<PAGE>   1
                                                                  Exhibit 13.1

 
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders
Big Lake Financial Corporation and Subsidiary
Okeechobee, Florida
 
     We have audited the consolidated balance sheets of Big Lake Financial
Corporation and Subsidiary (the "Company") as of December 31, 1998 and 1997, and
the related consolidated statements of operations and comprehensive income, cash
flows, and changes in stockholders' equity for each of the two years in the
period ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Big Lake
Financial Corporation and Subsidiary as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
 
STEVENS, SPARKS & COMPANY, P.A.
 
January 15, 1999
 
<PAGE>   2
 
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1998       1997
                                                              --------   --------
                                                                  (DOLLARS IN
                                                               THOUSANDS, EXCEPT
                                                                PER SHARE DATA)
<S>                                                           <C>        <C>
                                     ASSETS
Cash and cash equivalents:
  Cash and due from banks...................................  $  6,626   $  6,492
  Federal funds sold........................................     1,150      3,296
                                                              --------   --------
          Total cash and cash equivalents...................     7,776      9,788
Securities available-for-sale...............................    58,662     21,958
Securities held-to-maturity (market value of $926 for 1998
  and $823 for 1997)........................................       898        801
Loans.......................................................    75,103     73,972
Facilities..................................................     3,174      2,626
Accrued interest receivable.................................     1,125        813
Deferred income taxes.......................................       582        424
Intangible assets...........................................     2,458        616
Other assets................................................       774        794
                                                              --------   --------
          Total assets......................................  $150,552   $111,792
                                                              ========   ========
                                   LIABILITIES
Deposits:
  Noninterest-bearing demand deposits.......................  $ 28,802   $ 19,793
  Demand deposits...........................................    20,991     13,807
  Money market accounts.....................................     7,070      6,891
  Savings accounts..........................................    17,399     11,301
  Time, $100,000 and over...................................     8,385      6,252
  Other time deposits.......................................    55,961     43,288
                                                              --------   --------
          Total deposits....................................   138,608    101,332
Other borrowings............................................       500         --
Accrued interest payable on deposits........................       757        755
Accounts payable and accrued liabilities....................       207        282
                                                              --------   --------
          Total liabilities.................................   140,072    102,369
                                                              --------   --------
Commitments and contingencies...............................        --         --
                                                              --------   --------
                              STOCKHOLDERS' EQUITY
 
Common stock, $.01 par value, authorized 1,000,000 shares,
  issued 490,001 shares in 1998 and 475,223 shares in
  1997......................................................         5          5
Additional paid-in capital..................................     7,168      6,855
Retained earnings...........................................     3,395      2,569
Net unrealized holding losses on securities.................       (88)        (6)
                                                              --------   --------
          Total stockholders' equity........................    10,480      9,423
                                                              --------   --------
          Total liabilities and stockholders' equity........  $150,552   $111,792
                                                              ========   ========
Book value per common share.................................  $  21.39   $  19.36
                                                              ========   ========
Common shares outstanding, adjusted for stock dividends.....   490,001    486,815
                                                              ========   ========
</TABLE>
 
          See Accompanying Notes to Consolidated Financial Statements.
 
<PAGE>   3
 
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 
<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS,
                                                              EXCEPT PER SHARE DATA)
<S>                                                           <C>           <C>
INTEREST INCOME
  Interest and fees on loans................................   $7,033        $4,332
  Interest and dividend income from investment securities...    1,422           981
  Income on federal funds sold..............................      639           177
  Interest on deposits with other banks.....................       --             1
                                                               ------        ------
          Total interest income.............................    9,094         5,491
                                                               ------        ------
INTEREST EXPENSE
  Interest on deposits......................................    3,460         2,203
  Other.....................................................        4             1
                                                               ------        ------
          Total interest expense............................    3,464         2,204
                                                               ------        ------
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES......    5,630         3,287
PROVISION FOR CREDIT LOSSES.................................      144           280
                                                               ------        ------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES.......    5,486         3,007
                                                               ------        ------
OTHER INCOME
  Service charges on deposit accounts.......................    1,067           718
  Other fees for customer service and other income..........      138            96
                                                               ------        ------
          Total other income................................    1,205           814
                                                               ------        ------
OTHER EXPENSES
  Salaries and employee benefits............................    2,335         1,375
  Expenses of bank premises and fixed assets................      736           367
  Other operating expenses..................................    1,972         1,105
                                                               ------        ------
          Total other expenses..............................    5,043         2,847
                                                               ------        ------
INCOME BEFORE PROVISION FOR INCOME TAXES....................    1,648           974
PROVISION FOR INCOME TAXES..................................      574           316
                                                               ------        ------
NET INCOME..................................................    1,074           658
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES:
  Unrealized holding gains (losses) on securities arising
     during period..........................................      (82)           63
                                                               ------        ------
COMPREHENSIVE INCOME........................................   $  992        $  721
                                                               ======        ======
</TABLE>
 
          See Accompanying Notes to Consolidated Financial Statements.
 
