Tensas State Bank St. Joseph hostage
Two hostages were shot by suspect Fuaed Abdo Ahmed who was killed by police at Tensas State Bank, St. Joseph, Louisiana (Google)

A hostage situation at a Louisiana bank ended in a hail of bullets, as the suspect was killed by police after shooting dead one hostage and critically injouring another.

A Swat team stormed Tensas State Bank building, in the rural town of St. Joseph, and killed Fuaed Abdo Ahmed, just before midnight.

Ahmed, who police described as a paranoid schizophrenic in his 20s' already known to authorities, had entered the local bank armed with a rifle and a handgun about 12 hours earlier.

The gunmen took two women and a man captive, in what police said was a planned attack induced by his mental condition.

"He was mad at people that he said were mean to him. He had voices in his head," State Police superintendent Col. Mike Edmonson said, adding the incident wasn't a bank robbery.

The suspect also had a duffel bag that contained items he was going to torture the hostages with, Edmonson said.

"His intent was to inflict pain and kill these individuals," he said.

A tense standoff erupted during which negotiators persuaded Ahmed to free one of the female hostages.

Negotiations brokedown hours later, as the gunman said he was going to kill the remaining hostages.

Ahmed shot the man and the woman in upper body with a handgun and was subsequently gunned down by security forces.

The two hostages were rushed to a local hospital in critical conditions. "We're going to pray hard that these individuals make it," Edmonson said.

Edmonson said both showed signs of life when were taken away from the scene. However authroites later said one has died.

The city of St. Joseph lies on the Mississippi river about 35 miles south of Tallulah, and is home to less than 1,500 people.