U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                For the fiscal year ended     September 30, 2002
                                          -----------------------------

                                     - or -

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

         For the transition period from                  to
                                        ----------------    --------------------

                           Commission Number: 0-32139

                           FLORIDAFIRST BANCORP, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

                  Florida                                         59-3662010
---------------------------------------------                -------------------
(State or other jurisdiction of incorporation                 (I.R.S. Employer
  or organization)                                           Identification No.)

      205 East Orange Street, Lakeland, Florida                  33801-4611
------------------------------------------------             -------------------
      (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:  (863) 688-6811
                                                     --------------

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None
                                      ----

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $ .10 par value
                          -----------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES  X    NO
                                       ---      ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
Registrant,  based on the  closing  price of the  Registrant's  Common  Stock as
quoted on the Nasdaq  National  Market on December 10, 2002 of $24.02 per share,
was $108 million.

As of December 10, 2002,  there were issued and outstanding  5,378,957 shares of
the Registrant's Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>

                                     PART I

Item 1.  Description of Business
-------  -----------------------

General

The Registrant, FloridaFirst Bancorp, Inc. (the "Company") is the parent company
of and conducts most of its business  operations through  FloridaFirst Bank (the
"Bank"). The Bank, a federally-chartered savings bank headquartered in Lakeland,
Florida,  is a  community-oriented  retail savings bank offering a full range of
deposit services to both consumers and commercial  entities.  The Bank's lending
activities  include  residential  real estate  mortgage  loans,  commercial real
estate loans,  other  commercial loans and consumer loans. The Bank has operated
within its market  areas  since 1934 and  delivers  its  products  and  services
through  eighteen  offices  located in Florida's  Highlands,  Polk,  Manatee and
Sumter Counties.

On April 6, 1999, the Bank reorganized from a mutual savings  association into a
mutual holding company named  FloridaFirst  Bancorp MHC and formed  FloridaFirst
Bancorp, a middle-tier  holding company,  whereby the Bank became a wholly-owned
subsidiary  of  FloridaFirst  Bancorp.  In connection  with the  reorganization,
FloridaFirst Bancorp sold 2,703,851 shares of its Common Stock to the public and
the remaining 3,049,024 shares were held by FloridaFirst Bancorp MHC.

On December 21, 2000,  the Company  completed  its stock  offering in connection
with the  conversion and  reorganization  of  FloridaFirst  Bank and its holding
company,   FloridaFirst  Bancorp,  from  the  mutual  holding  company  form  of
organization   to  a  full  stock  company.   As  part  of  the  conversion  and
reorganization,  the  shares  formerly  held by  FloridaFirst  Bancorp  MHC were
cancelled,  the Company sold  3,147,952  new shares to the public and the shares
held by stockholders of FloridaFirst Bancorp were exchanged for 2,372,048 shares
of the Company.

The Company provides commercial and retail banking services, with an emphasis on
one-to-four  family  residential  mortgage loans, home equity loans and lines of
credit and consumer loans as well as certificates of deposit, checking accounts,
money-market accounts and savings accounts. In addition,  the Company originates
commercial  real estate  loans and offers  checking  accounts  and other  credit
facilities  to businesses  within its market area.  At September  30, 2002,  the
Company had total assets, deposits and equity of $859.4 million, $587.4 million,
and $99.0 million, respectively.

The Company  attracts  deposits from the general  public and uses these deposits
primarily  to  originate  loans  and  to  purchase   mortgage-backed  and  other
securities.  The  principal  sources  of funds  for the  Company's  lending  and
investing activities are deposits, Federal Home Loan Bank ("FHLB") advances, the
sale of loans held for sale,  loan  repayments and sale,  maturity,  and call of
securities.  The principal source of income is interest on loans and securities.
The principal expense is interest paid on deposits and FHLB advances.

On February 15, 2002,  the Bank acquired  seven  Florida  branches from SunTrust
Bank ("SunTrust")  coincident with SunTrust's  acquisition of such branches from
Huntington  National Bank  ("Huntington").  Four of the Huntington  branches are
located in Lakeland,  Florida,  and one each in Avon Park, Sebring and Wildwood,
Florida.  In this transaction,  the Bank assumed  approximately  $162 million in
deposits and the purchase of  approximately  $26 million in loans related to the
seven branches.

On  October  2,  2002,  the  Company  signed a  definitive  agreement  with BB&T
Corporation ("BB&T"), Winston-Salem,  North Carolina, whereby BB&T would acquire
100% of the outstanding  stock of the Company.  However,  pursuant to discussion
with  regulatory  officials,  BB&T and the Company  terminated  the agreement on
October 31,  2002 so that BB&T could  submit the proper  application  to request
permission to acquire control of the Company pursuant to regulatory  guidelines.
The  application  was  filed on  November  4,  2002  with the  Office  of Thrift
Supervision  ("OTS") and no further  merger related  activities  will take place
until proper approval is obtained from the OTS.

                                       1
<PAGE>

Competition

The  competition  for  deposit  products  comes  from  other  insured  financial
institutions such as commercial banks, thrift  institutions,  credit unions, and
multi-state  regional  banks in the Company's  market area of  Highlands,  Polk,
Manatee and Sumter Counties, Florida. Deposit competition also includes a number
of insurance  products  sold by local  agents and  investment  products  such as
mutual  funds and other  securities  sold by local and  regional  brokers.  Loan
competition varies depending upon market conditions and comes from other insured
financial  institutions such as commercial banks,  thrift  institutions,  credit
unions, multi-state regional banks, and mortgage bankers and brokers.



Lending Activities

General.  The Company primarily  originates  one-to-four family residential real
estate  loans,  commercial  real estate loans,  consumer  loans and other loans.
Consumer loans consist  primarily of direct and indirect  automobile loans, home
equity  loans and lines of  credit,  and other  consumer  loans.  The  Company's
commercial  real estate loans  consist  primarily of mortgage  loans  secured by
small  commercial  office/retail  space,  warehouses,  small  and  medium  sized
apartment  buildings and  residential  real estate  acquisition  and development
projects.

                                       2
<PAGE>

Loan Portfolio Composition.  The following table analyzes the composition of the
Company's  loan  portfolio by loan category and in percentages of the total loan
portfolios at the dates indicated ($ in thousands).

<TABLE>
<CAPTION>
                                                                             At September 30,
                                       --------------------------------------------------------------------------------------------
                                            2002               2001               2000                1999               1998
                                       ---------------    ---------------     ---------------     ---------------    --------------
                                       Amount  Percent    Amount  Percent     Amount  Percent     Amount  Percent    Amount Percent
                                       ------  -------    ------  -------     ------  -------     ------  -------    ------ -------
<S>                               <C>         <C>    <C>          <C>    <C>          <C>    <C>         <C>    <C>         <C>
Type of Loans:
Mortgage loans:
    Residential:
       Permanent..................  $ 301,622   57.7%  $ 312,309    61.7%  $ 304,419    66.1%  $ 276,115   65.6%  $ 244,667   68.3%
       Construction...............     29,058    5.6      35,516     7.0      27,996     6.1      32,974    7.8      27,311    7.6
    Commercial real estate........     58,177   11.1      58,371    11.6      31,786     6.9      25,570    6.1      20,598    5.8
    Land..........................     15,806    3.0       8,907     1.8      12,886     2.8       9,548    2.3       6,796    1.9

Commercial........................     10,806    2.1       5,061     1.0       2,533      .5       1,374     .3       1,083     .3

Consumer loans:
    Home equity loans (1).........     50,240    9.6      33,200     6.5      28,926     6.3      22,545    5.4      13,137    3.7
    Auto loans....................     39,989    7.6      42,293     8.3      40,717     8.8      42,181   10.0      34,795    9.7
    Other.........................     17,352    3.3      10,439     2.1      11,396     2.5      10,318    2.5       9,800    2.7
                                      -------  -----     -------   -----     -------   -----     -------  -----     -------  -----

Total loans.......................    523,050  100.0%    506,096   100.0%    460,659   100.0%    420,625  100.0%    358,187  100.0%
                                               =====               =====               =====              =====              =====
Less:
    Construction loans in
       process....................     19,167             28,289              16,952              19,774             17,013
    Allowance for loan losses.....      4,519              3,652               3,321               2,941              2,564
                                    ---------          ---------           ---------           ---------          ---------

Total loans, net..................  $ 499,364          $ 474,155           $ 440,386           $ 397,910          $ 338,610
                                    =========          =========           =========           =========          =========
</TABLE>

---------------
(1)  Includes home equity lines of credit.

                                       3
<PAGE>

Loan Maturity Schedule. The following table sets forth the maturity or repricing
of the  Company's  loan  portfolio at September 30, 2002.  Demand  loans,  loans
having no stated  maturity,  and overdrafts are shown as due in one year or less
(in thousands).

<TABLE>
<CAPTION>
                                                 Commercial
                                                 Real Estate
                               Residential (1)    and Land    Consumer  Commercial   Total
                               ---------------    --------    --------  ----------   -----
<S>                            <C>               <C>          <C>         <C>      <C>
Amounts Due:
Within 1 Year................    $   30,271        33,222       16,764      6,644    86,901
                                  ---------        ------      -------     ------   -------
After 1 Year:
   1 to 3 years..............        22,517         9,531       15,030      2,474    49,552
   3 to 5 years..............         7,369        13,382       28,567      1,618    50,936
   Over 5 years..............       270,523        17,848       47,220         70   335,661
                                  ---------        ------      -------     ------   -------

Total due after one year.....       300,409        40,761       90,817      4,162   436,149
                                  ---------        ------      -------     ------   -------

Total amount due.............     $ 330,680        73,983      107,581     10,806   523,050
                                  =========        ======      =======     ======   =======
</TABLE>
--------------
(1)  Includes $29,058 in construction loans.

The  following  table  sets  forth  the  dollar  amount  of all  loans due after
September  30,  2003,  which  have  predetermined  interest  rates or which have
floating or adjustable interest rates.

                                                           Floating or
                                                Fixed      Adjustable
                                                Rates         Rates        Total
                                                -----         -----        -----
                                                         (In thousands)
         Residential........................  $ 271,940       28,469     300,409
         Commercial real estate and land....     39,496        1,265      40,761
         Consumer...........................     90,817            -      90,817
         Commercial.........................      4,162            -       4,162
                                              ---------       ------     -------

         Total..............................  $ 406,415       29,734     436,149
                                              =========       ======     =======

Residential  Lending.  The Company's  primary lending  activity  consists of the
origination of one-to-four family residential mortgage loans secured by property
located  in  the  Company's  market  area.  The  Company  generally   originates
one-to-four family residential mortgage loans in amounts up to 80% of the lesser
of the  appraised  value or  selling  price of the  mortgaged  property  without
requiring private mortgage insurance. The Company will originate a mortgage loan
in an amount up to 95% of the lesser of the appraised  value or selling price of
a mortgaged  property,  however,  private mortgage insurance for the borrower is
generally  required  on the  amount  financed  in  excess  of 80%.  The  Company
currently  originates  shorter-term  fixed-rate  and  adjustable-rate  loans for
retention in its portfolio.  Longer-term fixed-rate mortgages are generally sold
to  correspondent  lenders  on a  servicing  released  basis.  A  mortgage  loan
originated by the Company,  whether  fixed-rate or  adjustable-rate,  can have a
term of up to 30 years.  Adjustable-rate  loans limit the periodic interest rate
adjustment  and the minimum and maximum  rates that may be charged over the term
of the loan.

The  majority  of the  Company's  one-to-four  family  residential  loans  (both
fixed-rate and  adjustable-rate)  are underwritten in accordance with Fannie Mae
or Freddie Mac guidelines,  regardless of whether they will be held in portfolio
or sold in the secondary market.  Substantially all of the Company's residential
mortgages  include

                                       4
<PAGE>

"due on sale"  clauses,  which  give the  Company  the  right to  declare a loan
immediately  payable if the borrower sells or otherwise transfers an interest in
the property to a third party.

Property appraisals on real estate securing the Company's  residential loans are
made by state  certified  and licensed  independent  appraisers  approved by the
Board of  Directors.  Appraisals  are performed in  accordance  with  applicable
regulations and policies.  The Company  obtains title insurance  policies on all
first mortgage real estate loans originated.  Borrowers generally advance funds,
with each monthly  payment of principal and interest,  to a loan escrow  account
from which the Company makes  disbursements for such items as real estate taxes,
hazard insurance premiums and mortgage insurance premiums as they become due.

Construction  Lending.  The Company is an active lender in the  construction  of
one-to-four family houses.  The residential  construction loans are made both to
individual  homeowners for the  construction  of their primary  residence and to
local builders for the  construction of pre-sold houses or houses that are being
built for speculative purposes.

As of September  30, 2002,  75% of all the  Company's  residential  construction
loans were made to individual  homeowners.  After the house is constructed,  the
loan terms are modified to terms that apply to permanent  residential loans. The
underwriting  guidelines for the construction to permanent loans are the same as
the permanent loans, but additional construction  administration  procedures and
inspections  are  followed  during  the  construction  process  to  assure  that
satisfactory  progress  is being  made prior to funding  the  construction  draw
requests.

Construction  lending is  generally  considered  to  involve a higher  degree of
credit risk than long-term  financing of residential  properties.  The Company's
risk of loss on a  construction  loan  depends  largely on the  accuracy  of the
initial  estimate of the property's  value at completion of construction and the
estimated cost of  construction.  If the estimate of  construction  cost and the
marketability  of the  property  after  the  project  is  completed  prove to be
inaccurate, the Company may be compelled to advance additional funds to complete
the construction.  Furthermore,  if the final value of the completed property is
less  than  the  estimated  amount,  the  value  of the  property  might  not be
sufficient to assure the repayment of the loan.

The Company  limits its exposure for  construction  loans made to local builders
through  periodic  credit  analysis  on the  individual  builder and a series of
inspections  throughout the construction phase. In addition,  the Company limits
the  amount  and  number  of  loans  made  to  an  individual  builder  for  the
construction of pre-sold and speculative  houses based on the financial strength
of the  builder.  At  September  30, 2002,  approximately  25% of the  Company's
construction loans were to local builders.

Commercial  Real  Estate  and  Other  Mortgage  Loans.  The  Company  originates
commercial real estate  mortgage loans and loans on  multi-family  dwellings and
developed and  undeveloped  land. The Company's  commercial real estate mortgage
loans are primarily  permanent loans secured by improved property such as office
buildings,  retail stores,  commercial  warehouses and apartment buildings.  The
terms and  conditions of each loan are tailored to the needs of the borrower and
based on the financial  strength of the project and any guarantors.  The average
loan size is approximately  $300,000 and loans are typically made at fixed rates
of interest with five to ten year maturities,  at which point the loan is repaid
or the  terms  and  conditions  are  renegotiated.  Essentially  all  originated
commercial  real estate loans are within the  Company's  market area and all are
within the State of Florida.  The Company's largest  commercial real estate loan
had a balance of $4.9 million on September 30, 2002 and was secured by a Class A
office  building.  Typically,  commercial  real estate loans are  originated  in
amounts up to 80% of the appraised value of the mortgaged property.

Commercial   real  estate,   multi-family   and  land  loans  generally  have  a
significantly  greater  risk  than  loans on  single  family  real  estate.  The
repayment of these loans  typically  depends on the  successful  operations  and
income stream of the commercial real estate and the borrower.  Such risks can be
significantly  affected by

                                       5
<PAGE>

economic  conditions.  In addition,  commercial  real estate  lending  generally
requires  substantially  greater  oversight efforts compared to residential real
estate lending.

Commercial  Loans. To accomplish its mission to become a full-service  community
bank, the Company has expanded its products and services offerings to the small-
to medium-size  businesses  within its market area.  Experienced  personnel have
been hired to assist in reaching the Company's objectives.  Sales call programs,
credit analysis  guidelines,  loan grading systems,  technology upgrades and new
products and services have been implemented to improve our lending capabilities.
The Company not only  satisfies  the  borrowing  needs of  prospective  business
customers,  but provides the full  complement  of deposit  services and customer
services  related to the checking,  savings,  and cash management needs of these
businesses.

Unlike residential  mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment from his or her employment and other income
and which are secured by real property with a value that tends to be more easily
ascertainable,  commercial business loans typically are made on the basis of the
borrower's  ability  to make  repayment  from  the cash  flow of the  borrower's
business. As a result, the availability of funds for the repayment of commercial
business  loans may be  substantially  dependent  on the success of the business
itself,  which is likely to be dependent upon the general economic  environment.
The Company's commercial business loans are sometimes,  but not always,  secured
by business assets,  such as accounts  receivable,  equipment and inventory,  as
well as real estate.  However,  the collateral securing the loans may depreciate
over time, may be difficult to appraise, and may fluctuate in value based on the
success of the business.

The Company recognizes the generally  increased risks associated with commercial
business lending.  The Company's  commercial  business lending policy emphasizes
the  following:

>   credit file documentation,
>   analysis of the borrower's capacity to repay the loan,
>   adequacy of the borrower's capital and collateral,
>   analysis of the borrower's character, and
>   evaluation of the industry conditions affecting the borrower.

Analysis  of the  borrower's  past,  present  and  future  cash flows is also an
important aspect of the Company's  credit analysis.  The Company plans to expand
its commercial business lending, subject to market conditions.

The Company  generally  obtains annual  financial  statements from borrowers for
commercial  business loans. These statements are analyzed to monitor the quality
of the loan. As of September 30, 2002, the commercial business loans ranged from
$3,000 to $2.2 million, with an average balance outstanding of $275,000.

Consumer Loans.  Consumer loans consist  primarily of automobile  loans and home
equity loans and credit lines.  The Company also  originates  unsecured lines of
credit,  loans secured by savings  accounts and other consumer  loans.  Consumer
loans are originated in the Company's  market area and generally have maturities
up to 15 years.  For savings  account loans,  the Company will lend up to 90% of
the account balance.

Consumer loans have a shorter term and generally  provide higher  interest rates
than residential loans. The consumer loan market can be helpful in improving the
spread  between  average  loan  yield  and  costs of funds  and at the same time
improve the matching of the rate sensitive assets and liabilities.

Consumer loans entail greater risks than one-to-four family residential mortgage
loans,  particularly  consumer  loans  secured  by  depreciable  assets  such as
automobiles  or  loans  that  are  unsecured.  In such  cases,  any  repossessed
collateral for a defaulted loan may not provide an adequate  source of repayment
of

                                       6
<PAGE>

the  outstanding  loan balance,  since there is a greater  likelihood of damage,
loss or  depreciation  of the  underlying  collateral.  Further,  consumer  loan
collections  depend  on  the  borrower's  continuing  financial  stability,  and
therefore are more likely to be adversely affected by job loss, divorce, illness
or personal bankruptcy. Even for consumer loans secured by real estate, the risk
to the Company is greater than in the single-family loan portfolio,  in that the
security for consumer  loans is generally not the first lien on the property and
ultimate collection of amounts due may depend on whether any value remains after
collection  by a holder with a higher  priority than the Company.  Finally,  the
application of various federal laws,  including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans after
a default.

At September 30, 2002, 54% of the Company's  automobile  loans  outstanding were
loans  originated  through local automobile  dealerships.  Although this type of
lending  generally  carries a greater risk factor,  the Company has  experienced
personnel to handle this type of lending.  The dealer  arrangements  are limited
primarily  to a few  local  dealers  where  long-term  relationships  have  been
established  and the loans  acquired  typically are those made to  higher-credit
quality borrowers.

The underwriting  standards employed by the Company for consumer loans include a
determination  of  the  applicant's  credit  history  and an  assessment  of the
applicant's  ability to meet existing  obligations  and payments on the proposed
loan.  The  stability of the  applicant's  monthly  income may be  determined by
verification of gross monthly income from primary  employment,  and additionally
from any verifiable  secondary income.  Creditworthiness  of the applicant is of
primary  consideration;  however,  the  underwriting  process  also  includes  a
comparison  of the value of the  collateral  in  relation to the  proposed  loan
amount.

Loan  Solicitation and Processing.  The Company's  customary sources of mortgage
loan applications  include repeat customers,  walk-ins,  and referrals from home
builders  and  real  estate  brokers.   Commercial  customer  relationships  are
developed through the officer call program and from referrals  developed through
the branch network.

After receiving a loan application from a prospective  borrower, a credit report
and  verifications are ordered to confirm specific  information  relating to the
loan applicant's  employment,  income and credit  standing.  An appraisal of the
real estate intended to secure the proposed loan is undertaken by an independent
fee appraiser. In connection with the loan approval process, the Company's staff
analyzes the loan applications and the property  involved.  Officers and lenders
are  granted  lending  authority  based on the loan types they  handle and their
level of  experience.  Generally,  a management  loan  committee  approves loans
exceeding individual authorities, with the Executive Committee or the full Board
of Directors approving loans in excess of management's authority.

Loan applicants are promptly notified of the decision of the Company by a letter
setting forth the terms and conditions of the decision. If approved, these terms
and  conditions   include  the  amount  of  the  loan,   interest-  rate  basis,
amortization  term,  a brief  description  of real estate to be mortgaged to the
Company,  tax escrow and the notice of requirement  of insurance  coverage to be
maintained  to protect  the  Company's  interest.  The  Company  requires  title
insurance  on  first  mortgage  loans  and fire and  casualty  insurance  on all
properties  securing loans, which insurance must be maintained during the entire
term of the loan.

Loan Commitments.  The Company  generally grants  commitments to fund fixed- and
adjustable-rate  single  family  mortgage  loans  for  periods  of 60  days at a
specified term and interest rate. The total amount of the Company's  commitments
to extend credit, including letters of credit, unfunded construction and line of
credit loans, as of September 30, 2002 was $51.4 million.

Loan  Origination and Other Fees. In addition to interest  earned on loans,  the
Company may charge loan  origination  and  commitment  fees for  originating  or
purchasing  certain loans.  Since most loans are originated without points being
charged, the Company has assessed customers certain fees related to underwriting
and

                                       7
<PAGE>

document  preparation.  The Company believes these fees approximate the costs to
originate  the loans.  Therefore,  net deferred  fees are minimal and  deferrals
would have an immaterial effect on operating results.

The Company also  receives  other fees and charges  relating to existing  loans,
which  include late charges and fees  collected in  connection  with a change in
borrower  or  other  loan  modifications.   These  fees  and  charges  have  not
constituted a material source of income.

Nonperforming Loans and Problem Assets


Collection  Procedures.  The Company's collection procedures provide that when a
loan is 15 days  delinquent,  the borrower is  notified.  If the loan becomes 30
days  delinquent,  the borrower is sent a written  delinquency  notice requiring
payment.  If the delinquency  continues,  subsequent efforts are made to contact
the delinquent borrower.  In certain instances,  the Company may modify the loan
or grant a limited  moratorium  on loan  payments  to  enable  the  borrower  to
reorganize  his  financial  affairs  and the  Company  attempts to work with the
borrower  to  establish  a repayment  schedule  to cure the  delinquency.  As to
mortgage  loans,  if the borrower is unable to cure the  delinquency  or reach a
payment  agreement  with the Company  within 90 days, the Company will institute
foreclosure  actions.  If a  foreclosure  action  is  taken  and the loan is not
reinstated, paid in full or refinanced, the property is sold at judicial sale at
which the Company  may be the buyer if there are no  adequate  offers to satisfy
the debt. Any property  acquired as the result of foreclosure or by deed in lieu
of foreclosure is classified as foreclosed  assets until such time as it is sold
or otherwise  disposed of by the Company.  When foreclosed  assets are acquired,
they are  recorded at the lower of the unpaid  principal  balance of the related
loan or its  fair  market  value  less  estimated  selling  costs.  The  initial
writedown of the property is charged against the allowance for loan losses.

As to  commercial-related  loans,  the main thrust of the  Company's  collection
efforts is through  telephone contact and a sequence of collection  letters.  If
the  Company  is unable to  resolve  the  delinquency  within 90 days or in some
situations  shorter time periods,  the Company will pursue all  available  legal
remedies.  The  Company's  commercial  lenders are  required  to  evaluate  each
assigned account on a case-by-case basis, within the parameters of the Company's
policies.

Loans are reviewed on a regular basis and are placed on a nonaccrual status when
they are more than 90 days  delinquent.  Loans  may be  placed  on a  nonaccrual
status  at any  time  if,  in the  opinion  of  management,  the  collection  of
additional interest is doubtful.  Interest accrued and unpaid at the time a loan
is placed on nonaccrual  status is charged against interest  income.  Subsequent
payments are either applied to the outstanding  principal balance or recorded as
interest income,  depending on the assessment of the ultimate  collectibility of
the loan.

                                       8
<PAGE>

Nonperforming  Assets.  The following table provides  information  regarding the
Company's  non-performing  loans and other nonperforming assets as of the end of
each of the last  five  fiscal  years.  As of each of the dates  indicated,  the
Company  did not have any  troubled  debt  restructurings  within the meaning of
Statement of Financial Accounting Standards ("SFAS") No. 15.

