<TABLE>
                       Ponchatoula Homestead Savings, F.A.
                        STATEMENTS OF FINANCIAL CONDITION
                    As of June 30, 1998 and December 31, 1997

                                     ASSETS
<CAPTION>
                                                       (UNAUDITED)     (AUDITED)
                                                         June 30,     December 31,
                                                          1998           1997
                                                        --------       --------
                                                            (In Thousands)
<S>                                                     <C>            <C>     
Cash and Cash Equivalents ........................      $  2,227       $    609

Interest-bearing Deposits in Other Institutions ..        12,704            645

Securities:

     Investment Securities Available
        for Sale (Amortized Cost of
        $2.3 million and $2.6 million) ...........         2,305          2,605

     Mortgage-Backed Securities
        Available for Sale (Amortized
        Cost of $13.2 million and $14.3 million) .        13,215         14,261

     Mortgage-Backed Securities
        Held to Maturity (Fair Value of
        $10.6 million and $10.4 million) .........        10,594         10,301

     Federal Home Loan Bank Stock, at Cost .......         1,187            584
                                                        --------       --------

        Total Securities .........................        27,301         27,751

Loans Held for Sale ..............................           634          1,414

Loans Receivable .................................        38,031         28,033
Leases Receivable ................................           284            301
                                                        --------       --------

        Total Loans and Leases Receivable ........        38,315         28,334

     Less:  Allowance for Loan and Lease Losses ..          (270)          (265)
                                                        --------       --------

        Net Loans and Leases Receivable ..........        38,045         28,069

Premises and Equipment, Net ......................           558            545
Accrued Interest Receivable ......................           457            420
Other Assets .....................................           272            127
                                                        --------       --------

        Total Assets .............................      $ 82,198       $ 59,580
                                                        ========       ========
</TABLE>

                                       1
<PAGE>
<TABLE>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
                                                       (UNAUDITED)      (AUDITED)
                                                         June 30,      December 31,
                                                           1998           1997
                                                        --------       --------
                                                         (In Thousands)
<S>                                                     <C>            <C>     
Deposits .........................................      $ 52,662       $ 42,111

Advances from Borrowers for Taxes and
     Insurance ...................................            37             32

Advances from Federal Home
     Loan Bank ...................................        23,428         11,500

Income Taxes Payable .............................            89            162

Other Liabilities ................................            57             40
                                                        --------       --------

        Total Liabilities ........................        76,273         53,845


Stockholders' Equity:

     Common Stock - $.10 Par Value;
        8,000,000 Shares Authorized, 606,479
        Shares Issued and Outstanding in 1998
        606,345 in 1997 ..........................            61             61

     Paid-in Capital in Excess of Par ............         2,200          2,017

     Retained Earnings - Substantially Restricted          3,700          3,734

     Unrealized Gain (Loss) on Securities
        Available for Sale, Net ..................             4            (35)
                                                        --------       --------

                                                           5,965          5,777

     Common Stock Acquired by Recognition Plans ..           (40)           (42)
                                                        --------       --------

        Total Stockholders' Equity ...............         5,925          5,735
                                                        --------       --------

        Total Liabilities and Stockholders'
            Equity ...............................      $ 82,198       $ 59,580
                                                        ========       ========
</TABLE>


                                       2
<PAGE>
<TABLE>
                       Ponchatoula Homestead Savings, F.A.
                              STATEMENTS OF INCOME

            for the three and six months ended June 30, 1998 and 1997
<CAPTION>
                                                               (UNAUDITED)              (UNAUDITED)
                                                          THREE MONTHS ENDED         SIX MONTHS ENDED
                                                                June 30,                 June 30,
                                                          1998         1997         1998          1997
                                                        -------      -------       -------      -------
                                                           (In Thousands)             (In Thousands)
<S>                                                     <C>          <C>             <C>        <C>    
Interest Income:
     Loans and Leases ............................      $   727      $   596         1,390      $ 1,188
     Mortgage-Backed Securities ..................          365          413           738          793
     Investment Securities .......................           44           46            88           90
     Other .......................................           34           25            46           41
                                                        -------      -------       -------      -------
        Total Interest Income ....................        1,170        1,080         2,262        2,112

Interest Expense:
     Deposits ....................................          467          494           930        1,001
     Borrowings ..................................          253          131           414          265
                                                        -------      -------       -------      -------
        Total Interest Expense ...................          720          625         1,344        1,266
                                                        -------      -------       -------      -------
        Net Interest Income ......................          450          455           918          846

