  instruments  include  commitments to extend credit and standby
letters of credit.  Those instruments  involve, to varying degrees,  elements of
credit  and  interest  rate  risk in  excess  of the  amount  recognized  in the
Consolidated   Balance  Sheets.  The  contract  or  notional  amounts  of  those
instruments  reflect  the  extent of the  Company's  involvement  in  particular
classes of financial instruments.

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

                                       38
<PAGE>

<TABLE>
<CAPTION>
As of December 31, 1999, financial instruments for which the    Contract or Notional
contract amounts were as follows represent credit risk:         Amount (in thousands)

<S>                                                                 <C>
                           Unadvanced Loan Funds                    $   6,332
                           Commitments to Extend Credit             $  18,915
                           Standby Letters of Credit                $       1
</TABLE>

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

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

NOTE 17 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

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

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

Cash and cash  equivalents:  The carrying  amounts  reported in the Consolidated
Balance  Sheets for cash and cash  equivalents  approximate  those  assets' fair
values.

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

Federal Home Loan Bank Stock: The carrying value of FHLB stock approximates fair
value based on the redemption provisions of the Federal Home Loan Bank.

                                       39
<PAGE>

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

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

FHLB  Advances:  Maturities  are  discounted to the Dallas FHLB's  Advance yield
curve.

Accrued  Interest:  The carrying  amounts of accrued  interest  approximate fair
value.

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

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

<TABLE>
<CAPTION>
                                                                  1999                             1998
                                                  ------------------------------     ------------------------------
                                                    Estimated         Recorded         Estimated        Recorded
                                                      Fair              Book              Fair            Book
      Assets                                         Value            Balance           Value            Balance
------------------                                -----------       ---------        -----------       ---------

<S>                                                 <C>                <C>            <C>              <C>
Cash                                                $  11,922          $ 11,922       $    7,578       $     7,578
Trading Securities                                        285               285              575               575
Investment Securities                                  38,017            37,981           39,098            38,764
Federal Home Loan Bank Stock                            3,689             3,689            2,920             2,920
Loans Receivable                                      241,068           244,996          229,840           225,752
Accrued Interest Receivable                             1,543             1,543            1,367             1,367

   Liabilities
-------------------
Deposits                                              214,548          213,212           204,027          201,654
Borrowings                                             57,863           63,850            47,374           47,228
Accrued Interest Payable                                  345               345              304              304
</TABLE>

                                       40
<PAGE>

The following is a summary of the components of other  comprehensive  income (in
thousands):

<TABLE>
<CAPTION>
                                                                           For The Years Ended December 31,
                                                               ---------------------------------------------------
                                                                   1999               1998               1997
                                                               ------------       ------------       -------------

Unrealized Gain (Loss) on Securities
<S>                                                             <C>                 <C>                 <C>
      Available for Sale, Net                                   $      (942)        $     (290)         $     101
Reclassification Adjustment for Net Gains
      Realized in Net Income                                              -                  -                  -
                                                              -------------       ------------       ------------
Other Comprehensive Income                                             (942)              (290)               101
Income Tax (Expense) Benefit Related to Other

       Comprehensive Income                                             320                 98                (34)
                                                              -------------       ------------       ------------
Other Comprehensive Income, Net of Income

      Taxes                                                      $     (622)        $     (192)        $       67
                                                              =============       ============       ============
</TABLE>

NOTE 20 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):

<TABLE>
<CAPTION>
                                                                       (In Thousands, except per share data)
                                                                  First         Second        Third        Fourth
                                                                  Quarter       Quarter       Quarter      Quarter

Year Ended December 31, 1999:

<S>                                                               <C>           <C>            <C>          <C>
Total Interest Income                                             $ 5,166       $ 5,214        $5,391       $5,636
Total Interest Expense                                              2,857         2,927         3,099        3,312
                                                                 --------      --------      --------     --------
     Net Interest Income                                            2,309         2,287         2,292        2,324

Provision for Loan Losses                                               -             -             -            -
                                                               ----------   -----------   -----------  -----------
      Net Interest Income After Provision
             for Loan Losses                                        2,309         2,287         2,292        2,324

Non-interest Income                                                   255           275           218          246
Non-interest Expense                                                1,718         1,661         1,708        1,684
                                                                 --------      --------      --------     --------

Income Before Income Taxes                                            846           901           802          886
Income Tax Expense                                                    300           325           277          327
                                                                 --------      --------      --------     --------
Net Income                                                            546           576           525           559
                                                                 ========      ========      ========      ========

Earnings per Share - basic                                       $    .36      $    .41      $    .40     $    .43
                                                                 ========      ========      ========     ========

Earnings per Share - diluted                                     $    .35      $    .40      $    .39     $    .41
                                                                 ========      ========      ========     ========


Year Ended December 31, 1998 :

Total Interest Income                                            $  5,342      $  5,508      $  5,454     $  5,249
Total Interest Expense                                              2,876         3,028         3,111        2,920
                                                                 --------      --------      --------     --------

     Net Interest Income                                            2,466         2,480         2,343        2,329

Provision for Loan Losses                                              45            45             -            -
                                                                ---------     ---------   -----------  -----------