<TABLE>
<CAPTION>
                                                                       At September 30,
                                                        --------------------------------------------
                                                        2002      2001      2000      1999      1998
                                                        ----      ----      ----      ----      ----
                                                                      ($ in thousands)
<S>                                               <C>          <C>        <C>      <C>       <C>
Loans accounted for on a nonaccrual basis:
Mortgage loans:
    Residential loans .............................   $  483       320        33       581       445
    Other mortgage loans ..........................      190       489       638       103         -
Commercial loans ..................................       18         -        45         -         -
Consumer loans:
    Home equity loans .............................      175        69         -         -         -
    Other consumer loans ..........................      245        82        46       146       391
                                                      ------     -----       ---     -----     -----
Total .............................................   $1,111       960       762       830       836
                                                      ======     =====       ===     =====     =====
Accruing loans which are contractually past
    due 90 days or more:
Mortgage loans:
    Residential loans .............................        -         -         -         -         -
    Other mortgage loans ..........................        -         -         -         -         -
Commercial loans ..................................        -         -         -         -         -
Consumer loans:
    Home equity loans .............................        -         -         -         -         -
    Other consumer loans ..........................        -         -         -         -         -
                                                      ------     -----       ---     -----     -----
Total  ............................................   $    -         -         -         -         -
                                                      ======     =====       ===     =====     =====
Total nonperforming loans .........................   $1,111       960       762       830       836
                                                      ======     =====       ===     =====     =====
Foreclosed assets .................................   $  347       276       203       203       494
                                                      ======     =====       ===     =====     =====
Total nonperforming assets ........................   $1,458     1,236       965     1,033     1,330
                                                      ======     =====       ===     =====     =====
Total nonperforming loans to gross loans
    less LIP ......................................      .22%      .20%      .17%      .21%      .25%
                                                      ======     =====       ===     =====     =====
Total nonperforming loans to total assets .........      .13%      .15%      .13%      .17%      .20%
                                                      ======     =====       ===     =====     =====
Total nonperforming assets to total assets ........      .17%      .19%      .17%      .21%      .32%
                                                      ======     =====       ===     =====     =====

</TABLE>

During the year ended  September  30,  2002,  approximately  $47,000 of interest
would have been recorded on loans  accounted  for on a nonaccrual  basis if such
loans had been current  according to the original loan agreements for the entire
period.

                                       9
<PAGE>

Classified Assets.  Management,  in compliance with regulatory  guidelines,  has
instituted  an internal  loan review  program  whereby  loans are  classified as
special  mention,  substandard,  doubtful or loss.  When a loan is classified as
substandard  or  doubtful,  management  is  required  to  establish  a valuation
allowance for loan losses in an amount that is deemed  prudent.  When management
classifies a loan as a loss asset,  a reserve  equal to 100% of the loan balance
is required to be  established  or the loan is  charged-off.  This allowance for
loan losses is composed of an allowance for both inherent risk  associated  with
lending activities and particular problem assets.

An asset is  considered  "substandard"  if it is  inadequately  protected by the
paying capacity and net worth of the borrower or the collateral pledged, if any.
Substandard assets include those characterized by the distinct  possibility that
the insured  institution  will  sustain  some loss if the  deficiencies  are not
corrected.  Assets classified as doubtful have all of the weaknesses inherent in
those classified substandard,  with the added characteristic that the weaknesses
present  make  collection  or  liquidation  in  full,  highly  questionable  and
improbable,  on the basis of currently existing facts,  conditions,  and values.
Assets classified as loss are those considered  uncollectible and of such little
value that their  continuance  as assets  without  the  establishment  of a loss
reserve is not  warranted.  Assets  which do not  currently  expose the  insured
institution to a sufficient  degree of risk to warrant  classification in one of
the  aforementioned  categories  but possess  credit  deficiencies  or potential
weaknesses  are required to be  designated  special  mention by  management.  In
addition,  each  loan  that  exceeds  $500,000  and  each  group of loans to one
borrower that exceeds  $500,000 is monitored more closely due to the potentially
greater losses from such loans.

Management's  evaluation of the classification of assets and the adequacy of the
allowance for loan losses is reviewed by the Board on a regular basis and by the
regulatory agencies as part of their examination process. At September 30, 2002,
the Company's classified assets were as follows (in thousands):


                  Special mention...........           $ 5,046
                  Substandard...............             3,723
                  Doubtful..................                 -
                  Loss......................                 -
                                                       -------

                  Total.....................           $ 8,769
                                                       =======

A brief description of classified assets at September 30, 2002 follows:

Special Mention
---------------
>   $1.8  million  in  corporate  bonds  that have a split  investment  rating,
     meaning that one national  rating  agency has rated the bond as  investment
     grade while another  rating agency rates the bond below  investment  grade.
     The  Company's  policy  allows  purchase  of  bonds  where  one  nationally
     recognized rating agency has given a rating as investment grade. Both bonds
     are debt of  financial  institutions  where the Company has  evaluated  the
     performance  characteristics  of the  companies.  Both  securities  have an
     unrealized gain as of September 30, 2002.
>    $1.1 million of commercial  loans  (consisting of 27 loans) acquired in the
     Branch   Acquisition  have  been  classified  due  to  the  poor  financial
     information,  creating an increased  level of risk concerning the repayment
     on these loans.
>    $1.2 million,  consisting of two commercial loans, have been classified due
     to certain concerns  involving the lack of current  financial  information,
     vacancy rates or potentially inadequate cash flows.

                                       10
<PAGE>

Substandard
-----------
>    $875,000 for vacant land that was originally purchased for the construction
     of a retail sales office. However, a change in plans has caused the Company
     to actively market the land. Therefore, as a nonearning asset, the land has
     been classified as substandard for regulatory reporting purposes.
>    $1.4 million of commercial  loans  (consisting  of 35 loans) that have been
     graded internally as substandard due to poor financial  information or lack
     of adequate  collateral.  Approximately 50% of these loans were acquired in
     the Branch Acquisition.
>    The remaining  substandard assets consist of normal mortgage  foreclosures,
     repossessed consumer assets and loans that are in nonaccrual status.

Foreclosed Assets. Assets acquired by the Company as a result of foreclosure, by
deed in lieu of foreclosure or through repossession are classified as foreclosed
assets  until such time as they are sold.  When  assets are  acquired,  they are
recorded  at the lower of the  unpaid  balance of the  related  loan or its fair
value less disposal costs. Any further  write-down of these assets is charged to
earnings.

Allowance  for Losses on Loans.  It is the policy of  management  to provide for
losses on unclassified loans in its portfolio in addition to classified loans. A
provision  for  loan  losses  is  charged  to  earnings  based  on  management's
evaluation  of the potential  losses that may be incurred in the Company's  loan
portfolio.

Management  will  continue to review the entire loan  portfolio to determine the
extent,  if any, to which further  additional loan loss provisions may be deemed
necessary.  There can be no assurance that the allowance for loan losses will be
adequate to cover losses which may be realized in the future. In addition, there
can  be no  assurance  that  additional  provisions  for  losses  on  loans  and
foreclosed assets will not be required.

                                       11
<PAGE>

The  following  table  sets forth  information  with  respect  to the  Company's
allowance for loan losses at the dates indicated:

<TABLE>
<CAPTION>
                                                                At or During the Year Ended September 30,
                                                   -------------------------------------------------------------
                                                       2002         2001         2000         1999         1998
                                                       ----         ----         ----         ----         ----
                                                                            ($ in thousands)
<S>                                            <C>             <C>          <C>          <C>          <C>
Allowance for loan losses, beginning of
         year...................................   $  3,652        3,321        2,941        2,564        2,633
                                                   --------      -------      -------      -------      -------
Provision for loan losses ......................        680          615          630          540          405
                                                   --------      -------      -------      -------      -------
Allowance acquired during branch
         acquisition ...........................      1,000            -            -            -            -
                                                   --------      -------      -------      -------      -------

Charge-offs:
    Residential ................................        (25)         (15)         (32)         (37)        (218)
    Commercial and commercial real
       estate ..................................       (450)         (45)           -            -         (146)
    Consumer ...................................       (433)        (326)        (256)        (214)        (110)
                                                   --------      -------      -------      -------      -------
Total charge-offs ..............................       (908)        (386)        (288)        (251)        (474)

Recoveries .....................................         95          102           38           88            -
                                                   --------      -------      -------      -------      -------
Net charge-offs ................................       (813)        (284)        (250)        (163)        (474)
                                                   --------      -------      -------      -------      -------

Allowance for loan losses, end of year..........   $  4,519        3,652        3,321        2,941        2,564
                                                   ========      =======      =======      =======      =======

Total loans less LIP outstanding................   $503,883      477,807      443,707      400,851      341,174
                                                   ========      =======      =======      =======      =======

Average loans less LIP outstanding..............   $482,809      463,569      423,409      368,513      339,218
                                                   ========      =======      =======      =======      =======

Allowance for loan losses as a percent
    of total loans less LIP outstanding ........        .90%         .76%         .75%         .73%         .75%

Net loans charged off as a percent of
    average loans less LIP outstanding .........        .17%         .06%         .06%         .04%         .14%

</TABLE>

                                       12
<PAGE>

Allocation  of Allowance  for Loan Losses.  The  following  table sets forth the
allocation of the  Company's  allowance for loan losses by loan category and the
percent of loans in each category to total loans  receivable,  net, at the dates
indicated.  The portion of the allowance for loan losses  allocated to each loan
category  does not  represent  the total  available  for future losses which may
occur within the loan  category  since the total  allowance for loan losses is a
valuation allowance applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
                                                                           At September 30,
                                    ----------------------------------------------------------------------------------------------
                                         2002                 2001              2000               1999               1998
                                    -----------------    ----------------  ----------------    ----------------   ----------------
                                              Percent             Percent           Percent             Percent            Percent
                                             of Loans            of Loans          of Loans            of Loans           of Loans
                                             to Total            to Total          to Total            to Total           to Total
                                    Amount      Loans    Amount     Loans  Amount     Loans    Amount     Loans   Amount     Loans
                                    ------      -----    ------     -----  ------     -----    ------     -----   ------     -----
                                                                           ($ in thousands)
<S>                              <C>         <C>      <C>       <C>     <C>        <C>      <C>        <C>     <C>       <C>
At end of period allocated to:
Residential....................... $ 1,796      63.3%   $ 1,846    68.7%  $ 1,804     72.2%   $ 1,689     73.4%  $ 1,564    75.9%
Commercial real estate and land...     727      14.1        748    13.4       568      9.7        309      8.4       226     7.7
Commercial........................     826       2.1         76     1.0        25       .5         17       .3        13      .3
Consumer .........................   1,170      20.5        982    16.9       924     17.6        926     17.9       761    16.1
                                   -------     -----    -------   -----   -------    -----    -------    -----   -------   -----

Total allowance................... $ 4,519     100.0%   $ 3,652   100.0%  $ 3,321    100.0%   $ 2,941    100.0%  $ 2,564   100.0%
                                   =======     =====    =======   =====   =======    =====    =======    =====   =======   =====
</TABLE>

                                       13
<PAGE>

Investment Activities

General.  Federally-chartered  savings  banks  have the  authority  to invest in
various types of liquid assets,  including  United States Treasury  obligations,
securities of various Federal agencies (including  securities  collateralized by
mortgages),  certain  certificates  of  deposits  of insured  banks and  savings
institutions, municipal securities, corporate debt securities and loans to other
banking institutions.

The  Company  maintains  liquid  assets  which  may  be  invested  in  specified
short-term  securities and certain other  investments.  Liquidity  levels may be
increased or decreased  depending on the yields on investment  alternatives  and
upon management's judgment as to the attractiveness of the yields then available
in relation to other  opportunities  and its expectation of future yield levels,
as well as management's  projections as to the short-term demand for funds to be
used in the Company's loan  origination and other  activities.  At September 30,
2002,  the Company had a securities  portfolio of $272.6 million (31.7% of total
assets).

Investment Policies.  The investment policy of the Company, which is established
by the Board of Directors,  is designed to foster earnings and liquidity  within
prudent interest-rate risk guidelines, while complementing the Company's lending
activities.  The policy  provides for available  for sale,  held to maturity and
trading  classifications.  However, the Company does not currently use a trading
classification  and  does not  anticipate  doing so in the  future.  The  policy
permits  investments in high credit quality  instruments  with  diversified cash
flows  while  permitting  the  Company  to  maximize  total  return  within  the
guidelines  set  forth  in  the  Company's   interest-rate  risk  and  liquidity
management policy.  Permitted  investments  include but are not limited to U. S.
government  obligations,   government  agency  or  government-sponsored   agency
obligations, state, county and municipal obligations, mortgage-backed securities
and  collateralized  mortgage  obligations,   investment  grade  corporate  debt
securities,  commercial paper and common stock. The Company also invests in FHLB
overnight  deposits and federal funds, but these  instruments are not considered
part of the investment portfolio.

The policy also includes several specific  guidelines and restrictions to insure
adherence with safe and sound  activities.  The policy prohibits  investments in
high risk mortgage  derivative  products (as defined within its policy)  without
prior  approval from the Board of Directors.  Management  must  demonstrate  the
business  advantage  of such  investments.  In addition,  the policy  limits the
maximum amount of the investment in a specific investment category.  The Company
does  not  participate  in  hedging  programs,  interest-rate  swaps,  or  other
activities   involving  the  use  of  off-balance  sheet  derivative   financial
instruments.  Further,  the Company does not invest in  securities  that are not
investment grade.

The Board through its  Investment  and Asset  Liability  Committee  ("ALCO") has
charged the Chief Financial  Officer to implement the policy.  All  transactions
are  reported  to the Board of  Directors  monthly,  with the  entire  portfolio
reported quarterly, including market values and unrealized gains (losses).


Securities.  The  Company  maintains  a  portfolio  of  securities  that are all
classified  as available  for sale to enhance  total return on  investments.  At
September 30, 2002, the Company's  securities  included U.S.  government  agency
obligations  with  varying   characteristics  as  to  rate,  maturity  and  call
provisions,  corporate bonds, and municipal bonds.  Callable agency  securities,
representing  46%  of  the  Company's  U.S.  government  agency  obligations  at
September  30,  2002,  could  reduce  the  Company's  investment  yield if these
securities are called prior to maturity.

                                       14
<PAGE>

Mortgage-backed Securities. The Company invests in mortgage-backed securities to
provide earnings,  liquidity,  cash flows, and  diversification to the Company's
overall  balance  sheet.  These  mortgage-backed  securities  are  classified as
available for sale. These securities are participation  certificates  issued and
guaranteed  by  Ginnie  Mae,  Fannie  Mae and  Freddie  Mac and are  secured  by
interests in pools of mortgages.  Mortgage-backed securities typically represent
a participation  interest in a pool of single-family or multi-family  mortgages,
although  the Company  focuses its  investments  on  mortgage-backed  securities
secured by single-family mortgages.

Mortgage-backed  securities  typically are issued with stated principal amounts.
The  securities  are backed by pools of mortgages  that have loans with interest
rates that are within a set range and have varying  maturities.  The  underlying
pool of  mortgages  can be  composed  of either  fixed-rate  or  adjustable-rate
mortgage loans. The interest-rate risk characteristics of the underlying pool of
mortgages  (i.e.,  fixed-rate or  adjustable-rate)  and the prepayment risk, are
passed on to the security  holder.  The life of a  mortgage-backed  pass-through
security is equal to the life of the underlying mortgages.

Collateralized  Mortgage Obligations ("CMOs"). The Company also invests in CMOs,
issued or sponsored by Fannie Mae,  Freddie Mac or private  issuers.  CMOs are a
type of debt security  that  aggregates  pools of mortgages and  mortgage-backed
securities  and  creates  different  classes  of  CMO  securities  with  varying
maturities and amortization  schedules as well as a residual  interest with each
class having different risk characteristics.  The cash flows from the underlying
collateral are usually divided into "tranches" or classes whereby  tranches have
descending priorities with respect to the distribution of principal and interest
repayment of the underlying mortgages and mortgage-backed  securities as opposed
to  mortgage-backed  securities where cash flows are distributed pro rata to all
security  holders.  Unlike  mortgage-backed  securities  from which cash flow is
received and prepayment risk is shared pro rata by all securities holders,  cash
flows from the mortgages and mortgage-backed securities underlying CMOs are paid
in  accordance  with a  predetermined  priority  to  investors  holding  various
tranches of such  securities or obligations.  A particular  tranche or class may
carry  prepayment  risk  that  may be  different  from  that  of the  underlying
collateral and other tranches.  Investing in CMOs allows the Company to moderate
reinvestment risk resulting from unexpected  prepayment activity associated with
conventional  mortgage-backed  securities.  Management believes these securities
represent attractive  alternatives relative to other investments due to the wide
variety of maturity, repayment and interest rate options available.

Corporate Bonds.  Corporate bonds (including capital trust securities) generally
have  longer-term  maturities,  but include  call  provisions  at earlier  dates
(generally  after five to ten  years).  The call  provisions  usually  contain a
premium  price to exercise the call  feature.  The Company has invested in these
longer  maturity  bonds and  securities  with fixed rates of interest to provide
higher  yields to  protect  part of its  assets  from the  possible  decline  in
interest rates over the life of the bond.  Although interest rates may rise over
the life of these  securities,  management  believes these securities  provide a
good  complement  to those assets  (loans and  securities)  which are subject to
periodic principal repayments and payoffs before contractual maturities.

Municipal  Bonds.  Municipal  bonds  have  maturities  from 11 to 20 years  with
premium call  provisions  after seven to ten years.  These bonds are exempt from
federal income taxes, therefore, have lower stated interest rates. All municipal
bonds owned by the bank have fixed rates of interest. The yields included in the
investment tables reflect the tax equivalent yields for the municipal bonds.

Other Securities. Other securities owned by the Company, but not included in the
security portfolio, consist of FHLB stock, interest-bearing deposits and federal
funds  sold.  As a member of the FHLB of Atlanta,  ownership  of FHLB of Atlanta
common shares is required. The remaining securities provide  diversification and
complement the Company's overall investment strategy.

                                       15
<PAGE>

The following  table sets forth the carrying  value of the Company's  securities
portfolio at the dates indicated.


                                                            At September 30,
                                                    ----------------------------
                                                        2002       2001     2000
                                                        ----       ----     ----
                                                             (In thousands)
Securities held to maturity:
----------------------------

U.S. government agency securities.................  $      -         -     1,000
Collateralized mortgage obligations ..............         -         -     8,687
                                                    --------   -------   -------

Total securities held to maturity ................         -         -     9,687
                                                    --------   -------   -------

Securities available for sale (at fair value):
----------------------------------------------

U.S. government agency securities ................    28,184     8,850    19,357
Collateralized mortgage obligations ..............    46,391    44,045    18,072
Mortgage-backed securities .......................   145,982    29,551    29,650
Corporate bonds ..................................    31,341    29,554    20,186
Municipal bonds ..................................    20,345    17,533     9,396
Common stock .....................................       381         -         -
                                                    --------   -------   -------

Total securities available for sale ..............   272,624   129,533    96,661
                                                    --------   -------   -------

Total ............................................  $272,624   129,533   106,348
                                                    ========   =======   =======

                                       16
<PAGE>

The  following  table sets forth  certain  information  regarding  the  carrying
values,  weighted average yields and maturities (or repricing terms for variable
rate  securities) of the Company's  securities  portfolio at September 30, 2002.
Expected  maturities  will differ from  contractual  maturities due to scheduled
repayments  and  because  borrowers  may  have  the  right  to  call  or  prepay
obligations with or without prepayment penalties.

<TABLE>
<CAPTION>
                                                              At September 30, 2002
                          ---------------------------------------------------------------------------------------------------
                          One Year or Less   One to Five Years  Five to Ten Years     More than Ten Years    Total Securities
                          -----------------  -----------------  -----------------     -------------------    ----------------
                          Carrying   Average Carrying  Average  Carrying  Average     Carrying  Average      Carrying Average
                            Value     Yield    Value    Yield     Value    Yield        Value    Yield         Value   Yield
                            -----     -----    -----    -----     -----    -----        -----    -----         -----   -----
                                                                 ($ in thousands)
<S>                      <C>         <C>    <C>       <C>     <C>        <C>       <C>         <C>       <C>         <C>
U.S. government agency
   securities............  $ 2,050     6.10    12,441   3.90      6,818    4.10         6,875    3.72        28,184    4.07

Collateralized mortgage
   obligations...........    2,585     3.62         -      -          -       -        43,806    5.60        46,391    5.49

Mortgage-backed
   securities............       72     4.06    11,037   4.79     48,233    5.49        86,640    5.76       145,982    5.59

Corporate bonds..........    6,562     6.30     6,580   7.85      2,178    7.99        16,021    8.64        31,341    7.94

Municipal bonds..........        -        -         -      -          -       -        20,345    7.40        20,345    7.40

Common stock.............      381     1.19         -      -          -       -             -       -           381    1.19
                           -------            -------           -------              --------              --------

Total....................  $11,650     5.49   $30,058   5.09    $57,229    5.42      $173,687    5.30      $272,624    5.31
                           =======            =======           =======              ========              ========
</TABLE>

                                       17
<PAGE>

Sources of Funds

General.  Deposits are the major source of the  Company's  funds for lending and
other investment  purposes.  Borrowings  (principally from the FHLB) are used to
compensate for reductions in the  availability  of funds from other sources.  In
addition to deposits  and  borrowing,  the Company  derives  funds from loan and
mortgage-backed securities principal repayments, and proceeds from the maturity,
call and sale of  mortgage-backed  securities  and  other  securities.  Loan and
mortgage-backed  securities  payments are a relatively  stable  source of funds,
while deposit inflows are significantly influenced by general interest rates and
money market conditions.

Deposits. The Company offers a variety of deposit accounts,  although a majority
of deposits are in fixed-term, market-rate certificate accounts. Deposit account
terms vary,  primarily as to the  required  minimum  balance,  the time that the
funds must remain on deposit and the applicable interest rate.

The Company's current deposit products include  certificate  accounts ranging in
terms from 90 days to five years as well as  checking,  savings and money market
accounts.  Individual retirement accounts (IRAs) are included in these accounts,
depending on the customer's investment preference.

Deposits are obtained  primarily from residents of Highlands,  Polk, Manatee and
Sumter Counties.  The Company attracts deposit accounts by offering  outstanding
service, competitive interest rates, and convenient locations and service hours.
The Company uses traditional methods of advertising to attract new customers and
deposits,  including  radio,  cable  television,  direct  mail and  print  media
advertising.  The Company  utilizes the services of deposit brokers from time to
time and management  believes that an  insignificant  number of deposit accounts
are held by non-residents of Florida.

The Company pays  interest on its deposits that are  competitive  in its market.
Interest  rates on deposits are set weekly by  management,  based on a number of
factors,  including:

>    projected cash flow;
>    a current  survey of a selected  group of  competitors'  rates for  similar
     products;
>    external data which may influence interest rates;
>    investment opportunities and loan demand; and
>    scheduled certificate maturities and loan and securities repayments.

Because of the large percentage of certificate accounts in the deposit portfolio
(61% at September  30,  2002),  the  Company's  liquidity  could be reduced if a
significant  amount of these  accounts,  maturing within a short period of time,
were not renewed. A significant portion of the certificate  accounts remain with
the Company  after they mature and the Company  believes  that  current  renewal
patterns will continue.  However, the need to retain these accounts could result
in an increase in the Company's cost of funds.

The following table shows the amount (in thousands) of the Company's certificate
accounts of $100,000 or more by time  remaining  until  maturity as of September
30, 2002.



         Maturity Period                                      Amount
         ---------------                                      ------

         Within three months........................       $  17,782
         Three through six months...................          14,023
         Six through twelve months..................          31,240
         Over twelve months.........................          49,904
                                                           ---------

                  Total.............................       $ 112,949
                                                           =========

                                       18
<PAGE>

Borrowings.  Deposits are the primary  source of funds of the Company's  lending
and investment activities and for general business purposes. The Company, as the
need arises or in order to take advantage of funding  opportunities,  may borrow
funds in the form of advances from the FHLB,  short-term  borrowings through the
Federal Reserve's Treasury  Investment Program or reverse repurchase  agreements
to  supplement  its  supply of  lendable  funds and to meet  deposit  withdrawal
requirements.  Advances  from the FHLB  are  secured  by stock in the FHLB and a
blanket lien over the Company's residential mortgage loans. Other borrowings are
secured by other  assets,  principally  securities.  The Company  typically  has
funded  loan  demand  and  investment  opportunities  out of  current  loan  and
mortgage-backed  securities repayments,  securities maturities and new deposits.
However,  the Company  utilizes FHLB advances and other borrowings to supplement
these  sources and as a match against  certain  assets in order to better manage
interest-rate risk. The following table sets forth the maximum month-end balance
and the average balance of these types of borrowings for the periods indicated.

<TABLE>
<CAPTION>
                                                                  For the Year Ended September 30,
                                                                  --------------------------------
                                                                      2002        2001       2000
                                                                      ----        ----       ----
                                                                           ($ in thousands)
<S>                                                                <C>           <C>        <C>
     Maximum amount of borrowings outstanding at any month end:
           Advances from FHLB......................................  $ 149,500     151,250    158,000
           Short-term Federal Reserve borrowings...................     15,000      11,049          -
           Reverse repurchase agreements...........................     19,834           -          -

     Approximate average borrowings outstanding with respect to:
           Advances from FHLB......................................    130,430     140,120    128,523
           Short-term Federal Reserve borrowings...................      6,031       1,670          -
           Reverse repurchase agreements...........................      3,004           -          -

     Approximate weighted average rate paid on:
        Advances from FHLB.........................................       5.45%       5.74%      5.93%
        Short-term Federal Reserve borrowings......................       1.61        3.46          -
        Reverse repurchase agreements..............................       2.27           -          -
</TABLE>

See Note 7 to the consolidated financial statements for additional information.


