McNeese State University

FORECAST FOR 2005 & 2006

Hibernia National Bank sponsors an annual Louisiana Economic Outlook report which contains projections for the State economy and the eight major metropolitan areas in the state for the next two years. The report was released in October of 2004 by its authors--Professors Loren Scott and James Richardson of Louisiana State University and A.M.M. Jamal of Southeastern Louisiana State University. Key projections for the Lake Charles MSA and the State are summarized below.

LAKE CHARLES MSA FORECAST

According to the report, over the next two year the Lake Charles economy will grow faster than any of the other seven major metropolitan statistical areas in the State.

� Over the 2005-06 forecast period, the projection is for 4,800 net new jobs in the Lake Charles area�2,400 jobs each year.

� Most of the new jobs are expected to result from construction activities (+1,800 jobs) and leisure and entertainment activities (+2,000 jobs). These new jobs are primarily linked to the Citgo Refinery, LNG Terminals, and Pinnacle Entertainment.

o At the Citgo Refinery, a $300 million expansion will increase refining capacity by 105,000 barrels per day and advance it from the 6^th to the 4^th largest refinery in the country. In the summer of 2005, Citgo is expected to begin construction of a $1.3 billion coke-fired cogeneration facility that will require 3,000 construction workers on site. Sometime during the 2005-06 period, Citgo is likely to begin a $250 million diesel desulfurization project.

o Several Liquefied Natural Gas (LNG) Terminals are under construction or planned for the area.

� Southern Union-Trunkline has a $116 million project under construction to double the size of its existing LNG terminal.

� Sempara Energy is spending $700 million on a new LGN terminal near Hackberry.

� Shell Oil is getting permits to build a $700 million LNG terminal just off the coast near Lake Charles .

� Cheniere Energy has received approval from the FERC to build a $650 million terminal near the Sabine Pass in Cameron Parish.

� Excelerate Energy plans to build an � Energy Bridge � about 166 miles off the coast below Lake Charles .

o Pinnacle Entertainment will open its new casino resort in Lake Charles in early 2005. Pinnacle is spending $365 million on its casino complex which also includes a golf course and a 26-story hotel with 746 rooms. By the time Pinnacle opens for business it expects to hire 1,522 employees. The net impact of the Pinnacle opening will depend on the extent to which the regional gaming market (largely supported by visitors from Houston) expands or is saturated and therefore results in a reallocation of gaming business from existing gaming operations at the Isle of Capri, Harrah�s, and Delta Downs.

� The favorable forecast for the Lake Charles MSA is also influenced by some planned changes at the Chennault Airpark.

o EADS now has about 350 employees and expects to add 25-50 more by the end of 2004. If business develops as planned, it will add two more �lines� at 75 new employees per line.

o Northrup Grumman is between JSTARS and E10A contracts and may drop from 600 employees to 200 this year. In mid-2006 the E10A contract will start and the firm will add 200-250 employees, with plans to grow to the 750-range by 2008.

� The biggest negative for the Lake Charles economy is expected to come from a continuing loss of manufacturing sector jobs (-500 jobs), primarily from the chemical industry, where record high natural gas and oil prices continue to impair the ability of local plants to compete in the global market.

Detailed employment projections for the Lake Charles MSA are shown in the table below.

NON-AGRICULTURAL WAGE & SALARY EMPLOYMENT

LAKE CHARLES

Thousands

	Annual Average					Percent Change
Sector	Actual			Projected		Actual		Projected
	2002	2003	2004	2005	2006	2003	2004	2005	2006

Natural Resources & Mining	0.8	0.5	0.5	0.5	0.5	-37.5	0.0	0.0	0.0

Contract Construction	9.1	8.5	8.5	9.2	10.3	-6.6	0.0	8.2	12.0

Manufacturing	9.7	9.3	8.7	8.3	8.2	-4.1	-6.5	-4.6	-1.2

Trade, Transportation, Utilities	16.5	16.8	17	17.1	17.3	1.8	1.2	0.6	1.2

Information	1.6	1.5	1.4	1.4	1.4	-6.3	-6.7	0.0	0.0

Financial Activities	3.2	3.4	3.5	3.6	3.7	6.3	2.9	2.9	2.8

Professional & Business Services	6.5	6.4	6.8	7.0	7.2	-1.5	6.3	2.9	2.9

Education & Health Services	10.6	10.8	11.1	11.3	11.5	1.9	2.8	1.8	1.8

Leisure, Hospitality & Other	14.4	14.3	14.6	16.0	16.6	-0.7	2.1	9.6	3.8

Government	13.5	13.6	13.5	13.6	13.7	0.7	-0.7	0.7	0.7

Total	85.9	85.1	85.6	88.0	90.4	-0.9	0.6	2.8	2.7

2004 based on 6 months of data.

