<PAGE>   1



                                    Acadiana Bancshares, Inc. 1998 Annual Report


                                                     Letter to shareholders    3
                                Selected consolidated financial information    6
                                       Management's discussion and analysis    7
                                               Independent auditor's report   22
                             Consolidated statements of financial condition   23
                                        Consolidated statement of operation   24
                            Consolidated statements of stockholders' equity   25
                                      Consolidated statements of cash flows   26
                                 Notes to consolidated financial statements   27
                                                          About the company   50
<PAGE>   2
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,
----------------------------------------------------------------------------------------------------------------------------
                                                            1998           1997         1996         1995           1994
============================================================================================================================
<S>                                                       <C>            <C>          <C>          <C>            <C>
SELECTED FINANCIAL CONDITION DATA:
      Total Assets                                        $ 282,089      $ 277,066    $ 264,374    $ 225,574      $ 223,166
      Cash and cash equivalents                               7,578         14,157       19,784       16,481         10,384
      Loans receivable, net                                 225,752        212,840      182,724      157,691        151,161
      Trading securities                                        575            826            -            -              -
      Investment securities                                  14,995         11,044       20,539        4,030         19,386
      Mortgage-backed securities                             23,769         30,652       34,653       39,514         33,349
      Deposit accounts                                      200,647        193,422      193,450      206,343        204,088
      Borrowings                                             47,228         36,628       22,250          250              -
      Equity                                                 32,174         44,562       47,091       17,697         17,845

<CAPTION>
                                                                                  Year Ended December 31,
----------------------------------------------------------------------------------------------------------------------------
                                                             1998           1997         1996         1995           1994
============================================================================================================================
<S>                                                      <C>            <C>          <C>          <C>            <C>
SELECTED OPERATING DATA:

      Interest Income                                     $  21,415      $  20,328    $  18,703    $  16,975      $  16,922
      Interest Expense                                       11,935         10,860       10,762       10,134          9,378
----------------------------------------------------------------------------------------------------------------------------
      Net interest income                                     9,480          9,468        7,941        6,841          7,544
      Provision for loan losses                                  90            180          355        1,274             63
----------------------------------------------------------------------------------------------------------------------------
      Net interest income after 
        provision for loan losses                             9,390          9,288        7,586        5,567          7,481
      Non-interest income                                     1,197          1,169          954          802            943
      Non-interest expense (1)                               (6,655)        (5,878)      (7,301)      (7,812)        (5,274)
----------------------------------------------------------------------------------------------------------------------------
      Income (loss) before taxes                              3,932          4,579        1,239       (1,443)         3,150
      Income tax expense (benefit)                            1,427          1,632          439         (477)         1,057
----------------------------------------------------------------------------------------------------------------------------
      Net Income (loss)                                    $  2,505       $  2,947     $    800     $   (966)      $  2,093
      Net income per share - basic(2)                      $   1.20       $   1.22     $   0.07          N/A            N/A
      Net income per share - diluted(2)                    $   1.17       $   1.20     $   0.07          N/A            N/A
      Dividends declared per share                         $   0.44       $   0.38     $   0.18          N/A            N/A
      Dividend payout ratio                                  37.05%         31.76%      267.46%          N/A            N/A

<CAPTION>
                                                                          At or For the Year Ended December 31,
----------------------------------------------------------------------------------------------------------------------------
                                                              1998           1997         1996         1995          1994
============================================================================================================================
<S>                                                         <C>            <C>          <C>          <C>           <C>
OTHER DATA:
      Profitability:
           Return (loss) on average assets                     0.87%          1.10%        0.32%       (0.43)%         0.91%
           Return (loss) on average equity                     6.05           6.38         2.55        (5.23)         12.19
           Interest rate spread for period (3)                 2.54           2.64         2.68         2.80           3.15
           Net interest margin (4)                             3.36           3.61         3.34         3.16           3.41
           Efficiency ratio (5)                               62.33          55.26        82.08        88.45          62.14
           Other expenses to average assets                    2.31           2.19         2.95         3.49           2.30
      Capital Ratios:
           Average equity to average assets                   14.34          17.23        12.71         8.25           7.48
           Total capital to risk-weighted assets              20.86          31.39        36.69        16.20          16.29
      Asset Quality:
           Non-performing assets to total assets (6)           0.07           0.22         0.36         0.70           1.35
           Allowance for loan losses to total loans            1.16           1.25         1.35         1.41           0.69
           Allowance for loan losses to non-performing
               loans and troubled debt restructuring         400.88         297.09       183.96       143.94          71.51
</TABLE>


(1)    With respect to 1997, includes $436,000 recovery of net costs of real
       estate owned; 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 real estate owned and $1.1 million of
       expenses of a previously contemplated merger/conversion.

(2)    1996 Net Income 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 real estate owned.


6


<PAGE>   3

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

The following discussion and analysis is intended to assist readers in
understanding the financial condition and results of operations of Acadiana
Bancshares, Inc. (the "Company") and its subsidiary for the years ended
December 31, 1996 through 1998. 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 $5.0 million, or 1.8%, from
  $277.1 million at December 31, 1997, to $282.1 million at December 31, 1998.
  Outpacing the growth in assets, net loans receivable of the Company increased
  $12.9 million, or 6.1%, from $212.8 million at December 31, 1997, to $225.8
  million at December 31, 1998. The growth in loans was funded by a $10.6
  million net increase in advances from the Federal Home Loan Bank of Dallas
  (the "FHLB"), together with a $7.2 million net increase in deposits. The
  Company purchased $14.5 of its common stock, at market values, during the year
  ended December 31, 1998, increasing its common shares held in treasury from
  150,000 shares at December 31, 1997,to 910,758 shares at December 31, 1998.
  The treasury stock purchases were partially funded by a $6.8 million decrease
  in cash in interest bearing deposits, and a $6.9 million decrease in total
  mortgage-backed securities.

CASH AND CASH EQUIVALENTS - Cash and cash equivalents, which consist of
  interest-bearing and noninterest-bearing deposits and cash on hand, decreased
  by $6.6 million, or 46.5%, to $7.6 million at December 31, 1998, compared to
  $14.2 million at December 31, 1997. The decrease in cash and cash equivalents
  was primarily due to funding the repurchases of the Company's common stock for
  treasury. At December 31, 1998, cash and cash equivalents amounted to 2.7% of
  total assets.

TRADING SECURITIES - At December 31, 1998, the Company held equity securities
  for trading of $575,000, or 0.2% of total assets at such date, compared to
  $826,000 at December 31, 1997. The Company has no intention to significantly
  increase its trading securities portfolio.

INVESTMENT SECURITIES - Investment securities increased by $4.0 million, or
  35.8%, to $15.0 million at December 31, 1998, compared to $11.0 at December
  31, 1997. At December 31, 1998, all of the Company's investment securities
  were classified as available for sale and had a pre-tax effected net
  unrealized gain of $49,000 at such date. In addition, at such date,
  substantially all of the Company's investment securities consisted of U.S.
  Government and Federal agency obligations and commercial paper. At December
  31, 1998, investment securities amounted to 5.3% of total assets. Note 3 to
  the Consolidated Financial Statements provides further information on the
  Company's investment securities.

MORTGAGE-BACKED SECURITIES - Mortgage-backed securities, available for sale and
  held to maturity, decreased by an aggregate of $6.9 million, or 22.5%, to
  $23.8 million at December 31, 1998, compared to $30.7 million at December 31
  1997. The decrease in mortgage-backed securities of $6.9 million was the
  result of $6.7 million of principal repayments and a $219,000 decrease in the
  carrying value of the mortgage-backed securities available for sale portfolio.
  At December 31, 1998, the Company's fixed-rate mortgage-backed securities, all
  of which were classified as available for sale, amounted to $11.4 million and
  comprised 4.0% of total assets. At that same date, the Company's
  adjustable-rate mortgage-backed securities, all of which were classified as
  held to maturity, amounted to $12.4 million and comprised 4.4% of total
  assets. At December 31, 1998, substantially all of the Company's
  mortgage-backed securities consisted of securities issued or guaranteed by


                                                                               7
<PAGE>   4

  Federal agencies and government sponsored enterprises. Note 4 to the
  Consolidated Financial Statements provides further information on the
  Company's mortgage-backed securities.

LOANS RECEIVABLE, NET - Loans receivable, net, increased $12.9 million, or 6.1%,
  to $225.8 million at December 31, 1998, compared to $212.8 million at December
  31, 1997. Total real estate loans increased $1.2 million, or 0.6%, during
  1998, primarily as the result of a $1.2 million, or 0.7%, increase in total
  single-family residential mortgage loans, which was partially offset by a
  $65,000, or 11.9%, decrease in total multi-family loans. Total single family
  residential loans comprised 63.9% of total assets at December 31, 1998. Total
  consumer loans increased $5.0 million, or 30.8%, during 1998. Commercial
  business loans increased $7.7 million, or 50.3%, during 1998. Total consumer
  and commercial business loans comprised 7.6% and 8.2% of total assets at
  December 31, 1998, respectively. Loans receivable, net amounted to 80.0% of
  total assets at December 31, 1998, compared to 76.8% at December 31, 1997.
  Note 5 to the Consolidated Financial Statements provides further information
  on 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 1998.

DEPOSITS - The Company's deposits increased by $7.2 million, or 3.7%, to $200.6
  million at December 31, 1998, compared to $193.4 million at December 31, 1997.
  Certificates of deposit funded 50.0% of total assets at December 31, 1998,
  compared to 51.8% at December 31, 1997. Total deposits funded 71.1% of total
  assets at December 31, 1998, compared to 69.8% at December 31, 1997. Interest
  credited during the 1998 year increased deposits by $6.4 million, supplemented
  by an increase in new deposits of $823,000. Additional information regarding
  deposits is provided in Note 9 to the Consolidated Financial Statements.

BORROWINGS - The Company's borrowings are composed of advances from the FHLB,
  which increased $10.6 million, or 28.9%, to $47.2 million at December 31,
  1998, compared to $36.6 million at December 31, 1997. FHLB borrowings provide
  the Company with an alternative source of funds compared to raising deposits
  in the local market that from time to time may be a cheaper source of funds
  because of interest rates in general. Additionally, the Company, like many
  other financial institutions, has experienced increasing difficulty in
  attracting net new deposits in amounts necessary to fully fund new loan
  demand. The FHLB has provided an important funding source that, when used
  together with deposits, is expected to be an adequate source of funds to meet
  anticipated loan demand. Borrowings at December 31, 1998, funded 16.7% of
  total assets, compared to 13.2% at December 31, 1997. Under a blanket
  agreement pledging Federal Home Loan Bank Stock and single-family mortgage
  loans as collateral, the Company has the ability to borrow total advances up
  to $122.4 million from the FHLB. Of total outstanding borrowings at December
  31, 1998, $9.4 million had variable rate interest rate features indexed to the
  London Inter-Bank Offered Rate ("LIBOR"). All borrowings at December 31, 1998,
  were non-amortizing advances of which $16.9 million were scheduled to mature
  in 1999. Additional information regarding borrowings is provided in Note 10 to
  the Consolidated Financial Statements.

STOCKHOLDERS' EQUITY - Stockholders' equity provides a source of permanent
  funding, allows for future growth, and provides the Company with a cushion to
  withstand unforeseen, adverse developments. At December 31, 1998,
  stockholders' equity totaled $32.2 million, a decrease of $12.4 million, or
  27.8%, compared to December 31, 1997. The decrease was primarily attributable
  to $14.5 million of purchases of common stock into treasury, together with
  $928,000 of dividends declared on the Company's common stock, all of which was
  partially offset by net income for the year ended December 31, 1998, of $2.5
  million, common stock released by the Company's employee stock own-


8
<PAGE>   5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

  ership plan ("ESOP") trust of $455,000, and common stock earned by 
  participants in the Company's recognition and retention plan ("RRP") of
  $226,000. As a result of the above changes, the Company reduced its equity to
  assets ratio from 16.1% at December 31, 1997, to 11.4% at December 31, 1998.
  Additional information regarding stockholders' equity is included in the
  Consolidated Statements of Stockholders' Equity and Note 13 to the
  Consolidated Financial Statements.