Personnel

As of  September  30,  2002  the  Company  had 252  full-time  employees  and 16
part-time  employees.   The  employees  are  not  represented  by  a  collective
bargaining unit. The Company believes its relationship  with its employees to be
satisfactory.

                                       19
<PAGE>

                                   Regulation

Set  forth  below  is a  brief  description  of  certain  laws  relating  to the
regulation of the Company and the Bank. The  description  does not purport to be
complete and is qualified  in its entirety by reference to  applicable  laws and
regulations.

Regulation of the Company

General.  The Company is registered  as a savings and loan holding  company with
the OTS.  The Company  will be required to file reports with the OTS and will be
subject to supervision and periodic examination by the OTS. In addition, the OTS
will have enforcement authority over the Company and any non-savings institution
subsidiaries.  The OTS can restrict or prohibit activities that it determines to
be a serious risk to the Company. OTS regulations are intended primarily for the
protection  of  the  depositors  and  not  for  the  benefit  of  the  Company's
stockholders.

As a unitary  savings and loan  holding  company,  the Company  generally is not
subject   to  any   restrictions   on  its   business   activities.   While  the
Gramm-Leach-Bliley Act (the "GLB Act"), enacted in November 1999, terminated the
"unitary  thrift  holding  company"  exemption from activity  restrictions  on a
prospective basis, the Company enjoys  grandfathered status under this provision
of the GLB Act because it acquired  the Bank prior to May 4, 1999.  As a result,
the Company's  freedom from activity  restrictions as a unitary savings and loan
holding company was not affected by the GLB Act. However, if the Company were to
acquire control of an additional savings  association,  its business  activities
would be subject to restriction under the Home Owners' Loan Act. Furthermore, if
the Company were in the future to sell control of the Bank to any other company,
such company would not succeed to the Company's  grandfathered  status under the
GLB Act and would be subject to the same activity restrictions. The continuation
of the Company's exemption from restrictions on business activities as a unitary
savings and loan  holding  company is also  subject to the  Company's  continued
compliance  with the Qualified  Thrift Lender ("QTL") test. See "- Regulation of
the Bank - Qualified Thrift Lender Test."


 Regulation of the Bank

General.  As  a  federally  chartered,  insured  savings  bank  of  the  Savings
Association Insurance Fund ("SAIF"), the Bank is subject to extensive regulation
by the OTS and the  Federal  Deposit  Insurance  Corporation  ("FDIC").  Lending
activities  and  other  investments  must  comply  with  federal  statutory  and
regulatory requirements. The Bank is also subject to reserve requirements of the
Federal  Reserve  System.  Federal  regulation  and  supervision  establishes  a
comprehensive  framework of activities in which an institution can engage and is
intended  primarily  for  the  protection  of  the  SAIF  and  depositors.  This
regulatory  structure gives the regulatory  authorities  extensive discretion in
connection with their  supervisory  and  enforcement  activities and examination
policies,  including  policies  regarding the  classification  of assets and the
establishment of an adequate allowance for loan losses.

The OTS  regularly  examines  the Bank and  prepares  reports to Bank's board of
directors  on  deficiencies,  if  any,  found  in  its  operations.  The  Bank's
relationship with its depositors and borrowers is also regulated by federal law,
especially in such matters as the ownership of savings accounts and the form and
content of the Bank's mortgage documents.

The Bank must file reports with the OTS and the FDIC  concerning  its activities
and financial condition,  and must obtain regulatory approvals prior to entering
into  certain  transactions  such as  mergers  with  or  acquisitions  of  other
financial  institutions.  Any  change in  applicable  statutory  and  regulatory
requirements,  whether by the OTS, the FDIC or the United States Congress, could
have a material adverse impact on the Bank or the Company, and their operations.

Insurance  of  Deposit  Accounts.  The FDIC  administers  two  separate  deposit
insurance funds.

                                       20
<PAGE>

Generally,  the Bank Insurance  Fund ("BIF")  insures the deposits of commercial
banks and the SAIF  insures the  deposits of savings  institutions.  The FDIC is
authorized  to  increase  deposit  insurance  premiums  if  it  determines  such
increases are appropriate to maintain the reserves of either the SAIF or the BIF
or to fund the  administration of the FDIC. In addition,  the FDIC is authorized
to levy emergency special assessments on BIF and SAIF members.  The FDIC has set
the deposit  insurance  assessment  rates for SAIF member  institutions  for the
first six months of 2002 at 0% to .027 % of insured  deposits  on an  annualized
basis, with the assessment rate for most savings institutions set at 0%.

In  addition,  all  insured  institutions  of  the  FDIC  are  required  to  pay
assessments  to the  corporation  at an annual rate of  approximately  .0212% of
insured  deposits to fund  interest  payments on bonds  issued by the  Financing
Corporation, an agency of the Federal government established to recapitalize the
predecessor  to the SAIF.  These  assessments  will continue until the Financing
Corporation bonds mature in 2017.

Regulatory  Capital  Requirements.   OTS  capital  regulations  require  savings
institutions to meet three capital standards:

>    tangible capital equal to 1.5% of total adjusted assets;
>    "Tier 1" or "core"  capital equal to at least 3% of total  adjusted  assets
     for savings  institutions that receive the highest  supervisory  rating for
     safety and soundness and 4% of total adjusted assets for all other thrifts;
     and
>    risk-based capital equal to 8% of total risk-weighted assets.


The Bank's capital ratios are set forth in Note 10 to the consolidated financial
statements.

For purposes of the OTS capital regulations, tangible capital is defined as core
capital less all intangible assets except for certain mortgage servicing rights.
Tier  1  and  core   capital  are  defined  as  common   stockholders'   equity,
noncumulative perpetual preferred stock and related surplus,  minority interests
in the equity accounts of  consolidated  subsidiaries,  certain  nonwithdrawable
accounts and pledged  deposits of mutual  savings  associations  and  qualifying
supervisory  goodwill.  Tier 1 and core capital are reduced by an  institution's
intangible assets,  with limited exceptions for certain mortgage and nonmortgage
servicing rights and purchased credit card relationships. Both core and tangible
capital are further reduced by an amount equal to the savings institution's debt
and equity investments in "nonincludable" subsidiaries engaged in activities not
permissible  to national  banks other than  subsidiaries  engaged in  activities
undertaken  as  agent  for  customers  or in  mortgage  banking  activities  and
subsidiary depository institutions or their holding companies.

The  risk-based   capital  standard  for  savings   institutions   requires  the
maintenance  of  total  risk-based  capital  of  8%  of  risk-weighted   assets.
Risk-based  capital  is  comprised  of  core  and  supplementary   capital.  The
components  of  supplementary  capital  include,  among other items,  cumulative
perpetual preferred stock,  perpetual  subordinated debt, mandatory  convertible
subordinated  debt,  intermediate-term  preferred  stock, and the portion of the
allowance for loan losses not designated  for specific loan losses.  The portion
of the allowance for loan and lease losses  includable in supplementary  capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, supplementary
capital is limited to 100% of core capital. A savings  institution's  risk-based
capital is reduced by the amount of capital instruments held by other depository
institutions  pursuant  to  reciprocal  arrangements  and by the  amount  of the
institution's  equity  investments,  other  than  those  deducted  from core and
tangible   capital,   and  its  high   loan-to-value   ratio   land   loans  and
non-residential construction loans.

A savings  institution's  risk-based  capital  requirement  is measured  against
risk-weighted assets, which equal the sum of each on-balance-sheet asset and the
credit-equivalent  amount of each  off-balance-sheet item after being multiplied
by an assigned  risk weight.  These risk weights  range from 0% for cash to 100%
for delinquent loans,  property acquired through foreclosure,  commercial loans,
and other assets.

                                       21
<PAGE>

Dividend and Other Capital  Distribution  Limitations.  The OTS imposes  various
restrictions  or  requirements  on the ability of savings  institutions  to make
capital distributions, including cash dividends.

A  savings  institution  that is a  subsidiary  of a  savings  and loan  holding
company,  such as the Bank, must file an application or a notice with the OTS at
least 30 days before making a capital  distribution.  A savings institution must
file an application for prior approval of a capital distribution if:

>    it  is  not  eligible  for  expedited   treatment  under  the  applications
     processing rules of the OTS;
>    the total  amount of all  capital  distributions,  including  the  proposed
     capital  distribution,  for the  applicable  calendar  year would exceed an
     amount  equal to the  savings  bank's net income for that year to date plus
     the institution's retained net income for the preceding two years;
>    it would not adequately be capitalized after the capital distribution; or
>    the  distribution  would  violate an agreement  with the OTS or  applicable
     regulation.

The Bank will be required to file a capital  distribution  notice or application
with the OTS  before  paying  any  dividend  to the  Company.  However,  capital
distributions by the Company, as a savings and loan holding company, will not be
subject to the OTS capital  distribution  rules. The OTS may disapprove a notice
or deny an application for a capital distribution by the Bank if:

>    the savings  institution  would be  undercapitalized  following the capital
     distribution;
>    the proposed capital distribution raises safety and soundness concerns; or
>    the capital  distribution  would  violate a  prohibition  contained  in any
     statute, regulation or agreement.

In addition, a federal savings institution cannot distribute  regulatory capital
that is required for its liquidation account.


Qualified Thrift Lender Test. Federal savings institutions must meet a qualified
thrift lender test or they become subject to the business activity  restrictions
and  branching  rules  applicable to national  banks.  To qualify as a qualified
thrift lender, a savings institution must either:


>    be deemed a "domestic  building  and loan  association"  under the Internal
     Revenue Code by  maintaining  at least 60% of its total assets in specified
     types of assets,  including  cash,  certain  government  securities,  loans
     secured  by  and  other  assets  related  to  residential   real  property,
     educational loans and investments in premises of the institution; or
>    satisfy the  statutory  qualified  thrift lender test set forth in the Home
     Owners' Loan Act by maintaining  at least 65% of its "portfolio  assets" in
     certain  qualified  thrift  investments,  defined  to  include  residential
     mortgages  and  related  equity   investments,   certain   mortgage-related
     securities,  small business loans, student loans and credit card loans, and
     50% of certain community  development  loans. For purposes of the statutory
     qualified thrift lender test,  portfolio assets are defined as total assets
     minus intangible assets, property used by the institution in conducting its
     business,  and  liquid  assets  equal to 10% of  total  assets.  A  savings
     institution  must  maintain  its status as a qualified  thrift  lender on a
     monthly  basis in at least  nine out of every 12  months.  The Bank met the
     qualified  thrift  lender test as of September  30, 2002 and in each of the
     last 12 months and, therefore, qualifies as a qualified thrift lender.

                                       22
<PAGE>

Loans to One Borrower.  Under federal law, savings institutions have, subject to
certain  exemptions,  lending  limits to one  borrower in an amount equal to the
greater of $500,000 or 15% of the institution's  unimpaired capital and surplus.
As of September  30, 2002,  the Bank's legal  lending  limit to one borrower was
$10.0 million.

FHLB  System.  The Bank is a member of the FHLB of  Atlanta,  which is one of 12
regional  FHLBs.  Each FHLB serves as a reserve or central  bank for its members
within its  assigned  region.  It is funded  primarily  from funds  deposited by
financial  institutions  and  proceeds  derived  from the  sale of  consolidated
obligations of the FHLB system.  It makes loans to members  pursuant to policies
and procedures established by the board of directors of the FHLB.

As a member,  the Bank is required to purchase and maintain stock in the FHLB of
Atlanta  in an  amount  equal  to  the  greater  of 1% of our  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the  beginning of each year or 5% of FHLB  advances.  The Bank is in  compliance
with this requirement.  The FHLB imposes various limitations on advances such as
limiting the amount of certain types of real estate related collateral generally
to 30% of a member's capital and limiting total advances to a member.

Federal  Reserve  System.  The Federal  Reserve  System  requires all depository
institutions  to  maintain  non-interest-bearing  reserves at  specified  levels
against their  checking  accounts and non-  personal  certificate  accounts.  At
September 30, 2002 the Bank was in compliance with these requirements.

                                       23
<PAGE>

Item 2.  Description of Property
-------  -----------------------

The Company's corporate office is located at 205 East Orange Street in Lakeland,
Florida and conducts its business through eighteen offices, which are located in
Highlands,  Polk,  Manatee and Sumter  Counties in Florida.  The following table
sets forth the location of each of our  offices,  the year the office was opened
and the net book value (in thousands) of each office and its related equipment.

<TABLE>
<CAPTION>
                                                   Year
                                                  opened or   Leased or     Net book value at
             Building/Office Location             acquired      Owned       September 30, 2002
        --------------------------------------   ---------- --------------- ------------------
<S>                                               <C>      <C>               <C>
        Corporate Headquarters and
        Downtown Branch Office                      1957          Owned          $ 3,115

        Branch Offices:
             Avon Park                              2002          Owned              407
             Combee                                 2002          Owned              390
             Cortez (Bradenton)                     1972         Leased (1)           64
             Edgewood                               2002          Owned              497
             Grove Park                             1961          Owned              405
             Harden                                 2002          Owned              565
             Highlands                              1972          Owned              621
             Interstate                             1985          Owned              439
             Lakewood Ranch                         2001          Owned            2,467
             Marcum                                 2002          Owned              464
             Scott Lake                             1997          Owned              517
             Sebring                                2002          Owned              541
             Town and Country                       2000         Leased (2)          231
             West Bradenton                         1989          Owned              862
             Wildwood                               2002          Owned              378
             Winter Haven North                     1978          Owned              438
             Winter Haven South                     1995          Owned              770

        Operations Center                           1964          Owned              237

        Residential Lending Office                  1999         Leased (3)           45

        Other construction in progress (4)                                         1,268

</TABLE>

------------------
(1)  Five-year lease that  terminates  December 31, 2003, but has two three-year
     renewal options.
(2)  Ten year lease with two five year options.
(3)  Three-year  lease that  terminates  April 30, 2005,  but has five  one-year
     renewal options.
(4)  Represents primarily land and construction costs of a new branch office.

                                       24
<PAGE>

Item 3.  Legal Proceedings
-------  -----------------

From  time to time the  Company  and the  Bank  are  involved  as  plaintiff  or
defendant in various  legal  actions  arising in the normal  course of business.
Presently,  neither the Company nor the Bank is a party to any material  pending
legal proceeding.

Item 4.  Submission of Matters to a Vote of Security Holders
-------  ---------------------------------------------------

Not applicable.

                                       25
<PAGE>

                                     PART II


Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
-------  -----------------------------------------------------------------------
         Matters
         -------


Stock Market Information and Dividends

Since its issuance on April 6, 1999,  the  Company's  common stock has traded on
the  Nasdaq  National  Market  under the symbol  FFBK.  Upon  completion  of the
conversion and  reorganization  on December 21, 2000, the common stock continues
to trade  on the  Nasdaq  National  Market  under  the same  symbol,  FFBK.  The
following table sets forth market price information, based on closing prices, as
reported by the Nasdaq  National  Market for the common stock high and low sales
prices for the periods  indicated.  The stock  prices prior to December 22, 2000
are adjusted to reflect the exchange  ratio of 1.0321 after the  conversion  and
reorganization.  See  Note 18 of the  consolidated  financial  statements  for a
summary of quarterly financial data.

                                                               Cash Dividends
                                         High         Low    Per Share Declared
                                         ----         ---    ------------------

Fiscal 2002
-----------
First Quarter...................       $ 16.60    $ 14.70          $ .05
Second Quarter..................         18.40      16.20            .06
Third Quarter...................         20.07      18.10            .06
Fourth Quarter..................         19.59      16.46            .06

Fiscal 2001
-----------
First Quarter...................         12.56      10.62            .04
Second Quarter..................         15.00      12.31            .05
Third Quarter...................         16.10      14.53            .05
Fourth Quarter..................         17.48      13.75            .05

The number of  stockholders  of record of common stock as of September  30, 2002
was approximately  700, which does not include the number of persons or entities
who held stock in nominee or "street" name through various brokerage firms.

                                       26
<PAGE>

Item 6.  Selected Financial Data
-------  -----------------------

<TABLE>
<CAPTION>
                                                Selected Financial Highlights
                                            (In thousands except per share data)

                                                         2002          2001         2000         1999        1998 (3)
                                                   ----------       -------      -------      -------         -------
<S>                                            <C>              <C>          <C>          <C>             <C>
At Septembe 30:
   Assets...................................       $  859,446       660,369      582,180      498,358         414,472
   Loans, net...............................          499,364       474,155      440,386      397,910         338,610
   Securities...............................          272,624       129,534      106,348       80,876          60,961
   Cash and cash equivalents................           30,628        21,676        6,734        2,598             647
   Deposits.................................          587,431       399,537      354,554      339,224         352,180
   FHLB advances and other borrowings.......          164,334       160,548      160,937       92,472          21,000
   Stockholders' equity.....................           98,978        93,814       61,081       61,337          36,107

   Actual number (not in thousands):
   Real estate loans outstanding............            4,189         4,481        4,615        4,696           4,433
   Deposit Accounts.........................           49,244        36,168       36,747       38,409          38,409
   Full service offices.....................               18            11            9            9               9
For the year ended September 30:
   Interest income..........................       $   48,910        44,846       39,840       32,648          32,141
   Interest expense.........................           24,948        25,895       23,575       17,128          18,966
                                                   ----------       -------      -------      -------         -------
   Net interest income......................           23,962        18,951       16,265       15,520          13,175

   Provision for loan losses................              680           615          630          540             405
                                                   ----------       -------      -------      -------         -------
   Net interest income after provision
     for loan losses........................           23,282        18,336       15,635       14,980          12,770
   Noninterest income.......................            5,196         2,487        2,114        1,473           4,347
   Noninterest expenses.....................           20,517        13,776       11,813       11,448          13,581
                                                   ----------       -------      -------      -------         -------
   Income before income taxes...............            7,961         7,047        5,936        5,005           3,536

   Income taxes.............................            2,357         2,178        2,094        1,748           1,151
                                                   ----------       -------      -------      -------         -------
   Net income...............................       $    5,604         4,869        3,842        3,257           2,385
                                                   ==========       =======      =======      =======         =======

   Basic earnings per share (1) (2).........       $     1.10           .92          .71          .33               -
                                                   ==========       =======      =======      =======         =======
   Diluted earnings per share (1) (2).......       $     1.05           .90          .70          .33               -
                                                   ==========       =======      =======      =======         =======
   Weighted average common and common
     equivalent shares outstanding: (1) (2)
         Basic (4)..........................            5,095         5,293        5,424        5,727               -
         Diluted (4)........................            5,339         5,429        5,516        5,727               -
</TABLE>

-----------------
(1)  Year 2001  includes  $30.6  million in net  proceeds  from the  issuance of
     common  stock in  connection  with  the  conversion  from a mutual  holding
     company to a full stock company on December 21, 2000.
(2)  Years  2000  and  1999  include  $25.7  million  in net  proceeds  from the
     reorganization  on April 6, 1999.  Prior to April 6,  1999,  the Bank was a
     mutual  institution.  Therefore,  earnings per share and  weighted  average
     shares  outstanding in 1999 are for the six months ended September 30, 1999
     (period subsequent to the reorganization.)
(3)  During fiscal year 1998,  the Bank sold five branches (and $55.5 million in
     related deposits) that were not contiguous to its primary market area for a
     pre-tax gain of $3.0 million. In connection with the sale of branches,  the
     Bank transferred $44.6 million in loans. In addition,  noninterest expenses
     includes special benefit plan adjustments of $2.2 million.
(4)  Shares  outstanding for the years ended 2000 and 1999 have been adjusted as
     of the beginning of the periods to give effect to the 1.0321 exchange ratio
     of previously  issued shares in conjunction  with the  conversion  that was
     effective December 21, 2000.

                                       27
<PAGE>

                            Selected Financial Ratios
<TABLE>
<CAPTION>
                                                                     At or For the Year Ended September 30,
                                                        ---------------------------------------------------------------
                                                         2002           2001         2000         1999            1998
                                                         ----           ----         ----         ----            ----
<S>                                                  <C>            <C>          <C>          <C>            <C>
Performance Ratios:
Return on average assets (net income
    divided by average total assets)..............        .74%           .80%         .70%         .72%           .55%
Return on average equity (net income
    divided by average equity)....................       5.92           5.61         6.43         6.65           6.55
Net interest-rate spread..........................       3.04           2.51         2.54         2.95           2.65
Net interest margin on average
    interest-earnings assets......................       3.47           3.30         3.13         3.56           3.10
Average interest-earning assets to
    average interest-bearing liabilities..........        112            118          113          116            110

Efficiency ratio (noninterest expense less
    amortization of core deposit intangible,
    divided by the sum of net interest income
    and noninterest income).......................         67             64           64           67             78

Asset Quality Ratios:
Nonperforming loans to total loans, net...........        .22            .20          .17          .21            .25
Nonperforming assets to total assets..............        .17            .30          .17          .21            .32
Net charge-offs to average loans less LIP
    outstanding...................................        .17            .06          .06          .04            .14
Allowance for loan losses to total loans
    less LIP......................................        .90            .76          .75          .74            .76

Capital Ratios:
Average equity to average assets
    (average equity divided by average
    total assets).................................      12.57          14.17        10.94        10.84           8.31
Equity to assets at period end....................      11.52          14.21        10.49        12.31           8.62
Dividend payout ratio.............................         22             19           10           12              -

</TABLE>
                                       28
<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
------- ------------------------------------------------------------------------
        of Operations
        -------------

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

The  following  discussion  should  be read in  conjunction  with  the  Selected
Financial Highlights,  Selected Financial Ratios and the Consolidated  Financial
Statements - See Part II, Items 6 and 8 of this report.

Overview

On  April  6,  1999,   FloridaFirst  Bank  reorganized  from  a  mutual  savings
association  into a mutual holding  company named  FloridaFirst  Bancorp MHC and
formed FloridaFirst Bancorp, a middle-tier holding company, whereby FloridaFirst
Bank became a wholly-owned  subsidiary of  FloridaFirst  Bancorp.  In connection
with the  reorganization,  FloridaFirst  Bancorp  sold  2,703,851  shares of its
Common  Stock to the  public and the  remaining  3,049,024  shares  were held by
FloridaFirst Bancorp MHC.

On December 21, 2000,  FloridaFirst  Bancorp, Inc. (the "Company") completed its
stock  offering  in  connection  with  the  conversion  and   reorganization  of
FloridaFirst  Bank (the "Bank") and its holding company,  FloridaFirst  Bancorp,
from the mutual holding company form of organization to a full stock company. As
part  of  the  conversion  and  reorganization,  the  shares  formerly  held  by
FloridaFirst  Bancorp MHC were cancelled,  the Company sold 3,147,952 new shares
to the public and the shares held by stockholders  of FloridaFirst  Bancorp were
exchanged for 2,372,048 shares of the Company. The conversion and reorganization
was  accounted for in a manner  similar to a pooling of  interests,  whereby the
assets and liabilities of FloridaFirst  Bancorp became the Company's  assets and
liabilities.

On  October  2,  2002,  the  Company  signed a  definitive  agreement  with BB&T
Corporation ("BB&T"), Winston-Salem,  North Carolina, whereby BB&T would acquire
100% of the outstanding  stock of the Company.  However,  pursuant to discussion
with  regulatory  officials,  BB&T and the Company  terminated  the agreement on
October 31,  2002 so that BB&T could  submit the proper  application  to request
permission to acquire control of the Company pursuant to regulatory  guidelines.
The  application  was  filed on  November  4,  2002  with the  Office  of Thrift
Supervision  ("OTS") and no further  merger related  activities  will take place
until proper approval is obtained from the OTS.

Forward-Looking Statements

The following discussions contain  forward-looking  statements that are based on
assumptions and describe future plans, strategies,  and expectations of the Bank
and the Company.  These  forward-looking  statements are generally identified by
use  of the  words  "believe,"  "expect,"  "intend,"  "anticipate,"  "estimate,"
"project," or similar  expressions.  The Company's ability to predict results or
the actual effect of future plans or strategies is inherently uncertain. Factors
that could have a material  adverse  effect on the operations of the Company and
its  subsidiaries  include,  but are not limited to, changes in interest  rates,
general economic conditions, legislative/regulatory changes, monetary and fiscal
policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal  Reserve Board,  the quality and  composition of the loan and investment
portfolios,  demand for loan products,  deposit flows,  competition,  demand for
financial  services  in the  Company's  market  area,  and  changes in  relevant
accounting  principles.  These risks and  uncertainties  should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. The Company does not undertake--and specifically disclaims--any
obligation to publicly  release the results of any  revisions  after the date of
the  statements or to reflect the  occurrence of  anticipated  or  unanticipated
events.