<PAGE>   4
 
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                1998           1997
                                                              ---------      --------
                                                              (DOLLARS IN THOUSANDS,
                                                              EXCEPT PER SHARE DATA)
<S>                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income................................................  $  1,074       $   658
  Adjustments to reconcile net income to net cash provided
     by (used in) operating activities:
     Provision for loan losses..............................       144           280
     Depreciation and amortization..........................       386           225
     Deferred income tax....................................      (105)          (30)
     Net premium amortization and discount accretion........       (16)          (13)
     Compensation recorded on stock options exercised.......        38            --
     (Increase) decrease in assets:
       Accrued interest receivable..........................      (312)          (51)
       Other assets.........................................       (69)           (3)
     Increase (decrease) in liabilities:
       Accounts payable and accrued liabilities.............       (73)          268
                                                              --------       -------
          Net cash provided by operating activities.........     1,067         1,334
                                                              --------       -------
CASH FLOWS FROM INVESTING ACTIVITIES
  Securities available-for-sale:
     Purchases..............................................   (59,826)       (3,729)
     Proceeds from maturities...............................    23,000         3,249
  Securities held-to-maturity:
     Purchases..............................................      (398)           --
     Proceeds from maturities...............................       304            --
  Proceeds from sale of other real estate...................       563            34
  Increase in loans.........................................    (1,749)       (6,756)
  Purchases of facilities...................................      (834)         (544)
  Premium paid on acquisition of branch deposits............    (1,942)           --
                                                              --------       -------
          Net cash used in investing activities.............   (40,882)       (7,746)
                                                              --------       -------
CASH FLOWS FROM FINANCING ACTIVITIES
  Increase in deposits:
     Noninterest-bearing....................................     9,009         3,059
     Interest-bearing.......................................    28,267         1,377
  Proceeds from other borrowings............................       500            --
  Proceeds from stock options exercised.....................        32            --
  Cash paid in lieu of fractional shares....................        (5)           --
                                                              --------       -------
          Net cash provided by financing activities.........    37,803         4,436
                                                              --------       -------
NET DECREASE IN CASH AND CASH EQUIVALENTS...................    (2,012)       (1,976)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..............     9,788        11,764
                                                              --------       -------
CASH AND CASH EQUIVALENTS, END OF PERIOD....................  $  7,776       $ 9,788
                                                              ========       =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash received during the year for interest and
     dividends..............................................  $  8,782       $ 5,426
                                                              ========       =======
  Cash paid during the year for interest....................  $  3,462       $ 1,986
                                                              ========       =======
  Cash paid during the year for income taxes................  $    897       $   234
                                                              ========       =======
  Cash and cash equivalents acquired in the acquisition of
     CNB Financial Corporation's common stock...............  $     --       $ 5,386
                                                              ========       =======
</TABLE>
 
          See Accompanying Notes to Consolidated Financial Statements.
 
<PAGE>   5
 
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
 
<TABLE>
<CAPTION>
                                                                                      NET
                                                                                  UNREALIZED
                                                                                    HOLDING
                                        CAPITAL STOCK     ADDITIONAL                 GAINS          TOTAL
                                      -----------------    PAID-IN     RETAINED   (LOSSES) ON   STOCKHOLDERS'
                                       SHARES    AMOUNT    CAPITAL     EARNINGS   SECURITIES       EQUITY
                                      --------   ------   ----------   --------   -----------   -------------
                                                              (DOLLARS IN THOUSANDS)
<S>                                   <C>        <C>      <C>          <C>        <C>           <C>
BALANCE, DECEMBER 31, 1996..........   313,435    $ 3       $3,070      $1,852       $(71)         $ 4,854
Stock issued to acquire CNB
  Financial Corporation.............   166,512      2        3,785          --          2            3,789
Treasury stock canceled.............    (4,724)    --           --          59         --               59
Comprehensive income:
  Net income........................        --     --           --         658         --
  Net change in net unrealized
     holding gains on securities....                                                   63
          Total comprehensive
            income..................        --     --           --          --         --              721
                                      --------    ---       ------      ------       ----          -------
BALANCE, DECEMBER 31, 1997..........   475,223      5        6,855       2,569         (6)           9,423
Stock dividend declared.............    11,592     --          243        (243)        --               --
Cash paid in lieu of fractional
  shares............................        --     --           --          (5)        --               (5)
Stock options exercised.............     3,186     --           70          --         --               70
Comprehensive income:...............        --     --           --          --         --
  Net income........................        --     --           --       1,074         --
  Net change in net unrealized
     holding losses on securities...                                                  (82)
          Total comprehensive
            income..................        --     --           --          --         --              992
                                      --------    ---       ------      ------       ----          -------
BALANCE, DECEMBER 31, 1998..........   490,001    $ 5       $7,168      $3,395       $(88)         $10,480
                                      ========    ===       ======      ======       ====          =======
</TABLE>
 
          See Accompanying Notes to Consolidated Financial Statements.
 
<PAGE>   6
 
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998
 
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
 
GENERAL:
 
     The consolidated financial statements include the accounts and transactions
of Big Lake Financial Corporation (the "Company") and its wholly-owned
subsidiary, Big Lake National Bank ("BLNB"). All significant intercompany
accounts and transactions have been eliminated in consolidation. The accounting
and reporting policies of BLNB and the Company conform with generally accepted
accounting principles and with general practices within the banking industry.
 
     On May 1, 1998, Clewiston National Bank ("CNB") was merged with and into
BLNB and the transaction was accounted for as a pooling-of-interests. CNB was
acquired by the Company through its acquisition of CNB Financial Corporation on
October 31, 1997. The acquisition of CNB Financial Corporation was accounted for
under the purchase accounting method. See Note 21 to the Consolidated Financial
Statements.
 
     On November 19, 1998, BLNB purchased certain assets and assumed certain
liabilities from two branches owned by First Union National Bank ("First
Union"). See Note 22 to the Consolidated Financial Statements.
 
     BLNB, a national banking association, and the Company are subject to
regulations issued by certain regulatory agencies and undergo periodic
examinations by those agencies. BLNB provides a wide range of banking services
to individual and corporate customers through its branch network, which
includes:
 
     - Its main office, which opened in July, 1986, at 1409 South Parrott
       Avenue, Okeechobee, Florida,
     - Taylor Creek Branch, also located in Okeechobee, Florida, which opened in
       November, 1992,
     - Lake Placid Branch, which was acquired from First America
       Bank -- Florida, FSB in December, 1995,
     - Former CNB branches located in Clewiston, LaBelle, and Moore Haven,
       Florida, and
     - Former First Union branches located in Wauchula and Arcadia, Florida.
 
     At December 31, 1998, BLNB's primary trade area encompassed Okeechobee,
Highlands, Hendry, Glades, Hardee, and DeSoto Counties. The majority of BLNB's
loans are currently to customers located in these counties.
 
USE OF ESTIMATES:
 
     In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ significantly from those estimates.
 
     Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses, the fair value of
financial instruments, and the valuation of real estate acquired in connection
with foreclosures or in satisfaction of loans ("Other Real Estate Owned"). In
connection with the determination of the allowances for credit losses on loans
and foreclosed real estate, management obtains independent appraisals for
significant properties.
 
     Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, including
independent appraisals for significant properties, future additions to the
allowance may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the allowance based on their judgments about information
available to them at the time of their examination.
 
<PAGE>   7
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INVESTMENTS:
 
     Statement of Financial Accounting Standards No. 115 ("FAS No. 115"),
Accounting for Certain Investments in Debt and Equity Securities, sets the
standard for classification of and accounting for investments in equity
securities that have readily determinable fair values, and all investments in
debt securities which are to be classified as held-to-maturity securities,
available-for-sale securities, or trading securities.
 