STATE OF LOUISIANA FORECAST

For the State economy, the forecast is that:

� The number of net new jobs will increase by 0.9% in 2005 and 1.2% in 2006 with a total of 40,100 new jobs in the Louisiana economy over the next two years.

� This compares with a the recessionary period of 2001-02 when the State lost 22,100 jobs, and the period of very weak growth during the 2003-04 when the state gained only 14,400 jobs (+0.4% annually)

Projections for growth across the different sectors of the State economy are mixed.

� Despite relatively high oil and natural gas prices, the extraction industry is projected to gain only 400 new jobs over the 2005-06 period. This sector is experiencing almost no increase in the rig count or employment due to new tort issues in the industry.

� The chemical industry is projected to loose another 1,700 jobs by 2006 as continuing high domestic natural gas and energy costs impair the ability of Louisiana chemical manufacturers to compete in global markets.

� The transportation equipment sector is projected to expand by 2,200 jobs with additional hiring by the Avondale and Bollinger Shipyards, the new Union Tank Car facility in Alexandria , and the likely addition of the Hummer 3 production line at GM�s plant in Shreveport .

� Though extraction-related layoffs will be a drag on the fabricated metals industry, significant new additions at Beaird Industries, CellXion, and the potential re-opening of American Iron Reduction (due to high steel prices) will boost employment in this sector by 300 jobs.

� Labor-saving technological advancements will stabilize employment in food processing and drive employment down further in the paper and refining industries.

� Construction employment will reverse recent trends and rise by 4,300 jobs, bolstered by work on at least 7 large LNG facilities, unusually large projects at the Citgo and ConocoPhillips refineries, and large capital expenditures planned by two of the State�s utility companies.

� Because of the growth in the sectors mentioned above, several feeder sectors will enjoy improved growth of the 2005-06 period: trade/transportation/utilities (+6,800) jobs), professional and business services (+2,900 jobs), healthcare (+6,000 jobs), local government (+3,500 jobs), and state government (+2,200 jobs). The leisure/hospitality sector should gain 8,700 jobs because of the opening of the 15^th riverboat casino (Pinnacle), the opening of several new hotels, and a booming restaurant industry.

� Louisiana personal income is projected to rise by an annual rate of 3.8% in 2005 and by 3.9% in 2006.

� The State�s population is projected to creep up by only 0.3% per year�hampered in its growth by serious net out-migration.

Detailed projections for the Louisiana State economy are shown in the table below.

Louisiana Non-Farm Wage & Salary Employment

Thousands

	Annual Average					Percent Change
Sector	Actual			Projected		Actual		Projected
	2002	2003	2004	2005	2006	2003	2004	2005	2006
Natural Resources & Mining	48.4	47.6	47.4	47.7	48.0	-1.7%	-0.4%	0.6%	0.6%
Oil & Gas Extraction	9.8	9.3	9.4	9.5	9.6	-5.1%	1.1%	1.1%	1.1%
Support Activities for Mining	33.8	33.5	32.7	32.8	32.9	-0.9%	-2.4%	0.3%	0.3%