Business Strategy

The Company  believes  that pursuing a strategy to broaden the range of products
and services  offered  should  offset the declining  margins in the  competitive
market for one-to-four family residential mortgage loans. The strategy includes:

>    increasing  the percentage of higher  yielding and more interest  sensitive
     assets;
>    increasing  the  percentage of commercial and consumer loans and commercial
     deposit accounts;
>    utilizing alternative sources of funding at reasonable rates;
>    increasing  sources of  non-interest  income;
>    utilizing  its computer  network for enhanced  sales,  service and security
     features; and

                                       29
<PAGE>

>    utilizing  alternative  delivery  systems,  including its internet  banking
     product, and investigating an enhanced customer care center strategy.


Highlights of the business strategy are as follows:

Community-Oriented  Institution.  Based on total assets, the Bank is the largest
independent  financial  institution  headquartered in Polk County,  Florida. The
Bank is committed to meeting the financial  needs of the communities in which it
operates.  Management  believes  that the Bank is large enough to provide a full
range of personal and business  financial  services,  and yet is small enough to
provide such services in a personalized and efficient  manner.  It is the Bank's
current plan to deliver the  products  and  services  that meet the needs of its
customers.

Commercial  Banking.  The Bank  continues  to expand its  lending  programs  for
commercial  business and commercial  real estate loans in an effort to satisfy a
perceived need within its market area and increase its loan portfolio.  The Bank
continues  to  realize  a  positive  impact  on its net  interest  margin  since
commercial  customers provide fair yields on loans, loans that generally provide
for shorter  maturities or repricing  periods than the  traditional  residential
mortgage loan, and provide a source of lower cost funds. The risks of commercial
lending  relate to the source of repayment of the loan which is weighted  toward
the ability to repay  versus being  primarily  collateral  dependent.  In recent
years, the Bank has assembled an experienced  commercial lending team to support
its increased  activities in this area and to increase its penetration  into the
smaller businesses operating in its market areas.

Branch Acquisition.  On February 15, 2002, the Company finalized the purchase of
seven Florida  retail sales offices  ("Branch  Acquisition")  from SunTrust Bank
coincident  with SunTrust  Bank's  acquisition  of such offices from  Huntington
National Bank ("Huntington").  The transaction resulted in the Company receiving
approximately $120.9 million in cash, and included  approximately $162.1 million
in deposits  and  approximately  $26.1  million in loans  related to those seven
offices.  The Company paid a premium of approximately 7.6%. This premium,  along
with additional  acquisition costs,  resulted in a core deposit intangible asset
of $12.7 million being recorded which is subject to periodic amortization over a
period of twelve years.  The cash received from the purchase was primarily  used
to reduce  $30.0  million in  short-term  fixed-rate  and  adjustable-rate  FHLB
advances and fund the purchase of approximately $85.0 million in securities. The
securities  were primarily  mortgage-backed  securities  with average lives less
than five years that provide cash flow from the time of purchase.  This strategy
allows the  Company to  immediately  earn a fair rate of return on the  invested
funds  and  utilize  the  cash  flow  from  the  securities  to  fund  new  loan
originations.

Comparison of Financial Condition at September 30, 2002 and September 30, 2001

Assets.  Total assets increased $199.0 million,  or 30.1 %, to $859.4 million at
September 30, 2002 from $660.4  million at September  30, 2001.  The increase in
total  assets  resulted  primarily  from  the  assets  acquired  in  the  Branch
Acquisition  (total assets added were $162.1 million),  less the funds that were
utilized to immediately reduce our borrowing position by $30.0 million.  Overall
securities increased $143.1 million, or 110.5%,  through deployment of the funds
in the Branch  Acquisition  and additional  purchases of securities that fit the
Company's strategic plan to increase profitability and leverage its capital. The
loan portfolio  remained  basically  flat during the year,  except for the $26.0
million in commercial  and consumer  loans  acquired in the Branch  Acquisition.
Management  continues  to  concentrate  its efforts to grow the  commercial  and
consumer  loan  portfolio  to  gradually  leverage  its  capital.   The  capital
leveraging  strategy also includes the purchase of securities to complement  its
loan origination efforts.

Cash and cash  equivalents  increased $9.0 million due to excess funds resulting
from $15.0  million in a U. S. Treasury  borrowing  program that placed funds in
the bank just prior to year end.

Premises and equipment  increased $3.8 million primarily due to the construction
of a new office,  offices acquired in the Branch Acquisition,  equipment for two
offices,  renovations at several  offices and capital  expenditures to implement
certain phases of the strategic technology plan.

Cash  surrender  value of bank  owned  life  insurance  increased  $5.3  million
primarily due the purchase of $4.5 million of additional policies, together with
an increase in the cash surrender value of the policies.

Liabilities.  Total  liabilities  increased $193.9 million,  or 34.2%, to $760.5
million at September  30, 2002 from $566.6  million at September  30, 2001.  The
increase in total  liabilities  resulted mainly due to a net

                                       30
<PAGE>

deposit increase of $187.9 million.  The increase in deposits resulted primarily
from the $162.1  million of  deposits  acquired  in the Branch  Acquisition.  In
addition, checking and money market accounts experienced continued strong growth
through expansion of the customer base.

Management  continues to evaluate the available funding sources.  The attributes
of the alternative  funding  sources that  management  considers in its analysis
include  the   interest   and  other  costs  of  such   funding,   the  maturity
considerations and the nature and characteristics of assets being funded.

Stockholder's  Equity.  The $5.2 million  increase in the  stockholders'  equity
includes:

>    $5.6 million in net income;
>    repurchase  of  115,000  shares  of the  Company's  stock at a cost of $2.2
     million;
>    purchase of 124,658 shares of the Company's stock for the restricted  stock
     plan  at  a  cost  of  $2.3  million,  less  shares  issued  at a  cost  of
     approximately $1.2 million;
>    net distribution of $1.1 million from the restricted stock plan for vesting
     of certain awards;
>    increase in accumulated other comprehensive income of $3.6 million;
>    repayment of $541,000 on the Employee  Stock  Ownership Plan ("ESOP") loan;
     and
>    dividends paid totaling $1.2 million.

The increased value in accumulated other comprehensive  income resulted from the
fluctuation  in market value of the  Company's  securities  available  for sale.
Because of continued interest rate volatility,  accumulated other  comprehensive
income and stockholders'  equity could materially fluctuate for each interim and
year-end period.



Liquidity and Capital Resources

The liquidity of a savings institution  reflects its ability to provide funds to
meet loan requests,  to accommodate  possible outflows in deposits,  and to take
advantage  of  market  opportunities.   Funding  loan  requests,  providing  for
liability outflows,  and managing interest rate fluctuations  require continuous
analysis in order to match the  maturities of short-term  loans and  investments
with specific types of deposits and borrowings.  An  institution's  liquidity is
normally considered in terms of the nature and mix of the institution's  sources
and uses of funds.

Assets providing liquidity are generated through loan repayments,  loan sale and
the management of maturity distributions for loans and securities.  An important
aspect of liquidity  management lies in maintaining  sufficient  levels of loans
and mortgage-backed securities that generate monthly cash flows.


                                       31
<PAGE>
Cash and cash  equivalents  increased $9.0 million to $30.6 million for the year
ended  September  30, 2002.  Significant  cash flows or uses  (amounts  shown in
parentheses) were as follows (in millions):

<TABLE>
<CAPTION>
<S>                                                                                   <C>
         Cash provided by operations...................................................  $   6.1

         Cash received upon purchase of deposits.......................................    120.9

         Federal Home Loan Bank advances and other borrowings..........................      3.8

         Increase in net deposits, exclusive of branch acquisition.....................     25.8

         Sales, maturities of and repayments on securities.............................    103.1

         Net purchases of securities and FHLB stock....................................   (239.0)

         Net purchases of premises and equipment, exclusive of branch acquisition......     (3.5)

         Net decrease in loans, exclusive of branch acquisition........................      1.0

         Purchase of bank owned life insurance.........................................     (4.5)

         Payments to acquire treasury stock and restricted stock plan shares...........     (4.5)

         Dividends paid................................................................     (1.2)

         Other, net....................................................................      1.0
                                                                                          ------
         Net increase in cash and cash equivalents.....................................      9.0
                                                                                          ======
</TABLE>

The  Company is  subject to federal  regulations  that  impose  certain  minimum
capital  requirements.  For a discussion on such capital levels,  see Note 10 in
the consolidated financial statements.

Management is not aware of any known trends,  events or uncertainties  that will
have  or are  reasonably  likely  to have a  material  effect  on the  Company's
liquidity,  capital  or  operations  nor is  management  aware  of  any  current
recommendation by regulatory authorities,  which if implemented, would have such
an effect.


Analysis of Net Interest Income

Historically, the Company's earnings have depended primarily on its net interest
income,  which is the difference between interest income earned on its loans and
securities ("interest-earning assets") and interest paid on its deposits and any
borrowed funds ("interest-bearing liabilities"). Net interest income is affected
by:

>    the interest-rate  spread - the difference between rates of interest earned
     on  interest-earning   assets  and  rates  paid  on  its   interest-bearing
     liabilities; and
>    the aggregate amounts of its  interest-earning  assets and interest-bearing
     liabilities.

                                       32
<PAGE>
Average  Balance  Sheet.  The  following  table sets forth  certain  information
relating to the Company for the periods indicated.  The average yields and costs
are  derived by dividing  income or expense by the average  balance of assets or
liabilities,  respectively,  for the periods presented.  Similar  information is
provided as of  September  30,  2002.  Average  balances  are derived from daily
average balances.
<TABLE>
<CAPTION>
                                                                             Year Ended September 30,
                                              --------------------------------------------------------------------------------------
                       At September 30, 2002             2002                           2001                         2000
                       ---------------------  --------------------------   ----------------------------  ---------------------------
                                    Actual                       Average                        Average                      Average
                           Actual   Yield/    Average            Yield/      Average            Yield/    Average            Yield/
                           Balance   Cost     Balance   Interest  Cost       Balance  Interest   Cost     Balance  Interest   Cost
                           -------   ----     -------   --------  ----       -------  --------   ----     -------  --------   ----
<S>                     <C>        <C>    <C>           <C>       <C>    <C>          <C>      <C>    <C>          <C>       <C>
Interest-earning
assets:
Residential               $ 316,923  7.02%  $ 314,686     23,066    7.33%  $ 322,388    24,544   7.61%  $ 305,854    22,686    7.42%
Consumer                    107,581  7.91      95,926      7,838    8.17      82,966     7,233   8.72      78,438     6,487    8.27
Commercial                   79,379  6.93      72,197      5,344    7.40      58,215     4,894   8.41      39,117     3,297    8.43
                          ---------         ---------   --------           ---------  --------          ---------  --------
   Total loans (1)          503,883  7.20     482,809     36,248    7.51     463,569    36,671   7.91     423,409    32,470    7.67
Securities and
  other (2)(6)              296,099  5.56     220,793     13,128    5.95     121,925     8,552   7.01     102,800     7,592    7.39
                          ---------         ---------   --------           ---------  --------          ---------  --------
   Total interest-
     earning assets         799,982  6.61     703,602     49,376    7.02     585,494    45,223   7.72     526,209    40,062    7.61
                                                        --------                      --------                     --------
Noninterest-earning
  assets                     59,464            49,113                         26,915                       19,890
                          ---------         ---------                      ---------                    ---------
   Total assets           $ 859,446         $ 752,715                      $ 612,409                    $ 546,099
                          =========         =========                      =========                    =========
Interest-bearing
liabilities:
Checking accounts            74,923  1.31      58,195        844    1.45      32,937       590   1.79      31,416       576    1.83
Savings accounts             54,432  1.58      44,832        722    1.61      27,940       486   1.74      31,012       581    1.87
Money market accounts        68,634  1.99      54,762      1,404    2.56      28,766     1,205   4.19      25,008     1,068    4.27
Certificate accounts        358,177  3.94     329,291     14,874    4.52     263,512    15,519   5.89     245,754    13,519    5.50
                          ---------         ---------   --------           ---------  --------          ---------  --------
   Total deposits           556,166  3.11     487,080     17,844    3.66     353,155    17,800   5.04     333,190    15,744    4.73
FHLB advances and
  other borrowings          164,334  4.99     139,482      7,104    5.09     142,536     8,018   5.63     132,054     7,831    5.93
                          ---------         ---------   --------           ---------  --------          ---------  --------
   Total interest-
     bearing
     liabilities            720,500  3.54     626,562     24,948    3.98     495,691    25,818   5.21     465,244    23,575    5.07
                                                        --------                                                   --------
Noninterest-bearing
  liabilities (3)(7)         39,968            31,534                         29,960        77             21,094
                          ---------         ---------                      ---------  --------          ---------
   Total liabilities        760,468           658,096                        525,651    25,895            486,338
Stockholders' equity         98,978            94,619                         86,758                       59,761
                          ---------         ---------                      ---------                    ---------
   Total liabilities
     and stockholders'
     equity               $ 859,446         $ 752,715                      $ 612,409                    $ 546,099
                          =========         =========                      =========                    =========

Net interest income (6)                                 $ 24,428                      $ 19,328                     $ 16,487
                                                        ========                      ========                     ========
Interest rate spread (4)             3.08%                          3.04%                        2.51%                         2.54%
                                     ====                           ====                         ====                          ====
Net margin on interest-
  earning assets (5)                 3.36%                          3.47%                        3.30%                         3.13%
                                     ====                           ====                         ====                          ====
Average interest-earning
  assets to average
  interest-bearing
  liabilities                         109%                           112%                         118%                          113%
                                      ===                            ===                          ===                           ===
</TABLE>
------------------------
(1)  Average balances include nonaccrual loans.
(2)  Securities  and other  includes  securities  available for sale and held to
     maturity, interest-bearing deposits and FHLB stock.
(3)  Includes noninterest-bearing checking accounts.
(4)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(5)  Net margin on  interest-earning  assets represents net interest income as a
     percentage of average interest-earning assets.
(6)  Interest  income and net interest  income do not agree to the  consolidated
     statement of earnings because the tax equivalent income (based on effective
     tax rate of 34%) on municipal bonds is included in this schedule.
(7)  Interest  in 2001  includes  interest  expense  on $80.9  million  of funds
     received from the public stock offering.

                                       33
<PAGE>

Rate/Volume  Analysis.  The  relationship  between  the  volume and rates of the
Company's  interest-earning assets and interest-bearing  liabilities affects the
Company's net interest  income.  The following table reflects the sensitivity of
the Company's  interest income and interest  expense to changes in volume and in
prevailing  interest rates during the periods indicated.  Each category reflects
the:  (1) changes in volume  (changes  in volume  multiplied  by old rate);  (2)
changes in rate (changes in rate multiplied by old volume);  and (3) net change.
The net change  attributable  to the combined impact of volume and rate has been
allocated proportionally to the absolute dollar amounts of change in each.

<TABLE>
<CAPTION>
                                                                 Year Ended September 30,
                                   ---------------------------------------------------------------------------------
                                                   2002 vs. 2001                            2001 vs. 2000
                                   ---------------------------------------    --------------------------------------
                                          Increase (Decrease) Due to                Increase (Decrease) Due to
                                   ---------------------------------------    --------------------------------------
                                      Volume            Rate          Net        Volume          Rate           Net
                                      ------            ----          ---        ------          ----           ---
                                                                   (Dollars in thousands)
<S>                               <C>              <C>        <C>           <C>              <C>         <C>
         Interest income:
         Residential.............   $   (578)           (900)      (1,478)       1,248            610         1,858
         Consumer................      1,079            (474)         605          385            361           746
         Commercial..............      1,086            (636)         450        1,520             77         1,597
                                     -------        --------      -------     --------         ------       -------
            Total loans..........      1,587          (2,010)        (423)       3,153          1,048         4,201

         Securities and other....      6,034          (1,458)       4,576        1,315           (355)          960
                                     -------        --------      -------     --------         ------       -------
         Total interest income...    $ 7,621          (3,468)       4,153        4,468            693         5,161
                                     =======        ========      =======     ========         ======       =======
         Interest expense:
         Checking accounts.......        384            (130)         254           27            (13)           14
         Savings accounts........        274             (38)         236          (55)           (40)          (95)
         Money-market accounts...        796            (597)         199          157            (20)          137
         Certificates of deposit.      3,407          (4,052)        (645)       1,011            989         2,000
                                     -------        --------      -------     --------         ------       -------
            Total deposits.......      4,861          (4,817)          44        1,140            916         2,056
                                     -------        --------      -------     --------         ------       -------
         FHLB advances and other
           borrowings............       (170)           (821)        (991)         567           (303)          264
                                     -------        --------      -------     --------         ------       -------

         Total interest expense..    $ 4,691          (5,638)        (947)       1,707            613         2,320
                                     =======        ========      =======     ========         ======       =======

         Change in net interest
           income................    $ 2,930           2,170        5,100        2,761             80         2,841
                                     =======        ========      =======     ========         ======       =======

</TABLE>
                                       34
<PAGE>

Comparison  of  Operating  Results  for the Years Ended  September  30, 2002 and
September 30, 2001

Net Income. Net income for the year ended September 30, 2002 increased $735,000,
or 15.1% to $5.6 million,  compared to $4.9 million for the year ended September
30, 2001.

>    Net interest income  increased $5.0 million,  or 26.4%,  for the year ended
     September  30,  2002  compared to the same  period in 2001.  This  increase
     resulted  primarily from interest income increasing $4.1 million,  together
     with a decrease in interest expense of $947,000,
>    Noninterest  income  increased by $2.7 million from 2001 to 2002 due mainly
     to:
     o    increased  fees and  service  charges  mainly  related  to the  Branch
          Acquisition;
     o    earnings related to bank owned life insurance policies;
     o    gains on sale of mortgage loans;
     o    net gains on sale of securities.

>    Noninterest  expenses  increased $6.7 million to $20.5 million for the year
     ended  September 30, 2002 from $13.8  million for the year ended  September
     30,  2001,  due to increases in several  expense  categories,  as discussed
     below.

Interest  Income.  The following  discussion  highlights  the major factors that
impacted the changes in interest income during the year ended September 30, 2002
compared  to the prior  year.  Detailed  changes  are  contained  in the Average
Balance Sheet table.

>    While  residential  loan  balances  decreased as a result of loan sales and
     accelerated  repayments,  consumer and commercial  loan balances  increased
     primarily  due to  the  addition  of  the  loans  acquired  in  the  Branch
     Acquisition.  The Company  continues to emphasize  commercial  and consumer
     loan growth in an effort to restructure its loan portfolio.
>    The average yield on loans decreased, as the sharp decrease in shorter-term
     interest rates throughout  calendar 2001 had a major impact on consumer and
     commercial loan yields.  The decrease in the commercial loan yield can also
     be  attributed  to a change  in the mix of the  portfolio  and the  intense
     competition  for these  loans.  Increased  refinance  activity,  due to the
     overall  lower  interest  rate  environment,  brought  about a decrease  in
     residential loan yields.
>    The average  balances in the securities  portfolio grew 111% as the Company
     invested funds received from the Branch Acquisition,  while it continued to
     pursue the  strategy of  leveraging  the  capital  raised in April 1999 and
     December 2000.
>    The  lower  yield  in the  securities  portfolio  resulted  from a shift to
     shorter  duration and  adjustable-rate  securities in fiscal 2002 to manage
     the  interest-rate  risk profile of the Company,  as well as the previously
     mentioned Federal Reserve policy to reduce short-term interest rates.


Interest  Expense.  The following  discussion  highlights the major factors that
impacted the changes in interest  expense  during the year ended  September  30,
2002 when  compared to the prior year.  Detailed  changes are  contained  in the
Average Balance Sheet table.

>    Deposit growth of 47% was primarily attributable to the Branch Acquisition.
     However,  our  increased  sales  effort to attract  new and retain  current
     deposits,  as well as customer concerns about equity investments,  provided
     additional deposit growth.
>    Average FHLB advances and other  borrowings  decreased due to the repayment
     of short-term  fixed-rate and adjustable-rate  advances with funds provided
     by the Branch Acquisition.
>    The  growth in average  balances  in  interest  checking  and  money-market
     accounts helped to reduce the overall cost of deposits, which is reflective
     of the significant decrease in interest rates over the past year.
>    The  reduction  in cost of funds  related  to the FHLB  advances  and other
     borrowings reflects the Company's decision to replace short-term fixed-rate
     advances with short-term daily rate credit advances and advances  utilizing
     the Treasury Investment Program. Actions by the Federal Reserve to decrease
     short-term  interest  rates  has  provided  a  reduction  in  the  cost  of
     adjustable-rate credit advances;  however,  greater declines in the overall
     cost of advances were not achieved due to higher-rate  convertible advances
     taken out in 2000 when the consensus of opinion at that time was that rates
     would continue to increase.

                                       35
<PAGE>

Provision for Loan Losses.  The provision for loan losses is charged to earnings
to bring the total  allowance  for loan  losses  to an  amount  that  represents
management's  best estimates of the losses inherent in the loan portfolio at the
balance sheet date, based on historical  experience,  volume and type of lending
conducted by the Company,  industry standards,  the level and status of past due
and  nonperforming  loans,  the general  economic  conditions  in the  Company's
lending area and other factors affecting the  collectability of the loans in its
portfolio.  The  allowance  for  loan  losses  is  maintained  at a  level  that
represents  management's  best  estimates of losses in the loan portfolio at the
balance sheet date.  However,  there can be no assurance  that the allowance for
losses will be adequate  to cover  losses,  which may be realized in the future,
and that additional provisions for losses will not be required.

The provision for loan losses was $680,000 for the year ended September 30, 2002
compared to $615,000 for fiscal 2001.  The provision  for loan losses  increased
for the current year  primarily as a result of  increased  consumer  loan growth
from the seven new retail sales offices. The allowance for loan losses increased
to $4.5 million at September  30, 2002 from $3.7 million at September  30, 2001.
An additional $1.0 million was added to the allowance for loan losses related to
loans acquired in the Branch  Acquisition due to the loans being underwritten on
a different basis than the Company's guidelines.  A higher charge-off percentage
is anticipated on the loans acquired.  The current allowance  represents .90% of
loans  outstanding  at September 30, 2002.  The Company had net  charge-offs  of
$813,000,  approximately  50% of which  related to loans  acquired in the branch
acquisition,  for the year ended  September 30, 2002 compared to net charge-offs
of $284,000 for fiscal 2001. In addition,  our classified  assets increased $5.1
million as further  discussed  at page 10. The Company  intends to maintain  its
allowance for loan losses  commensurate  with its loan  portfolio and classified
assets, especially its commercial real estate and consumer loan portfolio.

Noninterest Income. Noninterest income increased by $2.7 million to $5.2 million
for the year ended September 30, 2002. The major  components of the increase was
due to the following:

>    gains of  $274,000  recognized  on the sale of $19.4  million  in long term
     fixed-rate mortgage loans, an increase of $65,000 from fiscal 2001,
>    an  increase  in net  gain on  sale of  securities  available  for  sale of
     $919,000,  including  $679,000  in net gains on the sales of $48.2  million
     securities  available for sale. The current year gains include the recovery
     of $88,000 on a corporate  bond  previously  written  down due to a decline
     that was deemed to be other than temporary,
>    an increase of $651,000 in earnings on bank-owned life insurance due to the
     purchase of an additional  $9.5 million in insurance  contracts in 2001 and
     2002 and the recognition of $381,000 in equity  securities  received in the
     demutualization  of an  insurance  company  where the  Company was a policy
     holder,
>    an increase of $813,000 in account fees and service charges,  primarily due
     to the overall increase in deposit  accounts,  the majority of which relate
     to the Branch Acquisition.
>    an  increase  of $261,000 in other  noninterest  income,  primarily  due to
     recognition  a $201,000  deferred gain related to the sale of a former Bank
     property  (previously  deferred  due  to  possible   environmental  cleanup
     concerns).


Noninterest  Expenses.  Noninterest  expenses increased by $6.7 million to $20.5
million for the year ended  September  30, 2002 from $13.8  million for the year
ended  September 30, 2001.  The major  components of the increase was due to the
following:

>    Compensation and employee benefits increased $3.1 million due primarily to:
     o    increase of $808,000  due to the  addition of the seven  retail  sales
          offices  (56 staff  members)  related to the Branch  Acquisition,  and
          $106,000  in  additional  costs  for the full  year  operation  of two
          branches opened in the past two years;
     o    5%  average  salary   increases  due  to  merit  and  cost  of  living
          adjustments;
     o    increase in mortgage loan  commissions  of $224,000 due to a change in
          commission structure, and a $26.4 million increase in loan origination
          volume over the prior year;
     o    a $303,000  increase for health  insurance  costs due to the growth in
          the  employee  base,  including  the

                                       36
<PAGE>

          Branch Acquisition, as well as increased claims experience;
     o    increased costs of $481,000 related to the 2002 Restricted Stock Plan;
     o    increase  of  $240,000  related  to the  cost of the  ESOP  due to the
          increase in the Company's stock price.

>    Occupancy and equipment costs increased $838,000, due primarily to:
     o    full year utilization of new customer delivery software,  including an
          internet banking package;
     o    the opening of two new retail sales offices;  o operation of seven new
          retail sales offices acquired in the Branch Acquisition; and
     o    extensive remodeling at several retail sales offices.