Provision for (Recovery of) Loan and Lease
     Losses ......................................           15            0            16          (16)
                                                        -------      -------       -------      -------
        Net Interest Income After Provision for
            (Recovery of) Loan and Lease Losses ..          435          455           902          862
                                                        -------      -------       -------      -------
Noninterest Income:
     Gain on Sale of Loans .......................           20           36            82           80
     Loan Fees and Service Charges ...............           97           45           158           94
     Other Income ................................           19            6            26           12
                                                        -------      -------       -------      -------
        Total Noninterest Income .................          136           87           266          186
<PAGE>
<CAPTION>
                                                               (UNAUDITED)              (UNAUDITED)
                                                          THREE MONTHS ENDED         SIX MONTHS ENDED
                                                                June 30,                 June 30,
                                                          1998         1997         1998          1997
                                                        -------      -------       -------      -------
                                                           (In Thousands)             (In Thousands)
<S>                                                     <C>          <C>             <C>        <C>    
Noninterest Expense:
     Compensation and Benefits ...................          243          250           453          443
     Occupancy and Equipment Expense .............           37           35            77           71
     Federal Insurance Premium ...................            4            0            11            1
     Net Real Estate Owned Expense ...............            0           (2)            0            1
     Other .......................................          166          122           312          240
                                                        -------      -------       -------      -------
        Total Noninterest Expense ................          450          405           853          756
                                                        -------      -------       -------      -------
        Income Before Provision for Income
            Taxes ................................          121          137           315          292

Income Taxes .....................................           41           47           107           99
                                                        -------      -------       -------      -------
        Net Income ...............................      $    80      $    90           208      $   193
                                                        =======      =======       =======      =======

Per Share:
     Earnings Per Common Share ...................         0.13         0.15          0.34         0.32
                                                        =======      =======       =======      =======

     Earnings Per Common Share - Assuming Dilution         0.13         0.15          0.34         0.32
                                                        =======      =======       =======      =======

     Cash Dividends Declared .....................         0.20         0.17          0.40         0.33
                                                        =======      =======       =======      =======
</TABLE>





                                       3
<PAGE>
<TABLE>
                       Ponchatoula Homestead Savings, F.A.
                       STATEMENTS OF STOCKHOLDERS' EQUITY

                 for the six months ended June 30, 1998 and 1997
<CAPTION>
                                                       (UNAUDITED)    (UNAUDITED)
                                                         June 30,       June 30,
                                                          1998            1997
                                                         -------        -------
                                                              (In Thousands)
<S>                                                      <C>            <C>    
Common Stock:
     Balance - Beginning and End of Period .......       $    61        $    61
                                                         =======        =======

Paid-in Capital in Excess of Par:
     Balance - Beginning of Period ...............       $ 2,017        $ 1,698
        Exercise of Stock Options ................             1           --
        Dividends Declared and Waived
            by Holding Company ...................           182            151
                                                         -------        -------
     Balance - End of Period .....................       $ 2,200        $ 1,849
                                                         =======        =======

Retained Earnings:
     Balance - Beginning of Period ...............       $ 3,734        $ 3,844
        Net Income ...............................           208            193
        Cash Dividends Declared and Paid .........           (60)           (50)
        Dividends Declared and Waived
            by Holding Company ...................          (182)          (151)
                                                         -------        -------
     Balance - End of Period .....................       $ 3,700        $ 3,836
                                                         =======        =======

Unrealized Gain (Loss) on Securities
     Available for Sale, Net:
     Balance - Beginning of Period ...............       $   (35)       $  (101)
        Net Change in Unrealized Gain (Loss) .....            39              9
                                                         -------        -------
     Balance - End of Period .....................       $     4        $   (92)
                                                         =======        ======= 

Director & Management Recognition Plans
     Balance - Beginning of Period ...............       $   (42)           (57)
        Shares of Common Stock Earned ............             2              6

     Balance - End of Period .....................       $   (40)       $   (51)
                                                         =======        ======= 
</TABLE>