  Federal regulations impose minimum regulatory capital requirements on all
  institutions with deposits insured by the Federal Deposit Insurance
  Corporation (the "FDIC"). At December 31, 1998, the Bank significantly
  exceeded all regulatory capital ratio requirements with a tier 1 leverage
  capital ratio of 8.9%, a tier 1 risk-based capital ratio of 15.6%, and a total
  risk-based capital ratio of 16.8%. The Company is required to comply with
  similar regulatory capital requirements. At December 31, 1998, it also
  significantly exceeded all applicable regulatory capital requirements with a
  tier 1 leverage capital ratio of 11.3%, a tier 1 risk-based capital ratio of
  19.6%, and a total risk-based capital ratio of 20.9%. These compared to
  regulatory requirements of 4.0%, 4.0% and 8.0%, respectively for both the Bank
  and the Company.

RESULTS OF OPERATIONS

GENERAL - The Company operates in one segment of business - the financial
  services industry. Within this segment, the Company is primarily engaged in
  residential mortgage lending, and commercial and consumer banking. The
  Company's decision-making process for all aspects of its operations is
  centralized in the President and Chief Executive Officer. The Company reported
  net income of $2.5 million, $2.9 million and $800,000 for the years ended
  December 31, 1998, 1997 and 1996, respectively. The $442,000 decrease in net
  income in 1998 was due primarily to a increase in non-interest expense of
  $777,000, which was partially offset by an increase in net interest income of
  $12,000, an increase in non-interest income of $28,000, a decrease in
  provision for loan losses of $90,000, and a decrease in income tax expense of
  $205,000.

  The $2.1 million increase in net income in 1997 compared to 1996 was due
  primarily to an increase in net interest income of $1.5 million, a $215,000
  increase in non-interest income, a $175,000 decrease in provision for loan
  losses, and a $1.4 million decrease in non-interest expense, all of which was
  partially offset by a $1.2 million increase in income tax expense.

NET INTEREST INCOME - Net interest income is determined by interest rate spread
  (i.e., the difference between the yields earned on interest-earning assets and
  the rates paid on interest-bearing liabilities) and the relative amounts of
  interest-earning assets, and interest-bearing liabilities. The Company's
  average interest rate spread was 2.54%, 2.64%, and 2.68%, during the years
  ended December 31, 1998, 1997, and 1996, respectively.

  Net interest income increased slightly by $12,000, or 0.1%, in 1998 compared
  to 1997. The slight increase was the result of a $1.1 million increase in
  interest income, which was substantially offset by a similar increase in
  interest expense during 1998. The average balance of net interest-earning
  assets (the average balance of interest-earning assets less the average
  balance of interest-bearing liabilities) decreased $4.0 million, or 8.1%, to
  $45.9 million for the year ended December 31, 1998, compared to $50.0 million
  for the year ended December 31, 1997.

INTEREST INCOME - Interest income totaled $21.4 million for the year ended
  December 31, 1998, which was an increase of $1.1 million, or 5.3% over the
  $20.3 million for the year ended December 31, 1997. This improvement was
  mainly due to an increase in the Company's average interest-earning assets of
  $19.6 million, or 7.5%, to $281.8 million at December 31, 1998, as compared to
  $262.1 million at December 31, 1997, which was partially offset by a 16 basis
  point (with 100 basis points being equal 


                                                                               9
<PAGE>   6
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY

  to 1%) decrease in the yield earned. Interest earned on loans increased $1.7
  million, or 10.5% from $15.9 million at December 31, 1997, to $17.6 million at
  December 31, 1998. The increase in interest earned on loans was due to a $23.4
  million increase in the average balance of loans, which was partially offset
  by an 11 basis point decrease in the yield earned. Interest earned on
  mortgage-backed securities decreased $419,000, or 18.0%, to $1.9 million at
  December 31, 1998, from $2.3 million at December 31, 1997. The decrease was
  due to a $5.2 million decrease in the average balance of mortgage-backed
  securities together with a 17 basis point decrease in yield thereon. Interest
  earned on investment securities decreased $697,000, or 46.2%, to $813,000 at
  December 31, 1998, from $1.5 million at December 31, 1997. The decrease was
  due to a $8.6 million decrease in the average balance of investment securities
  together with a 79 basis point decrease in yield thereon. Interest income on
  other earning assets increased $539,000, or 93.9%, to $1.1 million at December
  31, 1998, from $574,000 at December 31, 1997. The increase was due to a $10.1
  million increase in the average balance of other earning assets and a 27 basis
  point increase in yield thereon.

  Interest income totaled $20.3 million for the year ended December 31, 1997,
  which was an increase of $1.6 million, or 8.7% over the $18.7 million for the
  year ended December 31, 1996. This improvement was mainly due to an increase
  in the Company's average interest-earning assets of $24.0 million, or 10.1%,
  to $262.1 million at December 31, 1997, as compared to $238.1 million at
  December 31, 1996. Interest earned on loans increased $1.7 million, or 11.9%
  from $14.2 million at December 31, 1996 to $15.9 million at December 31, 1997.
  The increase in interest earned on loans was due to a $24.3 million increase
  in the average balance of loans, which was partially offset by a 17 basis
  point decrease in the yield earned. Interest earned on mortgage-backed
  securities decreased $280,000, or 10.7%, to $2.3 million at December 31, 1997,
  from $2.6 million at December 31, 1996. The decrease was due to a $4.2 million
  decrease in the average balance of mortgage-backed securities, which was
  partially offset by a four basis point increase in yield thereon. Interest
  earned on investment securities increased $325,000, or 27.4%, to $1.5 million
  at December 31, 1997, from $1.2 million at December 31, 1996. The increase was
  due to a $4.9 million increase in the average balance of investment
  securities, which was partially offset by an eight basis point decrease in
  yield thereon. Interest income on other earning assets decreased $117,000, or
  16.9%, to $574,000 at December 31, 1997, from $691,000 at December 31, 1996.
  The decrease was due to a $1.1 million decrease in the average balance of
  other earning assets, together with a 51 basis point decrease in yield
  thereon.

INTEREST EXPENSE - Interest expense increased $1.1 million, or 9.9%, in 1998
  compared to 1997. The reason for such increase was a $23.7 million, or 11.2%,
  increase in average interest-bearing liabilities, which was partially offset
  by a six basis point decrease in interest rates on interest-bearing
  liabilities. Interest expense on deposits increased $226,000, or 2.5%, to $9.4
  million for 1998 compared to $9.2 million for 1997. The reason for such
  increase was a $7.1 million, or 3.9%, increase in average balances of
  interest-bearing deposits, which was partially offset by a seven basis point
  decrease in interest rates on interest-bearing deposits. Traditionally,
  deposits have included a relatively high amount of certificates of deposit,
  including "jumbo" certificates with balances in excess of $100,000. Such
  certificates generally are higher costing and more interest rate sensitive
  than "core" deposits. During 1998, the average balance of certificates of
  deposit amounted to 75.5% of the average balance of all interest-bearing
  deposits, compared to 79.4% during 1997. The average rate paid on certificates
  of deposit was 5.70% during 1998, representing a nine basis point decrease
  over the average rate in 1997, compared to average rates of 3.17% and 2.10%,
  respectively, on interest-bearing demand deposits and savings deposits in
  1998. Interest expense on advances from the FHLB increased $849,000, or 50.5%,
  to $2.5 million for the year ended December 31, 1998, compared to $1.7 million
  for 1997. The reason for such increase was a $16.6 million increase in average
  balances on advances from the FHLB, which was partially offset by a 20 basis
  point decrease in the average interest rate thereon.


10
<PAGE>   7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                                                                

Interest expense increased $98,000, or 0.9%, in 1997 compared to 1996. The
reason for such increase was a $4.2 million, or 2.0%, increase in average
interest-bearing liabilities, which was partially offset by a five basis point
decrease in interest rates on interest-bearing liabilities. Interest expense on
deposits decreased $1.0 million, or 9.9%, to $9.2 million for 1997 compared to
$10.2 million for 1996. The reason for such decrease was a $15.2 million, or
7.7%, decrease in average balances of interest-bearing deposits combined with a
12 basis point decrease in interest rates thereon. During 1997, the average
balance of certificates of deposit amounted to 79.4% of the average balance of
all interest-bearing deposits, compared to 78.0% during 1996. The average rate
paid on certificates of deposit was 5.79% during 1997, representing an 18 basis
point decrease over the average rate in 1996, compared to average rates of 1.95%
and 2.17%, respectively, on interest-bearing demand deposits and savings
deposits in 1997. Interest expense on advances from the FHLB increased $1.1
million, or 190.8%, to $1.7 million for the year ended December 31, 1997,
compared to $578,000 for 1996. The reason for such increase was a $19.3 million
increase in average balances on advances from the FHLB combined with an eight
basis point increase in the average interest rate thereon.


                                                                              11
<PAGE>   8
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY

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 are actually
received.

<TABLE>
<CAPTION>
(Dollars in thousands)                                                    Year Ended December 31,
----------------------------------------------------------------------------------------------------------------------
                                                                    1998                              1997
                                                     -------------------------------    ------------------------------
                                                                            Average                            Average
                                                      Average                Yield/      Average                Yield/
                                                      Balance    Interest     Cost       Balance    Interest     Cost
======================================================================================================================
<S>                                                  <C>         <C>           <C>      <C>         <C>          <C>
Interest-earning assets:
    Loans receivable:
        Real estate mortgage loans                   $ 182,597   $ 14,160      7.75%    $ 168,437   $ 13,365     7.93%
        Commercial business loans                       17,952      1,687      9.40        11,027      1,056     9.58
        Consumer and other loans                        18,325      1,732      9.45        15,974      1,494     9.35
----------------------------------------------------------------------------------------------------------------------
             Total loans                               218,874     17,579      8.03       195,438     15,915     8.14
    Mortgage-backed securities                          27,479      1,910      6.95        32,711      2,329     7.12
    Investment securities (1)                           13,342        813      6.09        21,958      1,510     6.88
    Other earning assets                                22,056      1,113      5.05        12,002        574     4.78
----------------------------------------------------------------------------------------------------------------------
        Total interest-earning assets                  281,751     21,415      7.60       262,109     20,328     7.76
Noninterest-earning assets                               6,682                              5,975
----------------------------------------------------------------------------------------------------------------------
        Total Assets                                 $ 288,433                          $ 268,084

Interest-bearing liabilities:
    Deposits:
        Demand deposits                              $  24,902        790      3.17     $  14,033        273     1.95
        Savings deposits                                21,529        453      2.10        23,539        510     2.17
        Certificates of deposit                        143,122      8,162      5.70       144,921      8,396     5.79
----------------------------------------------------------------------------------------------------------------------
             Total deposits                            189,553      9,405      4.96       182,493      9,179     5.03
    Advances from FHLB                                  46,277      2,530      5.47        29,648      1,681     5.67
----------------------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities             235,830     11,935      5.06       212,141     10,860     5.12
Noninterest-bearing demand deposits                      8,507                              7,182
Other noninterest-bearing liabilities                    2,721                              2,571
----------------------------------------------------------------------------------------------------------------------
        Total liabilities                              247,058                            221,894
Stockholders' equity                                    41,375                             46,190
======================================================================================================================
        Total liabilities and stockholders' equity   $ 288,433                          $ 268,084
Net interest-earning assets                          $  45,921                          $  49,968
Net interest income/interest rate spread                         $  9,480      2.54                 $  9,468     2.64
Net interest margin                                                            3.36                              3.61
Ratio of average interest-earning assets
    to average interest-bearing liabilities                       119.47%                            123.55%
</TABLE>