>    Postage  and  office  supplies  expense   increased   $164,000,   primarily
     attributable  to the  Branch  Acquisition  and the  conversion  to proof of
     deposit ("POD").
>    Amortization  of $1.1  million  of the  core  deposit  intangible  that was
     established in the Branch Acquisition transaction.

>    Other expenses increased by $1.5 million primarily due to the following:
     o    increase of $202,000 for the 2002 Restricted Stock Plan for Directors;
     o    increase of $160,000 in correspondent  bank charges primarily relating
          to the higher  costs  relating  to the POD  conversion  and the Branch
          Acquisition creating an increased volume of items processed;
     o    increase of $319,000 in other operating  expense  primarily due to the
          write-down of a Winter Haven property that was originally scheduled to
          be a retail  sales  office,  but is now being  actively  marketed  for
          sale;.
     o    increase of $128,000 in security guard expenses related to a series of
          robberies that occurred during the year;
     o    increase  of  $128,000  in debit card  expenses  related to  increased
          volume  from   additional   card   holders   acquired  in  the  Branch
          Acquisition;
     o    $120,000 in acquisition related costs that could not be capitalized;
     o    $138,000 in additional  telephone and data communication  costs due to
          the expanded branch network and upgrade of communication channels.

                                       37
<PAGE>

Comparison  of  Operating  Results  for the Years Ended  September  30, 2001 and
September 30, 2000

Net Income.  Net income for the year ended  September  30, 2001  increased  $1.0
million,  or 26.7% to $4.9 million,  compared to $3.8 million for the year ended
September 30, 2000.  Net income for the year ended  September 30, 2001 benefited
from the  deployment of $30.6 million in new capital  received from stock issued
in December 2000.

>    Net interest income  increased $2.7 million,  or 16.5%,  for the year ended
     September  30,  2001  compared to the same  period in 2000.  This  increase
     resulted primarily from interest income increasing $5.0 million,  offset by
     an increase in interest expense of $2.3 million,
>    Noninterest  income  increased by $630,000  from 2000 to 2001 due mainly to
     increase in cash surrender  value on the bank owned life insurance  product
     and gains on sale of mortgage loans, and
>    Noninterest  expenses  increased $2.0 million to $13.8 million for the year
     ended  September 30, 2001 from $11.8  million for the year ended  September
     30,  2000,  due to a net increase in the expense  categories,  as discussed
     below.

Interest  Income.  The following  discussion  highlights  the major factors that
impacted the changes in interest income during the year ended September 30, 2001
when compared to the prior year.  Detailed  changes are contained in the Average
Balance Sheet table.

>    Loan growth  reflected  strong  commercial  loan demand over the past year.
     While the  Company's  major  emphasis was on  commercial  and consumer loan
     origination efforts, mortgage originations remained strong throughout 2001.
>    The yield on loans  increased due to the emphasis  placed on commercial and
     consumer  loans in our market  areas.  New  mortgage  loan rates  decreased
     throughout  the  latter  half of 2001.  Although  new  mortgage  loan rates
     decreased  throughout  most of the  year,  about 54% of the  Company's  new
     originations were  construction  loans that were not fully disbursed during
     the year. The result of the timing on the construction  loan  disbursements
     kept the  yields on  mortgage  loans from  decreasing  in  relation  to the
     overall decrease in mortgage loan pricing.
>    The average balances in the securities portfolio grew 5.2% primarily due to
     the  Company's  strategy to leverage  capital  that was raised in the stock
     offering.
>    The yield in the  securities  portfolio  decreased  as a result of a steady
     decrease in market  interest  rates  throughout  fiscal 2001.  In addition,
     securities  growth  followed a strategy of purchasing  securities  that had
     slightly shorter average lives.


Interest  Expense.  The following  discussion  highlights the major factors that
impacted the changes in interest  expense  during the year ended  September  30,
2001 when  compared to the prior year.  Detailed  changes are  contained  in the
Average Balance Sheet table.

>    Deposits  grew 6.0%  because  the  Company  pursued a  slightly  aggressive
     pricing strategy as interest rates fell and the equity markets  experienced
     significant volatility.
>    FHLB  advances  grew  because the Company  considers  the  advances to be a
     cost-effective  funding  alternative.  Although  the costs of the  advances
     exceed the cost of  certificate  accounts,  funding  asset  growth  through
     certificate  accounts  was  deemed  to be  more  expensive  than  wholesale
     funding. In addition, FHLB advances provide a funding vehicle to assist the
     Company in extending the duration of its liabilities.
>    The  reduction in cost of funds  related to the FHLB advances is reflective
     of the drop in interest rates over the past year. The reduction in the cost
     of the  advances  was not as  significant  as the overall  drop in interest
     rates because of certain higher rate  convertible  advances taken in fiscal
     2000 that have extended liability duration as rates have dropped.

                                       38
<PAGE>

Provision  for  Loan  Losses.  The  provision  for loan  losses  is  charged  to
operations  to bring  the  total  allowance  for  loan  losses  to a level  that
represents  management's best estimates of the losses inherent in the portfolio,
based on  historical  experience,  volume and type of lending  conducted  by the
Company,  industry standards, the level and status of past due and nonperforming
loans, the general economic  conditions in the Company's  lending area and other
factors affecting the collectibility of the loans in its portfolio. For the year
ended September 30, 2001, the provision for loan losses was $615,000 compared to
$630,000 for fiscal 2000.  The  allowance  for loan losses at September 30, 2001
increased  $331,000 from  September  30, 2000.  Non-performing  loans  increased
$198,000 for the period, classified assets increased $2.0 million and commercial
and consumer  loans  increased in the aggregate of  approximately  $22.5 million
from September 30, 2000.  Such increases in classified  loans and commercial and
consumer loans  precipitated the increase in the provision for loan losses.  The
allowance for loan losses is maintained at a level that represents  management's
best  estimates  of losses in the loan  portfolio  at the  balance  sheet  date.
However,  there  can be no  assurance  that the  allowance  for  losses  will be
adequate to cover losses which may be realized in the future and that additional
provisions for losses will not be required.

Noninterest Income. Noninterest income increased by $373,000 to $2.5 million for
the year ended September 30, 2001. The major  components of the increase was due
to the following:

>    Gains of  $228,000  recognized  on the sale of $13.9  million  in long term
     fixed-rate  mortgage loans.
>    Increase of $331,000 in cash surrender value of bank-owned life insurance.
>    Increase  of $60,000 in checking  and  savings  account  service  fees.
>    Increase of $64,000 in income from increased debit card and ATM usage.
>    Loss  of  $257,000  due to  the  impairment  of a  security  classified  as
     available for sale. The security had been downgraded below investment grade
     and during the fourth quarter,  the issuer filed for  bankruptcy.  The fair
     value  of  this  security  could  decline  further  and the  Company  could
     recognize further losses.



Noninterest  Expenses.  Noninterest  expenses increased by $2.0 million to $13.8
million for the year ended  September  30, 2001 from $11.8  million for the year
ended  September 30, 2000.  The major  components of the increase was due to the
following:

> Compensation and employee benefits increased $1.4 million due primarily to:
     o    an approximate 10% increase in staffing;
     o    annual salary adjustments;
     o    increased health insurance claims during the year;
     o    increased  expenses  related  to the ESOP due to the  increase  in the
          Company's stock price.

>    Occupancy and equipment costs of $410,000, due primarily to:
     o    new customer delivery software, including an internet banking package;
     o    the opening of two new branch office locations;
     o    remodeling costs at the main office.

>    Other expenses increased by $303,000 primarily due to the following:
     o    increased   telephone   expense  due  to   enhanced   data  and  voice
          communications;
     o    increase in ATM and debit card usage;
     o    increased  check  clearing  charges due to  increased  volume of items
          processed;

>    Offsetting the increase in noninterest  expenses was a $116,000 decrease in
     marketing expense due to:
     o    a bidding  process  instituted  for vendors in order to better control
          costs;
     o    emphasis on  community  support  programs  versus  media  advertising,
          providing greater exposure within the communities we serve.

                                       39
<PAGE>
Item 7a.  Quantitative and Qualitative Disclosures About Market Risk
--------  ----------------------------------------------------------

Management of Interest Rate-Risk and Market Risk

Market  risk is the risk of loss due to  adverse  changes  in market  prices and
rates.  The  Company's  market risk arises  primarily  from  interest-rate  risk
inherent  in  its  lending  and  deposit  gathering  activities.  To  that  end,
management  actively monitors and manages its interest-rate  risk exposure.  The
measurement of market risk associated  with financial  instruments is meaningful
only when all related and offsetting on and off balance sheet  transactions  are
aggregated,  and the resulting net positions are identified.  Disclosures  about
the fair value of financial instruments,  which reflect changes in market prices
and  rates,  can be found  in Note 14 of the  Notes  to  Consolidated  Financial
Statements.

The Company does not engage in trading or hedging activities and does not invest
in interest-rate  derivatives or enter into  interest-rate  swaps. The Company's
primary  objective  in managing  interest-rate  risk is to minimize  the adverse
impact of changes in interest  rates on the  Company's  net interest  income and
capital, while adjusting the Company's  asset-liability  structure to obtain the
maximum yield-cost spread on that structure. The Company relies primarily on its
asset-liability structure to control interest-rate risk.

Qualitative  Analysis.   Because  the  majority  of  the  Company's  assets  and
liabilities  are sensitive to changes in interest  rates,  its most  significant
form of market risk is  interest-rate  risk, or changes in interest  rates.  The
Company is  vulnerable  to an  increase  in  interest  rates to the extent  that
interest-bearing    liabilities    mature   or   reprice   more   rapidly   than
interest-earning assets. Its lending activities have historically emphasized the
origination of long-term,  fixed-rate loans secured by single-family residences.
The  primary  source  of funds  has been  deposits  with  substantially  shorter
maturities.   While  having  interest-bearing   liabilities  that  reprice  more
frequently than interest-earning  assets is generally beneficial to net interest
income  during a period of declining  interest  rates,  such an  asset-liability
mismatch is generally  detrimental  during periods of rising  interest rates. In
addition, the customers' optionality to repay a loan or renegotiate the interest
rate on the loan when  interest  rates move in their favor creates an additional
variable in managing the asset-liability structure of the Bank.

The  Board of  Directors  has  established  an  asset-liability  committee  that
consists of the Company's  president and senior banking officers.  The committee
meets on a monthly  basis to review  loan and  deposit  pricing  and  production
volumes,  interest-rate  risk  analysis,  liquidity and borrowing  needs,  and a
variety of other asset and liability management issues.

To reduce the  effect of  interest  rate  changes on net  interest  income,  the
Company   has  adopted   various   strategies   to  improve   the   matching  of
interest-earning asset maturities to interest-bearing  liability maturities. The
principal elements of these strategies include:

>    the  origination  of  commercial  and consumer  loans with  adjustable-rate
     features or fixed-rate loans with shorter term maturities;
>    lengthening  the  maturities  of  liabilities  when deemed  cost  effective
     through  the  pricing  and  promotion  of   certificates   of  deposit  and
     utilization of Federal Home Loan Bank advances;
>    attracting low cost checking and transaction accounts which tend to be less
     sensitive to rising rates; and
>    when market  conditions  permit,  to  originate  and hold in its  portfolio
     adjustable-rate   mortgage   loans  which  have   periodic   interest  rate
     adjustments.  The  Company  also  maintains  a  securities  portfolio  that
     provides a stable cash flow, thereby providing  investable funds in varying
     interest rate cycles.

The Company has also made a  significant  effort to maintain  its level of lower
cost deposits as a method of enhancing profitability. At September 30, 2002, the
Company  had  39.0%  of its  deposits  in  savings,  checking  and  money-market
accounts.  These deposits have traditionally  remained relatively stable and are
expected to be only  moderately  affected in a period of rising  interest rates.
This  stability  has enabled the Company to offset the impact of rising rates in
other deposit accounts.

Quantitative  Analysis.  Exposure to interest-rate risk is actively monitored by
management.  The  Company's  objective  is to  maintain  a  consistent  level of
profitability  within  acceptable  risk  tolerances  across  a  broad  range  of
potential  interest  rate  environments.  The Company uses the OTS Net Portfolio
Value  ("NPV")  Model to monitor  its  exposure  to  interest  rate risk,  which
calculates  changes  in  NPV.  The  NPV  Model  measures  interest-rate  risk by
computing estimated changes in the NPV of cash flow from assets, liabilities and
off-balance  sheet  items in the event of a range of  assumed  changes in market
interest rates. The NPV
                                       40
<PAGE>

Model shows the degree to which balance sheet line items and NPV are potentially
affected by a 100 to 300 basis point change. One basis point equals 1/100th of a
percentage  point.  Reports  generated  by the NPV  Model  are  reviewed  by the
Asset/Liability  Management  Committee  and  reported to the Board of  Directors
quarterly.

The NPV Model uses an option-based  pricing approach to value one-to-four family
mortgages,  mortgages  serviced by or for others,  and firm  commitments to buy,
sell,  or  originate  mortgages.  This  approach  makes use of an interest  rate
simulation  program to generate  numerous  random  interest  rate paths that, in
conjunction with a prepayment  model, are used to estimate  mortgage cash flows.
Prepayment  options and interest rate caps and floors contained in mortgages and
mortgage-related  securities introduce significant uncertainty in estimating the
timing  of cash  flows  for  these  instruments  that  warrants  the use of this
sophisticated  methodology.  All other financial  instruments are valued using a
static  discounted cash flow method.  Under this approach,  the present value is
determined by discounting  the cash flows the instrument is expected to generate
by the yields currently  available to investors from an instrument of comparable
risk and duration.

Future  interest rates and their effects on NPV and net interest  income are not
predictable.  Computations of prospective effects of hypothetical  interest rate
changes are based on numerous  assumptions,  including relative levels of market
interest rates, prepayments, and deposit run-offs, and should not be relied upon
as  indicative  of actual  results.  Certain  shortcomings  are inherent in such
computations.  Although certain assets and liabilities may have similar maturity
or periods of  repricing,  they may react at  different  times and in  different
degrees to changes in the market  interest  rates.  The interest rate on certain
types of assets and  liabilities  may  fluctuate in advance of changes in market
interest  rates,  while rates on other types of assets and  liabilities  may lag
behind changes in market interest rates. Certain assets, such as adjustable-rate
mortgages,  generally have features that restrict changes in interest rates on a
short-term  basis and over the life of the  asset.  After a change  in  interest
rates,  prepayments and early withdrawal levels could deviate significantly from
those assumed in making calculations set forth above. Additionally, an increased
credit  risk may result if our  borrowers  are  unable to meet  their  repayment
obligations as interest rates increase.

The  following  table  presents  the NPV as of September  30, 2002.  The NPV was
calculated  by the OTS,  based upon the above model  assumptions  and  financial
information   provided  by  the  Company.  As  illustrated  in  the  table,  the
calculations  show that the Company would be adversely  affected by increases in
interest  rates and would  benefit  slightly  by  decreases  in  interest  rates
(dollars in thousands).

                                                         NPV as % of
                  Net Portfolio Value ("NPV")       Present Value of Assets
                -------------------------------   -------------------------
   Change                                                      Basis Point
   In Rates    $ Amount  $ Change      % Change   NPV Ratio       Change
   --------    --------  --------      --------   ---------       ------
   +300 bp       55,378   (35,542)        (39)%      6.66%        (351)
   +200 bp       70,073   (20,847)        (23)%      8.20%        (197)
   +100 bp       83,494    (7,425)         (8)%      9.52%         (65)
      0 bp       90,919         -           - %     10.17%           -
   -100 bp       91,271       352          .4%      10.08%          (9)



The OTS  defines the  sensitivity  measure as the change in NPV ratio with a 200
basis point shock.  Our sensitivity  measure reflects an 197 basis point decline
in NPV ratio as of September 30, 2002  compared to a sensitivity  measure of 373
basis  points as of September  30,  2001.  The  improvement  in our  sensitivity
measure at September  30, 2002  primarily  reflects  the decrease in  short-term
interest rates from September 30, 2001 and the  lengthening in the maturities of
certain liabilities.

                                       41
<PAGE>

Item 8.  Financial Statements and Supplementary Data
-------  -------------------------------------------



The financial  statements and supplementary  data required by Regulation S-X and
by Item 302 of Regulation S-K are set forth in the pages listed below:

                                                                           Page
                                                                           ----


Independent Auditors' Report.............................................    43

Consolidated Balance Sheets at September 30, 2002 and 2001...............    44

Consolidated Statements of Earnings for the Years Ended
    September 30, 2002, 2001 and 2000....................................    45

Consolidated Statements of Stockholders' Equity for the Years Ended
    September 30, 2002, 2001 and 2000.................................... 46-47

Consolidated Statements of Cash Flows for the Years Ended
    September 30, 2002, 2001 and 2000.................................... 48-49

Notes to Consolidated Financial Statements............................... 50-71


                                       42
<PAGE>

                    [Hacker, Johnson & Smith PA Letterhead]

                          Independent Auditors' Report



Board of Directors
FloridaFirst Bancorp, Inc.
Lakeland, Florida:

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
FloridaFirst  Bancorp, Inc. and Subsidiary (the "Company") at September 30, 2002
and 2001,  and the related  consolidated  statements of earnings,  stockholders'
equity  and cash  flows for each of the  years in the  three-year  period  ended
September 30, 2002.  These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the 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 consolidated financial statements referred to above
present fairly, in all material respects,  the financial position of the Company
at September 30, 2002 and 2001,  and the results of its  operations and its cash
flows for each of the years in the three-year period ended September 30, 2002 in
conformity with accounting principles generally accepted in the United States of
America.



/s/HACKER, JOHNSON & SMITH PA


HACKER, JOHNSON & SMITH PA
Tampa, Florida
November 15, 2002


                                       43
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                           Consolidated Balance Sheets
                     ($ in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                      At September 30,
                                                                   ----------------------
                                                                      2002         2001
                                                                   ---------     --------
<S>                                                              <C>           <C>
    Assets
Cash and due from banks                                            $  14,119        7,439
Interest-bearing deposits                                             16,509       14,237
                                                                   ---------     --------

         Total cash and cash equivalents                              30,628       21,676

Securities available for sale                                        272,624      129,534
Loans, net of allowance for loan losses of $4,519 and $3,652         499,364      474,155
Premises and equipment, net                                           14,721       10,944
Federal Home Loan Bank stock, at cost                                  6,966        7,670
Cash surrender value of bank-owned life insurance                     16,128       10,795
Core deposit intangible, net                                          11,576         --
Other assets                                                           7,439        5,595
                                                                   ---------     --------

              Total assets                                         $ 859,446      660,369
                                                                   =========      =======

    Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing deposits                                      31,265       20,306
    Interest-bearing deposits                                        556,166      379,231
                                                                   ---------     --------

              Total deposits                                         587,431      399,537

    Federal Home Loan Bank advances                                  129,500      149,500
    Other borrowings                                                  34,834       11,048
    Other liabilities                                                  8,703        6,470
                                                                   ---------     --------

              Total liabilities                                      760,468      566,555
                                                                   ---------     --------

Commitments and contingencies (Notes 5, 14 and 15)

Stockholders' equity:
    Preferred stock, no par value, 20,000,000 shares authorized,
         none issued or outstanding                                        -            -
    Common stock, $.10 par value, 80,000,000 shares authorized,
         5,528,452 and 5,521,850 issued                                  553          552
    Additional paid-in capital                                        52,044       52,059
    Retained earnings                                                 50,809       46,454
    Treasury stock, at cost, 150,000 and 35,000 shares                (2,680)        (481)
    Unallocated shares held by the employee stock ownership plan      (4,869)      (5,410)
    Unallocated shares held by the restricted stock plan              (2,082)        (986)
    Accumulated other comprehensive income                             5,203        1,626
                                                                   ---------     --------
              Total stockholders' equity                              98,978       93,814
                                                                   ---------     --------

              Total liabilities and stockholders' equity           $ 859,446      660,369
                                                                   =========      =======
</TABLE>

See Accompanying Notes to Consolidated Financial Statements.

                                       44
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                       Consolidated Statements of Earnings
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                        Year Ended September 30,
                                                                                -------------------------------------
                                                                                  2002           2001          2000
                                                                                --------       --------      --------
<S>                                                                           <C>            <C>           <C>
Interest and dividend income:
    Loans                                                                       $ 36,248         36,671        32,470
    Securities                                                                    12,082          7,526         6,837
    Other                                                                            580            649           533
                                                                                --------       --------      --------
         Total interest and dividend income                                       48,910         44,846        39,840
                                                                                --------       --------      --------
Interest expense:
    Deposits                                                                      17,844         17,800        15,744
    Federal Home Loan Bank advances and other borrowings                           7,104          8,095         7,831
                                                                                --------       --------      --------
         Total interest expense                                                   24,948         25,895        23,575
                                                                                --------       --------      --------
Net interest income                                                               23,962         18,951        16,265

         Provision for loan losses                                                   680            615           630
                                                                                --------       --------      --------
Net interest income after provision for loan losses                               23,282         18,336        15,635
                                                                                --------       --------      --------
Noninterest income:
    Fees and service charges                                                       2,359          1,546         1,365
    Net gain on sale of loans held for sale                                          274            209            14
    Net gain (loss) on sale of securities                                            685           (234)            5
    Earnings on bank-owned life insurance                                          1,214            563           232
    Other                                                                            664            403           498
                                                                                --------       --------      --------
         Total noninterest income                                                  5,196          2,487         2,114
                                                                                --------       --------      --------
Noninterest expenses:
    Salaries and employee benefits                                                10,781          7,689         6,325
    Occupancy expense                                                              3,003          2,165         1,755
    Data processing                                                                  598            500           498
    Postage and office supplies                                                      579            415           381
    Amortization of core deposit intangible                                        1,080              -             -
    Other                                                                          4,476          3,007         2,854
                                                                                --------       --------      --------
         Total noninterest expenses                                               20,517         13,776        11,813
                                                                                --------       --------      --------
Income before income taxes                                                         7,961          7,047         5,936

         Income taxes                                                              2,357          2,178         2,094
                                                                                --------       --------      --------
Net income                                                                      $  5,604          4,869         3,842
                                                                                ========       ========      ========
Earnings per share:

    Basic                                                                       $   1.10           0.92         0.71
                                                                                ========       ========      ========
    Diluted                                                                     $   1.05           0.90         0.70
                                                                                ========       ========      ========
Weighted-average common and common equivalent
    shares outstanding (in thousands):

    Basic                                                                          5,095          5,293        5,424
                                                                                ========       ========      ========
    Diluted                                                                        5,339          5,429        5,516
                                                                                ========       ========      ========
</TABLE>

See Accompanying Notes to Consolidated Financial Statements.

                                       45
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                 Consolidated Statements of Stockholders' Equity
              ($ in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                                                                     Shares    Unallocated   Compre-
                                   Common Stock    Additional                        Held        Shares      hensive       Total
                               -------------------  Paid-In    Retained   Treasury   by the      Held by     Income    Stockholders'
                                 Shares     Amount   Capital   Earnings    Stock     ESOP        the RSP     (Loss)       Equity
                                 ------     ------   -------   --------    -----     ----        -------     ------       ------

<S>                           <C>          <C>      <C>        <C>       <C>        <C>       <C>          <C>           <C>
Balance at September 30, 1999  5,752,875    $ 575     25,124     39,037          -    (2,163)          -     (1,236)       61,337
                                                                                                                          -------
Comprehensive income:
   Net income                          -        -          -      3,842          -         -           -          -         3,842
   Change in unrealized
     loss on securities
     available for sale, net           -        -          -          -          -         -           -          5             5
                                                                                                                          -------
Total comprehensive income                                                                                                  3,847

Shares repurchased, at cost             -        -         -          -     (3,606)        -           -          -        (3,606)

Fair value of ESOP shares
   allocated                           -        -        (39)         -          -       325           -          -           286

Shares acquired for RSP,
   at cost                             -        -          -          -          -         -        (410)         -          (410)

Dividends ($.16 per share)             -        -          -       (373)         -         -           -          -          (373)
                               ---------    -----     ------     ------       ----    ------        ----      -----        ------

Balance at September 30, 2000  5,752,875      575     25,085     42,506     (3,606)   (1,838)       (410)    (1,231)       61,081
                                                                                                                          -------
Comprehensive income:
   Net income                          -        -          -      4,869          -         -           -          -         4,869
   Change in unrealized
     loss on securities
     available for sale, net           -        -          -          -          -         -           -      2,857         2,857
                                                                                                                          -------
Total comprehensive income                                                                                                  7,726

Stock issuance, net of issuance
   costs of $1,007             3,147,952      315     30,245          -          -         -           -          -        30,560

Convert common and retire
   treasury stock             (3,381,206)    (338)    (3,268)         -      3,606         -           -          -             -

Proceeds from exercise of
   stock options                   2,229        -         18          -          -         -           -          -            18

35,000 shares repurchased,
   at cost                             -        -          -          -       (481)        -           -          -          (481)

Fair value of ESOP and RSP
   shares allocated                    -        -        (21)         -          -       325         157          -           461

Shares acquired for ESOP and
   RSP, at cost                        -        -          -          -          -    (3,897)       (733)         -        (4,630)

Dividends ($.19 per share)             -        -          -       (921)         -         -           -          -          (921)
                               ---------    -----     ------     ------       ----    ------        ----      -----        ------

Balance at September 30, 2001  5,521,850    $ 552     52,059     46,454       (481)   (5,410)       (986)     1,626        93,814
                               =========    =====     ======     ======       ====    ======        ====      =====        ======
</TABLE>
                                       46
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

           Consolidated Statements of Stockholders' Equity, Continued
              ($ in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                   Unallocated            Accumulated
                                                                                     Shares    Unallocated   Other
                                   Common Stock    Additional                        Held        Shares      Compre-       Total
                               -------------------  Paid-In    Retained   Treasury   by the      Held by     hensive   Stockholders'
                                 Shares     Amount   Capital   Earnings    Stock     ESOP        the RSP     Income       Equity
                                 ------     ------   -------   --------    -----     ----        -------     ------       ------

<S>                          <C>          <C>       <C>        <C>          <C>     <C>          <C>        <C>          <C>
Balance at September 30, 2001  5,521,850    $ 552     52,059     46,454       (481)   (5,410)      (986)      1,626        93,814
                                                                                                                           ------
Comprehensive income:
   Net income                          -        -          -      5,604          -         -          -           -         5,604
   Change in unrealized gain
     on securities available
     for sale, net                     -         -         -          -          -         -          -       3,577         3,577
                                                                                                                           ------
Total comprehensive income                                                                                                  9,181
                                                                                                                           ------
Proceeds from exercise of
   stock options                   6,602         1        53          -          -         -          -           -            54

Fair value of ESOP and RSP
   shares allocated                    -         -      (169)         -          -       541      1,190           -         1,562

Tax benefit from stock options
   and RSP shares                      -         -       101          -          -         -          -           -           101

115,000 and 124,658 shares acquired
   for treasury and RSP, at cost       -         -         -          -     (2,199)        -     (2,286)          -        (4,485)

Cash dividends ($.23 per share)        -         -         -     (1,249)         -         -          -           -        (1,249)
                               ---------     -----    ------     ------     ------    ------     ------       -----        ------

Balance at September 30, 2002  5,528,452     $ 553    52,044     50,809     (2,680)   (4,869)    (2,082)      5,203        98,978
                               =========     =====    ======     ======     ======    ======     ======       =====        ======
</TABLE>

See Accompanying Notes to Consolidated Financial Statements.