     Debt securities that an enterprise has the positive intent and ability to
hold to maturity are classified as held-to-maturity securities and reported at
amortized cost. Debt and equity securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses included
in earnings. Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized gains
and losses excluded from earnings and reported as a separate component of
stockholders' equity.
 
     BLNB classifies its investments at the purchase date in accordance with the
above-described guidelines. Premiums or discounts on securities at the date of
purchase are being amortized or accreted, respectively, over the estimated life
of the security using a method which approximates the level yield method. Gains
and losses realized on the disposition of securities are based on the specific
identification method and are reflected in other income.
 
LOANS:
 
     Loans receivable are stated at unpaid principal balances, less the
allowance for credit losses and net deferred loan fees and unearned discounts.
Unearned discounts on installment loans are recognized as income over the term
of the loans using a method that approximates the interest method. Nonrefundable
loan fees and certain direct loan origination costs are deferred and the net
amount is recognized into income over the life of the loans as a yield
adjustment.
 
     Interest income on loans is accounted for on the accrual basis. Generally,
the BLNB's policy is to discontinue the accrual of interest on loans delinquent
over ninety days unless fully secured and in the process of collection. The
accrued and unpaid interest is reversed from current income and thereafter
interest is recognized only to the extent payments are received. A nonaccrual
loan may be restored to accrual basis when interest and principal payments are
current and prospects for future recovery are no longer in doubt.
 
     In 1995, the Company adopted Statement of Financial Accounting Standards
No. 114 ("FAS No. 114"), Accounting by Creditors for Impairment of a Loan, which
sets the standard for recognition of loan impairment and the measurement methods
for certain impaired loans and loans whose terms are modified in troubled debt
restructurings.
 
     Under FAS No. 114, a loan is impaired when it is probable that a creditor
will be unable to collect the full amount of principal and interest due
according to the contractual terms of the loan agreement. When a loan is
impaired, a creditor has a choice of ways to measure the impairment. The
measurement of impairment may be based on (1) the present value of the expected
future cash flows of the impaired loan discounted at the loan's original
effective interest rate, (2) the observable market price of the impaired loan,
or (3) the fair value of the collateral of a collateral-dependent loan.
Creditors may select the measurement method on a loan-by-loan basis, except that
collateral-dependent loans for which foreclosure is probable must be measured at
the fair value of the collateral. A creditor in a troubled debt restructuring
involving a restructured loan should measure impairment by discounting the total
expected future cash flows at the loan's original effective rate of interest. If
the value of the loan is less than the recorded investment in the loan, a loss
should be recognized by recording a valuation allowance and a corresponding
increase to the provision for credit losses charged to operating expenses.
<PAGE>   8
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
ALLOWANCE FOR CREDIT LOSSES:
 
     The provision for credit losses charged to operating expenses is based upon
management's judgment of the adequacy of the allowance giving consideration to
its loan loss experience and an evaluation of the current loan portfolio.
 
     The allowance for credit losses is maintained at a level which, in
management's judgment, is adequate to absorb credit losses inherent in the loan
portfolio. The amount of the allowance is based on management's evaluation of
the collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specific impaired
loans, and economic conditions. Allowances for impaired loans are generally
determined based on collateral values or the present value of estimated cash
flows. The allowance is increased by a provision for credit losses, which is
charged to expense, and reduced by charge-offs, net of recoveries.
 
FACILITIES:
 
     Facilities are stated at cost, less accumulated depreciation and
amortization. Charges to income for depreciation and amortization are computed
on the straight-line method over the assets' estimated useful lives.
 
     When properties are sold or otherwise disposed of, the gain or loss
resulting from the disposition is credited or charged to income. Expenditures
for maintenance and repairs are charged against income and renewals and
betterments are capitalized.
 
OTHER REAL ESTATE OWNED:
 
     Real estate properties acquired through, or in lieu of, loan foreclosure
are to be sold and are initially recorded at fair value at the date of
foreclosure establishing a new cost basis. After foreclosure, valuations are
periodically performed by management and the real estate is carried at the lower
of carrying amount or fair value less cost to sell. Revenue and expenses from
operations and changes in the valuation allowance are included in loss on
foreclosed real estate.
 
INTANGIBLE ASSETS:
 
     Intangible assets (consisting of core deposit premium and goodwill) are
amortized on a straight-line basis over a period of seven to fifteen years. For
income tax purposes, intangibles are amortized over fifteen years on a
straight-line basis.
 
     The amortization for core deposit premium and goodwill totaled $100,000 in
1998 and $85,000 in 1997.
 
OFF-BALANCE SHEET INSTRUMENTS:
 
     In the ordinary course of business, the BLNB has entered into off-balance
sheet financial instruments consisting of commitments to extend credit and
standby letters of credit. Such financial instruments are recorded in the
financial statements when they become payable.
 
EMPLOYEE BENEFITS:
 
     Profit-sharing costs are charged to salaries and employee benefits expense
and are funded as accrued.
 
INCOME TAXES:
 
     Provisions for income taxes are based on amounts reported in the statements
of operations, after exclusion of non-taxable income such as interest on state
and municipal securities, and include deferred taxes on temporary differences in
the recognition of income and expense for tax and financial statement purposes.
The
 
<PAGE>   9
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
principal temporary differences are depreciation and amortization, credit loss
provision, CNB merger expenses and purchase accounting adjustments, and
unrealized holding gains (losses) on securities. Deferred taxes are computed on
the liability method as prescribed in FAS No. 109, Accounting for Income Taxes.
 
EARNINGS PER SHARE:
 
     Earnings per share ("EPS") of common stock is computed by dividing net
income by the weighted-average number of shares of common stock outstanding
during the period. Basic earnings per share amounts are computed by dividing net
earnings by the weighted average number of common shares outstanding during the
period. Diluted earnings per share are computed by dividing net earnings by the
weighted average number of shares and all dilutive potential shares outstanding
during the period. As discussed in Note 15 to the Consolidated Financial
Statements, the Company declared a 2.5% stock dividend in 1998. The average
number of shares and dilutive potential shares have been restated for the stock
dividend. The following information was used in the computation of earnings per
share on both a basic and diluted basis for the years ended December 31, 1998
and 1997.
 