                                       4
<PAGE>
<TABLE>
                       Ponchatoula Homestead Savings, F.A.
                            STATEMENTS OF CASH FLOWS

                 for the six months ended June 30, 1998 and 1997
<CAPTION>
                                                                                      (UNAUDITED)
                                                                                        June 30
                                                                                -----------------------
                                                                                  1998           1997
                                                                                --------       --------
<S>                                                                             <C>            <C>     
Cash Flows From Operating Activities:
     Net Income ..........................................................      $    208       $    193
     Adjustments to Reconcile Net Income
        to Net Cash Provided by (Used in) Operating
        Activities:
            Depreciation .................................................            16             13
            Provision for (Recovery of)
                for Loan and Lease Losses ................................            16            (16)
            Net Amortization of Premiums on Securities ...................            41             31
            Stock Dividends on Federal Home
                Loan Bank Stock ..........................................           (22)           (15)
            Net (Increase) Decrease in Loans
                Held for Sale ............................................           780          1,553

            Change in Assets and Liabilities
                (Increase) Decrease in Accrued
                   Interest Receivable ...................................           (37)            40
                (Increase) Decrease in Other
                   Assets ................................................          (145)           (22)
                Increase (Decrease) in Income
                   Taxes Payable .........................................           (73)             0
                Increase (Decrease) in Other
                   Liabilities ...........................................            17             66
                                                                                --------       --------
                       Net Cash Provided by (Used in) Operating Activities           801          1,843

Cash Flows From Investing Activities:
     Purchases of Property and Equipment .................................           (29)           (15)
     Maturities of Investment Securities .................................           600            600
     Purchases of Investment Securities ..................................          (300)          (700)
     Maturities of Mortgage-Backed Securities ............................         2,557          2,185
     Proceeds from Call of Maturites of Mortgage-Backed Securities .......          --              349
     Purchases of Mortgage-Backed
        Securities .......................................................        (1,786)        (1,199)
     Proceeds from Sale of Real Estate Owned .............................          --                6
     Purchase of Real Estate Owned .......................................          --               (1)
     Net (Increase) Decrease in Loans and Leases
        Receivable .......................................................       (10,011)        (1,172)
                                                                                --------       --------
                       Net Cash Provided by (Used in) Investing Activities        (8,969)            53

</TABLE>
                                       5
<PAGE>
<TABLE>
<CAPTION>
                                                                                      (UNAUDITED)
                                                                                        June 30
                                                                                -----------------------
                                                                                  1998           1997
                                                                                --------       --------
<S>                                                                             <C>            <C>     
Cash Flows From Financing Activities:
     Net Increase (Decrease) in Money Market Accounts,
        NOW Accounts and Savings Accounts ................................        11,363           (173)
     Net Increase (Decrease) in Certificates
        of Deposit .......................................................          (812)          (157)
     Proceeds from (Repayment of) Federal Home
        Loan Bank Advances ...............................................        11,928           (500)
     Increase (Decrease) in Advances from
        Borrowers for Taxes and Insurance ................................             5            (12)
     Dividends Paid on Common Stock ......................................           (60)           (50)
     Purchase of Federal Home Loan Bank Stock ............................          (581)          --
     MRP Shares Issued ...................................................             2              6
                                                                                --------       --------
                       Net Cash Provided by (Used In)
                            Financing Activities .........................        21,845           (886)
                                                                                --------       --------
Net Increase (Decrease) in Cash and
     Cash Equivalents ....................................................        13,677          1,010

Cash and Cash Equivalents -
     Beginning of Period .................................................         1,254          1,298
                                                                                --------       --------
Cash and Cash Equivalents -
     End of Period .......................................................      $ 14,931       $  2,308
                                                                                ========       ========

Supplemental Disclosures of Cash flow
     Information:
        Cash Payments for:
            Interest Paid to Depositors ..................................      $    930       $  1,002
                                                                                ========       ========
            Interest Paid on Borrowings ..................................      $    414       $    265
                                                                                ========       ========
            Income Taxes .................................................      $     78       $    265
                                                                                ========       ========
Supplemental Schedules of Noncash
     Investing and Financing Activities:
        Real Estate Acquired in Settle-
            ment of Loans and Leases .....................................      $   --         $     59
                                                                                ========       ========
        Increase (Decrease) in Unrealized Gain (Loss)
            on Securities Available for Sale .............................      $     39       $     14
                                                                                ========       ========
        (Increase) Decrease in Deferred Tax
            Effect on Unrealized Gain (Loss) on Securities
            Available for Sale ...........................................      $    (13)      $     (5)
                                                                                ========       ========
</TABLE>


                                       6
<PAGE>
                       Ponchatoula Homestead Savings, F.A.
                          Notes to Financial Statements
                                   (Unaudited)
                             June 30, 1998 and 1997

Note 1 - Summary of Significant Accounting Policies -

         The accounting  principles  followed by Ponchatoula  Homestead Savings,
F.A.  are those  which are  generally  practiced  within  the  savings  and loan
industry.  The methods of  applying  those  principles  conform  with  generally
accepted accounting principles and have been applied on a consistent basis.