                                       47
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      Year Ended September 30,
                                                                              ---------------------------------------
                                                                                 2002           2001           2000
                                                                              ---------       ---------      --------
<S>                                                                         <C>              <C>           <C>
Cash flows from operating activities:
    Net income                                                                $   5,604           4,869         3,842
    Adjustments to reconcile net income to net cash provided by
      operating activities:
         Provision for loan losses                                                  680             615           630
         Depreciation                                                             1,004             995           700
         Amortization of core deposit intangible                                  1,080               -             -
         Net amortization of premiums and discounts on securities                   270            (129)          (98)
         Deferred income tax benefit                                                (62)           (278)         (187)
         Net (gain) loss on sale of securities                                     (685)            234            (5)
         Tax benefit from stock options and RSP shares                              101               -             -
         Net gain on sale of loans held for sale                                   (274)           (209)          (14)
         Proceeds from sales of loans held for sale                              19,631          15,258             -
         Loans originated for sale                                              (21,200)        (14,989)            -
         Earnings on bank-owned life insurance                                   (1,214)           (563)         (232)
         Net increase in other assets                                            (1,186)            (76)         (752)
         Net increase in other liabilities                                        2,370           1,323           390
                                                                              ---------       ---------      --------
              Net cash provided by operating activities                           6,119           7,050         4,274
                                                                              ---------       ---------      --------
Cash flows from investing activities:
    Proceeds from calls, sales, maturities and repayments of securities
         available for sale                                                     103,062          37,008        16,451
    Proceeds from sales, maturities and repayments of securities
         held to maturity                                                             -           9,675         3,037
    Purchase of securities available for sale                                  (239,677)        (65,440)      (44,845)
    Net decrease (increase) in loans, exclusive of branch acquisition             1,038         (34,742)      (42,813)
    Net redemption (purchase) of FHLB stock                                         704             255        (3,450)
    Purchase of bank-owned life insurance                                        (4,500)         (5,000)       (5,000)
    Purchases of premises and equipment, exclusive of branch
         acquisition                                                             (3,531)         (3,408)       (2,843)
    Net proceeds from sales of foreclosed assets                                    937               -             -
    Net proceeds on sale of premises and equipment                                    -             404            26
                                                                              ---------       ---------      --------
              Net cash used in investing activities                            (141,967)        (61,248)      (79,437)
                                                                              ---------       ---------      --------
Cash flows from financing activities:
    Cash received upon purchase of deposits in branch acquisition               120,922               -             -
    Net increase in deposits, exclusive of branch acquisition                    25,772          44,983        15,330
    Net (decrease) increase in FHLB advances                                    (20,000)         (8,500)       70,400
    Net increase(decrease) in other borrowings                                   23,786           8,111        (1,935)
    Payments to acquire treasury stock                                           (2,199)           (481)       (3,606)
    Payments to acquire shares held by the ESOP                                       -          (3,897)            -
    Payments to acquire shares held by the RSP                                   (2,286)           (733)         (410)
    Dividends paid                                                               (1,249)           (921)         (480)
    Net proceeds received from issuance of common stock                              54          30,578             -
                                                                              ---------       ---------      --------
              Net cash provided by financing activities                         144,800          69,140        79,299
                                                                              ---------       ---------      --------

Net increase in cash and cash equivalents                                         8,952          14,942         4,136

Cash and cash equivalents at beginning of year                                   21,676           6,734         2,598
                                                                              ---------       ---------      --------

Cash and cash equivalents at end of year                                      $  30,628          21,676         6,734
                                                                              =========       =========      ========

                                                                                                           (continued)
</TABLE>
                                 48

<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                Consolidated Statements of Cash Flows, Continued
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                     Year Ended September 30,
                                                                                -------------------------------------
                                                                                   2002          2001          2000
                                                                                   ----          ----          ----
<S>                                                                          <C>              <C>           <C>
Supplemental disclosure of cash flow information:
    Cash paid during the year for:
         Interest                                                               $ 24,808         25,948        22,966
                                                                                ========         ======        ======

         Income taxes                                                           $  2,894          2,374         2,099
                                                                                ========         ======        ======

Supplemental disclosure of noncash information:
    Transfer loans to foreclosed assets                                         $  1,011            298           221
                                                                                ========         ======        ======

    Change in unrealized gain or loss on securities available for
         sale, net of tax                                                       $  3,577          2,857             5
                                                                                ========         ======        ======

    Net distribution of restricted stock plan shares                                 967            177             -
                                                                                ========         ======        ======

    Net allocation of shares held by the ESOP                                   $    595            284           286
                                                                                ========         ======        ======

    Transfer of land from premises and equipment to other assets                $  1,199              -             -
                                                                                ========         ======        ======

    Common stock distribution received                                          $    381              -             -
                                                                                ========         ======        ======

    Acquisition of branches:
         Fair value of premises and equipment acquired                          $  2,449              -             -
                                                                                ========         ======        ======

         Fair value of loans acquired                                           $ 26,095              -             -
                                                                                ========         ======        ======

         Core deposit intangible                                                $ 12,656              -             -
                                                                                ========         ======        ======

         Deposits assumed in acquisition of branches                            $ 41,200              -             -
                                                                                ========         ======        ======

</TABLE>

See Accompanying Notes to Consolidated Financial Statements.

                                       49
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                   Notes to Consolidated Financial Statements

September  30,  2002  and  each of the  years  in the  three-year  period  ended
September 30, 2002

(1)    General, Reorganization and Summary of Significant Accounting Policies

       General.  FloridaFirst Bancorp, Inc. (the "Company") is the parent of and
       conducts its business principally through FloridaFirst Bank (the "Bank").
       The Bank, a  federally-chartered  savings bank headquartered in Lakeland,
       Florida, is a community-oriented savings institution that delivers retail
       and commercial banking services through eighteen full-service  locations.
       The Company  purchased  seven branches during February 2002 (see Footnote
       13).  Principal  sources of income are derived through interest earned on
       loans and investments. The primary sources of funds are customer deposits
       and  Federal  Home Loan Bank  advances.  The Bank is  subject  to various
       regulations  governing  savings  institutions  and is subject to periodic
       examination by its primary  regulator,  the Office of Thrift  Supervision
       (the "OTS").

       Reorganization.  On April 6,  1999,  the Bank  reorganized  from a mutual
       savings  association  into a mutual  holding  company named  FloridaFirst
       Bancorp MHC ("MHC") and formed  FloridaFirst  Bancorp (the "Bancorp"),  a
       middle-tier  holding  company,  whereby  the Bank  became a  wholly-owned
       subsidiary of the Bancorp (the "Reorganization").  In connection with the
       Reorganization,  the Bancorp sold 2,703,851 shares of its Common Stock to
       the  public  and the  remaining  3,049,024  shares  were held by MHC.  On
       December 21, 2000, the Company completed its stock offering in connection
       with the  conversion  and  reorganization  of the  Bank  and its  holding
       company,   the  Bancorp,   from  the  mutual  holding   company  form  of
       organization to a full stock company (the  "Conversion").  As part of the
       conversion  and  reorganization,  the  shares  formerly  held by MHC were
       cancelled,  the Company sold  3,147,952  new shares to the public and the
       shares held by  stockholders  of the Bancorp were exchanged for 2,372,048
       shares of the Company.

       At  the  time  of the  Conversion,  the Bank  established  a  liquidation
       account in an  amount  equal  to the MHC's  applicable  equity as defined
       in  regulations  (approximately  $36  million).  The liquidation  account
       will be  maintained  for the benefit  of  eligible  account  holders  and
       supplemental  eligible  account holders who continue  to  maintain  their
       accounts at the  Bank  after  the  Conversion.  The  liquidation  account
       will  be  reduced  annually, to the extent that eligible and supplemental
       eligible  account  holders  have reduced their qualifying  deposits as of
       each  anniversary  date.  Subsequent  increases  in  balances  will   not
       restore an eligible or supplemental eligible  account  holder's  interest
       in the liquidation  account. In the event  of  a  complete liquidation of
       the Bank, each eligible and supplemental  eligible  account  holder  will
       be entitled to receive a distribution from  the  liquidation  account  in
       an  amount  proportionate to  the  current adjusted  qualifying  balances
       for accounts then held.

       Subsequent  to the  Conversion,  the  Bank  may not  declare  or pay cash
       dividends on its shares of common stock if the effect thereof would cause
       equity to be reduced  below  applicable  regulatory  capital  maintenance
       requirements or if such  declaration and payment would otherwise  violate
       regulatory requirements.

       Summary  of  Significant  Accounting  Policies.  A summary of significant
       accounting  policies  used in preparation of the  consolidated  financial
       statements is as follows:

       Principles of Consolidation.  The consolidated  financial statements have
       been prepared in conformity with accounting principles generally accepted
       in the United  States of America and include the  accounts of the Company
       and the  Bank.  All  intercompany  transactions  and  balances  have been
       eliminated in consolidation.

                                       50
<PAGE>

       Use of Estimates.  The preparation of financial  statements in conformity
       with  accounting  principles  generally  accepted  in the  United  States
       requires  management to make  estimates and  assumptions  that affect the
       reported  amounts of assets and  liabilities and disclosure of contingent
       assets and liabilities at the date of the financial  statements,  and the
       reported amount of revenues and expenses during the reporting period. The
       major  estimate  by  management  that  is  critical  to the  consolidated
       financial  statements  is the  appropriate  level of  allowance  for loan
       losses which can be significantly impacted by future industry, market and
       economic  trends and  conditions.  Actual results could differ from these
       estimates.  Regulatory agencies,  as a part of their examination process,
       periodically  review  the  Company's  allowance  for  loan  losses.  Such
       agencies  may require the Company to recognize  changes in the  allowance
       based on their judgements of information available to them at the time of
       their examination.

       Cash and Cash Equivalents.  For financial statement purposes, the Company
       considers  cash,  due  from  banks  and  interest-bearing  accounts  with
       original   maturities  of  three  months  or  less  in  other   financial
       institutions to be cash and cash equivalents.

       Securities.  Securities  available  for sale are  stated  at fair  value.
       Unrealized  gains and losses on  securities  available  for sale,  net of
       taxes,  are included in  accumulated  other  comprehensive  income in the
       consolidated  balance  sheets  until these gains or losses are  realized.
       Securities  available  for sale that  experience  a decline in fair value
       that is other  than  temporary  are  written  down to fair  value and the
       resultant  losses  are  reflected  in  the  consolidated   statements  of
       earnings.  Gains and losses on the sale of securities  available for sale
       are  recorded  on the  trade  date  and  determined  using  the  specific
       identification method.

       Capital  stock in the Federal Home Loan Bank of Atlanta  ("FHLB") is held
       in  accordance  with  certain  requirements  of the FHLB.  The  Company's
       investment is carried at cost and serves as collateral for FHLB advances.

       Loans Held For Sale.  Loans  originated  and held for sale by the Company
       are  carried  at  the  lower  of  cost  or  market   using  the  specific
       identification  method.  Gains and  losses on the sale of such  loans are
       recognized  using the specific  identification  method.  The Company held
       $3.0  million and $1.2  million of loans held for sale at  September  30,
       2002 and September 30, 2001, respectively.

       Mortgage  Loan  Interest  Income.  The Company  provides an allowance for
       uncollected  interest  generally on all accrued interest related to loans
       90 days or more  delinquent.  This  allowance is netted  against  accrued
       interest receivable for financial statement disclosure. Such interest, if
       ultimately collected, is credited to income in the period of recovery.

       Loans and  Provisions  for Losses.  Loans are stated at unpaid  principal
       balances, less loans in process and an allowance for loan losses.

       The Company follows a consistent  procedural  discipline and accounts for
       loan  loss  contingencies  in  accordance  with  Statement  of  Financial
       Accounting  Standards  (SFAS) No. 5,  Accounting for  Contingencies,  and
       accounts for impaired loans in conformity  with SFAS No. 114,  Accounting
       by  Creditors  for  Impairment  of a Loan,  as amended  by SFAS No.  118,
       Accounting by Creditors for Impairment of a Loan - Income Recognition and
       Disclosure.  The  following is a  description  of how each portion of the
       allowance for loan losses is determined.

       The Company segregates the loan portfolio for loan loss purposes into the
       following  broad   segments:   commercial  and  commercial  real  estate,
       residential  real  estate,  and  consumer.  The Company  provides  for an
       allowance  for losses in the  portfolio  by the above  categories,  which
       consists of two  components:  general loss  percentages and specific loss
       analysis.

                                       51
<PAGE>

       General loss percentages are calculated based upon historical analyses. A
       portion  of  the  allowance  is  calculated  for  inherent  losses  which
       management  believes  exist as of the  evaluation  date even  though they
       might not have been identified by the more objective processes used. This
       is due to the risk of error and/or  inherent  imprecision in the process.
       This portion of the  allowance is  particularly  subjective  and requires
       judgments  based on qualitative  factors which do not lend  themselves to
       exact  mathematical  calculations  such as: trends in  delinquencies  and
       nonaccruals;  migration trends in the portfolio; trends in volume, terms,
       and portfolio mix; new credit  products  and/or changes in the geographic
       distribution  of  those  products;   changes  in  lending   policies  and
       procedures;   loan   review   reports  on  the   efficacy   of  the  risk
       identification  process;  changes in the outlook for local,  regional and
       national economic  conditions;  concentrations of credit;  and peer group
       comparison.

       Allowances  are  also  provided  in the  event  the  specific  collateral
       analysis on a loan  indicates  the  estimated  loss upon  liquidation  of
       collateral would be in excess of the general percentage  allocation.  The
       provision  for loan  losses is debited or  credited in order to state the
       allowance for loan losses to the required level as determined above.

       The  Company  considers a loan to be  impaired  when it is  probable  the
       Company will be unable to collect all amounts  due,  both  principal  and
       interest,  according to the contractual terms of the loan agreement. When
       a loan is impaired,  the Company may measure  impairment based on (a) the
       present  value of the  expected  future cash flows of the  impaired  loan
       discounted  at the  loan's  original  effective  interest  rate;  (b) the
       observable  market price of the impaired  loan;  or (c) the fair value of
       the collateral of a  collateral-dependent  loan. The Company  selects the
       measurement    method   on   a    loan-by-loan    basis,    except    for
       collateral-dependent  loans for which  foreclosure  is  probable  must be
       measured  at  the  fair  value  of the  collateral.  In a  troubled  debt
       restructuring   involving  a  restructured  loan,  the  Company  measures
       impairment by  discounting  the total  expected  future cash flows at the
       loan's original effective interest rate.

       Premises  and  Equipment.  Depreciation  of  premises  and  equipment  is
       accumulated  using the  straight-line  method over the  estimated  useful
       lives of the  related  assets.  Estimated  lives  are 10 to 50 years  for
       buildings and leasehold  improvements,  and 3 to 10 years for  furniture,
       fixtures and equipment.

       Maintenance   and  repairs  are   charged  to  expense   when   incurred.
       Expenditures for renewals and betterments generally are capitalized.  The
       costs and  accumulated  depreciation  relating to office  properties  and
       equipment  retired  or  otherwise  disposed  of are  eliminated  from the
       accounts,  and any  resulting  gains  and  losses  are  reflected  in the
       consolidated statements of earnings.

       Foreclosed Assets. Assets acquired through foreclosure or deed in lieu of
       foreclosure are recorded at the lower of cost  (principal  balance of the
       former  mortgage  loan) or estimated fair value,  less estimated  selling
       expenses.  The  carrying  value  of  foreclosed  assets,  which  includes
       repossessed  consumer assets,  was $347,000 and $276,000 at September 30,
       2002 and 2001 and is included in Other Assets in the consolidated balance
       sheets.  The Company  reported net expenses  related to these  foreclosed
       assets of  $70,000,  $47,000 and  $49,000  during the fiscal  years ended
       September 30, 2002, 2001 and 2000, respectively.

       Transfer of Financial Assets. Transfers of financial assets are accounted
       for as sales, when control over the assets has been surrendered.  Control
       over  financial  assets is deemed to be  surrendered  when (1) the assets
       have been isolated from the Company, (2) the transferee obtains the right
       (free of  conditions  that  constrain  it from taking  advantage  of that
       right) to pledge or exchange the transferred  assets, and (3) the Company
       does not maintain  effective control over the transferred  assets through
       an agreement to repurchase them before their maturity.

                                       52
<PAGE>

       Income Taxes.  Deferred tax assets and liabilities are recognized for the
       future tax consequences attributable to temporary differences between the
       financial  statement  carrying amounts of existing assets and liabilities
       and their  respective tax bases.  Deferred tax assets and liabilities are
       measured  using enacted tax rates  expected to apply to taxable income in
       the  years  in which  those  temporary  differences  are  expected  to be
       recovered or settled.  The effect on deferred tax assets and  liabilities
       of a change in tax rates is  recognized  in  income  in the  period  that
       include the enactment date.

       Financial Instruments With Off-Balance Sheet Risk. In the ordinary course
       of  business,  the  Company  is a party  to  financial  instruments  with
       off-balance sheet risk. These financial  instruments  include commitments
       to extend  credit at both  fixed- and  variable-interest  rates,  standby
       letters of credit,  undisbursed construction and line of credit loans and
       loans sold with  recourse  obligations.  These  instruments  involve,  to
       varying  degrees,  elements  of  credit  risk  in  excess  of the  amount
       recognized,  if any, in the  consolidated  balance sheets.  The Company's
       exposure to credit loss for  commitments  to extend  credit,  undisbursed
       loans and standby  letters of credit is  represented  by the  contractual
       amount of these instruments. The Company uses the same credit policies in
       making commitments and conditional  obligations as it does for on-balance
       sheet instruments.

       Commitments to extend credit are agreements to lend to a customer as long
       as there is no violation of any  condition  established  in the contract.
       Commitments  generally have  fixed-expiration  dates or other termination
       clauses and may require  payment of a fee.  The  Company  evaluates  each
       customer's credit worthiness on a case-by-case basis.

       Standby  letters  of credit  are  conditional  commitments  issued by the
       Company to guarantee the performance of a customer to a third party.  The
       credit risk involved in issuing letters of credit is essentially the same
       as that involved in extending loan facilities to customers.

       Loans  sold  with  recourse  obligations  relate  to  loans  the  Company
       originates and sells in the secondary market. These sales usually require
       the Company to  repurchase  the loans if the borrower  defaults  within a
       certain time period after the sale, usually three to twelve months.

       Self-Insurance.  The Company is  self-insured  for  employee  medical and
       dental  benefits,  but has a reinsurance  contract to limit the amount of
       liability for these benefits in any plan year.  Benefits are administered
       through a third  party  administrator  and the  related  liabilities  are
       reflected in the consolidated financial statements. The Company accrues a
       liability to target a certain  percentage of average claims paid over the
       past three years. The plan covers only active employees as defined in the
       plan.  During the years ended  September  30,  2002,  2001 and 2000,  the
       Company recognized  expenses,  including claims and administrative  fees,
       net of amounts  received  under the  reinsurance  contract  and  premiums
       received  from   employees,   of   $1,053,000,   $750,000  and  $563,000,
       respectively.


       Derivative Instruments. The Company does not purchase, sell or enter into
       derivative financial  instruments or derivative commodity  instruments as
       defined by Statement of Financial  Accounting  Standards  (SFAS) No. 119,
       Disclosures  About  Derivative  Financial  Instruments  and Fair Value of
       Financial Instruments.

       Stock  Compensation  Plans.  SFAS No.  123,  Accounting  for  Stock-Based
       Compensation,  encourages all entities to adopt a fair value based method
       of accounting for employee stock compensation plans, whereby compensation
       cost is measured at the grant date based on the value of the award and is
       recognized over the service period,  which is usually the vesting period.
       However,  it also allows an entity to  continue  to measure  compensation
       cost for those plans using the intrinsic value based method of accounting
       prescribed by Accounting  Principles Board Opinion No. 25, Accounting for
       Stock Issued to Employees,  whereby  compensation  cost is the excess, if
       any, of the quoted  market price of the stock at the grant date (or other
       measurement  date) over the amount an  employee  must pay to acquire  the
       stock. Stock options issued under the Company's stock option plan have no
       intrinsic  value  at  the  grant  date,  and  under  Opinion  No.  25  no
       compensation  cost is  recognized  for them.  The  Company has elected to
       continue  with the  accounting  methodology  in Opinion  No. 25 and, as a
       result, has provided pro forma disclosures of net income and earnings per
       share  and  other  disclosures,  as if the fair  value  based  method  of
       accounting had been applied (See note 12).

                                       53
<PAGE>
       Earnings Per Share of Common Stock. The Company follows the provisions of
       SFAS No. 128, "Earnings Per Share".  SFAS No. 128 provides accounting and
       reporting  standards for calculating  earnings per share.  Basic earnings
       per share of common  stock has been  computed by dividing  the net income
       for the year by the weighted-average number of shares outstanding. Shares
       of common stock  purchased by the ESOP (see Note 11) are only  considered
       outstanding  when the shares are released or committed to be released for
       allocation to  participants.  For the years ended  September 30, 2002 and
       2001,  shares  released for  allocation to  participants  each month were
       3,400 and 2,707.  Diluted  earnings per share is computed by dividing net
       income by the weighted-average number of shares outstanding including the
       dilutive  effect  of stock  options  (see Note 12) and  shares  needed to
       satisfy the requirements of the restricted  stock plan, if any,  computed
       using the treasury stock method prescribed by SFAS No. 128. The following
       table presents the calculation of basic and diluted earnings per share of
       common stock (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                                             Year Ended September 30,
                                                                           ----------------------------
                                                                            2002       2001       2000
                                                                           ------     ------     ------
<S>                                                                       <C>        <C>        <C>
        Weighted-average shares of common stock issued and
          outstanding before adjustments for ESOP and stock options         5,457      5,520      5,602
        Adjustment to reflect the effect of unallocated ESOP shares          (362)      (227)      (178)
                                                                           ------     ------     ------
        Weighted-average shares for basic earnings per share                5,095      5,293      5,424
                                                                           ======     ======     ======
        Basic earnings per share                                           $ 1.10        .92        .71
                                                                           ======     ======     ======

        Weighted-average shares for basic earnings per share                5,095      5,293      5,424
        Additional dilutive shares using the average market
          value for the period utilizing the treasury stock method
          regarding stock options and outstanding restricted                  244        136         92
                                                                           ------     ------     ------
        Weighted-average common shares and equivalents
          outstanding for diluted earnings per share                        5,339      5,429      5,516
                                                                           ======     ======     ======

        Diluted earnings per share                                         $ 1.05        .90        .70
                                                                           ======     ======     ======
</TABLE>

       Recent Accounting Pronouncements.  In June 2001, the Financial Accounting
       Standards  Board  issued  Statement  of  Financial   Accounting  Standard
       ("SFAS")  No. 141  Business  Combinations  and No. 142 Goodwill and Other
       Intangible Assets.