<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1998        1997
                                                              --------    --------
                                                              (IN THOUSANDS EXCEPT
                                                                PER SHARE DATA)
<S>                                                           <C>         <C>
Basic EPS computation:
  Numerator -- Net income...................................   $1,074      $  658
                                                               ------      ------
  Denominator -- Weighted average shares outstanding........      489         345
                                                               ------      ------
  Basic EPS.................................................   $ 2.20      $ 1.91
                                                               ======      ======
Diluted EPS computation:
  Numerator -- Net income...................................   $1,074      $  658
                                                               ------      ------
  Denominator -- Weighted average shares outstanding........      489         345
  Stock options.............................................        9          11
                                                               ------      ------
                                                                  498         356
                                                               ------      ------
  Diluted EPS...............................................   $ 2.16      $ 1.85
                                                               ======      ======
</TABLE>
 
STATEMENTS OF CASH FLOWS:
 
     For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts on deposit in noninterest-bearing accounts with other
commercial banks, and federal funds sold.
 
RECLASSIFICATION OF ACCOUNTS:
 
     Certain items in the financial statements for 1997 have been reclassified
to conform to the classifications used for the current year.
 
<PAGE>   10
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 2 -- INVESTMENT SECURITIES
 
     The amortized cost and estimated fair value of instruments in debt and
equity securities at December 31, 1998, are as follows:
 
<TABLE>
<CAPTION>
                                                               GROSS        GROSS      ESTIMATED
                                                 AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                   COST        GAINS        LOSSES       VALUE
                                                 ---------   ----------   ----------   ---------
                                                             (DOLLARS IN THOUSANDS)
<S>                                              <C>         <C>          <C>          <C>
Securities available-for-sale:
  U.S. Government agencies.....................   $58,486       $10          $151       $58,345
  Mortgage-backed securities...................       179        --            --           179
  Other........................................       138        --            --           138
                                                  -------       ---          ----       -------
                                                  $58,803       $10          $151       $58,662
                                                  =======       ===          ====       =======
Securities to be held-to-maturity:
  State and municipal..........................   $   898       $28          $ --       $   926
                                                  =======       ===          ====       =======
</TABLE>
 
     The amortized cost and estimated fair value of instruments in debt and
equity securities at December 31, 1997, are as follows:
 
<TABLE>
<CAPTION>
                                                               GROSS        GROSS      ESTIMATED
                                                 AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                   COST        GAINS        LOSSES       VALUE
                                                 ---------   ----------   ----------   ---------
                                                             (DOLLARS IN THOUSANDS)
<S>                                              <C>         <C>          <C>          <C>
Securities available-for-sale:
  U.S. Government agencies.....................   $21,484       $11          $ 21       $21,474
  Mortgage-backed securities...................       250         1            --           251
  State and municipal..........................        95        --            --            95
  Other........................................       138        --            --           138
                                                  -------       ---          ----       -------
                                                  $21,967       $12          $ 21       $21,958
                                                  =======       ===          ====       =======
Securities to be held-to-maturity:
  State and municipal..........................   $   801       $22          $  -       $   823
                                                  =======       ===          ====       =======
</TABLE>
 
     The fair value of securities fluctuates during the investment period. No
provision for loss has been made in connection with the decline of fair value
below book value, because the securities are purchased for investment purposes
and the decline is not deemed to be other than temporary. Temporary declines in
fair value of securities available-for-sale at December 31, 1998, of $88,000
(net of deferred income taxes of $53,000) are regarded as an adjustment to
stockholders' equity. The estimated fair value of securities is determined on
the basis of market quotations. At December 31, 1998, securities with carrying
value of approximately $4,196,000, and market values of approximately
$4,236,000, were pledged to secure deposits and for other operating purposes.
 
     There were no gross realized gains or losses in 1998 or 1997.
 
<PAGE>   11
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The cost and estimated fair value of debt and equity securities at December
31, 1998, by contractual maturities, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
 
<TABLE>
<CAPTION>
                                                       SECURITIES           SECURITIES TO BE
                                                   AVAILABLE-FOR-SALE       HELD-TO-MATURITY
                                                  ---------------------   ---------------------
                                                              ESTIMATED               ESTIMATED
                                                  AMORTIZED     FAIR      AMORTIZED     FAIR
                                                    COST        VALUE       COST        VALUE
                                                  ---------   ---------   ---------   ---------
                                                             (DOLLARS IN THOUSANDS)
<S>                                               <C>         <C>         <C>         <C>
Due in one year or less.........................   $11,307     $11,318      $ 50        $ 50
Due from one to five years......................    43,861      43,707       300         309
Due from five to ten years......................     3,497       3,499        50          52
Due after ten years.............................        --          --       498         515
Other...........................................       138         138        --          --
                                                   -------     -------      ----        ----
                                                   $58,803     $58,662      $898        $926
                                                   =======     =======      ====        ====
</TABLE>
 
NOTE 3 -- LOANS
 
     The loan portfolio is classified as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Commercial and agricultural.................................  $ 6,399       $ 6,671
Real estate.................................................   61,710        58,455
Installment and other loans.................................    8,828        10,546
                                                              -------       -------
          Total loans.......................................   76,937        75,672
Less, unearned income and deferred fees and credits.........     (557)         (517)
Less, allowance for credit losses...........................   (1,277)       (1,183)
                                                              -------       -------
                                                              $75,103       $73,972
                                                              =======       =======
</TABLE>
 
     The following is a summary of the transactions in the allowance for credit
losses:
 
<TABLE>
<CAPTION>
                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Balance, beginning of year..................................   $1,183        $  470
Allowance for credit losses acquired from CNB...............       --           424
Provisions charged to operating expenses....................      144           280
Loans charged-off...........................................     (128)          (54)
Recoveries..................................................       78            63
                                                               ------        ------
Balance, end of year........................................   $1,277        $1,183
                                                               ======        ======
</TABLE>
 
     Loans on which interest was not being accrued (nonaccrual loans) were also
classified by management as impaired. Impairment of loans having recorded
investments of $1,049,000 and $1,529,000 at December 31, 1998 and 1997,
respectively, has been recognized in conformity with FAS No. 114. The average
recorded investment in such impaired loans during 1998 and 1997 was
approximately $1,018,000 and $220,000, respectively. The total allowance for
loan losses related to these loans was $163,000 and $192,000 in 1998 and 1997,
respectively, and the amount of recorded investment for which there is no
related allowance for loan losses totaled $886,000 and $971,000, respectively.
 