         The  accompanying  unaudited  financial  statements  were  prepared  in
accordance  with  instructions  for Form  10-QSB and,  therefore  do not include
information  or footnotes  necessary  for a complete  presentation  of financial
position,  results of  operations  and cash flows in conformity  with  generally
accepted accounting  principles.  However,  all adjustments  (consisting only of
normal recurring  accruals)  which, in the opinion of management,  are necessary
for a fair presentation of the financial statements have been included.

         Comprehensive Income

         The  Financial  Accounting  Standards  Board issued  Statement  No. 130
"Reporting  Comprehensive  Income",  which  becomes  effective  for fiscal years
beginning  after  December 15, 1997.  This statement  establishes  standards for
reporting  and  display of  comprehensive  income and its  components  which are
revenues,   expenses,  gains,  and  losses  that  under  GAAP  are  included  in
comprehensive  income but  excluded  from net income.  Ponchatoula  adopted this
statement in 1998. The only component of  comprehensive  income  included in the
financial  statements was an unrealized gain (loss) on securities  available for
sale, which was immaterial for all periods presented.

Note 2 - Dividends and Earnings Per Share -

         Ponchatoula  declared  quarterly  dividends  of $.20 for the  first and
second  quarters of 1998. The Mutual Holding Company waived receipt of dividends
declared  on all  shares  owned;  the  amounts  waived  have  been  recorded  by
Ponchatoula as additional paid-in capital.  Total dividends paid to stockholders
other  than the  Mutual  Holding  Company  in the first  six  months of 1998 was
$61,000  or $.40 per  share.  Under  Federal  regulations,  Ponchatoula  may not
declare or pay a cash dividend on its capital stock if the effect  thereof would
cause  Ponchatoula's  regulatory capital to be reduced below the amount required
for liquidity.

         Earnings  per common  share are  computed by dividing net income by the
number of shares of common stock outstanding,  which is 606479 for the six month
period ended June 30, 1998.  Earnings per common share  assuming  dilution,  are
computed  by  dividing  net  income by the  number  of  shares  of common  stock
outstanding plus the effect of diluted securities,  which was 617940 for the six
month period ended June 30, 1998.
<PAGE>
Note 3 - Stock Option and Management Recognition Plans -

         1996 Stock Incentive Plan

     This program was designed to attract and retain qualified  personnel in key
positions,  provide key employees with a proprietary  interest in Ponchatoula as
an  incentive  to  contribute  to the  success  of  Ponchatoula  and  reward key
employees  for  outstanding  performance.  An  aggregate  of  10,782  shares  of
authorized but unissued  Common Stock of  Ponchatoula  was reserved for issuance
under the Plan,  which is equal to 7.5% of Common  Stock issued to the public in
connection  with the formation of the mutual holding  company ("the  offering").
The exercise price of each option equals the market price of Ponchatoula's stock
on the date of grant  and an  option's  maximum  term is 10 years.  Options  are
granted  and vested at the  discretion  of the  Compensation  Committee.  Ninety
percent of the options  were  granted on July 10,  1996.  At December  31, 1997,
shares available for grant under this plan


                                       7
<PAGE>
amounted to 1,449 shares.  There were 134 options exercised during the first six
months of 1998

         1996 Directors' Stock Option Plan

         In order to attract and retain qualified directors for Ponchatoula, the
Board of  Directors  and  stockholders  of  Ponchatoula  have  adopted  the 1996
Directors'  Stock Option Plan.  An aggregate of 3,594 shares of  authorized  but
unissued  Common  Stock of  Ponchatoula  was  reserved  for  issuance  under the
Directors'  Stock  Option  Plan,  which is equal to 2.5% of the Common  Stock of
Ponchatoula issued in the offering. The exercise price of each option equals the
market price of Ponchatoula's stock on the date of grant and an option's maximum
term is 10 years.  Ninety  percent of the options  were  granted on the date the
Plan was approved by the stockholders of Ponchatoula,  which was April 10, 1996.
The options become exercisable after six months from the grant date.