<TABLE>
<CAPTION>
(Dollars in thousands)
---------------------------------------------------------------------------------------
                                                                      1996
                                                        -------------------------------
                                                                                Average
                                                          Average                Yield/
                                                          Balance    Interest     Cost
=======================================================================================
<S>                                                      <C>         <C>          <C>
Interest-earning assets:
    Loans receivable:
        Real estate mortgage loans                       $ 150,541   $ 12,438     8.26%
        Commercial business loans                            3,818        349     9.14
        Consumer and other loans                            16,780      1,431     8.53
---------------------------------------------------------------------------------------
             Total loans                                   171,139     14,218     8.31
    Mortgage-backed securities                              36,869      2,609     7.08
    Investment securities (1)                               17,032      1,185     6.96
    Other earning assets                                    13,067        691     5.29
---------------------------------------------------------------------------------------
        Total interest-earning assets                      238,107     18,703     7.85
Noninterest-earning assets                                   9,238
---------------------------------------------------------------------------------------
        Total Assets                                     $ 247,345

Interest-bearing liabilities:
    Deposits:
        Demand deposits                                  $  15,953        291     1.82
        Savings deposits                                    27,506        692     2.52
        Certificates of deposit                            154,187      9,201     5.97
---------------------------------------------------------------------------------------
             Total deposits                                197,646     10,184     5.15
    Advances from FHLB                                      10,338        578     5.59
---------------------------------------------------------------------------------------
        Total interest-bearing liabilities                 207,984     10,762     5.17
Noninterest-bearing demand deposits                          3,342
Other noninterest-bearing liabilities                        4,592
---------------------------------------------------------------------------------------
        Total liabilities                                  215,918
Stockholders' equity                                        31,427
=======================================================================================
        Total liabilities and stockholders' equity       $ 247,345
Net interest-earning assets                              $  30,123
Net interest income/interest rate spread                             $  7,941     2.68
Net interest margin                                                               3.34
Ratio of average interest-earning assets
    to average interest-bearing liabilities                           114.48%
</TABLE>

(1) Includes FHLB stock.



12
<PAGE>   9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                                                                

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,
                                            ====================================================================================
                                                     1998 compared to 1997                       1997 compared to 1996
                                            ========================================   =========================================
                                            Increase (decrease) due to                 Increase (decrease) due to
                                            ==========================                 ==========================
                                                                          Total                                       Total
                                                                 Rate/    Increase                           Rate/    Increase
                                            Volume     Rate     Volume   (Decrease)    Volume      Rate     Volume   (Decrease)
===============================================================================================================================
<S>                                        <C>        <C>       <C>      <C>          <C>        <C>       <C>       <C>
Interest-earning assets:
    Loans receivable                       $ 1,908    $ (218)   $ (26)     $ 1,664    $ 2,019    $ (282)   $ (40)      $ 1,697
    Mortgage-backed securities                (373)      (55)       9         (419)      (294)       16       (2)         (280)
    Investment securities                     (592)     (172)      67         (697)       343       (14)      (4)          325
    Other earning assets                       481        32       26          539        (56)      (66)       5          (117)
-------------------------------------------------------------------------------------------------------------------------------
         Total net change in income
            on interest-earning assets       1,424      (413)      76        1,087      2,012      (346)     (41)        1,625
-------------------------------------------------------------------------------------------------------------------------------

Interest-bearing liabilities:
    Interest-bearing deposits
         Demand and savings deposits           185       223       52          460       (133)      (77)      10          (200)
         Certificates of deposit              (104)     (131)       1         (234)      (553)     (268)      16          (805)
-------------------------------------------------------------------------------------------------------------------------------
              Total deposits                    81        92       53          226       (686)     (345)      26        (1,005)
    Advance from FHLB                          943       (60)     (34)         849      1,080         8       15         1,103
-------------------------------------------------------------------------------------------------------------------------------
         Total net change in expense on
           interest-bearing liabilities      1,024        32       19        1,075        394      (337)      41            98
    Net change in net interest income      $   400    $ (445)   $  57      $    12    $ 1,618    $   (9)   $ (82)      $ 1,527

</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 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 a provision for loan losses of $90,000 in 1998, compared to
  $180,000 and $355,000 in 1997 and 1996, respectively.

  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. At December 31, 1996,
  the Company's allowance for loan losses amounted to $2.6 million, or 1.4% of
  total loans and 184.0% of non-performing loans and troubled debt
  restructurings.

NON-INTEREST INCOME - For 1998 and 1997, the Company reported non-interest
  income of $1.2 million, with a slight increase of $28,000 for 1998. The
  primary reasons for the $28,000, or 2.4%, increase 


                                                                              13
<PAGE>   10
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY



  were an $83,000 increase in deposit fees and service charges, and a $234,000
  increase in net gain on sale of loans, both of which were substantially offset
  by the difference in trading gains and losses of $248,000, a $34,000 loss from
  investment in a limited liability company, and a decrease of $7,000, or 11.3%,
  from servicing fees on loans sold.

  For 1997, the Company reported non-interest income of $1.2 million, compared
  to $954,000 for 1996. The primary reasons for the $215,000, or 22.5%, increase
  were an increase of $180,000 in deposit fees and service charges and a
  $137,000 net gain on trading securities, both of which were partially offset
  by a $102,000 decrease in other income.

NON-INTEREST EXPENSE - Non-interest expense includes salaries and employee
  benefits, occupancy, depreciation, net cost of real estate owned, Savings
  Association Insurance Fund ("SAIF") deposit insurance premiums, advertising,
  bank shares and franchise tax, and other expense items.

  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 real estate owned of $8,000 for 1998, 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 $79,000, or 22.5%, increase in bank shares
  and franchise tax, and a $52,000, or 3.0%, increase in other expenses.

  Non-interest expense amounted to $5.9 million for the year ended December 31,
  1997, a decrease of $1.4 million, or 19.5%, compared to $7.3 million for the
  year ended December 31, 1996. The primary reason for the $1.4 million decrease
  was the absence of a SAIF special assessment in 1997 compared to $1.3 million
  in 1996, together with net costs of real estate owned being a net recovery of
  $436,000 for 1997 compared to a net cost of $129,000 for 1996. Bank shares and
  franchise tax expense together amounted to $351,000 in 1997, the first year
  for which the Company was subject to these taxes on capital. There was no
  comparable expense in 1996.

  Salaries and employee benefits, the largest component of non-interest
  expenses, increased $194,000, or 6.2%, in 1998 compared to 1997. The primary
  reasons for such increase was an increase in salaries and employee benefits
  for employees staffing a new Bank branch office located in New Iberia,
  Louisiana, which was opened near the end of 1997, and an increase in employee
  benefit plan expenses relating to the ESOP and the RRP, as further explained
  in Note 14 of the Consolidated Financial Statements. Salaries and employee
  benefits increased $490,000, or 18.5%, in 1997 compared to 1996. The primary
  reason for such increase was a $451,000 increase in employee benefit plan
  expenses relating primarily to the ESOP and the RRP. The ESOP was in effect
  for only half of 1996. The ESOP and the RRP were in effect for all of 1997.

INCOME TAXES - For the years ended December 31, 1998, 1997, and 1996, the
  Company incurred income tax expense of $1.4 million, $1.6 million, and
  $439,000, respectively. The Company's effective tax rate amounted to 36.3%,
  35.6%, and 35.4% during 1998, 1997, and 1996, respectively. The difference
  between the effective rate and the statutory tax rate primarily related to
  variances in the items that are either non-taxable or non-deductible, 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 11 of the Consolidated Financial Statements.

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 portfolios of investment securities held for sale and
mortgage-backed securities held for sale. The Company's primary sources of funds
are deposits, borrowings, proceeds from sale of stock, and amortization,
prepayments


14
<PAGE>   11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS



and maturities from its loan portfolio and its held to maturity investment
securities and mortgage-backed securities portfolios, and other funds provided
from operations. While scheduled payments from the amortization of loans and
mortgage-backed securities and maturing investment securities are relatively
predictable sources of funds, deposit flows, loan prepayments, and
mortgage-backed securities prepayments are greatly influenced by general
interest rates, economic conditions and competition. The Company has the ability
to borrow up to approximately $122.4 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, 1998, the total approved commitments to extend credit amounted to
$32.5 million. Certificates of deposit scheduled to mature in one year or less
at that same date totaled $77.0 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 is 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, among other things, set interest rate risk targets and review the
Company's current composition of assets and liabilities in light of the
prevailing interest rate environment. The committee assesses its interest rate
risk strategy quarterly, which is then reviewed by the full Board of Directors.
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 impacting the Company's asset/liability
management related activities based upon estimated market risk sensitivity,
policy limits, and overall market interest rate levels and trends.


                                                                              15
<PAGE>   12
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY



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 impacting net interest income ("NII"), 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,
1998, 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 $3.1 million, or 1.1%, of the
Company's 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,
1998:

<TABLE>
<CAPTION>
                                      Estimated NII
  Rate Change                          Sensitivity
===================================================
<S>                                     <C>
  + 200 basis points                    + 0.14%
  - 200 basis points                    + 0.27%
</TABLE>

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 cashflows. 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 



16
<PAGE>   13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS



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.

As a part of the Company's asset/liability management strategies, the Company
has increased its emphasis on originating commercial business loans, which
generally have higher as well as variable or adjustable rates of interest, and
has increased its emphasis on originating consumer loans, which have higher
interest rates and relatively short terms to maturity. The aggregate average
balances of commercial business loans and consumer loans has increased as a
percentage of the total average loan balances from 12.0% in 1996 to 13.8% in
1997 and 16.6% in 1998. The Company also has increased the amount of
non-interest bearing demand deposits, which are considered "core deposits" and
which are expected to lessen the effects of changes in interest rates on the
Company's net interest margin. The average balance of noninterest-bearing
deposits increased from $3.3 million in 1996, to $7.2 million in 1997 and to
$8.5 million in 1998. Additionally, the Company maintains substantially all of
its fixed-rate investment securities, and its fixed-rate mortgage-backed
securities in its available for sale portfolios, which at December 31, 1998,
amounted to $15.0 million and $11.4 million, respectively, as further described
in Notes 3 and 4 to the Consolidated Financial Statements, and which are carried
at fair value and could be liquidated in response to rapid changes in interest
rates, if deemed appropriate. As more fully described in Note 5 to the
Consolidated Financial Statements, the Company's loan portfolio includes
approximately $89.5 million of long-term adjustable-rate mortgage loans, $100.5
million of long-term fixed-rate loans, $21.4 million of shorter term consumer
loans, and $23.1 million of commercial loans. The Company's mortgage-backed
securities held to maturity portfolio of $12.4 million is substantially
comprised of adjustable-rate securities. The Company's asset/liability strategy
with respect to these portfolios includes an attempt to balance the effects of
rising and falling interest rates on the projected interest income from these
assets.





                                                                              17
<PAGE>   14
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY



The following table summarizes the anticipated maturities or repricing of the
Company's interest-sensitive assets and interest-sensitive liabilities as of
December 31, 1998 based on the information and assumptions set forth in the
notes below.

<TABLE>
<CAPTION>
(Dollars in Thousands)
                                                                                           More Than
                                                               Three to      More Than    Three Years
                                                Within Three    Twelve      One Year to     to Five     Over Five
                                                   Months       Months      Three Years      Years        Years       Total
=============================================================================================================================
<S>                                               <C>           <C>           <C>           <C>          <C>         <C>
Interest-sensitive assets(1):
    Loans receivable(2)                           $ 42,868      $ 43,247      $ 72,556      $ 38,325     $28,566     $225,562
    Investment securities(3)                        18,102         1,500                                   5,622       25,224
    Mortgage-backed securities(4)                   12,740         3,666         4,250         1,288       1,825       23,769
-----------------------------------------------------------------------------------------------------------------------------
        Total                                       73,710        48,413        76,806        39,613      36,013      274,555
-----------------------------------------------------------------------------------------------------------------------------
Interest-sensitive liabilities:
Deposits:
    NOW accounts(5)                                      -             -             -             -       9,022        9,022
    Savings accounts(5)                                  -             -             -             -      19,706       19,706
    Money market deposit accounts(5)                19,364             -             -             -           -       19,364
    Certificates of deposit                         21,249        56,561        46,438        14,604       2,191      141,043
Advances from FHLB                                  21,878             -        17,000         8,100         250       47,228
-----------------------------------------------------------------------------------------------------------------------------
        Total                                       62,491        56,561        63,438        22,704      31,169      236,363
-----------------------------------------------------------------------------------------------------------------------------
Excess (deficiency) of interest-sensitive
    assets over interest-bearing liabilities      $ 11,219      $ (8,148)     $ 13,368      $ 16,909     $ 4,844     $ 38,192
Cumulative excess of
    interest-sensitive assets over 
    interest-sensitive liabilities                $ 11,219      $  3,071      $ 16,439      $ 33,348     $38,192
Cumulative excess of
    interest-sensitive assets over
    interest-sensitive liabilities as a
    percent of total assets                          3.98%         1.09%         5.83%        11.82%      13.54%
</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 1998.