<PAGE>   12
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The interest income earned but not recorded by BLNB pursuant to its
nonaccrual policy totaled $82,000 and $34,000 in 1998 and 1997, respectively.
Interest income received on impaired and nonaccrual loans during 1998 and 1997
and included in income on a cash basis totaled $54,000 and $6,000, respectively.
Interest income on impaired loans resulting from the passage of time was not
considered material and no such amount was recognized in 1998 or 1997.
 
     Loans having carrying values of $474,000 and $77,000 were transferred to
foreclosed real estate in 1998 and 1997, respectively.
 
NOTE 4 -- FACILITIES
 
     Facilities are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Land........................................................  $   943       $   688
Buildings...................................................    2,163         2,030
Furniture, fixtures, and equipment..........................    2,297         1,949
Other fixed assets..........................................      270           171
                                                              -------       -------
          Total.............................................    5,673         4,838
Less accumulated depreciation...............................   (2,499)       (2,212)
                                                              -------       -------
Premises and equipment -- net...............................  $ 3,174       $ 2,626
                                                              =======       =======
</TABLE>
 
     Depreciation expense amounted to $286,000 and $140,000 for the years ended
December 31, 1998 and 1997, respectively.
 
     BLNB leases property at three branch locations under noncancelable
operating leases expiring in 1999 through 2008. Minimum future rental payments
under these leases as of December 31, 1998, are as follows (dollars in
thousands):
 
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S>                                                           <C>
       1999.................................................  $102
       2000.................................................    86
       2001.................................................    76
       2002.................................................    72
       2003.................................................    72
       Thereafter...........................................   324
                                                              ----
                                                              $732
                                                              ====
</TABLE>
 
     Lease payments charged to operations for the above leases were
approximately $24,000 and $2,000 for the years ended December 31, 1998 and 1997,
respectively.
 
<PAGE>   13
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 5 -- OTHER ASSETS
 
     Other assets are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                               1998            1997
                                                              -------         -------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>             <C>
Other real estate owned.....................................   $172            $261
Capital lease receivable....................................     --             153
Prepaid expenses............................................    364             304
Income tax receivable.......................................    226              43
Miscellaneous...............................................     12              33
                                                               ----            ----
                                                               $774            $794
                                                               ====            ====
</TABLE>
 
NOTE 6 -- TIME DEPOSITS
 
     Included in interest bearing deposits are certificates of deposit issued in
amounts of $100,000 or more. These certificates and their remaining maturities
at December 31, 1998 and 1997, were as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Three months or less........................................   $2,873        $2,639
Over three through twelve months............................    3,698         2,840
Over twelve months through three years......................    1,539           515
Over three years............................................      275           258
                                                               ------        ------
                                                               $8,385        $6,252
                                                               ======        ======
</TABLE>
 
NOTE 7 -- OTHER BORROWINGS
 
     The Company has a line of credit agreement with Independent Bankers' Bank
of Florida dated November 25, 1998, that enables the Company to borrow up to
$1,000,000. This credit facility matures on November 25, 2003, and requires
annual principal repayments of up to $200,000, plus annual interest payments at
6.5% per year. The purpose of this loan was to provide additional capital to
BLNB in connection with its acquisition of two branches from First Union. All of
the outstanding common stock of BLNB has been pledged as collateral for this
loan.
 
NOTE 8 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
     Accounts payable and accrued liabilities are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                               1998            1997
                                                              -------         -------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>             <C>
Accounts payable and other accrued expenses.................   $160            $250
Income taxes payable........................................     --              18
Miscellaneous...............................................     47              14
                                                               ----            ----
                                                               $207            $282
                                                               ====            ====
</TABLE>
 
<PAGE>   14
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 9 -- INCOME TAXES
 
     The provision (credit) for income taxes on income is summarized as follows:
 
<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                               1998            1997
                                                              -------         -------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>             <C>
Current:
  Federal...................................................   $ 581           $ 391
  State.....................................................      99              67
                                                               -----           -----
                                                                 680             458
                                                               -----           -----
Deferred:
  Federal...................................................     (91)           (122)
  State.....................................................     (15)            (20)
                                                               -----           -----
                                                                (106)           (142)
                                                               -----           -----
          Total income tax provision........................   $ 574           $ 316
                                                               =====           =====
</TABLE>
 
     A reconciliation of the income tax computed at the Federal statutory rate
of 34% and the income tax provision shown on the statements of operations,
follows:
 
<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                                        -------------------------------
                                                             1998             1997
                                                        --------------   --------------
                                                        AMOUNT     %     AMOUNT     %
                                                        ------    ----   ------    ----
<S>                                                     <C>       <C>    <C>       <C>
Tax computed at statutory rate........................   $560     34.0    $331     34.0
Increase (decrease) resulting from:
  Effect of tax-exempt income.........................    (33)    (2.0)    (19)    (2.0)
  State tax -- net of federal benefit.................     40      2.4      23      2.4
  Other (net).........................................      7      0.4     (19)    (2.0)
                                                         ----     ----    ----     ----
          Income tax provision........................   $574     34.8    $316     32.4
                                                         ====     ====    ====     ====
</TABLE>
 
     The components of the deferred income tax assets are as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                               1998            1997
                                                              -------         -------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>             <C>
Deferred tax asset:
  Federal...................................................   $694            $667
  State.....................................................    119             113
                                                               ----            ----
                                                                813             780
                                                               ----            ----
Deferred tax liability:
  Federal...................................................    197             304
  State.....................................................     34              52
                                                               ----            ----
                                                                231             356
                                                               ----            ----
          Net deferred income tax asset.....................   $582            $424
                                                               ====            ====
</TABLE>
 
<PAGE>   15
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The tax effects of each type of significant item that gave rise to deferred
taxes are:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                              1997             1998
                                                              -----            -----
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>              <C>
Net unrealized gains on securities available-for-sale.......  $ 53             $  5
  Depreciation and amortization.............................   (46)            (115)
  Allowance for credit losses...............................   405              379
  CNB merger................................................   258              302
  Other.....................................................   (88)            (147)
                                                              ----             ----
     Net deferred income tax asset..........................  $582             $424
                                                              ====             ====
</TABLE>
 
NOTE 10 -- EMPLOYEE BENEFIT PLAN
 
     BLNB sponsors a 401(k) Profit Sharing Plan that covers substantially all
employees. BLNB contributions under this plan are made at the discretion of the
Board of Directors. During 1998 and 1997, the employer contribution approved by
the Board of Directors amounted to 50% of a participant's contributions, subject
to a maximum of 3% of the participant's salary. The 401(k) Profit Sharing Plan
is a prototype plan and has been approved by the Internal Revenue Service.
 