         1996 Management Recognition Plan for Officers

         The objective of this plan is to enable Ponchatoula to provide officers
and key employees with a proprietary interest in Ponchatoula as compensation for
their  contributions  to the  Association  and as an incentive to  contribute to
Ponchatoula's  future success. An aggregate of 4,312 shares of authorized Common
Stock of Ponchatoula was issued to the Management Recognition Plan for Officers,
which  is  equal  to 3.0% of the  Common  Stock  of  Ponchatoula  issued  in the
offering.  The awards are allocated at the discretion of the  Committee.  Shares
vest at the rate of 20% on each annual anniversary date.

         1996 Management Recognition Plan for Directors

The  objective  of this plan is to enable  Ponchatoula  to provide  non-employee
directors with a proprietary  interest in Ponchatoula as compensation  for their
contributions  to Ponchatoula and as an incentive to contribute to Ponchatoula's
future  success.  An  aggregate of 1,434  shares of  authorized  Common Stock of
Ponchatoula was issued to the Management  Recognition Plan for Directors,  which
is equal to 1.0% of the  Common  Stock of  Ponchatoula  issued in the  offering.
Ninety  percent of the awards were  granted on the date the Plan was approved by
the  stockholders  of  Ponchatoula,  which was April 10, 1996. The remaining 144
shares  were  granted  April 10,  1997.  Shares  vest at the rate of 20% on each
annual anniversary date.
<PAGE>
Note 4 - The Conversion -

     On  February  5,  1998,   Ponchatoula   Homestead   Savings,   F.  A.  (The
"Association")   incorporated   Homestead  Bancorp,   Inc.  (The  "Company")  to
facilitate the conversion of Homestead  Mutual Holding  Company (the "MHC") from
mutual to stock form (the "Conversion").  In connection with the Conversion, the
Company  offered  its  common  stock  to the  depositors  and  borrowers  of the
Association as of specified  dates,  to an employee stock  ownership plan and to
members of the general public.  Upon  consummation of the Conversion on July 17,
1998, the MHC merged into the  Association,  the Association then merged with an
interim  subsidiary  of the  Company  (with  the  Association  as the  surviving
entity),  all of the Association's  outstanding  common stock (other than shares
held by the MHC,  which were  cancelled)  was  exchanged for common stock of the
Company,  and the Company  became the holding  company for the  Association  and
issued shares of common stock to the general public.

         The  Company  filed  a Form  SB-2  with  the  Securities  and  Exchange
Commission  ("SEC") on April 2, 1998, which as amended was declared effective by
the SEC on May 14,  1998.  The  Association  filed a Form AC with the  Office of
Thrift  Supervision  ("OTS") on April 2, 1998. The Form AC and related  offering
and proxy  materials,  as  amended,  were  conditionally  approved by the OTS by
letters dated May 14, 1998. The Company also filed an Application H-(e) 1-S with
the OTS on April 17, 1998, which was conditionally approved by the OTS by letter
dated  May  26,  1998.  The  members  of the MHC  and  the  stockholders  of the
Association  approved the Plan at special meetings held on July 1, 1998, and the
subscription and community offerings closed on June 23, 1998.

     The  Company  sold  1,119,543  shares of common  stock in the  subscription
offering  at a price of $10.00  per  share,  for  aggregate  gross  proceeds  of
$11,195,430. In addition, a total of 358,402 shares of common stock were


                                       8
<PAGE>
issued by the Company in exchange for all of the 152,635  shares of common stock
of  the  Association   outstanding  prior  to  consummation  of  the  Conversion
(excluding the 456,240 shares held by the MHC, which were cancelled), based upon
an exchange  ratio of 2.34810  shares of Company  common stock for each share of
Association common stock.