       SFAS 141 changes  the  accounting  for  business  combinations  under APB
       Opinion 16 - Business  Combinations  ("APB 16"). This Statement  requires
       that all  business  combinations  be  accounted  for under  the  purchase
       method.  Also,  intangible  assets  that meet  certain  criteria  must be
       recognized as an asset and apart from  goodwill.  The  provisions of this
       Statement  apply to all business  combinations  initiated  after June 30,
       2001, as well as purchase  method business  combinations  completed after
       June 30, 2001.

       SFAS 142 requires that an identifiable  intangible asset that is acquired
       either  individually  or with a group of  other  assets  (but  not  those
       acquired in a business  combination)  is to be initially  recognized  and
       measured based on its fair value. An identifiable intangible asset with a
       finite  useful life is  amortized  over its  estimated  useful  life.  An
       intangible asset with an indefinite useful life is not amortized,  but is
       tested for impairment.  Goodwill  recognized in business  combinations is
       not amortized,  but is tested for impairment under the provisions of SFAS
       142 at a level of  reporting  referred  to as a  reporting  unit.  To the
       extent a reporting  unit's  carrying  amount  exceeds its fair value,  an
       indication  exists that the reporting unit's goodwill may be impaired and
       the Company must  perform a second step of the  impairment  test.  In the
       second step, if the carrying  amount of reporting  unit goodwill  exceeds
       the implied fair value of that goodwill, an impairment loss is recognized
       in an amount equal to that excess. Goodwill of a reporting unit is tested
       for  impairment  on an annual  basis and between  annual tests in certain
       circumstances.  For purchase  business  combinations that are consummated
       after  June 30,  2001,  goodwill  and  identifiable  intangibles  will be
       recorded in accordance  with SFAS 142, which requires no  amortization of
       goodwill and separately  identifiable  intangible  assets with indefinite
       lives.

       The  Company  accounted  for the  intangible  assets  acquired  in branch
       acquisition described in Note 13 in accordance with SFAS 141 and 142.

                                       54
<PAGE>

       Comprehensive Income.  Accounting principles generally require recognized
       revenue,  expenses,  gains and losses be included in net income. Although
       certain changes in assets and  liabilities,  such as unrealized gains and
       losses on  available-for-sale  securities,  are  reported  as a  separate
       component of the equity section of the consolidated  balance sheets, such
       items, along with net income are components of comprehensive  income. The
       components of other  comprehensive  income and related tax effects are as
       follows (in thousands):

<TABLE>
<CAPTION>
                                                                                   2002      2001     2000
                                                                                 -------   -------   ------
<S>                                                                             <C>       <C>       <C>
        Unrealized gain on securities available for sale arising
           during year, net of taxes                                             $ 4,009     2,710        8
                                                                                 -------   -------   ------
        Less reclassification adjustment for gain (loss) included in
           net income                                                                685      (234)       5
        Income taxes (benefit)                                                       253       (87)       2
                                                                                 -------   -------   ------
        Reclassification adjustment for realized gain (loss), net of taxes           432      (147)       3
                                                                                 -------   -------   ------
        Unrealized gain on securities available for sale,
           net of taxes                                                          $ 3,577     2,857        5
                                                                                 =======   =======   ======
</TABLE>

       Reclassifications.  Certain  amounts  in the 2001  and 2000  consolidated
       financial  statements  have  been  reclassified  to  conform  to the 2002
       presentation.


 (2)    Securities Available for Sale

       The amortized cost and estimated fair values of securities  available for
       sale are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                  Gross           Gross
                                                                  Amortized     Unrealized      Unrealized       Fair
                                                                    Cost           Gains          Losses         Value
                                                                 ---------      --------         -------      --------
<S>                                                            <C>             <C>            <C>         <C>
             September 30, 2002:
                Obligations of U.S. government agencies          $  28,028           506            (350)       28,184
                Collateralized mortgage obligations                 46,226           632            (467)       46,391
                Mortgage-backed securities                         141,975         4,289            (282)      145,982
                Corporate bonds                                     28,454         2,951             (64)       31,341
                Municipal bonds                                     19,301         1,044               -        20,345
                Common stock                                           381             -               -           381
                                                                 ---------      --------         -------      --------
                   Total                                         $ 264,365         9,422          (1,163)      272,624
                                                                 =========      ========         =======      ========
             September 30, 2001:
                Obligations of U.S. government agencies              8,504           346               -         8,850
                Collateralized mortgage obligations                 43,429           653             (37)       44,045
                Mortgage-backed securities                          28,644           907               -        29,551
                Corporate bonds                                     28,962           999            (406)       29,555
                Municipal bonds                                     17,415           262            (144)       17,533
                                                                 ---------      --------         -------      --------
                   Total                                         $ 126,954         3,167            (587)      129,534
                                                                 =========      ========         =======      ========

</TABLE>

                                       55
<PAGE>

       The maturity  distribution for the portfolio of securities  available for
       sale at September 30, 2002 is as follows (in thousands):

                                                            Amortized     Fair
                                                               Cost       Value
                                                           ----------   -------

             Due in one year or less                       $   6,504      6,668
             Due after one year through five years            18,085     19,021
             Due after five years through ten years            8,284      8,490
             Due after ten years                              42,910     45,691
                                                           ---------    -------
                                                              75,783     79,870

             Collateralized mortgage obligations              46,226     46,391
             Mortgage-backed securities                      141,975    145,982
             Common stock                                        381        381
                                                           ---------    -------
             Total                                         $ 264,365    272,624
                                                           =========    =======

       A  summary  of  sales  of  securities  available  for  sale  follows  (in
       thousands):

                                                    Year Ended September 30,
                                               ---------------------------------
                                                 2002         2001         2000
                                               --------      ------       -----


       Proceeds from sales                     $ 48,196      10,349       5,700
                                               ========      ======       =====

       Gross gains                             $    828          51           5

       Gross losses                                (143)        (16)          -
                                               --------      ------       -----

       Net gain                                $    685          35           5
                                               ========      ======       =====


       During 2002,  the Company  received a  distribution  of 18,165  shares of
       common stock relating to the  demutualization of the Principal  Financial
       Group.  The Company  recorded  this  investment  at the then current fair
       value of  $381,000  and  recorded a gain which is included in earnings on
       bank-owned life insurance in the consolidated statements of earnings.

       During 2001, a $257,000 loss on the impairment of a security was recorded
       since the decline in value was determined to be other than temporary.

       Securities  available for sale with carrying  values of $68.6 million and
       $33.3 million were pledged as collateral to secure public funds, Treasury
       Investment Program funds, Federal Reserve discount advances,  and reverse
       repurchase agreements at September 30, 2002 and 2001, respectively.


(3)    Securities Held to Maturity

       In August 2001,  the entire  securities  held to maturity  portfolio  was
       sold. The decision to sell the entire portfolio was based on a variety of
       reasons  including price  compression due to balance  decline,  a lagging
       index, which was unpopular in the falling rate environment,  and recently
       increased values, resulting from the recent falling rate environment.  As
       a result of the sale of the held to maturity  portfolio,  Securities  and
       Exchange Commission ("SEC") regulations  prohibit further  classification
       of securities as held to maturity for a period of two years.

       Proceeds  from sales of  securities  held to maturity  for the year ended
       September  30, 2001 were $8.6  million.  Gross gains of $34,000 and gross
       losses of $46,000 were realized on those sales during 2001. There were no
       other sales of held to maturity securities.

                                       56
<PAGE>

(4)    Loans

       Loans consist of the following:

<TABLE>
<CAPTION>
                                                                          September 30,
                                                                       --------------------
                                                                          2002       2001
                                                                       ---------    -------
                                                                          ($ in thousands)
<S>                                                                  <C>         <C>
              First mortgage loans:
                 Residential 1-4:
                    Permanent                                          $ 301,622    312,309
                    Construction                                          29,058     35,516
                 Commercial real estate                                   58,177     58,371
                 Land                                                     15,806      8,907
                                                                       ---------   --------
                    Total first mortgage loans                           404,663    415,103
                                                                       ---------   --------
              Other loans:
                 Consumer loans                                          107,581     85,932
                 Commercial loans                                         10,806      5,061
                                                                       ---------   --------
                    Total other loans                                    118,387     90,993
                                                                       ---------   --------
                    Total loans                                          523,050    506,096

              Allowance for loan losses                                   (4,519)    (3,652)
              Construction loans in process                              (19,167)   (28,289)
                                                                       ---------   --------
                    Loans, net                                         $ 499,364    474,155
                                                                       =========   ========

                 Weighted-average yield on loans at year end                7.20%     7.66%
                                                                       =========   ========
</TABLE>

       The  activity  in the  allowance  for  loan  losses  was as  follows  (in
       thousands):

                                                     Year Ended September 30,
                                                   ---------------------------
                                                    2002      2001      2000
                                                   -------   -------   -------

              Balance at beginning of year         $ 3,652     3,321     2,941

                 Provision for loan losses             680       615       630
                 Branch acquisition                  1,000         -
                 Charge-offs                          (908)     (386)     (288)
                 Recoveries                             95       102        38
                                                   -------   -------   -------
              Balance at end of year               $ 4,519     3,652     3,321
                                                   =======   =======   =======

         The Company was also  servicing  approximately  $7.8  million and $11.2
         million in loans for the  benefit of others at  September  30, 2002 and
         2001,  respectively.  The Company holds  custodial  escrow deposits for
         these  serviced loans  totaling  approximately  $89,000 and $127,000 at
         September 30, 2002 and 2001, respectively.

                                       57
<PAGE>

       The Company makes loans to certain  executive  officers and directors and
       their  related  interests  and  associates.  These loans were made in the
       ordinary  course of business at prevailing  terms and  conditions.  These
       loans were as follows (in thousands):

                                                     Year Ended September 30,
                                                     ------------------------
                                                       2002            2001
                                                       ----            ----

           Balance at beginning of year               $ 317             152
           New loans originated                           -             170
           Principal repayments                         (11)             (5)
                                                      -----           -----
           Balance at end of year                     $ 306             317
                                                      =====           =====

       Impaired loans have been  recognized in conformity  with SFAS No. 114, as
       amended by SFAS No.  118.  Impaired  loans,  all of which are  collateral
       dependent, and related information are as follows:

<TABLE>
<CAPTION>
                                                                                         September 30,
                                                                               -----------------------------
                                                                                  2002       2001      2000
                                                                                  ----       ----      ----
                                                                                        (In thousands)

<S>                                                                          <C>          <C>       <C>
           Impaired loans at year end                                          $ 1,073        960       762
                                                                               =======      =====     =====

           Allowance for loan losses for impaired loans at year-end                215        192       189
                                                                               =======      =====     =====

           Average balance of impaired loans during the year                     1,221      1,028       454
                                                                               =======      =====     =====

           Interest income received and recognized during the year                  47         14        43
                                                                               =======      =====     =====
</TABLE>


(5)    Premises and Equipment


       Premises and equipment consists of the following:

                                                                September 30,
                                                             -------------------
                                                                2002      2001
                                                                ----      ----
                                                                (In thousands)

           Land                                              $  4,151     3,629
           Buildings and leasehold improvements                11,219     8,167
           Furniture, fixtures and equipment                    6,187     5,205
           Construction in progress                               486       589
                                                             --------   -------

           Total, at cost                                      22,043    17,590

           Less accumulated depreciation and amortization      (7,322)   (6,646)
                                                             --------   -------

           Premises and equipment, net                       $ 14,721    10,944
                                                             ========   =======

       The  Company  conducts a portion  of its  operations  from  three  leased
       facilities and leases certain  equipment  under operating  leases.  As of
       September 30, 2002, the Company was committed to noncancelable  operating
       leases with annual minimum lease payments  approximating $193,000 through
       September 30, 2003,  $94,000  through  September 30, 2005 and $75,000 per
       year  thereafter  through fiscal year 2010. All leases contain options to
       renew.   Rent  expense  under  all  operating  leases  was  approximately
       $172,000,  $159,000 and $106,000 for the years ended  September 30, 2002,
       2001 and 2000, respectively.


                                       58
<PAGE>

(6)    Deposits

       Deposits and weighted-average interest rates are as follows:

<TABLE>
<CAPTION>
                                                                       September 30,
                                                     -----------------------------------------------
                                                             2002                     2001
                                                     ---------------------    ----------------------
                                                                 Weighted                 Weighted
                                                                  Average                  Average
                                                        Amount     Rate           Amount    Rate
                                                        ------     ----           ------    ----
                                                                    ($ in thousands)

<S>                                                <C>           <C>         <C>          <C>
           Noninterest-bearing checking              $  31,265        -  %     $  20,306        - %
                                                     ---------                 ---------
           Interest-bearing checking                    74,923      1.31          34,705     1.67
                                                     ---------                 ---------
           Savings accounts                             54,432      1.58          27,547     1.51
                                                     ---------                 ---------
           Money-market accounts                        68,634      1.99          33,768     3.19
                                                     ---------                 ---------

           Certificate accounts:
                1.00% - 1.99%                           21,146                   -
                2.00% - 2.99%                          101,169                   -
                3.00% - 3.99%                           64,047                   -
                4.00% - 4.99%                           65,813                    98,731
                5.00% - 5.99%                           73,927                    73,605
                6.00% and above                         32,075                   110,875
                                                     ---------                 ---------

                    Total certificates accounts        358,177      3.94         283,211     5.64
                                                     ---------                 ---------
                    Total deposits                   $ 587,431      2.95       $ 399,537     4.52
                                                     =========                 =========
</TABLE>

       Certificate accounts in amounts of $100,000 or more totaled approximately
       $112.9  million  and  $85.7  million  at  September  30,  2002 and  2001,
       respectively.  Deposits in excess of $100,000 are not federally  insured.
       The Company had  certificate  accounts  totaling  $50.2 million and $37.7
       million  under  public  deposits  programs,  primarily  with the State of
       Florida,  at September 30, 2002 and 2001,  respectively.  Deposits  under
       these programs are  collateralized  with securities with a carrying value
       of $31.0  million  and $18.3  million  at  September  30,  2002 and 2001,
       respectively, in accordance with applicable regulations.

       Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
                                                                           Year Ended September 30,
                                                                     ------------------------------------
                                                                       2002            2001        2000
                                                                     --------        -------      -------
                                                                                 (In thousands)
<S>                                                                <C>              <C>          <C>
           Interest on interest-bearing checking and money-market
               accounts                                              $  2,234          1,795        1,648
           Interest on savings and certificate accounts                15,673         16,086       14,173
           Less early withdrawal penalties                                (63)           (81)         (77)
                                                                     --------        -------      -------
           Total interest expense on deposits                        $ 17,844         17,800       15,744
                                                                     ========        =======      =======
</TABLE>

                                       59
<PAGE>


       Certificate  accounts by year of  scheduled  maturity  are as follows (in
       thousands):

                                                         September 30,
                                                    ----------------------
           Fiscal Year Ending                           2002         2001
           ------------------                           ----         ----

                2002                                $       -      191,523
                2003                                  204,071       54,409
                2004                                   79,991       20,012
                2005                                   28,963       17,267
                2006                                    6,916            -
                2007                                   37,494            -
                2008                                      742            -
                                                    ---------      -------

                Total                               $ 358,177      283,211
                                                    =========      =======

(7)    Advances From Federal Home Loan Bank and Other Borrowings

       The Company had $129.5  million and $149.5  million in FHLB advances with
       weighted-average  interest rates of 5.23% and 5.22% at September 30, 2002
       and 2001,  respectively.  The advances as of  September  30, 2002 include
       $114.5 million in convertible advances whereby the FHLB has the option at
       a predetermined time to convert the fixed-interest  rate to an adjustable
       rate tied to LIBOR (London interbank offering rate). The Company then has
       the option to prepay the advances  without  penalty if the FHLB  converts
       the interest  rate.  Should the Company  elect to otherwise  prepay these
       borrowings  prior to  maturity,  prepayment  penalties  may be  incurred.
       Advances from the FHLB are collateralized with a blanket floating lien on
       qualifying  first mortgage  residential  loans and all the Company's FHLB
       stock.

       The Company's advances from the FHLB are as follows ($ in thousands):

                                      Conversion
                                        Option        Rate     Maturity    Rate
                                        ------        ----     --------    ----

    At September 30, 2002:

         2003                         $   81,000     5.53%  $  15,000      4.41%
         2004                              5,000     5.13       5,000      5.72
         2005                             10,000     5.10      10,000      6.49
         2006                             13,500     4.94      15,000      5.33
         2007                              5,000     4.66       5,000      4.09
         2008                                  -        -      15,000      5.07
         2010                                  -        -      26,000      6.11
         2011                                  -        -      23,500      5.06
         2012                                  -        -      15,000      4.25
                                      ----------            ---------
    Total and weighted-average rate   $  114,500     5.37%  $ 129,500      5.23%
                                      ==========            =========

                                       60
<PAGE>



                                      Conversion
                                       Option        Rate    Maturity      Rate
                                       ------        ----    --------      ----

    At September 30, 2001:

         2002                         $  56,000      5.86%   $ 40,000      4.54%
         2003                            15,000      5.29      10,000      5.67
         2004                             5,000      5.13       5,000      5.72
         2005                             5,000      6.10      10,000      6.49
         2006                            13,500      4.94      15,000      5.33
         2008                                 -         -      15,000      5.07
         2009                                 -         -       5,000      3.15
         2010                                 -         -      26,000      6.11
         2011                                 -         -      23,500      5.06
                                       --------              --------

    Total and weighted-average rate    $ 94,500      5.61%   $149,500      5.22%
                                       ========              ========


       As of September  30, 2002 and 2001,  respectively,  the Company had $15.0
       and  $11.0  million  in  overnight   borrowings  utilizing  the  Treasury
       Investment  Program (TIP) through the Federal Reserve bearing interest at
       1.51%  and  2.50%,   respectively   per  annum.   These   borrowings  are
       collateralized  by securities  with carrying  values of $17.1 million and
       $11.0 million at September 30, 2002 and 2001, respectively.

       As of  September  30,  2002,  the  Company  also has  reverse  repurchase
       agreements  with third parties  totaling $19.8 million at an average rate
       of 2.26% per annum.  The Company has pledged  $20.5 million in securities
       related to these agreements.

(8)    Income Taxes

       Income taxes consists of the following (in thousands):


                                               Current    Deferred       Total
                                               -------    --------       -----
          Year Ended September 30, 2002:
               Federal                         $ 2,024        (53)       1,971
               State                               395         (9)         386
                                               -------     ------       ------
                                               $ 2,419        (62)       2,357
                                               =======     ======       ======

          Year Ended September 30, 2001:
               Federal                           2,074       (234)       1,840
               State                               382        (44)         338
                                               -------     ------       ------
                                               $ 2,456       (278)       2,178
                                               =======     ======       ======

          Year Ended September 30, 2000:
               Federal                           1,943       (160)       1,783
               State                               338        (27)         311
                                               -------     ------       ------
                                               $ 2,281       (187)       2,094
                                               =======     ======       ======

                                       61
<PAGE>

       The tax effects of temporary  differences  that give rise to  significant
       portions of the deferred tax assets and deferred tax  liabilities  are as
       follows (in thousands):

<TABLE>
<CAPTION>
                                                                          September 30,
                                                                      --------------------
                                                                         2002       2001
                                                                         ----       ----
<S>                                                                 <C>        <C>
           Deferred tax assets:
               Allowance for loan losses                              $ 1,278      1,305
               Deferred compensation plans                                442        354
               Core deposit intangible                                    195          -
               Self-insurance reserve                                     135        132
               Other real estate owned                                    122          -
               Other                                                       13        196
                                                                      -------    -------
                   Total deferred tax assets                            2,185      1,987
                                                                      -------    -------
           Deferred tax liabilities:
               Unrealized gain on securities available for sale        (3,056)      (954)
               FHLB stock                                                (267)      (365)
               Other securities                                          (144)       -
               Depreciation                                              (143)       (53)
                                                                      -------    -------
                   Total deferred tax liabilities                      (3,610)    (1,372)
                                                                      -------    -------

               Net deferred tax (liability) asset                     $(1,425)       615
                                                                      =======    =======
</TABLE>

       The net deferred tax liability at September 30, 2002 is included in other
       liabilities  and the net  deferred  tax asset at  September  30,  2001 is
       included in other assets in the consolidated balance sheets.

       The Company's  effective rate on pretax income differs from the statutory
Federal income tax rate as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                       Year Ended September 30,
                                           --------------------------------------------------------
                                              2002       %         2001      %        2000      %
                                           -------      ---     -------     ---    -------      ---
<S>                                     <C>          <C>     <C>         <C>    <C>          <C>
       Taxes at federal statutory
             rate                          $ 2,707      34%     $ 2,396     34%    $ 2,018      34%
       Increase (decrease) in tax
          resulting from:
              Tax-exempt income, net          (565)     (7)        (356)    (5)       (148)     (2)
              State income taxes, net of
                Federal income tax benefit     255       3          234      3         205       3
              Other, net                       (40)      -          (96)    (1)         19       -
                                           -------    ----      -------   ----     -------    ----

       Total                               $ 2,357      30%     $ 2,178     31%    $ 2,094      35%
                                           =======    ====      =======   ====     =======    ====
</TABLE>

       Until 1997, the Internal  Revenue Code (the "Code") allowed the Company a
       special bad debt  deduction  for  additions to bad debt  reserves for tax
       purposes.  Provisions in the Code  permitted the Company to determine its
       bad debt deduction by either the  experience  method or the percentage of
       taxable income  method.  The statutory  percentage  used to calculate bad
       debt  deductions by the percentage of taxable income method was 8% before
       such deduction.  The experience  method was calculated  using actual loss
       experience of the Company.

                                       62
<PAGE>

       The Small  Business Job Protection Act of 1996 repealed the percentage of
       taxable income method of accounting for bad debts for tax years beginning
       after  1995.  The  Company  switched to the  experience  method  above to
       compute its bad debt  deduction in 1997 and future years.  As a result of
       the change in the Code, the Company is required to recapture into taxable
       income the  portion of its bad debt  reserves  that  exceeds its bad debt
       reserves  calculated under the experience  method since 1987; a recapture
       of approximately $366,000 ratably over six years beginning in 1999.

       Retained  earnings at  September  30, 2002  includes  approximately  $5.8
       million  base  year,  tax basis bad debt  reserve  for which no  deferred
       Federal and state income tax liability  has been  accrued.  These amounts
       represent an allocation of income to bad debt deductions for tax purposes
       only.  Reduction of amounts so allocated for purposes  other than tax bad
       debt losses or adjustments arising from carryback of net operating losses
       would create income for tax purposes only,  which would be subject to the
       then current  corporate  income tax rate. The unrecorded  deferred income
       tax  liability  on the above  amounts was  approximately  $2.2 million at
       September 30, 2002.  Certain events,  as defined,  will still trigger the
       recapture of the base year  reserve.  The base year  reserves also remain
       subject to income tax  penalty  provisions  which,  in  general,  require
       recapture  upon certain  stock  redemptions  or excess  distributions  to
       stockholders.


 (9)   Concentration of Credit Risk

       The Company  originates  real  estate,  consumer,  and  commercial  loans
       primarily in its Central Florida market area.  Although the Company has a
       diversified  loan  portfolio,  a  substantial  portion of its  borrowers'
       ability to honor their  contracts  depends on the economic  conditions of
       Central Florida.  The Company does not have a significant exposure to any
       individual customer or counterparty.

       The  Company  manages its credit  risk by  limiting  the total  amount of
       arrangements  outstanding  with individual  customers,  by monitoring the
       size  and  maturity  structure  of  the  loan  portfolio,   by  obtaining
       collateral based on management's credit assessment of the customers,  and
       by applying a uniform credit process for all credit exposures.

(10)  Regulatory Matters

       The  Bank  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 Bank's  financial  statements.
       Under capital adequacy guidelines and the regulatory framework for prompt
       corrective  action,  the Bank must meet specific capital  guidelines that
       involve  quantitative  measures of the Bank's  assets,  liabilities,  and
       certain off-balance sheet items as calculated under regulatory accounting
       practices. The Bank's 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  the Bank to maintain  minimum  amounts and ratios (set
       forth in the table below) of risk-based and Tier I capital (as defined in
       the regulations) to risk-weighted  assets (as defined) and adjusted total
       assets (as defined).

       As of  September  30,  2002,  the most recent  notification  from the OTS
       categorized the Bank as "well capitalized" under the regulatory framework
       for prompt corrective  action.  To be categorized as "well  capitalized,"
       the Bank 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
       the Bank's category.

