Rebuilding efforts are underway in metropolitan New Orleans. The U.S. Department of Housing and Urban Development has approved a plan for up to $10.8 billion in grants to qualified homeowners under Louisiana’s Road Home Program. There are plans for a $100 million, federally funded grant program for small businesses affected by the hurricane. The Louisiana Recovery Authority, which oversees distribution of Federal relief funds, has earmarked $20 million to promote tourism in New Orleans.

The local economy in southern Louisiana is reliant on a variety of sectors. Traditionally, the oil industry, the Port of New Orleans and tourism were the bellweathers of the local economy. The local economy has diversified, although oil, shipping and tourism remain important sectors of the economy. Government is a large employer in Orleans Parish due to substantial presence of U.S. Navy installations and other military operations. In addition, shipbuilding had been important to the economy of New Orleans.

Service jobs represent the largest employment sector in both Jefferson and Orleans Parish. Currently, Jefferson Parish’s population base exceeds that of New Orleans’. The 2006 median household income in Jefferson and Orleans Parishes was $40,713 and $31,257, respectively, compared to $51,546 for the entire United States. Population in Jefferson Parish decreased by 3.8% from 2000 through 2006, but is projected to increase by 2.7% through 2011, compared to the projected 1.3% increase for the United States as a whole.

The Company is primarily engaged in attracting deposits from the general public and using those funds to invest in loans and securities. The Company’s principal sources of funds are deposits, repayments of loans and mortgage-backed securities, maturities of investments and interest-bearing deposits, other funds provided from operations and funds borrowed from outside sources such as the Federal Home Loan Bank of Dallas.

At December 31, 2006, the Company’s net loan portfolio totaled $89.3 million or 40.6% of total assets. Historically, the Company’s principal lending activity has been the origination of loans collateralized by one- to four-family, also known as “single-family,” residential real estate loans located in its market area.

The Company has increased its emphasis on originating multi-family (over four units) residential, commercial real estate and land loans in recent years. The Company’s also originates consumer loans, consisting primarily of home equity loans and lines of credit and student loans, and other loans.

The types of loans that the Company may originate are subject to federal and state law and regulations. Interest rates charged by the Company on loans are affected principally by the demand for such loans and the supply of money available for lending purposes and the rates offered by the Company’s competitors.

At December 31, 2006, the Company’s investment and mortgage-backed securities amounted to $117.0 million in the aggregate or 53.2% of total assets at such date. The largest component of the Company’s securities portfolio in recent periods has been mortgage-backed securities, which amounted to $91.6 million or 78.3% of the securities portfolio at December 31, 2006. In addition, the Company invests in U.S. government and agency obligations, municipal securities, corporate debt obligations and other securities.

Total interest income amounted to $12.2 million for the year ended December 31, 2006 compared to $11.2 million for the year ended December 31, 2005.

Total interest expense amounted to $5.3 million for the year ended December 31, 2006 compared to $4.9 million for the year ended December 31, 2005, an increase of $419,000 or 8.5%.

Non-interest income decreased by $190,000, or 31.1%, to $421,000 for the year ended December 31, 2006 compared to $611,000 for the year ended December 31, 2005.

Non-interest expense increased by $372,000, or 8.4%, to $4.8 million for the year ended December 31, 2006 compared to $4.4 million for the year ended December 31, 2005.