         Current  regulations  allow  Ponchatoula  to pay dividends on its stock
after the  conversion  if its  regulatory  capital  would not thereby be reduced
below the amount  then  required  for the  Liquidation  Account.  Also,  capital
distribution   regulations   limit   Ponchatoula's   ability  to  make   capital
distributions  which  include  dividends,   stock  redemptions  or  repurchases,
cash-out  mergers,  interest  payments on certain  convertible  debt,  and other
transactions  charged to the capital  account  based on their  capital level and
supervisory  condition.  Federal regulations also preclude any repurchase of the
stock of Ponchatoula or its holding  company for six years after the conversion,
except  for  repurchases  of  qualifying  shares of a director  and  repurchases
pursuant to an offer made on a pro-rate basis to all stockholders and with prior
approval of the Office of Thrift Supervision or pursuant to an open-market stock
repurchase program that complies with certain regulatory  criteria.  Ponchatoula
has  retained the  services of both a marketing  firm and legal  counsel for the
specific purpose of implementing the Plan. Costs relating to the conversion will
be deferred and, upon  conversion,  such costs and any additional  costs will be
charged against the proceeds from the sale of stock.


                                       9
<PAGE>
                       Ponchatoula Homestead Savings, F.A.

                       Managements Discussion and Analysis
                Of Financial Condition and Results of Operations

                                  June 30, 1998

                                     General

         Ponchatoula's results of operation depend primarily on its net interest
income,  which is the difference  between  interest  income on  interest-earning
assets and  interest  expense on  interest  bearing  liabilities.  Ponchatoula's
principle   interest-earning  assets  are  loans  and  leases,   mortgage-backed
securities and investment  securities.  Ponchatoula's results of operations also
are affected by the provision  for losses on loans and leases;  the level of its
other  income,  including  loan  fees and  service  charges,  federal  insurance
premiums,  net real estate owned expense and  miscellaneous  other expenses;  as
well as its income tax expense.

                         Changes in Financial Condition

         At June 30,  1998,  Ponchatoula's  total  assets,  deposits  and equity
amounted to $82.2 million, $52.7 million, and $5.9 million respectively compared
to $59.6 million,  $42.1 million,  and $5.7 million respectively at December 31,
1997. The increase in total assets of 22.6 million or 37.9% was due primarily to
an increase of $10 million in the net loan and lease portfolio.  The increase of
35.5% in net loan and lease portfolio was due to new loan originations exceeding
new loan sales and repayment.  Interest-bearing  deposits in other  institutions
increased  $12.1  million  during  the first six  months to $12.7  million.  The
increase in interest-bearing  deposits in other institutions,  was due primarily
to deposits made in the  institution  to purchase  stock offered for sale in the
conversion.

         Ponchatoula's  short term  borrowing  from the  Federal  Home Loan Bank
decreased during the first six months of 1998 by 1 million or 8.7%.  Ponchatoula
uses the  proceeds  from  short  term  borrowing  to  finance  the  purchase  of
mortgage-backed  securities.  Ponchatoula's long term borrowing from the Federal
Home Loan Bank  increased  during the first six  months of 1998 by $13  million.
Ponchatoula  uses the proceeds from long term  borrowing to fund long term fixed
rate mortgages.  Deposits with Ponchatoula have increased 10.6 million or 25.1%.
The increase in deposits was due primarily to deposits  made in the  institution
to purchase stock offered for sale in the conversion.  The equity of Ponchatoula
increased $190,000 or 3.3% in the first six months of 1998, due to net income of
$208,000  combined  with a increase in  unrealized  gain on  available  for sale
securities of $39,000 offset by dividends paid out of $60,000.
<PAGE>
                                     Capital

         As  of  June  30,  1998,  Ponchatoula's  unaudited  regulatory  capital
exceeded all minimum capital requirements as indicated in the following table:
<TABLE>
<CAPTION>
                                             Unaudited Regulatory Capital
                                             ----------------------------
                                   Tier 1
                                    Core                   Risk-Based
                                   Capital         %         Capital          %
                                 -------        ------     ---------      -------- 
<S>                              <C>            <C>         <C>           <C>   
GAAP Capital ...............     $ 5,925                    $ 5,925
Adjustments:
    Unrealized Gain on
    Securities Available
    for Sale ...............          (4)                        (4)
    General Valuation
     Reserves ..............        --                          250

Regulatory Capital .........       5,921          7.20%       6,171         19.72%

Minimum Capital Requirements       3,288          4.0         2,503          8.0
                                 
Excess Regulatory Capital ..     $ 2,633          3.20%     $ 3,668         11.72%

</TABLE> 


                                       10
<PAGE>
                                   Liquidity

         Ponchatoula  is  required  under  applicable  federal   regulations  to
maintain  specific levels of "liquid"  investments in qualifying types of United
States  Government,  federal agency and other  investments  having maturities of
five  years or less.  Current  regulations  require  that a Savings  institution
maintain  liquid  assets of not less than 5% of its average daily balance of net
withdrawable shares.