(2)    Balances have been reduced for non-performing loans, which amounted to
       $190,000 at December 31, 1998.

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

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

(5)    Although the Company's NOW accounts and 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 NOW 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 $25.7 million or 9.10% of total assets.


18
<PAGE>   15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS



YEAR 2000

The Year 2000 date change is possibly the largest technological challenge ever
faced by the business and financial community. Many computer systems may not be
able to distinguish between the year 2000 and the year 1900, which is a critical
issue as the new millennium approaches. Most computers were originally
programmed to record years using two-digit fields, rather than four-digit
fields. Being Year 2000 ready means that software can appropriately distinguish
between the year 1900 and the year 2000, as well as correctly interpreting
certain other esoteric dates, which could otherwise lead to incorrect
calculations or other problems.

The Company completed its awareness and assessment phases of its Year 2000
planning process. The Company's essential information technology ("IT") systems
are provided by several large third-party vendors. Based on successful test
results, third-party vendors providing essential IT for the Company's financial
and operation systems have made representations to the Company or the Bank that
such products are Year 2000 ready. Such renovated products are installed and
running at the Company, without any material change in recurring or ongoing
operational costs relating to product support services or renovation of existing
products and services provided by third party vendors. The Company has completed
its assessment of issues related to the impact of the year 2000 on its critical
IT and non-critical IT systems. Based on its assessment, the Company believes
that there will be no consequences of its Year 2000 issues that will be material
to the Company's business, results of operations or financial condition. The
Company has estimated total costs of completion of its Year 2000 process to not
exceed $10,000.

The Company is now involved in its in-house testing and validation phase of its
Year 2000 plan, which tests of its essential information technology systems are
expected to validate successful test results by its third party vendors. As of
December 31, 1998, the Company had completed approximately 95% of its internal
testing. Such test results have substantially validated and continue to reaffirm
the Year 2000 compliance of the Company's mission critical systems.

The status of these activities is provided to the Company's Board of Directors,
and the Company's regulators monitor Year 2000 readiness.

The discussion above entitled "Year 2000" includes certain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 ("PSLRA"). This statement is included for the express purpose of
availing the Company of the protections of the safe harbor provisions of the
PSLRA. Management's ability to predict results or effects of Year 2000 issues is
inherently uncertain, and is subject to factors that may cause actual results to
differ materially from those projected. Factors that could affect the actual
results include the possibility that remediation efforts and contingency plans
will not operate as intended, the Company's failure to timely or completely
identify all software and hardware applications requiring remediation,
unexpected costs, and the uncertainty associated with the impact of Year 2000
issues on the banking industry and on the Company's customers, vendors, and
others with whom it conducts business. Readers are cautioned not to place undue
reliance on these forward-looking statements.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued SFAS 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
retained income. The accumulated balance of other comprehensive income will be
disclosed separately from retained income in the shareholders' equity section 



                                                                              19
<PAGE>   16
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY



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 131, Disclosures About Segments of an
Enterprise and Related Information. This statement establishes standards for the
way public business enterprises report information about operating segments and
establishes standards for related disclosures about products and services,
geographic areas and major customers. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision-maker in deciding how to
allocate resources and in assessing performance. Information required to be
disclosed includes segment profit or loss, certain specific revenue and expense
items, segment assets and certain other information. This statement is effective
for the Company for financial statements issued for the year beginning January
1, 1998. Adoption of this statement did not have a material impact on the
financial condition or results of operation because it addresses reporting and
disclosure issues.

In June 1998, the FASB issued SFAS 133, Accounting for Derivative Instruments
and Hedging Activities. This 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. This statement is effective for
fiscal years beginning after June 15, 1999. The Company currently has no
derivatives and does not have any hedging activities. Adoption of this statement
is not expected to have a material impact on financial condition or results of
operation.


20
<PAGE>   17
INDEPENDENT AUDITORS' REPORT

[CASTAING, HUSSEY, LOLAN & DAUTERIVE, LLP LETTERHEAD]


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

We have audited the accompanying consolidated statements of financial condition
of Acadiana Bancshares, Inc., and Subsidiary as of December 31, 1998 and 1997,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1998.
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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.


/s/ CASTAING, HUSSEY, LOLAN & DAUTERIVE, LLP


New Iberia, Louisiana
January 29, 1999



22
<PAGE>   18


ACADIANA BANCSHARES, INC., AND SUBSIDIARY
--------------------------------------------------------------------------------
Consolidated Statements OF Financial Condition

December 31, 1998 and 1997
(In Thousands, except share data)

<TABLE>
<CAPTION>
                                                                                        1998             1997
================================================================================================================
<S>                                                                                 <C>              <C>
ASSETS
Cash and Cash Equivalents:
   Cash and Amounts Due from Banks                                                      $     844       $     622
   Interest Bearing Deposits                                                                6,734          13,535
-----------------------------------------------------------------------------------------------------------------
      Total                                                                                 7,578          14,157
Trading Securities                                                                            575             826
Securities Available for Sale, at Fair Value                                               14,995          11,044
Mortgage-Backed Securities:
   Available for Sale, at Fair Value                                                       11,409          17,846
   Held to Maturity (Fair Value of $12,694 and $12,736, respectively)                      12,360          12,806
Loans Receivable, Net of Allowance for
   Loan Losses of $2,726 and $2,760, respectively                                         225,752         212,840
Investment in Limited Liability Company                                                       966              --
Federal Home Loan Bank Stock, at Cost                                                       2,920           1,887
Real Estate Owned, Net                                                                          7             204
Premises and Equipment, Net                                                                 2,777           2,806
Accrued Interest Receivable                                                                 1,367           1,416
Other Assets                                                                                1,383           1,234
-----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                            $ 282,089       $ 277,066

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Deposits                                                                                $ 200,647       $ 193,422
Advances from Federal Home Loan Bank                                                       47,228          36,628
Accrued Interest Payable on Deposits                                                          124              49
Advance Payments by Borrowers for Taxes and Insurance                                         394             431
Accrued and Other Liabilities                                                               1,522           1,974
-----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                         249,915         232,504
-----------------------------------------------------------------------------------------------------------------
Commitments and Contingencies

STOCKHOLDERS' EQUITY:

Preferred Stock of $.01 Par Value; 5,000,000 shares authorized,
   -0- shares issued or outstanding                                                            --              --
Common Stock of $.01 Par Value; 20,000,000 shares authorized,
   2,731,250 shares issued                                                                     27              27
Additional Paid-in Capital                                                                 32,192          32,005
Retained Earnings (Substantially Restricted)                                               20,932          19,355
Unearned Common Stock Held by ESOP                                                         (1,965)         (2,228)
Unearned Common Stock Held by RRP Trust                                                    (1,335)         (1,602)
Treasury Stock, at Cost; 910,758 and 150,000 Shares, respectively                         (17,935)         (3,445)
Accumulated Other Comprehensive Income                                                        258             450
-----------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                                 32,174          44,562
-----------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $ 282,089       $ 277,066
</TABLE>


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

                                                                              23
<PAGE>   19
ACADIANA BANCSHARES, INC., AND SUBSIDIARY
--------------------------------------------------------------------------------
Consolidated Statements of Operations

Years Ended December 31, 1998, 1997 and 1996
(In Thousands, except per share data)

<TABLE>
<CAPTION>
                                                             1998                  1997                 1996
=================================================================================================================
<S>                                                       <C>                  <C>                   <C>         
INTEREST INCOME:
     Loans                                                $     17,579         $      15,915         $     14,218
     Mortgage-Backed Securities                                  1,910                 2,329                2,609
     Investment Securities                                         813                 1,510                1,185
     Interest Bearing Deposits                                   1,113                   574                  691
-----------------------------------------------------------------------------------------------------------------
Total Interest Income                                           21,415                20,328               18,703
-----------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
     Deposits                                                    9,405                 9,179               10,184
     Advances from Federal Home Loan Bank                        2,530                 1,681                  578
-----------------------------------------------------------------------------------------------------------------
Total Interest Expense                                          11,935                10,860               10,762
-----------------------------------------------------------------------------------------------------------------
Net Interest Income                                              9,480                 9,468                7,941
Provision for Loan Losses                                           90                   180                  355
-----------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for
     Loan Losses                                                 9,390                 9,288                7,586
-----------------------------------------------------------------------------------------------------------------
Non-Interest Income:
     Loan Fees and Service Charges                                 138                   136                  157
     Servicing Fees on Loans Sold                                   55                    62                   60
     Deposit Fees and Service Charges                              832                   749                  569
     Trading Account (Losses) Gains, Net                          (111)                  137                   --
     Gain (Loss) on Sale of Loans, Net                             233                    (1)                 (20)
     Loss from Investment in Limited Liability
         Company                                                   (34)                   --                   --
     Other                                                          84                    86                  188
-----------------------------------------------------------------------------------------------------------------
Total Non-Interest Income                                        1,197                 1,169                  954
-----------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE:
     Salaries and Employee Benefits                              3,338                 3,144                2,654
     Occupancy                                                     280                   308                  285
     Depreciation                                                  393                   322                  320
     Net Costs of Real Estate Owned                                  8                  (436)                 129
     SAIF Deposit Insurance Premium                                118                   122                  354
     SAIF Special Assessment                                        --                    --                1,338
     Advertising                                                   297                   328                  307
     Bank Shares and Franchise Tax Expense                         430                   351                   --
     Other                                                       1,791                 1,739                1,914
-----------------------------------------------------------------------------------------------------------------
Total Non-Interest Expense                                       6,655                 5,878                7,301
-----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                       3,932                 4,579                1,239

Income Tax Expense                                               1,427                 1,632                  439
-----------------------------------------------------------------------------------------------------------------
Net Income                                                $      2,505         $       2,947         $        800

Net Income Per Common Share* - basic                      $       1.20         $        1.22         $        .07

Net Income Per Common Share* - diluted                    $       1.17         $        1.20         $        .07
</TABLE>

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

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



24
<PAGE>   20
ACADIANA BANCSHARES, INC., AND SUBSIDIARY
--------------------------------------------------------------------------------
Consolidated Statements of Stockholders' Equity

Years Ended December 31, 1998, 1997 and 1996
(In Thousands)