      Net Interest Income After Provision

             for Loan Losses                                        2,421         2,435         2,343        2,329

Non-interest Income                                                   349           264           135          311
Non-interest Expense                                                1,574         1,707         1,648        1,726
                                                                 --------      --------      --------     --------

Income Before Income Taxes                                          1,196           992           830          914
Income Tax Expense                                                    432           365           310          320
Net Income                                                            764           627           520           594
                                                                 ========      ========      ========      ========

Earnings per Share - basic                                       $    .33      $    .28      $    .25     $    .34
                                                                 ========      ========      ========     ========

Earnings per Share - diluted                                     $    .32      $    .27      $    .24     $    .34
                                                                 ========      ========      ========     ========
</TABLE>


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

<S>                                                                           <C>
        Main Office Branch
        101 West Vermilion Street, Lafayette, Louisiana 70501

        Northside Branch
        2601 Moss Street, Lafayette, Louisiana 70501

        Southside Branch
        3701 Johnston Street, Lafayette, Louisiana 70503

        Broadmoor Branch
        5301 Johnston Street, Lafayette, Louisiana 70503

        New Iberia Branch
        230 West Main Street, New Iberia, Louisiana 70560

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

Al W. Beacham, M.D.                                                      Don O'Rourke, Sr.
President, Beacham Urology Group, Inc.                                   President, Don J. O'Rourke & Associates, Ltd.

John H. DeJean                                                           Thomas S. Ortego
Retired                                                                  Self-employed Accountant

Lawrence Gankendorff                                                     Jerry Reaux
Chairman of the Board,                                                   President and Chief Executive Officer,
Acadiana Bancshares, Inc., and                                           Acadiana Bancshares, Inc., and
LBA Savings Bank                                                         LBA Savings Bank

James J. Montelaro                                                       Kaliste J. Saloom, Jr.
Executive Vice President - Mortgage Banking,                             Of Counsel, Saloom & Saloom, Attorneys-at-Law
LBA Savings Bank

William H. Mouton
Retired Attorney, William H. Mouton Law Offices

EXECUTIVE OFFICERS
------------------------------------------------------------------------------------------------------------------------------------

Lawrence Gankendorff                                                     Wayne Bares
Chairman of the Board of the Company and the Bank                        Senior Vice President - Commercial Lending, of the Bank

Jerry Reaux                                                              Mary Anne S. Bertrand
President and Chief Executive Officer of the Company                     Senior Vice President - Retail Lending,
 and the Bank                                                            Of the Bank

James J. Montelaro                                                       Emile E. Soulier, III
Executive Vice President - Mortgage Banking,                             Vice President and Chief Financial Officer,
Of the Bank                                                              Of the Company and the Bank

Gregory King                                                             Thomas Debaillon
Executive Vice President - Chief Operating Officer,                      Vice President - Operations, of the Bank
Of the Company and the Bank
</TABLE>

                                       43
<PAGE>

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of Acadiana Bancshares, Inc., will be held at
2:00 p.m. (Central Time) Wednesday,  April 26, 2000, at `a la carte, 301 Heymann
Boulevard, Lafayette, Louisiana 70503.

STOCK LISTING

The common stock of Acadiana  Bancshares,  Inc., is traded on the American Stock
Exchange under the symbol "ANA." Price and other column  information  are listed
under the "ANA" symbol in The Wall Street Journal and under similar designations
in other  daily news  sources.  Below is a table  showing the high and low sales
prices of the common stock and cash  dividends  declared  during each quarter of
1999 and 1998:

<TABLE>
<CAPTION>
              1999
              Quarter Ended                 High              Low       Dividends Declared
              --------------------------------------------------------------------------------
<S>           <C>                          <C>              <C>               <C>
              March 31, 1999               $18 3/8          $17 3/8           $0.13
              June 30, 1999                $18 7/8          $17 5/8           $0.13
              September 30, 1999           $18 7/8          $18 1/4           $0.13
              December 31, 1999            $20 7/8          $18 5/8           $0.13

              1998
              Quarter Ended                 High              Low       Dividends Declared
              --------------------------------------------------------------------------------
              March 31, 1998               $23 5/8          $21 5/8           $0.11
              June 30, 1998                 $25 5/8           $22             $0.11
              September 30, 1998           $22 1/2          $15 1/2           $0.11
              December 31, 1998            $18 3/8            $15             $0.11
</TABLE>

REGISTRAR AND TRANSFER AGENT

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

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

INVESTOR INFORMATION

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

              Jerry Reaux, President & CEO, or
              Emile E. Soulier, III, Vice President & CFO
              Phone: (337) 232-4631
              Fax: (337) 269-6233
INDEPENDENT AUDITORS
              Castaing, Hussey, Lolan, & Dauterive, LLP
              525 Weeks Street
              New Iberia, Louisiana 70560
SPECIAL COUNSEL
              Elias, Matz, Tiernan & Herrick L.L.P.
              734 15th Street N.W.
              Washington, D.C. 20005
GENERAL COUNSEL
              Mark Andrus
              Davidson, Meaux, Sonnier, McElligott & Swift
              810 South Buchanan Street
              Lafayette, Louisiana 70501

                                       44