Construction	119.0	119.0	117.0	119.2	121.3	0.0%	-1.7%	1.9%	1.8%

Manufacturing	160.7	155.8	154.6	154.3	155.2	-3.0%	-0.8%	-0.2%	0.6%
Durable Goods	80.5	78.2	78.2	79.0	80.7	-2.9%	-0.0%	1.0%	2.2%
Fabricated Metals	17.3	16.4	15.7	15.8	16.0	-5.2%	-4.3%	0.6%	1.3%
Transportation Equip.	22.1	22.9	23.3	24.0	25.5	3.6%	1.7%	3.0%	6.3%
Nondurable Goods	80.1	77.5	76.4	75.3	74.5	-3.2%	-1.4%	-1.4%	-1.1%
Food & Kindred Products	18.6	18.4	18.5	18.6	18.7	-1.1%	0.5%	0.5%	0.5%
Paper & Allied Products	10.6	10.2	10.1	10.0	9.9	-3.8%	-1.0%	-1.0%	-1.0%
Chemicals	25.7	24.6	23.5	22.5	21.8	-4.3%	-4.5%	-4.3%	-3.1%
Petroleum & Coal	10.5	10.5	10.2	10.1	10.0	0.0%	-2.9%	-1.0%	-1.0%

Trade, Transportation and Utilities	384.3	381.0	383.0	386.9	392.2	-0.9%	0.5%	1.0%	1.4%
Wholesale Trade	77.2	75.7	74.9	75.3	76.1	-1.9%	-1.1%	0.5%	1.1%
Retail Trade	225.1	223.2	226.2	229.3	233.0	-0.8%	1.3%	1.4%	1.6%
General Merchandise	49.4	49.2	49.0	49.7	50.5	-0.4%	-0.4%	1.4%	1.6%
Food & Beverage Stores	43.0	41.6	41.3	40.9	40.6	-3.3%	-0.7%	-1.0%	-0.7%
Auto & Parts Dealers	28.1	28.0	28.4	28.9	29.3	-0.4%	1.4%	1.8%	1.4%
Utilities	10.1	9.9	9.7	9.7	9.7	-2.0%	-2.0%	0.0%	0.0%
Transportation & Warehousing	72.0	72.3	72.2	72.6	73.4	0.4%	-0.1%	0.6%	1.1%

Information	29.0	29.1	29.2	29.3	29.4	0.3%	0.3%	0.3%	0.3%

Financial Activities	99.9	101.1	100.5	99.9	100.6	1.2%	-0.6%	-0.6%	0.7%
Finance & Insurance	66.5	67.8	68.1	67.1	67.4	2.0%	0.4%	-1.5%	0.4%
Real Estate	33.4	33.3	32.4	32.8	33.2	-0.3%	-2.7%	1.2%	1.2%

Professional & Business Services	180.6	178.9	179.2	180.5	182.1	-0.9%	0.2%	0.7%	0.9%
Prof. Scientific & Tech Services	68.5	69.2	70.0	71.0	72.5	1.0%	1.2%	1.4%	2.1%
Management of Companies	22.8	21.5	21.0	20.5	20.0	-5.7%	-2.3%	-2.4%	-2.4%
Admin. Support & Waste Mgt.	89.3	88.2	88.2	89.0	89.6	-1.2%	0.0%	0.9%	0.7%

Education & Health Service	235.8	244.7	249.8	253.6	257.4	3.8%	2.1%	1.5%	1.5%
Education Services	35.2	36.2	39.3	40.1	40.9	2.8%	8.6%	2.0%	2.0%
Health Services	200.6	208.5	210.5	213.5	216.5	3.9%	1.0%	1.4%	1.4%

Leisure & Hospitality	194.6	198.4	201.0	205.1	209.7	2.0%	1.3%	2.0%	2.2%
Arts, Entertainment, Recreation	37.2	36.6	36.2	36.9	37.5	-1.6%	-1.1%	1.9%	1.6%
Accommodation	25.3	25.7	26.2	26.7	27.3	1.6%	1.9%	1.9%	2.2%
Eating & Drinking Places	132.1	136.1	138.6	141.5	144.9	3.0%	1.8%	2.1%	2.4%

Other Services	70.5	70.7	70.4	70.8	71.2	0.3%	-0.4%	0.6%	0.6%

Government	374.9	378.4	380.1	382.5	385.2	0.9%	0.4%	0.6%	0.7%
Federal	35.2	35.2	34.8	34.5	34.2	0.0%	-1.1%	-0.9%	-0.9%
State	115.9	117.9	118.3	119.4	120.5	1.7%	0.3%	0.9%	0.9%
Local	223.9	225.4	227.0	228.6	230.5	0.7%	0.7%	0.7%	0.8%
Total	1897.8	1904.7	1912.2	1929.8	1952.3	0.4%	0.4%	0.9%	1.2%