<TABLE>
<CAPTION>
                                                                           Retained          Unearned
                                                          Additional       Earnings -         Common
                                              Common       Paid-In       (Substantially     Stock Held
                                              Stock        Capital        Restricted)         By ESOP
=======================================================================================================
<S>                                           <C>            <C>             <C>            <C>
BALANCE, JANUARY 1, 1996                      $              $               $16,996        $
Comprehensive Income:
   Net Income                                                                    800
   Change in Unrealized Gain (Loss)
     on Securities Available for Sale,
     Net of Deferred Taxes
Total Comprehensive Income
Common Stock Issued in Conversion                  27         31,811                         (2,622)
Common Stock Released by ESOP Trust                               16                            132
Cash Dividends Declared                                                         (452)
-------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996                         27         31,827          17,344         (2,490)
Comprehensive Income:
   Net Income                                                                  2,947
   Change in Unrealized Gain (Loss)
     on Securities Available for Sale,
     Net of Deferred Taxes
Total Comprehensive Income
Common Stock Released by ESOP Trust                              178                            262
Common Stock Acquired by Recognition
   and Retention Plan Trust
Common Stock Earned by Participants of
   Recognition and Retention Plan Trust
Repurchase of Common Stock
Cash Dividends Declared                                                         (936)
-------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                         27         32,005          19,355         (2,228)
Comprehensive Income:
   Net Income                                                                  2,505
   Change in Unrealized Gain (Loss)
     on Securities Available for Sale,
     Net of Deferred Taxes
Total Comprehensive Income
Common Stock Released by ESOP Trust                              192                            263
Common Stock Earned by Participants of
   Recognition and Retention Plan Trust                           (5)
Repurchase of Common Stock
Cash Dividends Declared                                                         (928)
-------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                    $    27        $32,192         $20,932        $(1,965)
</TABLE>

<TABLE>
<CAPTION>
                                              Unearned
                                               Common                       Accumulated      Total
                                               Stock                           Other         Stock-
                                               Held By      Treasury        Comprehensive   holder's
                                              RRP Trust      Stock             Income        Equity
======================================================================================================
<S>                                           <C>           <C>              <C>            <C>
BALANCE, JANUARY 1, 1996                       $              $               $    701      $  17,697
Comprehensive Income:
   Net Income                                                                                     800
   Change in Unrealized Gain (Loss)
     on Securities Available for Sale,
     Net of Deferred Taxes                                                        (318)         (318)
                                                                                          ----------   
Total Comprehensive Income                                                                        482
Common Stock Issued in Conversion                                                              29,216
Common Stock Released by ESOP Trust                                                               148
Cash Dividends Declared                                                                          (452)
-------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996                                                         383         47,091
Comprehensive Income:
   Net Income                                                                                   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                                                               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
Repurchase of Common Stock                                      (3,445)                        (3,445)
Cash Dividends Declared                                                                          (936)
-------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                      (1,602)         (3,445)            450         44,562
Comprehensive Income:
   Net Income                                                                                   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                                                               455
Common Stock Earned by Participants of
   Recognition and Retention Plan Trust            267                                            262
Repurchase of Common Stock                                     (14,490)                       (14,490)
Cash Dividends Declared                                                                          (928)
-------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                     $(1,335)       $(17,935)       $    258      $  32,174
</TABLE>


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

                                                                              25


<PAGE>   21
ACADIANA BANCSHARES, INC., AND SUBSIDIARY
--------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
Years Ended December 31, 1998, 1997 and 1996
(In Thousands)

<TABLE>
<CAPTION>
                                                                               1998          1997           1996
==================================================================================================================
<S>                                                                     <C>             <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                               $     2,505      $  2,947      $    800
------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash Provided
  by Operating Activities:
     Depreciation and Amortization                                               410           328            320
     Provision for Deferred Income Taxes                                         (17)            2            (43)
     Provision for Losses on Loans                                                90           180            355
     Provision for Losses on Real Estate Owned and Other
       Property Acquired                                                          --            --            256
     Compensation Expense Recognized on RRP                                      232           227             --
     ESOP Contribution                                                           455           440            148
     Other Gains and Losses, Net                                                 (19)         (427)          (121)
     Net Change in Securities Classified as Trading                              251          (826)            --
     Loss from Investment in Limited Liability Company                            34            --             --
     (Gain) Loss on Sale of Loans Held for Sale                                 (233)            1             20
     Proceeds from Sale of Loans Held for Sale                                19,383           921          6,353
     Originations of Loans Held for Sale                                     (19,150)         (922)        (6,373)
     Accretion of Discounts, Net of Premium Amortization
       On Securities                                                             (42)          (63)           (46)
     Amortization of Deferred Revenues and Unearned Income
       on Loans                                                                  (13)          (60)          (161)
     FHLB Stock Dividend Received                                               (153)         (109)          (101)
     Changes in Assets and Liabilities:
         Decrease (Increase) in Accrued Interest Receivable                       49           135           (364)
         (Increase) Decrease in Other Assets                                     (21)          167          1,139
         (Decrease) Increase in Accounts Payable and Accrued
           Expenses                                                             (475)          846            133
------------------------------------------------------------------------------------------------------------------
Total Adjustments                                                                781           840          1,515
------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                $     3,286      $  3,787      $   2,315
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Calls and Maturities of Securities Available
  for Sale                                                               $    39,925      $ 22,498      $   3,000
Purchases of Securities Available for Sale                                   (43,917)      (12,998)       (19,500)
Principal Collections on Mortgage-Backed Securities Available
   for Sale                                                                    6,236         3,870          4,020
Principal Collections on Mortgage-Backed Securities Held to
  Maturity                                                                       440           290            397
Investment in Limited Liability Company                                       (1,000)           --             --
Purchase of FHLB Stock                                                          (880)           --             --
Net Advances on Loans                                                        (13,110)      (30,739)       (25,416)
Proceeds from Sale of Premises and Equipment                                      --            --             11
Purchase of Premises and Equipment                                              (364)       (1,301)          (416)
Proceeds from Sale of Real Estate Owned and Other Property
  Acquired                                                                       350           801            874
Capital Costs Incurred on Real Estate Owned and Other Property
  Acquired                                                                       (13)           --            (35)
------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                   $   (12,333)     $(17,579)     $ (37,065)
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Change in Demand, NOW and Savings Deposits                           $     9,707      $ (3,271)     $  (1,260)
Net Change in Time Deposits                                                   (2,482)        3,243        (11,633)
Net Change in Mortgage Escrow Funds                                              (37)          (10)           (44)
Proceeds from FHLB Advances                                                   42,600        14,378         22,000
Payments on FHLB Advances                                                    (32,000)           --             --
Proceeds from Issuance of Common Stock                                            --            --         30,153
Dividends Paid to Shareholders                                                (1,009)         (901)          (226)
Acquisition of Common Stock by RRP                                                --        (1,829)            --
Purchase of Treasury Stock                                                   (14,311)       (3,445)            --
Stock Conversion Costs Incurred                                                   --            --           (937)
------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                $     2,468      $  8,165      $  38,053
------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                     $    (6,579)     $ (5,627)     $   3,303

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                14,157        19,784         16,481
------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $     7,578      $ 14,157      $  19,784

SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
     Acquisition of Real Estate in Settlement of Loans                   $       121      $    503      $     189
     Unrealized Loss on Securities                                       $      (290)     $   (101)     $    (481)
SUPPLEMENTAL DISCLOSURES:
     Cash Paid For:
     Interest on Deposits and Borrowings                                 $    11,861      $ 10,779      $  10,747
     Income Taxes                                                        $     1,465      $  1,541      $     526
</TABLE>


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


26
<PAGE>   22

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

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

Acadiana Bancshares, Inc. (the "Company") is a Louisiana Corporation organized
in February 1996 for the purpose of becoming the bank holding company for LBA
Savings Bank (the "Bank"). The Board of Directors of the Bank adopted the Plan
of Conversion pursuant to which the Bank converted from a Louisiana chartered
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 business 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 real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowances
for losses on loans and foreclosed real estate, management obtains independent
appraisals for significant properties.

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

While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions. Because of these factors, it is
reasonably possible that the allowances for losses on loans and foreclosed real
estate may change materially in the near term.



Continues



                                                                              27
<PAGE>   23
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY


Note 1 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 net income. Unrealized gains and losses, net of applicable income
taxes, on securities available for sale are recognized as a net amount in other
comprehensive income. The cost of securities sold is recognized using the
specific identification method.

Mortgage-Backed Securities

Mortgage-Backed Securities, or MBSS, owned by the Company represent
participating interests in pools of underlying long-term first mortgage loans
issued by one of three agencies: GNMA, FNMA, and FHLMC. Collateralized Mortgage
Obligations, or CMOs, owned by the Company represent participating interests in
a multiclass security that is secured by one or more pools of mortgage
pass-through pools. Management classifies certain of both types of MBSs as
available for sale securities, which are carried at fair value. Management also
classifies certain of both types of MBSs as held to maturity, which are carried
at cost, adjusted for amortization of premiums and accretion of discounts using
methods approximating the interest method. The Company has both the intent and
ability to hold such securities to maturity. Unrealized gains and losses, net of
applicable income taxes, on MBSs available for sale are recognized as a net
amount in other comprehensive income. The cost of Mortgage-Backed Securities
sold is recognized using the specific identification method.

Federal Home Loan Bank Stock

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, 1998 and 1997, 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, 1998 and 1997, 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.

                                                                       Continues

28
<PAGE>   24
Notes To Consolidated Financial Statements


Note 1 continued


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.

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

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.

Premises and Equipment

Depreciation and amortization are provided over the estimated useful lives of
the respective assets, 15 to 30 years for buildings and 3 to 15 years for
furniture, fixtures and equipment. All premises and equipment are recorded at
cost and are depreciated on either the straight line method or declining balance
method.

Real Estate and Other Property Acquired in Settlement of Loans

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



Continues

                                                                             29



<PAGE>   25
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY


Note 1 continued

Loan Servicing

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

Advertising Costs

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

Income Taxes

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

Fair Values of Financial Instruments

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

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

       Cash and cash equivalents: The carrying amounts reported in the
       Statements of Financial Condition for cash and cash equivalents
       approximate those assets' fair values.

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

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


                                                                       Continues


30
<PAGE>   26
Notes To Consolidated Financial Statements


Note 1 continued


       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. The
       carrying amount of accrued interest payable approximates fair value.

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

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

Effects of New Accounting Pronouncements

In 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 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 establishes standards for the
way public business enterprises report information about operating segments and
establishes standards for related disclosures about products and services,
geographic areas and major customers. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision-maker in deciding how to
allocate resources and in assessing performance. Information required to be
disclosed includes segment profit or loss, certain specific revenue and expense
items, segment assets and certain other information. This statement is effective
for the Company for financial statements issued 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 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 is
effective for fiscal years beginning after June 15, 1999. The Company currently
has no derivatives and does not have any hedging activities. The adoption of
this statement is not expected to have a material effect on financial position
and results of operations.



Continues

                                                                              31
<PAGE>   27
                                       ACADIANA BANCSHARES, INC., AND SUBSIDIARY


Note 1 Continued

Reclassifications

Certain reclassifications have been made to the 1996 and 1997 Consolidated
Financial Statements in order to conform to the classifications adopted for
reporting in 1998.

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, 1998 and 1997 was approximately
$446,000 and $298,000, respectively, and the Company satisfied its reserve
requirements at both dates.

NOTE 3 - INVESTMENT SECURITIES:

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

<TABLE>
<CAPTION>
                                       December 31, 1998                                December 31, 1997
                      --------------------------------------------------  -----------------------------------------------
                                        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>
Commercial Paper      $      5,992  $     --       $       --  $   5,992  $       --   $      --  $     --  $        --
U.S. Government and
   Federal Agencies          8,949        25               (1)     8,973      10,918         103        --       11,021
Marketable Equity
   Security                      5        25               --         30           5          18        --           23
-------------------------------------------------------------------------------------------------------------------------
Total                 $     14,946   $    50       $       (1) $  14,995  $   10,923   $     121  $     --  $    11,044
</TABLE>


The following is a summary of maturities of securities available for sale as of
December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
                                                    Securities Available for Sale
                                                 ------------------------------------
                                                 Amortized                   Fair
                                                    Cost                     Value
=====================================================================================
<S>                                              <C>                      <C>
Amounts maturing in:
One year or less                                 $    9,941               $     9,965
After one year through five years                        --                        --
After five years through ten years                    5,000                     5,000
After ten years                                          --                        --
-------------------------------------------------------------------------------------
                                                     14,941                    14,965
Marketable Equity Security                                5                        30
-------------------------------------------------------------------------------------
Total                                            $   14,946               $    14,995
</TABLE>

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

During 1998, 1997 and 1996, proceeds from calls and maturities of securities
available for sale were approximately $39,925,000, $22,498,000 and $3,000,000
respectively, resulting in no realized gain or loss. During 1998, 1997 and 1996,
no securities available for sale were sold.