     CNB sponsored a defined contribution pension plan that covered
substantially all employees of CNB. A favorable determination letter had been
received from the Internal Revenue Service that the plan was qualified. In 1998,
this plan was terminated and all former CNB employees were included in BLNB's
401(k) Profit Sharing Plan.
 
     The amounts included in salaries and employee benefits as pension expense
for 1998 and 1997 totaled $27,000 and $22,000, respectively.
 
NOTE 11 -- RELATED PARTY TRANSACTIONS
 
     BLNB has entered into transactions with its directors, executive officers,
significant stockholders, and their affiliates (Related Parties). Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management, involve more than normal credit risk
or present other unfavorable features.
 
     The aggregate extensions of credit to such related parties at December 31,
1998 and 1997, were $2,263,000 and $2,372,000, respectively. Unfunded
commitments to the same parties totaled $403,000 at December 31, 1998.
 
     Following is a summary of activity for 1997 and 1998 for such loans:
 
<TABLE>
<CAPTION>
                                                   BEGINNING                            END OF
                                                    OF YEAR                              YEAR
                                                    BALANCE    ADDITIONS   REDUCTIONS   BALANCE
                                                   ---------   ---------   ----------   -------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                <C>         <C>         <C>          <C>
1997.............................................   $2,683       $732        $1,043     $2,372
1998.............................................   $2,372       $990        $1,099     $2,263
</TABLE>
 
<PAGE>   16
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
 
     The Company's consolidated financial statements do not reflect various
commitments and contingent liabilities that arise in the normal course of
business and involve elements of credit risk, interest rate risk, and liquidity
risk. These commitments and contingent liabilities of BLNB, which include
unfunded commitments to related parties, are commitments to extend credit and
commercial and standby letters of credit. A summary of the BLNB's commitments
and contingent liabilities at December 31, 1998, follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Commitments to extend credit
  Secured by real estate....................................   $3,516        $1,824
  Other.....................................................    3,291         2,845
  Commercial and standby letters of credit..................      129           103
                                                               ------        ------
                                                               $6,936        $4,772
                                                               ======        ======
</TABLE>
 
     Commitments to extend credit and commercial letters of credit all include
exposure to some credit loss in the event of non-performance of the customer.
BLNB's credit policies and procedures for credit commitments and financial
guarantees are the same as those for extension of credit instruments that are
recorded in the consolidated financial statements. In the opinion of management,
these instruments do not generally present any significant liquidity risk to
BLNB. BLNB's experience has been that approximately 70% to 80% of loan
commitments are drawn upon by customers. BLNB did not incur any losses on its
commitments in either 1998 or 1997.
 
     The Company is a party to litigation and claims arising in the normal
course of business. Management, after consultation with legal counsel, believes
that the liabilities, if any, arising from such litigation and claims will not
be material to the financial position of the Company.
 
     At December 31, 1998, BLNB had $1,500,000 unfunded lines of credit from
other banks for the purchase of overnight federal funds.
 
NOTE 13 -- CONCENTRATIONS OF CREDIT
 
     Substantially all of BLNB's loans, commitments, and commercial and standby
letters of credit have been granted to customers in BLNB's market area.
Substantially all such customers are depositors of the BLNB. The concentrations
of credit by type of loan are set forth in Note 3. The distribution of
commitments to extend credit approximates the distribution of loans outstanding.
Letters of credit were granted to commercial borrowers. BLNB, as a matter of
policy, do not extend credit to any single borrower or group of related
borrowers in excess of its legal lending limit.
 
NOTE 14 -- REGULATORY MATTERS
 
     BLNB is subject to certain restrictions on the amount of dividends that it
may declare without prior regulatory approval. At December 31, 1998,
approximately $2.3 million of BLNB's retained earnings were available for
dividend declaration without prior regulatory approval.
 
     BLNB is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory -- and possibly additional discretionary -- actions
by regulators that, if undertaken, could have a direct material effect on the
BLNB's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, BLNB must meet specific
capital guidelines that involve quantitative measures of BLNB's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. BLNB's
 
<PAGE>   17
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings, and other factors.
 
     Quantitative measures established by regulation to ensure capital adequacy
require BLNB to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1998, that BLNB
meets all capital adequacy requirements applicable to BLNB.
 
     As of December 31, 1998, the most recent notification from the Office of
the Comptroller of the Currency ("OCC") categorized BLNB as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized, BLNB must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed BLNB's category.
 
<TABLE>
<CAPTION>
                                                                                      TO BE WELL
                                                                                      CAPITALIZED
                                                                                     UNDER PROMPT
                                                        FOR CAPITAL ADEQUACY       CORRECTIVE ACTION
                                          ACTUAL              PURPOSES                PROVISIONS
                                      --------------    ---------------------    --------------------
                                      AMOUNT   RATIO    >=AMOUNT     >=RATIO     >=AMOUNT     >=RATIO
                                      ------   -----    ---------    -------     --------     -------
<S>                                   <C>      <C>      <C>          <C>         <C>          <C>
BIG LAKE NATIONAL BANK
As of December 31, 1998:
  Total Risk-Based Capital
  (To Risk-Weighted Assets).........  $8,872   11.89%    >=$5,971     >=8.0%     >=$7,463     >=10.0%
  Tier I Capital
  (To Risk-Weighted Assets).........  $7,904   10.59%    >=$2,985     >=4.0%     >=$4,478     >= 6.0%
  Tier I Capital
  (To Adjusted Total Assets)........  $7,904    6.23%    >=$5,079     >=4.0%     >=$6,348     >= 5.0%
BIG LAKE FINANCIAL CORPORATION:
As of December 31, 1998:
  Total Risk-Based Capital
  (To Risk-Weighted Assets).........  $9,084   12.08%    >=$6,014     >=8.0%     >=$7,517     >=10.0%
  Tier I Capital
  (To Risk-Weighted Assets).........  $8,110   10.79%    >=$3,007     >=4.0%     >=$4,510     >= 6.0%
  Tier I Capital
  (To Adjusted Total Assets)........  $8,110    6.36%    >=$5,100     >=4.0%     >=$6,375     >= 5.0%
</TABLE>
 
NOTE 15 -- STOCK DIVIDEND
 
     On January 21, 1998, the Company's Board of Directors declared a stock
dividend payable at a rate of 2.5% of shares issued and outstanding to
stockholders of record on February 27, 1998, payable on or before March 19,
1998. Cash in lieu of fractional shares was paid at the rate of $19.83 per
share, which was the estimated fair market value at that time. The total cash
paid in lieu of fractional shares amounted to approximately $5,000.
 