                              Results of Operations

         Net income for the first six months of 1998 was  $208,000  compared  to
$193,000  for the same period of 1997.  The increase in net income of $15,000 or
7.8%,  was primarily due to an increase in net interest  income after  provision
for  recovery  of loan and lease  losses of  $40,000 or 4.6%,  combined  with an
increase  in  non-interest  income of $80,000 or 43%,  offset by an  increase in
non-interest  expense of $97,000 or 12.8%,  and an increase of $8,000 or 8.1% in
income tax expense. The increase in non-interest income is due to an increase in
loan fees,  due to an increase in the volume of loans  closed.  The  increase in
total   non-interest   expense  was  attributable  to  an  increase  of  $10,000
compensation  expense combined with an increase of $60,000 in other non-interest
expense.  The  increase in other  non-interest  expense is  attributable  to the
increased  loan volume.  Net income for the three months ended June 30, 1998 was
$80,000  compared to $90,000 for the same  period of 1997.  The  decrease in net
income of $10,000 or 11.1%,  was  primarily  due to a decrease  in net  interest
income after provision for recovery of loan and lease losses of $20,000 or 4.4%,
combined with an increase in non-interest expense of $45,000 or 11.1%, offset by
an  increase  in  non-interest  income of  $49,000  or 56.3%.  The  increase  in
non-interest  income is due to an increase  in loan fees,  due to an increase in
the volume of loans  closed.  The  increase  in total  non-interest  expense was
attributable to an increase of $44,000 in other non-interest expense,  offset by
a decrease of $7,000 in compensation expense. The increase in other non-interest
expense is attributable to the increased loan volume.
<PAGE> 

                               Net Interest Income

         The primary source of earnings for Ponchatoula is net interest  income;
the  difference  between  income  generated  from  interest-earning  assets less
interest  expense on  interest-bearing  liabilities.  The primary  factors  that
affect  interest  income are changes in the volume and type of  interest-earning
assets and interest-bearing liabilities, along with changes in market rates. Net
interest  income for the first six months of 1998 was  $918,000  an  increase of
$72,000 or 8.5% over the same  period of 1997.  This  increase  in net  interest
income was primarily  attributable to an increase in interest income of $150,000
or 7.1%,  offset by an increase in interest  expense of $78,000 or 6.2% over the
same period of 1997.  The increase in interest  income was due to an increase in
interest  received  from  Ponchatoula's  loan and lease  portfolio,  offset by a
decrease in  interest  earned on  mortgage-backed  securities.  The  increase in
interest  expense was due to a decrease in  interest  paid on deposit  accounts,
offset by an increase in interest paid on Federal Home Loan Bank  Advances.  Net
interest income for the three months ended June 30, 1998 was $450,000 a decrease
of $5,000 or 1.1% over the same period of 1997.  This  decrease in net  interest
income was primarily  attributable to an increase in interest expense of $95,000
or 15.2%,  offset by an increase in interest  income of $90,000 or 8.3% over the
same period of 1997.  The increase in interest  income was due to an increase in
interest  received  from  Ponchatoula's  loan and lease  portfolio,  offset by a
decrease in  interest  earned on  mortgage-backed  securities.  The  increase in
interest  expense was due to a decrease in  interest  paid on deposit  accounts,
offset by an  increase  in  interest  paid on Federal  Home Loan Bank  Advances.
Interest rate spread is the yield of interest-earning  assets minus the costs of
interest-bearing  liabilities. The interest rate spread for the six months ended
June 30. 1998 was 2.64% as compared to 2.57% for the same period in 1997.

         The table of Average  Balance Sheets and Interest Rate Analysis for the
six months ended June 30, 1998 and 1997 on page 13, and the corresponding  table
of Interest  Differentials  on page 14, detail the effect of a change in average
balances and the change in interest yield and interest cost have on net interest
income for the respective periods.

                                       11
<PAGE>
                              Nonperforming Assets

         Nonperforming  assets  include  non-accrual  loans and  leases and real
estate owned.  Loans are considered  non-accrual  when the principal or interest
becomes 90 days past due or when there is uncertainty about the repayment of the
principal  and interest in accordance  with the terms of the loans.  Non-accrual
loans at June 30, 1998 were $226,000  compared to $164,000 at June 30, 1997. The
percentage of non-accrual  loans and leases to total loan and leases at June 30,
1998 and June 30, 1997 is 0.60%.