                                                                       Continues


32


<PAGE>   28
Notes to Consolidated Financial Statements



Note 3 continued

Investment securities with a carrying amount and fair value of approximately 
$511,000 and $516,000 at December 31, 1998 and 1997, respectively, were pledged
to secure deposits as required or permitted by law.

NOTE 4 - MORTGAGE-BACKED SECURITIES:

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

<TABLE>
<CAPTION>
                         DECEMBER 31, 1998                               December 31, 1997
            -------------------------------------------    ---------------------------------------------
                         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>
GNMA        $  1,128   $    37       $  --    $  1,165    $    1,366     $     33   $   --     $  1,399
FNMA           6,954       269          --       7,223         9,978          509       --       10,487
FHLMC          2,557        39          --       2,596         5,439           42      (18)       5,463
FNMA CMO         428        --          (3)        425           502           --       (5)         497
--------------------------------------------------------------------------------------------------------
Total       $ 11,067   $   345       $  (3)   $ 11,409    $   17,285     $    584   $  (23)    $ 17,846
</TABLE>

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

<TABLE>
<CAPTION>
                         DECEMBER 31, 1998                               December 31, 1997
            -------------------------------------------    ---------------------------------------------
                         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>
GNMA        $    828   $     3       $   --   $    831     $  1,121      $   26     $   --      $  1,147
FNMA             185        --           (1)       184          206          --         (2)          204
FHLMC            616        --           (3)       613          750          --        (29)          721
FNMA CMO       4,736       221           --      4,957        4,736          --         (8)        4,728
FHLMC CMO      5,995       126          (12)     6,109        5,993          19        (76)        5,936
--------------------------------------------------------------------------------------------------------
Total       $ 12,360   $   350       $  (16)  $ 12,694     $ 12,806      $   45     $ (115)     $ 12,736
</TABLE>

The following is a summary of maturities of Mortgage-Backed Securities available
for sale and held to maturity as of December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
                                             Available for Sale                  Held to Maturity
                                       ------------------------------    ---------------------------------
                                         Amortized         Fair           Amortized              Fair
                                           Cost            Value            Cost                 Value
----------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>              <C>                  <C>
Amounts maturing in:
One year or less                       $       3,694    $       3,808    $         244        $        251
After one year through five years              5,936            6,119              672                 690
After five years through ten years             1,360            1,402              417                 428
After ten years                                   77               80           11,027              11,325
----------------------------------------------------------------------------------------------------------
Total                                  $      11,067    $      11,409    $      12,360        $     12,694
</TABLE>


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

During 1998, 1997 and 1996, no Mortgage-Backed Securities available for sale
were sold.  There were no sales of held to maturity Mortgage-Backed Securities
in 1998, 1997 or 1996.


                                                                             33
<PAGE>   29

                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY


NOTE 5 - LOANS RECEIVABLE:

Loans Receivable at December 31, 1998 and 1997 are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                 1998                   1997
--------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                  <C>
 Mortgage Loans:                                                                                  
     Single-Family Residential                                             $   168,533          $   169,637
     Single-Family Construction                                                 11,651                9,301
     Multi-family Residential                                                      481                  546
     Commercial Real Estate                                                      9,371                9,363
--------------------------------------------------------------------------------------------------------------

          Total Mortgage Loans                                                 190,036              188,847

 Commercial Business Loans                                                      23,143               15,400
 Consumer Loans:
     Savings                                                                     2,122                2,046
     Indirect Dealer                                                             2,367                4,526
     Other                                                                      16,899                9,783
--------------------------------------------------------------------------------------------------------------

          Total Loans                                                          234,567              220,602

 Less:
     Allowance for Loan Losses                                                  (2,726)              (2,760)
     Unearned Discounts and Prepaid Dealer Reserve                                  57                  162
     Net Deferred Loan Origination Fees                                           (357)                (535)
     Loans in Process and Undisbursed Funds                                     (5,789)              (4,629)
--------------------------------------------------------------------------------------------------------------
          Net Loans                                                        $   225,752          $   212,840
</TABLE>


At December 31, 1998 and 1997, the Company's loan portfolio included $89,521,000
and $96,690,000 in adjustable-rate mortgage loans, respectively.

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

<TABLE>
<CAPTION>
                                                             1998                 1997                   1996
------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                   <C>                   <C>
      Balance, Beginning                                  $     2,760           $     2,592           $     2,329
            Provision Charged to Income                            90                   180                   355
            Loans Charged Off                                    (313)                 (235)                 (277)
            Loans Recovered                                       189                   223                   185
------------------------------------------------------------------------------------------------------------------

      Balance, Ending                                     $     2,726           $     2,760            $    2,592
</TABLE>



34
<PAGE>   30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6 - LOAN SERVICING:

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
mortgage loans serviced for others was $23,346,000 and $21,186,000 at December
31, 1998 and 1997, respectively.

Custodial escrow balances maintained in connection with the foregoing loan
servicing were approximately $367,000 and $602,000 at December 31, 1998 and
1997, respectively.

Mortgage loan servicing rights of $91,000 and $1,000 were capitalized in 1998
and 1997, respectively. Amortization of mortgage servicing rights was $17,000,
$6,000 and $3,000 in 1998, 1997 and 1996, respectively, and the balance of
mortgage servicing rights at December 31, 1998 and 1997 was $101,000 and
$27,000, respectively.

NOTE 7 - INVESTMENT IN CADENCE HOLDINGS, LLC:

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's share
of the net loss for the year ended December 31, 1998 was $34,000.

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 8 - PREMISES AND EQUIPMENT:

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

<TABLE>
<CAPTION>
                                                                               1998                  1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                   <C>
  Land                                                                       $      929            $      929
  Office Buildings                                                                1,832                 1,736
  Furniture, Fixtures and Equipment                                               3,241                 2,973
  Transportation Equipment                                                           95                    95
---------------------------------------------------------------------------------------------------------------
                                                                                  6,097                 5,733
  Accumulated Depreciation                                                       (3,320)               (2,927)
---------------------------------------------------------------------------------------------------------------
  Premises and Equipment, Net                                                $    2,777            $    2,806
</TABLE>


                                                                             35
<PAGE>   31

                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY


NOTE 9 - DEPOSITS:

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

<TABLE>
<CAPTION>
                                                      
                                         Weighted                     1998                       1997
                                      Average Rate at    ------------------------      -------------------------
                                     December 31, 1998       Amount          %             Amount        %
----------------------------------------------------------------------------------------------------------------
<S>                                             <C>     <C>                <C>         <C>              <C>
 NOW Accounts                                    1.8%    $     9,022         4.5%       $    8,177        4.2%
 Money Market Accounts                           4.1%         19,364         9.7             9,436        4.9
 Non-interest Bearing Checking Accounts           --%         11,512         5.7             8,941        4.6
----------------------------------------------------------------------------------------------------------------

       Total Demand Deposits                                  39,898        19.9            26,554       13.7
----------------------------------------------------------------------------------------------------------------

 Savings Deposits                                2.1%         19,706         9.8            23,343       12.1
----------------------------------------------------------------------------------------------------------------

 Certificate of Deposit Accounts:
       Less than 4.00%                                           469         0.2               226        0.1
       4.0% to 4.99%                                          38,636        19.3            13,474        7.0
       5.0% to 5.99%                                          57,020        28.4            79,702       41.2
       6.0% to 6.99%                                          32,493        16.2            34,172       17.7
       7.0% to 8.99%                                          11,533         5.8            15,056        7.8
       9.0% and over                                             892         0.4               895        0.4
----------------------------------------------------------------------------------------------------------------
        Total Certificates of Deposit            5.6%        141,043        70.3%          143,525       74.2
----------------------------------------------------------------------------------------------------------------
       Total Deposits                            4.6%    $   200,647       100.0%       $  193,422      100.0%
</TABLE>


At December 31, 1998, scheduled maturities of certificates of deposit accounts
were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                Amount
------------------------------------------------------------------------------------------
<S>                                                                          <C>
One year or less                                                                $   76,955
Over one year through two years                                                     33,090
Over two years through three years                                                  14,198
Over three years through five years                                                 14,609
Over five years through ten years                                                    2,191
------------------------------------------------------------------------------------------
Total Certificates of Deposit                                                   $  141,043
</TABLE>

Certificates of deposit with a balance of $100,000 and over were $37,492,000 and
$36,833,000 at December 31, 1998 and 1997, respectively.

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

<TABLE>
<CAPTION>
                                                            1998                   1997                  1996
-----------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                   <C>                    <C>
      NOW Accounts                                       $        144          $        109           $       160
      Money Market                                                646                   163                   131
      Savings                                                     517                   589                   692
      Certificates of Deposits                                  8,098                 8,318                 9,201
-----------------------------------------------------------------------------------------------------------------
      Total Interest Expense on Deposits                 $      9,405          $      9,179           $    10,184
</TABLE>

Income from early withdrawal penalties on certificate accounts was $56,000,
$79,000, and $63,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.


36
<PAGE>   32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - FEDERAL HOME LOAN BANK ADVANCES:

Federal Home Loan Bank advances totaled $47,228,000 and $36,628,000 as of
December 31, 1998 and 1997, respectively, which are secured by mortgage loans
under an existing blanket collateral agreement and by FHLB stock. The advances
have variable interest rates that are indexed to LIBOR (London Inter-Bank
Offered Rate) and reprice either monthly or quarterly. No payments are scheduled
prior to maturity. The Company has the ability to borrow total advances up to
$122,418,000 from the FHLB which would also be secured by the existing blanket
collateral agreement and by FHLB stock. Advances at December 31, 1998 and 1997
are as follows (in thousands):

<TABLE>
<CAPTION>
Interest Rate                                                            1998                       1997
-------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                      <C>
    Variable rate - 5.05% to 5.45% at December 31, 1998                 $      9,378             $     36,378
    Fixed rate - 4.80% to 8.70% at December 31, 1998                          37,850                      250
-------------------------------------------------------------------------------------------------------------

    Total Advances                                                      $     47,228             $     36,628
</TABLE>

Advances at December 31, 1998 have maturities in future years as follows (in
thousands):

<TABLE>
<CAPTION>
                             Year Ending December 31                       Amount
------------------------------------------------------------------------------------
<S>                                   <C>                               <C>
                                       1999                              $    16,878
                                       2003                                    8,100
                                       2005                                      250
                                       2008                                   22,000
------------------------------------------------------------------------------------
                                      Total                              $    47,228
</TABLE>

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 contractural maturities.

NOTE 11 - INCOME TAXES:

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

<TABLE>
<CAPTION>
                                                      1998                  1997                  1996
------------------------------------------------------------------------------------------------------------
<S>                                               <C>                   <C>                  <C>
Current:
      Federal                                      $      1,431          $      1,623         $         468
      State                                                  13                     7                    14
Deferred Tax Expense (Benefit)                              (17)                    2                   (43)
------------------------------------------------------------------------------------------------------------

Total Income Tax Expense                           $      1,427          $      1,632          $        439
</TABLE>

There was an income tax payable of $12,000 and $173,000 at December 31, 1998 and
1997, respectively.