NOTE 16 -- STOCK OPTION PLAN
 
     The Company has adopted a Stock Option Plan (as amended) that permits
certain directors to purchase additional shares of the Company's common stock at
a purchase price of $10.00 per share. The number of shares permitted for
purchase by each participant originated at 2,750 shares, and has been adjusted
for subsequent stock dividends according to the terms of the plan. At December
31, 1998, the approximate
 
<PAGE>   18
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
number of shares under this plan totaled 3,186 shares per participant. Options
totaling approximately 15,930 shares are outstanding and exercisable until the
expiration date, which has been extended until June 30, 2001.
 
     For the year ended December 31, 1996, Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("FAS No. 123"),
became effective. FAS No. 123 permits application of the accounting requirements
of an earlier issued APB Opinion No. 25 and, accordingly, no compensation cost
were recognized in 1997. On May 20, 1998, a former director exercised all of his
outstanding stock options and purchased 3,186 shares of common stock at the
exercise price of $10.00 per share. The estimated fair market value of the
Company's stock based on recent trades was $22.00 per share. A charge to
earnings of approximately $24,000 (net of income taxes of $14,000) was recorded
to recognize services provided by this director under the terms of the stock
option agreement.
 
     The Company must comply with certain additional disclosures under FAS No.
123. A summary of the disclosures follows:
 
<TABLE>
<CAPTION>
                                                               NUMBER     WEIGHTED AVERAGE
                                                              OF SHARES    EXERCISE PRICE
                                                              ---------   ----------------
<S>                                                           <C>         <C>
Outstanding at December 31, 1997 and 1996...................   18,660          $10.00
                                                                               ======
  Increase due to stock dividend, 1998......................      456          $10.00
                                                                               ======
  Stock options exercised, 1998.............................   (3,186)         $10.00
                                                               ------          ======
  Outstanding at December 31, 1998..........................   15,930          $10.00
                                                               ======          ======
</TABLE>
 
     All outstanding options were fully vested and exercisable at December 31,
1998 and 1997, with a weighted average remaining contractual life of thirty
months at December 31, 1998. Since no additional options have been granted in
1998 or 1997, and the compensation recorded in 1998 for the stock options
exercised amounted to approximately 2% of net income, net income and earnings
per share would not materially differ from reported results had the Company
adopted the accounting treatment under FAS No. 123.
 
NOTE 17 -- PREFERRED STOCK
 
     In addition to the 1,000,000 shares of authorized common stock, the
Company's articles of incorporation authorize up to 500,000 shares of non-voting
preferred stock at $1.00 par value. The Board of Directors are further
authorized to establish designations, powers, preferences, rights, and other
terms for preferred stock by resolution.
 
     On March 26, 1986, the Board of Directors, designated 2,000 shares as
Redeemable Preferred Stock, Series 1 ("Series 1"). Series 1 shares have no
voting or conversion rights and pay no dividends. However, Series 1 shares have
preference on liquidation at the rate of $10 per share after January 1, 1987.
 
     No shares of preferred stock, including Series 1 shares, have been issued.
 
<PAGE>   19
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 18 -- NONINTEREST OPERATING EXPENSES
 
     Other expenses for 1998 and 1997 were as follows:
 
<TABLE>
<CAPTION>
                                                                1998          1997
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Advertising and public relations............................   $  105        $   64
Data processing fees and service charges....................      197           194
Telephone...................................................      120            43
Postage.....................................................      127            73
Stationary, printing, and supplies..........................      243           113
FDIC and OCC assessments....................................      117            50
Director fees...............................................      116            80
Professional and legal expenses.............................      170            73
Amortization................................................      100            85
Merger-related expenses.....................................       45           149
Other.......................................................      632           181
                                                               ------        ------
                                                               $1,972        $1,105
                                                               ======        ======
</TABLE>
 
NOTE 19 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
 
CASH AND CASH EQUIVALENTS:
 
     For those short-term instruments, the carrying amount is a reasonable
estimate of fair value.
 
INVESTMENT SECURITIES:
 
     For securities held as investments, fair value equals quoted market price,
if available. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar securities.
 
LOANS RECEIVABLE:
 
     For loans subject to repricing and loans intended for sale within six
months, fair value is estimated at the carrying amount plus accrued interest.
 
     The fair value of other types of loans is estimated by discounting the
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings and for the same remaining maturities.
 
DEPOSIT LIABILITIES:
 
     The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand at the reporting date. The fair
value of long-term fixed maturity certificates of deposit is estimated using the
rates currently offered for deposits of similar remaining maturities.
 
SHORT-TERM DEBT:
 
     For short-term debt, including accounts and demand notes payable, the
carrying amount is a reasonable estimate of fair value.
 
<PAGE>   20
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
OTHER BORROWINGS:
 
     Since this borrowing is at a recent market interest rate, the carrying
amount is a reasonable estimate of fair value.
 
     The estimated fair values of the BLNB's financial instruments at December
31, 1998, are as follows:
 
<TABLE>
<CAPTION>
                                                              CARRYING        FAIR
                                                               AMOUNT        VALUE
                                                              --------      --------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>
Financial Assets
  Cash and cash equivalents.................................  $  7,776      $  7,776
  Investment securities.....................................    59,560        59,588
  Loans.....................................................    75,103        76,602
                                                              --------      --------
          Total assets valued...............................  $142,439      $143,966
                                                              ========      ========
Financial Liabilities
  Deposits..................................................  $138,608      $138,969
  Other borrowings..........................................       500           500
                                                              --------      --------
          Total liabilities valued..........................  $139,108      $139,469
                                                              ========      ========
</TABLE>
 
     While these estimates of fair value are based on management's judgment of
the most appropriate factors, there is no assurance that, were BLNB to have
disposed of such items at December 31, 1998, the estimated fair values would
necessarily have been achieved at that date, since market values may differ
depending on various circumstances. The estimated fair values at December 31,
1998, should not necessarily be considered to apply at subsequent dates.
 
