LOANS AND ASSET QUALITY – Lending activities resulted in growth of $88.5 million, or 9.3%, to $1.0 billion in the loan portfolio at December 31, 2002 as compared to $956.0 million at December 31, 2001. The increase during 2002 was generally due to growth in commercial loans of $68.2 million, or 19.7%, and growth in mortgage loans of $19.3 million, or 9.4%. Loan growth came primarily from the commercial and private banking sectors of the New Orleans and Acadiana Markets, with no one customer representing a disproportionate percentage of the increase. The loss of any one customer, or group of customers engaged in similar activities, would not have a material adverse effect on the Company. The percentage of fixed rate loans within the total loan portfolio has decreased slightly from 72% in 2001 to 71% in 2002.  The following table sets forth the composition of the Company’s loan portfolio as of December 31 for the years indicated. COMMERCIAL LOANS.  Commercial real estate and commercial business loans generally have higher yields and shorter repayment periods than residential 1-4 family loans. The Company has increased its investment in commercial real estate loans from $228.3 million, or 23.9% of the total loan portfolio, as of December 31, 2001 to $254.7 million, or 24.4% of the total loan portfolio, as of December 31, 2002. The increase in commercial real estate loans reflects, in part, the Company's focused efforts to originate such loans in its market area. The Company intends to moderately increase the amount of commercial real estate lending in the Company's portfolio. The properties securing the Company's commercial real estate loans are located in the Company’s market area, and include owner-occupied, multi-family, strip shopping centers, professional office buildings, small retail establishments and warehouses. The Company's underwriting standards generally provide for loan terms of three to five years, with amortization schedules of no more than twenty years. Loan-to-value ratios are usually limited to no more than 80%. As a rule, the Company obtains personal guarantees of the principals as additional security for any commercial real estate loan.  The Company originates commercial business loans on a secured and, to a lesser extent, unsecured basis. As of December 31, 2002, the Company's commercial business loans amounted to $159.3 million, or 15.2% of the Company's gross loan portfolio. The Company's commercial business loans may be structured as term loans or revolving lines of credit. Term loans are generally structured with terms of no more than three to five years, with amortization schedules of no more than seven years. The Company’s commercial business term loans are generally secured by equipment, machinery or other corporate assets. The Company also provides for revolving lines of credit generally structured as advances upon perfected security interests in accounts receivable and inventory. Revolving lines of credit generally have an annual maturity. As a rule, the Company obtains personal guarantees of the principals as additional security for any commercial business loan.  19 TABLE 1 - LOAN PORTFOLIO COMPOSITION December 31, (dollars in thousands) 2002 2001 2000 1999 1998 Commercial loans: Real estate $ 254,688  25% $228,284  24% $196,479  21% $157,248  19% $117,768  15% Other  159,339  15% 117,530  12% 78,986  8% 82,485  10% 83,237  11% Total commercial loans 414,027  40% 345,814  36% 275,465  29% 239,733  29% 201,005  26% Mortgage loans: Residential 1-4 family 207,130  20% 198,403  21% 279,193  30% 266,161  31% 299,987  39% Construction 16,470  1% 5,915  1% 7,482  1% 6,381  1% 7,402  1% Total mortgage loans 223,600  21% 204,318  22% 286,675  31% 272,542  32% 307,389  40% Loans to individuals: Indirect automobile 219,280  21% 220,698  23% 205,143  22% 179,350  21% 118,529  15% Home equity 122,799  12% 114,056  12% 108,070  11% 91,531  11% 73,185  10% Other 64,786  6% 71,129  7% 65,172  7% 59,722  7% 68,127  9% Total consumer loans 406,865  39% 405,883  42% 378,385  40% 330,603  39% 259,841  34% Total loans receivable $1,044,492  100% $956,015  100% $940,525  100% $842,878  100% $768,235  100%