         Real  estate  owned  is  properties  held  for  sale  acquired  through
foreclosure or negotiated  settlements of debt. At June 30, 1998 the Association
had no real estate owned,  compared to $146,000 at June 30, 1997.  Nonperforming
assets at June 30, 1998 and June 30, 1997 were 0.27% of total assets.


                                       12
<PAGE>
<TABLE>
                       Ponchatoula Homestead Savings, F.A.
          AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS for the six
                       months ended June 30, 1998 and 1997

<CAPTION>
                                                           Six Months Ended                                Six Months Ended
                                                             June 30, 1998                                  June 30, 1997
                                                  ----------------------------------              ---------------------------------
                                                  AVERAGE                     YIELD/              AVERAGE                    YIELD/
                                                  BALANCE       INTEREST       RATE               BALANCE      INTEREST       RATE
                                                  ----------------------------------              ---------------------------------
                                              (In Thousands) (In Thousands)                   (In Thousands) (In Thousands)
<S>                                               <C>            <C>           <C>               <C>            <C>           <C>
Interest - Earning Assets:

       Loans and Leases Receivable                $32,200         1,390        8.63%              $27,981        1,188        8.50% 
       Mortgage - Backed Securities                23,786           738        6.21%               25,822          793        6.14% 
       Investment Securities                        3,306            88        5.32%                2,984           90        6.03% 
       Other Interest - Earning Assets              1,433            46        6.42%                1,363           41        6.02% 
                                                  ----------------------------------              ---------------------------------
       Total Interest - Earning Assets            $60,725         2,262        7.45%              $58,150        2,112        7.26% 

Noninterest - Earning Assets                        1,519                                           1,685
                                                  -------                                         -------
       Total Assets                               $62,244                                         $59,835
                                                  =======                                         =======

Interest - Bearing Liabilities:

       Deposits                                   $42,085           930        4.42%              $44,228        1,001        4.53% 
       Federal Home Loan Bank Advances             13,921           414        5.94%                9,727          265        5.45% 
                                                  ----------------------------------              ---------------------------------
       Total Interest-bearing Liabilities         $56,006         1,344        4.80%              $53,955        1,266        4.69% 

Noninterest - Bearing Liabilities                     373                                             252
                                                  -------                                         -------
       Total Liabilities                          $56,379                                         $54,207
                                                  =======                                         =======

Retained Earnings                                 $ 5,865                                         $ 5,628
                                                  =======                                         =======

       Total Liabilities and Retained Earnings    $62,244                                         $59,835
                                                  =======                                         =======


Net Interest Income; Interest Rate Spread                        $  918        2.65%                           $  846        2.57%
                                                                 ==================                            ================== 


Net Interest Margin as a % of
   Total Earning Assets                                                        3.02%                                         2.91%
                                                                               ====                                          ==== 
</TABLE>


                                       13
<PAGE>
<TABLE>
                       Ponchatoula Homestead Savings, F.A.
                             INTEREST DIFFERENTIALS

                 for the six months ended June 30, 1998 and 1997
<CAPTION>
                                                  June 30, 1998 VS June 30, 1997
                                                  ------------------------------
                                                    CHANGE DUE TO              
                                                    -------------         TOTAL
                                                  VOLUME      RATE        CHANGE
                                                  -----       -----       -----
                                                          (In Thousands)
<S>                                               <C>         <C>         <C>  
Interest - Earning Assets:

       Loans and Lease Receivable ..........      $ 183       $  19       $ 202
       Mortgage-Backed Securities ..........        (63)          8         (55)
       Investment Securities ...............          9         (11)         (2)
       Other Interest-Earning assets .......          2           3           5
                                                  -----       -----       -----
           Total Interest Income ...........      $ 131       $  19       $ 150


Interest - Bearing Liabilities:

       Deposits ............................      $ (48)      $ (23)      $ (71)
       Federal Home Loan Bank Advances .....        123          26         149
                                                  -----       -----       -----
           Total Interest Expense ..........      $  75       $   3       $  78


Increase (Decrease) in Interest Differential      $  56       $  16       $  72
                                                  =====       =====       =====
</TABLE>




                                       14