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

<TABLE>
<CAPTION>
                                                         1998                  1997                  1996
----------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>                  <C>
  Statutory Federal Income Tax Rate                      34.0%                 34.0%                34.0%
  Increase (Decrease) in Taxes Resulting From:
        State Income Tax on Non-Bank Entities             0.3                   0.2                  1.1
        Nondeductible ESOP                                1.6                   1.3                  0.4
        Other Items                                       0.4                   0.1                 (0.1)
----------------------------------------------------------------------------------------------------------
        Effective Tax Rate                               36.3%                 35.6%                35.4%
</TABLE>

Continues


                                                                             37
<PAGE>   33

                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY


Note 11 continued

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

<TABLE>
<CAPTION>
                                                                             1998                   1997
-------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                     <C>
 Deferred Tax Assets:
       Deferred loan fees                                                $          86          $        108
       Book provision for losses on loans and real estate owned                    939                   949
       Depreciable property basis differences                                       30                    20
       ESOP and RRP                                                                141                   118
       Unrealized losses on Trading Securities                                      27                    --
       Other                                                                        39                    36
-------------------------------------------------------------------------------------------------------------
             Subtotal                                                            1,262                 1,231
-------------------------------------------------------------------------------------------------------------

 Deferred Tax Liabilities:
       Discount Accretion on Investment Securities                                  40                    29
       FHLB stock                                                                  338                   286
       Unrealized gains on Securities Available for Sale                           133                   232
       Unrealized gains on Trading Securities                                       --                    49
-------------------------------------------------------------------------------------------------------------
             Subtotal                                                              511                   596
-------------------------------------------------------------------------------------------------------------
       Net Deferred Tax Asset                                            $         751          $        635
</TABLE>


The likelihood of realization of the entire amount of the deferred tax asset is
considered to be more likely than not; therefore, no valuation allowance has
been provided for 1998 or 1997.

Included in retained earnings at December 31, 1998 and 1997, is approximately
$7,073,000, in bad debt reserves for which no deferred federal income tax
liability has been recorded. These amounts represent allocations of income to
bad debt deductions for tax purposes only for tax years prior to 1987. Reduction
of these reserves for purposes other than tax bad debt losses or adjustments
arising from carryback of net operating losses would create income for tax
purposes, which would be subject to the then-current corporate income tax rate.

NOTE 12 - EARNINGS PER SHARE:

The Company adopted FAS 128, Earning Per Share, as of December 31, 1997.
Restatement of earnings per share for all prior periods presented is required.
Weighted average shares of common stock outstanding for basic EPS excludes the
weighted average shares unreleased by the Employee Stock Ownership Plan ("ESOP")
(174,618, 196,578 and 213,026 shares at December 31, 1998, 1997, and 1996,
respectively) and the weighted average unvested shares in the Recognition and
Retention Plan ("RRP") (95,493, 96,769 and -0- shares at December 31, 1998, 1997
and 1996, respectively). The effect on diluted EPS of stock option shares
outstanding and unvested RRP shares is calculated using the treasury stock
method. EPS for periods preceding the third quarter of 1996 are not applicable,
as the Company's conversion from mutual-to-stock form and reorganization into a
holding company format was not completed until July 15, 1996. The following is a
reconcilement of the numerator and denominator for basic and diluted Earnings
Per Share.

                                                                      Continues


38
<PAGE>   34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 12 continued

<TABLE>
<CAPTION>
                                                                Income                 Shares            Per-Share
                                                              (Numerator)           (Denominator)         Amount
                                                                       YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                       <C>               <C>
Basic EPS
      Income Available to Common Stockholders                $  2,505,000              2,088,775         $    1.20

Effect of Dilutive Securities
      Stock Options Outstanding                                        --                 44,649
      RRP Grants                                                       --                 15,800
--------------------------------------------------------------------------------------------------------------------
Diluted EPS
      Income Available to Common Stockholders
            Plus Assumed Conversions                         $  2,505,000              2,149,224         $    1.17

<CAPTION>
                                                                        Year ended December 31, 1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                       <C>               <C>
Basic EPS
      Income Available to Common Stockholders                $ 2,947,000               2,408,779         $    1.22

Effect of Dilutive Securities
      Stock Options Outstanding                                       --                  38,315
      RRP Grants                                                      --                  15,932
--------------------------------------------------------------------------------------------------------------------
Diluted EPS
      Income Available to Common Stockholders
            Plus Assumed Conversions                         $ 2,947,000               2,463,026         $    1.20


<CAPTION>
                                                                     Six months ended December 31, 1996
--------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                       <C>               <C>
Basic EPS
      Income Available to Common Stockholders                $   169,000               2,518,224         $    0.07
</TABLE>


No stock options or other potential common stock securities were outstanding
for the six months ended December 31, 1996.

NOTE 13 - REGULATORY MATTERS:

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

At December 31, 1998 and 1997, the Bank was classified as "well capitalized".
There are no conditions or events since those dates that management believes
have changed the Bank's category.

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


Continues
                                                                             39
<PAGE>   35
                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY

Note 13 continued

<TABLE>
<CAPTION>
                                                                             DECEMBER 31, 1998
                                                             -------------------------------------------------
                                                                  Required                       Actual
                                                              Amount   Percent              Amount     Percent
--------------------------------------------------------------------------------------------------------------
<S>                                                         <C>        <C>                <C>          <C>
Tier 1 leverage capital:
     Acadiana Bancshares, Inc.                               $ 11,271   4.0%               $ 31,916     11.3%
     LBA Savings Bank                                          10,839   4.0%                 24,125      8.9%

Tier 1 risk-based capital:
     Acadiana Bancshares, Inc.                                  6,513   4.0%                 31,916     19.6%
     LBA Savings Bank                                           6,196   4.0%                 24,125     15.6%

Total risk-based capital:
     Acadiana Bancshares, Inc.                                 13,026   8.0%                 33,971     20.9%
     LBA Savings Bank                                          12,392   8.0%                 26,082     16.8%

<CAPTION>
                                                                             December 31, 1997
                                                             -------------------------------------------------
                                                                  Required                       Actual
                                                              Amount   Percent              Amount     Percent
--------------------------------------------------------------------------------------------------------------
<S>                                                         <C>        <C>                <C>          <C>
Tier 1 leverage capital:
     Acadiana Bancshares, Inc.                               $ 11,029   4.0%               $ 44,112     16.0%
     LBA Savings Bank                                          10,660   4.0%                 33,214     12.5%

Tier 1 risk-based capital:
     Acadiana Bancshares, Inc.                                  5,855   4.0%                 44,112     30.1%
     LBA Savings Bank                                           5,732   4.0%                 33,214     23.2%

Total risk-based capital:
     Acadiana Bancshares, Inc.                                 11,710   8.0%                 45,953     31.4%
     LBA Savings Bank                                          11,465   8.0%                 35,017     24.4%
</TABLE>


LBA Savings Bank is restricted under applicable laws in the payment of dividends
to an amount equal to current year earnings plus undistributed earnings for the
immediately preceding year, unless prior permission is received from the
Commissioner of Financial Institutions for the State of Louisiana. During 1998,
the Bank received permission from the commissioner to pay a $12,000,000 dividend
to the Company. Because of the amount by which dividends paid by the Bank to the
Company in 1998 exceeded 1998 income, the Bank will not be able to pay any
dividends to the Company in 1999 without permission.


NOTE 14 - EMPLOYEE BENEFITS:

401(k) AND MONEY PURCHASE PENSION PLANS

The Company maintains a 401(k) Profit Sharing Plan to provide retirement
benefits for substantially all employees. Eligible employees may defer up to ten
percent of compensation. Until 1997, the Company contributed a matching
contribution of 100 percent of employee deferrals up to three percent of
compensation. The board of directors determines the amount of an additional
discretionary contribution, if any, annually. All employees are eligible after
completing one year of service and attaining age 21.

Employer contributions made to the plan was $-0-, $-0-, and $52,000 for the
years ended December 31, 1998, 1997 and 1996, respectively.


                                                                      Continues



40
<PAGE>   36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 continued

EMPLOYEE STOCK OWNERSHIP PLAN

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

The ESOP was effective upon completion of the conversion. Full-time employees of
the Company and the Bank who have been credited with at least 1,000 hours of
service during a 12-month period and who have attained age 21 are eligible to
participate in the ESOP. 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 will be held in a
suspense account and released on a pro-rata basis as debt service payments are
made. Shares released will be allocated among participants on the basis of
compensation. Participants will vest in their right to receive their account
balances within the ESOP at the rate of 20 percent per year starting after one
year of service. In the case of a "change of control," as defined in the plan,
participants will become immediately and fully vested in their account balances.

Under SOP 93-6, unearned ESOP shares are not considered outstanding and are
shown as a reduction of stockholders' equity. Dividends on unallocated ESOP
shares are considered to be compensation expense. The Company 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. Dividends on allocated shares are used to pay the ESOP debt.

Compensation cost for the year ended December 31, 1998, was $455,000 based on
the release of 21,892 shares. For the year ended December 31, 1997, compensation
cost was $440,000 based on the release of 21,892 shares. For the year ended
December 31, 1996, compensation cost was $148,000 based on the release of 10,946
shares. There were 53,793, 32,707 and 10,946 shares allocated and 163,770,
185,662 and 207,554 shares held in suspense by the ESOP for the years ended
December 31, 1998, 1997 and 1996, respectively. The fair value of the unearned
ESOP shares at December 31, 1998 and 1997, using the quoted market closing price
per share, was approximately $2,866,000 and $4,341,000, respectively.

RECOGNITION AND RETENTION PLAN

The Company established the Recognition and Retention Plan (RRP) 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 year ended December 31, 1998 and 1997, the recognition and retention
plan expense was $232,000 and $227,000, respectively. The


Continues


                                                                             41
<PAGE>   37

                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY


Note 14 continued

weighted-average grant-date fair value of the restricted stock granted under
the RRP during the year ended December 31, 1998 and 1997 was $17.36 and $15.50,
respectively. A summary of the changes in restricted stock follows:

<TABLE>
<CAPTION>
                                                                                    Unawarded              Awarded
                                                                                      Shares                Shares
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>
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
</TABLE>

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.

The following table summarizes the activity related to stock options:

<TABLE>
<CAPTION>
                                                                                                      Weighted-
                                                              Available            Options             Average
                                                              for Grant          Outstanding        Exercise Price
--------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                  <C>                <C>
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


Exercisable at December 31, 1997                                                         -0-
EXERCISABLE AT DECEMBER 31, 1998                                                      42,340            $  15.50
</TABLE>

The weighted-average remaining life of the outstanding options at December 31,
1998 is 8.4 years.

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


                                                                      Continues


42
<PAGE>   38


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 14 continued


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:


<TABLE>
<CAPTION>
                                                                                   1998                 1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                   <C>
         Net income
             As reported                                                        $  2,505,000          $  2,947,000
             Pro forma                                                          $  2,344,000          $  2,804,000

         Earnings per share
             As reported       - Basic                                               $  1.20               $  1.22
                               - Diluted                                             $  1.17               $  1.20
             Pro forma         - Basic                                               $  1.12               $  1.16
                               - Diluted                                             $  1.09               $  1.14
</TABLE>

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
1998 and 1997 grants: dividend yields of 2.15 and 2.20 percent; expected
volatility of 27.7 and 16.91 percent; risk-free interest rate of 5.48 and 6.51
percent; and expected lives of 7.5 years for all options.


NOTE 15 - RELATED PARTY TRANSACTIONS:

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

The Company has an employment agreement with an executive officer under which
the Company agreed to pay compensation of $130,000 annually (plus merit
increases) through October 31, 1999. The Company has also entered into severance
agreements with seven officers. The total commitments under the severance
agreements at December 31, 1998 was $968,000.

NOTE 16 - 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 17 - 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
Statements of

Continues
                                                                          43

<PAGE>   39

                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY


Note 17 continued

Financial Condition. The contract or notional amounts of those
instruments reflect the extent of the Company's involvement in particular
classes of financial instruments.

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

<TABLE>
<CAPTION>
As of December 31, 1998, financial instruments for which the                  Contract or Notional
   contract amounts were as follows represent credit risk:                   Amount (in thousands)
                                                                             ---------------------
           <S>                                                                   <C>
            Undisbursed Loans in Process                                          $    5,789
            Commitments to Extend Credit                                          $   26,608
            Standby Letters of Credit                                             $       79
</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
primarily issued to support public and private borrowing arrangements, including
commercial paper, bonding financing, and similar transactions. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.