NOTE 20 -- PARENT COMPANY FINANCIAL INFORMATION
 
     Presented below are condensed financial statements for Big Lake Financial
Corporation (dollars in thousands):
 
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS (PARENT ONLY) AS OF DECEMBER 31:      1998       1997
---------------------------------------------------------     -------    -------
<S>                                                           <C>        <C>
ASSETS
  Cash and cash equivalents.................................  $    68    $    76
  Investment in subsidiary bank, net........................   10,274      9,148
  Facilities................................................      536        556
  Other assets..............................................        4        333
                                                              -------    -------
          Total.............................................  $10,882    $10,113
                                                              =======    =======
LIABILITIES AND STOCKHOLDERS' EQUITY
  Equity Liabilities........................................  $   402    $   690
  Stockholders' equity......................................   10,480      9,423
                                                              -------    -------
          Total.............................................  $10,882    $10,113
                                                              =======    =======
</TABLE>
 
<PAGE>   21
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS AND STOCKHOLDERS' EQUITY (PARENT ONLY)
YEARS ENDED DECEMBER 31:                                                    1998       1997
-------------------------------------------------------------------------  -------    -------
<S>                                                                        <C>        <C>
Equity in net income of subsidiary bank...........................         $ 1,129    $   721
Other income......................................................              51         70
Other expenses....................................................            (106)      (133)
                                                                           -------    -------
Net income........................................................           1,074        658
Stockholders' Equity:
  Beginning of year...............................................           9,423      4,854
  Cash paid in lieu of fractional shares..........................              (5)        --
  Stock issued to acquire CNB Financial Corporation...............              --      3,789
  Treasury stock canceled.........................................              --         59
  Stock options exercised.........................................              70         --
  Net change in unrealized holding gains (losses) on securities in
     subsidiary bank..............................................             (82)        63
                                                                           -------    -------
  End of year.....................................................         $10,480    $ 9,423
                                                                           =======    =======
</TABLE>
 
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS (PARENT ONLY)
YEARS ENDED DECEMBER 31:                                                    1998       1997
------------------------------------------------                           -------    ------
<S>                                                                        <C>        <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income........................................................         $ 1,074    $  658
Adjustment to reconcile net income to net cash provided by
  operating activities:
  Equity in undistributed earnings of subsidiary bank.............          (1,129)     (721)
  Other...........................................................               6        34
                                                                           -------    ------
          Total...................................................             (49)      (29)
                                                                           -------    ------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
  Capital contribution to subsidiary bank.........................            (500)       --
                                                                           -------    ------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
  Proceeds from other borrowings..................................             500        --
  Proceeds from stock options exercised...........................              46        --
  Cash paid in lieu of fractional shares..........................              (5)       --
                                                                           -------    ------
          Total...................................................             541        --
                                                                           -------    ------
DECREASE IN CASH AND CASH EQUIVALENTS.............................              (8)      (29)
CASH AND CASH EQUIVALENTS:
  Beginning of year...............................................              76       105
                                                                           -------    ------
  End of year.....................................................         $    68    $   76
                                                                           =======    ======
</TABLE>
 
NOTE 21 -- ACQUISITION OF CNB FINANCIAL CORPORATION
 
     The Company consummated its merger with CNB Financial Corporation on
October 31, 1997. The merger was accounted for as a purchase by the Company. The
purchase was based on the fair market values of the Company and CNB Financial
Corporation determined by independent experts, which resulted in a cost of $3.8
million. The Company acquired from CNB Financial Corporation total assets valued
at $46.9 million, total net loans valued at $31.3 million, and total deposits
valued at $42.6 million.
 
     The purchase method of accounting, which requires (1) no restatement of the
Company's historical financial statements, and (2) the inclusion of the acquired
company's historical financial information on a fair value basis only from the
date of consummation, was used in this transaction. With respect to this
transaction,
 
<PAGE>   22
                 BIG LAKE FINANCIAL CORPORATION AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
the Company issued 166,512 shares of its common stock in exchange for the common
stock of CNB Financial Corporation. This transaction resulted in an increase to
stockholders' equity of $3.8 million. The net book value of CNB Financial
Corporation exceeded the fair value of the net assets acquired by $.4 million
(net of deferred income tax asset of $.3 million); therefore, no goodwill was
recorded as a result of this transaction. All adjustments to fair value of loans
and deposits will be amortized over the estimated remaining maturities of the
underlying loans and deposits on a straight-line basis, which is not materially
different from the interest method.
 
     Total acquired assets related to the Company's purchase accounting
acquisition of CNB Financial Corporation amounted to 79% of the Company's total
assets at December 31, 1996. The pro forma income per common share amount was
slightly dilutive. The following summarized pro forma (unaudited) information
assumes the acquisition had occurred on January 1, 1997 (dollars in thousands,
except per share data):
 
<TABLE>
<S>                                                           <C>
Net interest income.........................................  $5,104
                                                              ======
Net income..................................................  $1,004
                                                              ======
Earnings per share..........................................  $ 2.11
                                                              ======
</TABLE>
 
NOTE 22 -- BRANCH ACQUISITIONS
 
     During 1998, BLNB entered into negotiations with First Union National Bank
("First Union") to acquire certain assets and assume deposit liabilities and
related accrued interest of First Union's Wauchula and Arcadia Branches
("Branch"). The Branch acquisitions were approved by the OCC and the Company's
Board of Directors, and consummated on November 19, 1998. A summary of the
transaction follows (dollars in thousands):
 
<TABLE>
<S>                                                           <C>
Liabilities assumed.........................................  $30,957
                                                              -------
Less assets purchased and other adjustments:
  Core deposit premium......................................    1,942
  All other assets..........................................    1,092
  Other adjustments, net....................................       (8)
                                                              -------
                                                                3,026
                                                              -------
          Cash received at closing..........................  $27,931
                                                              =======
</TABLE>
 
     The closing transactions are subject to a post-closing review period that
will expire in the first quarter of 1999. Management does not anticipate any
significant adjustments will be required. The proceeds reserved at closing were
invested in federal funds sold and U. S. Government securities.