NOTE 18 - CONCENTRATION OF CREDIT:

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


44
<PAGE>   40


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 19 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

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

<TABLE>
<CAPTION>
                                                               1998                               1997
--------------------------------------------------------------------------------------------------------------------
                                                    Estimated         Recorded        Estimated          Recorded
                                                      Fair              Book             Fair              Book
                                                     Value             Balance          Value            Balance
--------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                <C>             <C>               <C>
ASSETS
Cash                                              $     7,578       $     7,578      $    14,157       $    14,157
Investment Securities                                  18,490            18,490           13,757            13,757
Mortgage-Backed Securities                             24,103            23,769           30,582            30,652
Loans Receivable                                      229,840           225,752          212,282           212,840

LIABILITIES
Deposits:
     Regular Savings, NOW Accounts,
         and Money Market Deposits                     59,604            59,604           49,897            49,897
     Certificates of Deposit                          143,416           141,043          144,358           143,525
Advances from Federal Home Loan Bank                   47,374            47,228           36,628            36,628

</TABLE>


NOTE 20 - COMPREHENSIVE INCOME:

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

<TABLE>
<CAPTION>
                                                                          For The Years Ended December 31,
--------------------------------------------------------------------------------------------------------------------
                                                                    1998               1997               1996
--------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>                <C>
Unrealized Gain (Loss) on Securities
      Available for Sale, Net                                   $      (290)        $      101         $     (486)
Reclassification Adjustment for Net Gains
      Realized in Net Income                                             --                 --                 --
--------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income                                             (290)               101               (486)
Income Tax (Expense) Benefit Related to Other
       Comprehensive Income                                              98                (34)               168
--------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, Net of Income
      Taxes                                                     $      (192)        $       67         $     (318)
</TABLE>


NOTE 21 - CONVERSION FROM MUTUAL TO STOCK ASSOCIATION:

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

In accordance with regulations, at the time that the Bank converted from a
mutual savings bank to a stock savings bank, the Bank established a liquidation
account in the amount of $17,697,000. The liquidation account will be
maintained for the benefit of eligible account holders and supplemental
eligible account holders who continue to maintain their accounts at the Bank
after the Conversion. The liquidation account will be reduced annually to the
extent that eligible account holders and supplemental eligible account holders
have reduced their qualifying deposits. Subsequent increases in deposits will



Continues

                                                                             45
<PAGE>   41
                                     ACADIANA BANCSHARES, INC., AND SUBSIDIARY

Note 21 continued

not restore an eligible account holder's or supplemental eligible account
holder's interest in the liquidation account. In the event of a complete
liquidation of the Bank, each account holder and supplemental eligible account
holder will be entitled to receive a distribution from the liquidation account
in an amount proportionate to the current adjusted qualifying balances for
accounts then held. The Bank may not pay a dividend on its capital stock if the
dividend would bring regulatory capital below the balance of the liquidation
account.

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

NOTE 22 - SEGMENT INFORMATION:

The Company, through its subsidiary bank, operates in one segment - the
financial services industry.  Within this segment, the Company is primarily
engaged in commercial and consumer banking and mortgage lending.

NOTE 23 - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

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

Condensed Balance Sheet
(In thousands)

<TABLE>
<CAPTION>
                                                                                DECEMBER 31,          December 31,
                                                                                    1998                 1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                   <C>
ASSETS
Cash in Bank                                                                   $          484        $       8,266
Equity Securities Held for Trading                                                        575                  826
Securities Available for Sale                                                           5,992                2,018
Investment in Subsidiary                                                               24,383               33,652
Investment in Limited Liability Company                                                   966                   --
Other Assets                                                                               75                  116
--------------------------------------------------------------------------------------------------------------------
     Total Assets                                                              $       32,475        $      44,878
--------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities                                                                    $          301        $         316
--------------------------------------------------------------------------------------------------------------------
Stockholders' Equity                                                                   32,174               44,562
--------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Equity                               $       32,475        $      44,878

</TABLE>
                                                                     Continues


46
<PAGE>   42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 23 continued


Condensed Statement of Income
(In thousands)

<TABLE>
<CAPTION>
                                                                                                   Period from
                                                            For the Years Ended                 July 15, 1996 to
                                                        1998                1997                December 31, 1996
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                <C>                  <C>
Operating Income:
     Dividends from Subsidiary Bank                   $   12,000         $     3,274          $           50
     Interest Income                                         665                 659                     335
     Trading Account (Losses) Gains                         (111)                137                      --
     Other Losses                                            (34)                 --                      --
--------------------------------------------------------------------------------------------------------------------
Total Operating Income                                    12,520               4,070                     385

Operating Expenses                                           502                 411                      14
--------------------------------------------------------------------------------------------------------------------
Income Before Income Tax Expense and 
     Decrease in Equity in Undistributed
     Earnings of Subsidiary                               12,018               3,659                     371

Income Tax Expense                                             4                 138                     119
--------------------------------------------------------------------------------------------------------------------
Income Before Decrease in Equity in
     Undistributed Earnings of Subsidiary                 12,014               3,521                     252

Decrease in Equity in Undistributed 
     Earnings of Subsidiary                               (9,509)               (574)                    (83)
--------------------------------------------------------------------------------------------------------------------
Net Income                                            $    2,505         $     2,947          $          169
</TABLE>



Continues

                                                                             47

<PAGE>   43

                                      ACADIANA BANCSHARES, INC., AND SUBSIDIARY

Note 23 continued


Condensed Statement of Cash Flows
(In thousands)

<TABLE>
<CAPTION>
                                                                                                     Period from
                                                                 For the Years Ended               July 15, 1996 to
                                                                 1998             1997            December 31, 1996
--------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>              <C>                 <C>
Cash Flows from Operating Activities:
     Net Income                                              $    2,505       $    2,947           $       169

Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
     Decrease in Equity in Net Income of Subsidiary               9,509              574                    83
     Provision for Deferred Income Taxes                            (76)              49                    --
     Loss from Limited Liability Company                             34               --                    --
     Net Change in Securities Classified as Trading                 251             (826)                   --
     Decrease (Increase) in Other Assets                             39              (56)                  (60)
     Increase (Decrease) in Other Liabilities                       (38)            (117)                  124
--------------------------------------------------------------------------------------------------------------------
         Net Cash Provided by Operating Activities               12,224            2,571                   316
--------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
     Proceeds from Calls and Maturities of
         Securities Available for Sale                           34,925            6,998                    --
     Purchase of Securities Available for Sale                  (38,917)          (6,998)               (2,000)
     Purchase of Capital Stock in
         Limited Liability Company                               (1,000)              --                    --
     Purchase of Capital Stock of Subsidiary                         --               --               (15,919)
--------------------------------------------------------------------------------------------------------------------
         Net Cash Used in Investing Activities                   (4,992)              --               (17,919)
--------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
     Capital Contributed to Subsidiary                              (82)             (79)                  (20)
     Payments Received From ESOP                                    388              388                   194
     Net Proceeds From Issuance of
         Common Stock                                                --               --                30,153
     Dividends Paid to Shareholders                              (1,009)            (901)                 (226)
     Acquisition of Common Stock by RRP                              --           (1,829)                   --
     Repurchase of Common Stock                                 (14,311)          (3,445)                   --
     Stock Conversion Costs Incurred                                 --               --                  (937)
--------------------------------------------------------------------------------------------------------------------
         Net Cash (Used in) Provided by
             Financing Activities                               (15,014)          (5,866)               29,164
--------------------------------------------------------------------------------------------------------------------
         Net (Decrease) Increase in Cash
             and Cash Equivalents                                (7,782)          (3,295)               11,561

Cash and Cash Equivalents, Beginning of Period                    8,266           11,561                    --
--------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period                     $      484       $    8,266           $    11,561
</TABLE>


Other Disclosures:

At December 31, 1998 and 1997, the Bank owed the Company $31,000 and $56,000,
respectively for overpayment of estimated tax payments.



48
<PAGE>   44
Notes to Consolidated Financial Statements


NOTE 24 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):

(In Thousands, except per share data)

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------------------------------------------------------------
                                                                  First         Second        Third        Fourth
                                                                  Quarter       Quarter       Quarter      Quarter
--------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>           <C>          <C>
Total Interest Income                                            $  5,307      $  5,473      $  5,425     $  5,209
Total Interest Expense                                              2,876         3,029         3,111        2,920
--------------------------------------------------------------------------------------------------------------------
     Net Interest Income                                            2,431         2,444         2,314        2,289

Provision for Loan Losses                                              45            45            --           --
--------------------------------------------------------------------------------------------------------------------
     Net Interest Income After Provision
             for Loan Losses                                        2,386         2,399         2,314        2,289

Noninterest Income                                                    384           300           164          351
Noninterest Expense                                                 1,574         1,706         1,648        1,726
--------------------------------------------------------------------------------------------------------------------

Income Before Income Taxes                                          1,196           993           830          914
Income Tax Expense                                                    432           365           310          320
--------------------------------------------------------------------------------------------------------------------
Net Income                                                            764           628           520          594

Net Income per Common Share - basic                              $    .33      $    .28      $    .25     $    .35

Net Income per Common Share - diluted                            $    .32      $    .27      $    .24     $    .34
</TABLE>


(In Thousands, except per share data)

<TABLE>
<CAPTION>
                                                                          Year Ended December 31, 1997
--------------------------------------------------------------------------------------------------------------------
                                                                  First         Second        Third        Fourth
                                                                 Quarter       Quarter       Quarter      Quarter
--------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>           <C>           <C>          <C>
Total Interest Income                                           $   4,953     $   5,036     $   5,106    $   5,232
Total Interest Expense                                              2,595         2,655         2,762        2,848
--------------------------------------------------------------------------------------------------------------------
     Net Interest Income                                            2,358         2,381         2,344        2,384

Provision for Loan Losses                                              45            45            45           45
--------------------------------------------------------------------------------------------------------------------
     Net Interest Income After Provision
             for Loan Losses                                        2,313         2,336         2,299        2,339

Noninterest Income                                                    261           262           327          320
Noninterest Expense                                                 1,403         1,632         1,570        1,272
--------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                          1,171           966         1,056        1,387
Income Tax Expense                                                    400           341           362          529
--------------------------------------------------------------------------------------------------------------------
Net Income                                                            771           625           694          858

Net Income per Common Share - basic                             $     .31     $     .26     $     .29    $     .37

Net Income per Common Share - diluted                           $     .31     $     .25     $     .28    $     .35
</TABLE>





                                                                           49
<PAGE>   45


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 are:

                  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 Third Street, Eunice, Louisiana  70535

DIRECTORS
-------------------------------------------------------------------------------
<TABLE>
<S>                                             <C>
AL W. BEACHAM, M.D.                             DON J. O'ROURKE, SR.
Urologist                                       Architect

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,    Attorney and retired City Judge
LBA Savings Bank

WILLIAM H. MOUTON
Attorney


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

LAWRENCE GANKENDORFF                            WAYNE BARES
Chairman of the Board                           Senior Vice President - Commercial Lending

JERRY REAUX                                     MARY ANNE S. BERTRAND
President and Chief Executive Officer           Senior Vice President - Retail Lending

JAMES J. MONTELARO                              EMILE E. SOULIER, III
Executive Vice President - Mortgage Banking     Vice President and Chief Financial Officer

GREGORY KING                                    THOMAS DEBAILLON
Executive Vice President - Chief Operating      Vice President - Operations
Officer

</TABLE>


50
<PAGE>   46


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 28, 1999, 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 news sources. The Company's common stock is held of record by xxx
shareholders as of March 19, 1999. Below is a table showing the high and low
sales prices of the common stock and cash dividends declared during each quarter
of 1998 and 1997.

1998
Quarter Ended              High             Low               Dividend 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

1997
Quarter Ended              High             Low               Dividend Declared
-------------------------------------------------------------------------------
March 31, 1997             $19 1/4          $14 7/8                 $0.09
June 30, 1997              $20              $17 1/2                 $0.09
Sept. 30, 1997             $22 1/4          $19 3/4                 $0.09
Dec. 31, 1997              $24 3/4          $22 1/4                 $0.11


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 and CFO
    Phone: (318) 232-4631
    Fax: (318) 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



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