                                       63
<PAGE>

       The Bank's actual capital  amounts and  percentages  are as follows ($ in
       thousands):

<TABLE>
<CAPTION>
                                                                                                   "Well Capitalized"
                                                                           For Capital               Under Prompt
                                                                            Adequacy                Corrective Action
                                                      Actual                  Purpose                 Provisions
                                            ----------------------    ----------------------     ----------------------
                                              Amount           %        Amount          %           Amount        %
                                            ---------       ------      ------       ------         ------     ------
<S>                                      <C>               <C>      <C>              <C>       <C>            <C>
         September 30, 2002:
           Risk-based capital
              (to risk-weighted assets)     $ 66,708         13.0%    $ 40,982         8.0%       $ 51,227      10.0%
           Tier I capital (to risk-
              weighted assets)                62,189         12.1       20,491         4.0          30,736       6.0
           Tier I capital
              (to adjusted total assets)      62,189          7.4       33,525         4.0          41,906       5.0

         September 30, 2001:
           Risk-based capital
              (to risk-weighted assets)       72,867         16.9       34,432         8.0          43,040      10.0
           Tier I capital (to risk-
              weighted assets)                69,215         16.1       17,216         4.0          25,824       6.0
           Tier I capital
              (to adjusted total assets)      62,215         11.3       24,496         4.0          30,620       5.0
</TABLE>


       The payment of dividends by the Bank to the Company are  restricted.  OTS
       regulations  impose  limitations on all capital  distributions by savings
       institutions.  Capital distributions include cash dividends,  payments to
       repurchase or otherwise acquire the institution's capital stock, payments
       to  stockholders  of another  institution in a cash-out  merger and other
       distributions  charged against capital.  A savings  institution that is a
       subsidiary of a savings and loan holding company,  such as the Bank, must
       file an  application  or a notice  with  the OTS at least 30 days  before
       making a capital  distribution.  Savings institutions are not required to
       file an  application  for permission to make a capital  distribution  and
       need only file a notice if the following conditions are met: (1) they are
       eligible for expedited  treatment under OTS  regulations,  (2) they would
       remain  adequately  capitalized  after the  distribution,  (3) the annual
       amount of capital  distribution  does not exceed net income for that year
       to date added to retained net income for the two preceding years, and (4)
       the capital distribution would not violate any agreements between the OTS
       and the savings  institution or any OTS regulations.  Any other situation
       would require an application to the OTS.


(11)   Benefit Plans

       Director  Retirement Plan. The Company  sponsors a nonqualified  Director
       Retirement  Plan (the  "Director  Plan").  The Director Plan will pay all
       Directors  that have  served on the board at least ten  years,  an amount
       equal  to  the  regular  board  fee  as of the  date  of  the  Directors'
       retirement  (currently  $1,000 per month) for 120 months beginning at the
       end  of  their  final  three-year  term.  If a  Director  dies  prior  to
       retirement  or prior to receipt of all monthly  payments  under the plan,
       the Company has no further  financial  obligations to the Director or his
       or her estate.  For both of the years ended  September 30, 2002 and 2001,
       the Company  recognized  costs of  approximately  $25,000 related to this
       Director  Plan.  For the  year  ended  September  30,  2000  the  Company
       recognized a net reduction in expense of $34,000 related to adjusting the
       remaining  liability  after the death of a  Director.  The  amounts  were
       determined by discounting  the anticipated  cash flow required,  based on
       the  years  of  service   rendered   by  each   covered   director.   The
       weighted-average discount rate used to measure the expense was 5.50%.

                                       64
<PAGE>

       Employee Stock  Ownership  Plan.  The Company  sponsors an employee stock
       ownership  plan  ("ESOP").  The ESOP covers  eligible  employees who have
       completed twelve months of continuous  employment with the Company during
       which they worked at least 1,000 hours and who have  attained  the age of
       21. As part of the  Reorganization  in April 1999, the ESOP borrowed $2.2
       million from the Company to purchase  223,251  shares of the common stock
       of the Company.  After the Conversion in December 2000, the ESOP acquired
       an additional  251,836 shares at a total cost of $3.9 million.  The funds
       were  obtained  through  a loan  from  the  Company.  Since  the  ESOP is
       internally  leveraged,  the Company  does not report the loan  receivable
       from the ESOP as an asset and does not report the loan  payable  from the
       ESOP  as a  liability.  The  Company's  accounting  for  its  ESOP  is in
       accordance  with AICPA Statement of Position 93-6,  Employers  Accounting
       for  Employee  Stock  Ownership  Plans,  which  requires  the  Company to
       recognize compensation expense equal to the fair value of the ESOP shares
       during the  periods in which they became  committed  to be  released.  As
       shares are committed to be released,  the shares become  outstanding  for
       earnings per share computations. To the extent that the fair value of the
       ESOP shares differs from the cost of such shares,  this differential will
       be  charged  or  credited  to  equity  as  additional   paid-in  capital.
       Management  expects  the  recorded  amount of  expense  to  fluctuate  as
       continuing  adjustments  are made to reflect changes in the fair value of
       the ESOP  shares.  As of September  30, 2002 and 2001,  30,600 and 32,481
       shares were  committed  for release  and the  Company  recorded  employee
       benefits  expense of $700,000,  $480,000 and $284,000 for the years ended
       September 30, 2002, 2001 and 2000, respectively, relating to the ESOP.

       Dividends  paid by the Company that relate to  unallocated  shares of the
       ESOP  are used to make  payments  on the ESOP  loan or are  allocated  as
       earnings to the participants. As of September 30, 2002, the fair value of
       the 367,201 unallocated shares held by the ESOP was $6.5 million.

       401(k)  Retirement  Plan.  The  Company  has a 401(k)  plan for  eligible
       employees.  Subject  to  certain  restrictions,  eligible  employees  may
       voluntarily  contribute  up to 15% of their annual  compensation  and the
       Company   may   authorize   discretionary   contributions   to   eligible
       participants.  For the years ended  September 30, 2002, 2001 and 2000 the
       Company  recognized  $134,000,  $117,900  and $94,000,  respectively,  of
       employee benefits expense for the Company's  matching  contribution under
       the plan.

       Supplemental  Executive  Retirement  Plan  ("SERP").  The  Company  has a
       nonqualified defined contribution plan to provide supplemental retirement
       benefits for certain  executive  officers.  For the years ended September
       30, 2002,  2001 and 2000 the Company  recognized  $191,000,  $144,000 and
       $130,000, respectively, of employee benefits expense related to the SERP.


(12)   Stock-Based Compensation Plans

       Restricted  Stock Plan ("RSP").  On October 19, 1999 the Company adopted,
       and the stockholders approved, the 1999 RSP for directors and officers to
       enable  the  Bank  to  attract  and  retain   experienced  and  qualified
       personnel.  Under the 1999 RSP,  directors  and officers of the Bank were
       initially awarded 111,625 shares of the Company's stock. These restricted
       shares are earned at a rate of 20% each year of continued  service to the
       Company.  The fair value of the shares  awarded was  $919,000,  using the
       market closing price of $8.24 on the date of grant.  This amount is being
       amortized  over  a  five-year  period  to  employee   benefits   expense,
       commencing October 1, 1999.

       During 2002, the Company adopted and the shareholders approved a 2002 RSP
       under which 124,750 shares of the Company stock were awarded to directors
       and officers.  These shares vest over three or five year terms.  The fair
       value of these shares was $2.0 million using the market  closing price of
       $16.03 on the date of grant.  During the years ended  September 30, 2002,
       2001 and 2000, the Company  recognized  $862,000,  $181,000 and $215,000,
       respectively in employee benefits expense related to the RSP.

                                       65
<PAGE>

       In the event of death or disability of a participant or change of control
       of the Company,  all shares awarded to the participant become immediately
       vested.  All  shares  awarded  under  the RSP are  considered  as  shares
       outstanding  for purposes of calculating  earnings per share.  The shares
       earned under this plan are  entitled to all voting and other  stockholder
       rights, except that, while restricted,  the shares must be held in escrow
       and cannot be sold, pledged or otherwise  conveyed.  The Company acquires
       the shares for the plan  through open market  purchases.  During 2002 and
       2001, the RSP purchased  124,658 and 51,889 shares,  respectively,  at an
       average price of $18.34 and $14.13 per share, respectively.  At September
       30, 2002 the plan held  128,151  unvested  shares at an average  price of
       $16.25 per share.

       Stock Option  Plans.  The Company has two Stock Option Plans (the "Option
       Plans") under which a total of 593,848  common shares were  authorized to
       be granted to directors,  officers and  employees of the Company.  Shares
       granted under the Option Plans are exercisable at the market price at the
       date of the grant and vest over three or five  years.  Options  generally
       expire at the earlier of ten years from the date of grant or three months
       following  the date an  officer or  employee  terminates  the  employment
       relationship  for reasons other than disability  (options expire one year
       after disability) or death (options expire two years after death).  Total
       stock  options  available  for future  grants  under both Option Plans at
       September 30, 2002 was 6,245.

       During the years ended  September 30, 2002 and 2000,  311,750 and 279,053
       options were granted under the Option Plans,  respectively.  SFAS No. 123
       requires pro forma fair value  disclosures if the intrinsic  value method
       is being utilized.  For purposes of pro forma disclosures,  the estimated
       fair value was included in expense over the period  vesting  occurs.  The
       pro forma information has been determined as if the Company had accounted
       for its stock  options  under the fair value  method of SFAS No. 123. The
       proforma  information and assumptions used in calculating the fair values
       of stock options granted is as follows ($ in thousands,  except per share
       amounts):

<TABLE>
<CAPTION>
                                                                                      Year Ended September 30,
                                                                             ----------------------------------------
                                                                                  2002          2001           2000
                                                                                  ----          ----           ----
<S>                                                                        <C>              <C>          <C>
          Risk-free rate of return                                               5.43%           N/A          6.00%
          Annualized dividend                                                    1.50%           N/A          2.50%
          Estimated volatility                                                     22%           N/A            65%
          Expected life of options granted                                    10 years           N/A       10 years
          Weighted-average grant-date fair value of options issued
              during the year                                                $    5.75           N/A           4.78
                                                                             =========         =====          =====
          Proforma net income                                                $   4,833         4,655          3,462
                                                                             =========         =====          =====
          Proforma basic earnings per share                                  $    0.95          0.88           0.64
                                                                             =========         =====          =====
          Proforma diluted earnings per share                                $    0.91          0.86           0.63
                                                                             =========         =====          =====
</TABLE>

       The following is a summary of option transactions:

<TABLE>
<CAPTION>
                                                                                           Range of Per       Weighted
                                                                             Number of     Share Option      Average Per
                                                                              Shares           Price         Share Price
                                                                              ------           -----         -----------
<S>                                                                         <C>             <C>               <C>
          Outstanding, September 30, 2000                                     278,536        $ 8.23            $ 8.23
              Exercised                                                        (2,229)         8.24              8.24
              Forfeited                                                        (2,683)         8.24              8.24
                                                                              -------
          Outstanding, September 30, 2001                                     273,624         7.63-10.23         8.23
              Exercised                                                        (6,602)         8.24              8.24
              Granted                                                         311,750        16.03-19.20        16.06
                                                                              -------
          Outstanding, September 30, 2002                                     578,772         7.63-19.20        12.45
                                                                              =======         ==========        =====
</TABLE>

                                       66
<PAGE>
       The  weighted  average  remaining  contractual  life  of the  outstanding
       options at September 30, 2002 was 8.6 years.  The outstanding  options at
       September 30, 2002 are exercisable as follows:

                                             Weighted       Weighted Average
                             Number of        Average     Remaining Contractual
  Year Ending                 Shares      Exercise Price          Life
  -----------                 ------      --------------  ---------------------

       Already vested         254,916      $   8.23                7.0
       2003                   147,003         11.90                8.0
       2004                   147,003         13.25                8.0
       2005                    15,378         15.58                9.0
       2006                    14,472         16.06                9.0
                              -------
       Total                  578,772         12.45                8.6
                              =======

(13)     Branch Acquisition

       On February 15, 2002, the Company finalized the purchase of seven Florida
       retail sales offices ("Branch Acquisition") from SunTrust Bank coincident
       with SunTrust Bank's acquisition of such offices from Huntington National
       Bank  ("Huntington").  Four of these  Huntington  offices  are located in
       Lakeland,  Florida,  and one each in Avon  Park,  Sebring  and  Wildwood,
       Florida.  The  Company  received  approximately  $120.9  million in cash,
       $162.1  million in deposits,  $26.1  million in loans and $2.4 million in
       premises and equipment  related to these seven offices.  The  transaction
       resulted in a deposit premium of approximately 7.6%. This premium,  along
       with additional  acquisition costs, resulted in a core deposit intangible
       asset of $12.7 million.  This intangible asset is being amortized using a
       150%  declining   balance  method  over  twelve  years  and  the  Company
       recognized  $1.1  million  of  amortization  expense  for the year  ended
       September 30, 2002.

(14)      Fair Values of Financial Instruments

       Fair value estimates, methods and assumptions are set forth below.

       Cash  and  Cash  Equivalents.  The  carrying  amounts  of cash  and  cash
       equivalents    (demand   deposits   maintained   at   various   financial
       institutions) represent fair value.

       Securities.  The  Company's  securities  represent  investments  in  U.S.
       government  agency  obligations,  CMOs, MBS,  corporate bonds,  municipal
       bonds and common stock.  The fair value of these securities was estimated
       based on quoted market prices or bid quotations  received from securities
       dealers.

       FHLB  Stock.  The FHLB  stock is not  publicly  traded  and the  carrying
       amounts were used to estimate the fair value.

       Loans.  For  variable  rate loans  that  reprice  frequently  and have no
       significant  change in credit  risk,  fair  values are based on  carrying
       values. Fair values for residential,  commercial real estate,  commercial
       and consumer  loans other than variable  rate loans are  estimated  using
       discounted  cash flow  analysis,  using the Office of Thrift  Supervision
       ("OTS") pricing model.  Fair values of impaired loans are estimated using
       discounted  cash flow analysis or  underlying  collateral  values,  where
       applicable.

       Deposits.  The fair  values  disclosed  for  noninterest  bearing  demand
       deposits  are, by  definition,  equal to the amount  payable on demand at
       September  30,  2002 and  2001  (that is  their  carrying  amounts).  The
       carrying amounts of variable-rate,  fixed-term  money-market accounts and
       interest-bearing  demand  deposits  approximate  their  fair value at the
       reporting  date.  Fair values for fixed-rate  time deposits are estimated
       using the OTS pricing model.

       Federal  Home Loan Bank  Advances.  Fair value for Federal Home Loan Bank
       advances are estimated using the OTS pricing model.

       Other  Borrowings.  Fair values of other  borrowings are estimated  using
       discounted  cash flow analysis based on the Company's  current  borrowing
       rates for similar types of borrowing arrangements.

                                       67
<PAGE>

       The estimated fair values of the Company's  financial  instruments are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                     At September 30,
                                                   ---------------------------------------------------
                                                            2002                        2001
                                                   -----------------------      ----------------------
                                                                 Estimated                  Estimated
                                                    Carrying       Fair         Carrying      Fair
                                                     Amount        Value         Amount       Value
                                                     ------        -----         ------       -----
<S>                                              <C>          <C>            <C>         <C>
           Financial assets:
               Cash and cash equivalents           $  30,628       30,628         21,676      21,676
               Securities available for sale         272,624      272,624        129,534     129,534
               Federal Home Loan Bank stock            6,966        6,966          7,670       7,670
               Loans                                 499,364      524,850        474,155     485,300
                                                   =========    =========       ========   =========

           Financial liabilities:
               Deposits:
                  Without stated maturities          229,254      229,254        116,326     116,326
                  With stated maturities             358,177      368,125        283,211     289,854
               Federal Home Loan Bank advances       129,500      142,851        149,500     157,076
               Other borrowings                       34,834       35,772         11,048      11,048
                                                   =========    =========       ========   =========
</TABLE>


       Commitments.  The  Company  makes  commitments  in the  normal  course of
       business to originate loans and to fund undisbursed construction and line
       of credit loans. All such commitments are for relatively short periods of
       time,  so the  market  value  of the  loans  on the  commitment  date and
       origination or delivery date is seldom materially different.  The Company
       also has  recourse  obligations  on loans sold in the  secondary  market.
       These recourse obligations require the Company to repurchase loans if the
       borrower  defaults  within a certain  time period after the loan is sold,
       usually three to twelve months. The Company has not had to repurchase any
       loan  sold  in  the  secondary  market  in  relation  to  these  recourse
       obligations.  The  Company's  commitments  at  September  30, 2002 are as
       follows (in thousands):

<TABLE>
<CAPTION>
                                                                                              Estimated
                                                                     Notional     Carrying      Fair
                                                                       Amount       Amount      Value
                                                                       ------       ------      -----

<S>                                                                <C>             <C>        <C>
               Loan commitments and letters of credit                $  6,143            -           -
                                                                     ========        =====       =====
               Undisbursed construction and line of credit loans     $ 45,240            -           -
                                                                     ========        =====       =====
               Loans sold with recourse obligations                  $ 17,936            -           -
                                                                     ========        =====       =====
</TABLE>


(15)   Legal Contingencies

       Various legal claims also arise from time to time in the normal course of
       business  which,  in the opinion of management  of the Company,  will not
       have  a  material   effect  on  the  Company's   consolidated   financial
       statements.



(16)   Subsequent Event

       On October 2, 2002, the Company entered into a definitive  agreement with
       BB&T  Corporation  ("BB&T")  whereby  BB&T  would  acquire  100%  of  the
       outstanding common stock of the Company. However, pursuant to discussions
       with regulatory officials,  BB&T and the Company terminated the agreement
       on October 31, 2002 so that BB&T could submit the proper  application  to
       acquire control of the Company  pursuant to regulatory  guidelines.  This
       application  was filed on  November 4, 2002.  The  Company  has  expended
       approximately  $610,000 in costs  related to the  acquisition,  including
       approximately $120,000 during the year ended September 30, 2002.

                                       68
<PAGE>

(17)   Parent Company Only Financial Statements

     The unconsolidated  condensed financial statements of FloridaFirst Bancorp,
     Inc. are as follows (in thousands):

<TABLE>
<CAPTION>
                            Condensed Balance Sheets
                            ------------------------
                                                                                  At September 30,
                                                                            --------------------------------
                                                                                2002                 2001
                                                                                ----                 ----
         Assets

<S>                                                                      <C>                  <C>
         Cash and cash equivalents                                          $    141                   86
         Loans to subsidiary                                                  17,621               20,547
         Securities available for sale                                         2,507                2,402
         Investment in subsidiary                                             78,739               70,769
         Other assets                                                             59                   52
                                                                            --------               ------
             Total assets                                                   $ 99,067               93,856
                                                                            ========               ======

         Liabilities and Stockholders' Equity

         Other liabilities                                                        89                   42
         Stockholders' equity                                                 98,978               93,814
                                                                            --------               ------
             Total liabilities and stockholders' equity                     $ 99,067               93,856
                                                                            ========               ======

</TABLE>

<TABLE>
<CAPTION>
                        Condensed Statements of Earnings
                        --------------------------------
                                                                                Year Ended September 30,
                                                                           ---------------------------------
                                                                               2002        2001       2000
                                                                               ----        ----       ----
<S>                                                                      <C>           <C>        <C>
         Interest income:
         Securities available for sale                                     $    213         209        135
         Loans to subsidiary                                                    852         976        500
                                                                            -------      ------     ------
             Total income                                                     1,065       1,185        635
                                                                            -------      ------     ------

         Operating expenses                                                    (227)       (212)      (102)
                                                                            -------      ------     ------
         Income before income taxes and equity in undistributed
             earnings of subsidiary                                             838         973        533
         Income taxes                                                          (317)       (340)      (191)
                                                                            -------      ------     ------

         Income before equity in undistributed earnings of subsidiary           521         633        342
         Equity in undistributed earnings of subsidiary                       5,083       4,236      3,500
                                                                            -------      ------     ------
         Net income                                                         $ 5,604       4,869      3,842
                                                                            =======      ======     ======
</TABLE>

                                       69

<PAGE>

<TABLE>
<CAPTION>
                       Condensed Statements of Cash Flows
                       ----------------------------------
                                                                                          Year  Ended September 30,
                                                                                       --------------------------------
                                                                                           2002       2001       2000
                                                                                           ----       ----       ----
<S>                                                                                  <C>          <C>        <C>
         Cash flows from operating activities:
             Net income                                                                 $ 5,604      4,869      3,842
             Adjustments to reconcile net income to net cash provided by
                operating activities:
                  Equity in undistributed earnings of subsidiary                         (5,083)    (4,236)    (3,500)
                  Net decrease (increase) in other                                            2        (12)      (126)
                                                                                       --------   --------    -------
                  Net cash provided by operating activities                                 523        621        216
                                                                                       --------   --------    -------
         Cash flows from investing activities:
             Capital contribution to subsidiary                                           -        (16,000)      -
             Purchase securities available for sale                                       -         -          (2,263)
             Repayment (issuance) of loans to subsidiary                                  2,926    (13,761)     6,133
                                                                                       --------   --------    -------
                  Net cash provided by (used in) investing activities                     2,926    (29,761)     3,870
                                                                                       --------   --------    -------
         Cash flows from financing activities:
             Payments to acquire treasury stock                                          (2,199)      (481)    (3,606)
             Dividends paid                                                              (1,249)      (921)      (480)
             Net proceeds from stock issuances                                               54     30,578       -
                                                                                       --------   --------    -------
                  Net cash (used in) provided by financing activities                    (3,394)    29,176     (4,086)
                                                                                       --------   --------    -------
         Net increase in cash                                                                55         36       -

         Cash at beginning of year                                                           86         50         50
                                                                                       --------   --------    -------
         Cash at end of year                                                           $    141         86         50
                                                                                       ========   ========    =======
</TABLE>
                                       70
<PAGE>

(18)   Quarterly Financial Data (Unaudited)

       Unaudited quarterly financial data is as follows ($ in thousands,  except
per share data):

<TABLE>
<CAPTION>
                                    Year Ended September 30, 2002                 Year Ended September 30, 2001
                               ----------------------------------------       ----------------------------------------
                                First     Second      Third     Fourth         First    Second       Third     Fourth
                               Quarter    Quarter    Quarter    Quarter       Quarter   Quarter     Quarter    Quarter
                               -------    -------    -------    -------       -------   -------     -------    -------

<S>                         <C>         <C>        <C>        <C>           <C>       <C>         <C>        <C>
       Interest income        $ 11,266     11,825     12,948     12,871        10,947    11,025      11,385     11,489
       Interest expense          6,171      6,130      6,390      6,257         6,761     6,334       6,431      6,369
                             ---------    -------    -------    -------       -------   -------     -------    -------
       Net interest income       5,095      5,695      6,558      6,614         4,186     4,691       4,954      5,120
       Provision for loan
          losses                   150        170        180        180           180       135         150        150
                             ---------    -------    -------    -------       -------   -------     -------    -------
       Net interest income
          after provision
          for loan losses        4,945      5,525      6,378      6,434         4,006     4,556       4,804      4,970
                             ---------    -------    -------    -------       -------   -------     -------    -------

       Noninterest income          834      1,051      1,588      1,723           573       677         729        508
       Noninterest expense       3,872      4,881      5,713      6,051         3,124     3,535       3,459      3,658
                             ---------    -------    -------    -------       -------   -------     -------    -------

       Income before income
          taxes                  1,907      1,695      2,253      2,106         1,455     1,698       2,074      1,820
       Income taxes                573        487        681        616           483       520         640        535
                             ---------    -------    -------    -------       -------   -------     -------    -------

       Net income            $   1,334      1,208      1,572      1,490           972     1,178       1,434      1,285
                             =========    =======    =======    =======       =======   =======     =======    =======
       Basic earnings per
          share              $     .26        .24        .31        .29          0.18      0.22        0.27       0.25
                             =========    =======    =======    =======       =======   =======     =======    =======
       Diluted earnings
          per share          $     .25        .22        .30        .28          0.18      0.21        0.26       0.25
                             =========    =======    =======    =======       =======   =======     =======    =======
</TABLE>

                                       71

<PAGE>

Item   9.  Changes in and  Disagreements  With  Accountants  on  Accounting  and
---------  ---------------------------------------------------------------------
           Financial Disclosure
           --------------------

Not applicable.


                                       72
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers
--------  --------------------------------

Compliance with Section 16(a) of the Securities Exchange Act

Section 16(a) of the 1934 Act,  requires the  Company's  directors and executive
officers to file reports of  ownership  and changes in ownership of their equity
securities of the Company with the  Securities  and Exchange  Commission  and to
furnish the Company with copies of such  reports.  To the best of the  Company's
knowledge,  all of the filings by the Company's directors and executive officers
were made on a timely  basis  during the 2002  fiscal  year.  The Company is not
aware of other beneficial owners of more than ten percent of its common stock.

Biographical Information

The business experience of each director and executive officer of the Company is
set forth below.  All persons have held their  present  positions for five years
unless otherwise stated.

Llewellyn N.  Belcourt,  70, is a  stockholder  of Carter,  Belcourt & Atkinson,
P.A., a certified  public  accounting firm located in Lakeland,  Florida.  He is
Treasurer and a Board member of the Community Foundation of Greater Lakeland and
a Board member of the Lakeland Regional Medical Center Foundation.

J.  Larry  Durrence,  63,  is  President  of  Polk  Community  College,  a state
institution  with  campuses in Lakeland  and Winter  Haven,  Florida.  He was an
executive  manager in the Florida  Department of Revenue from late 1992 to early
1998, and prior to that was in higher education. He was also a City Commissioner
and Mayor of Lakeland,  1981-1989.  He currently  serves on the boards of United
Way of Central Florida,  Lakeland Chamber of Commerce,  Polk Economic  Education
Council, Polk Workforce Development Board,  Volunteers in Service to the Elderly
(Advisory),  and the Board of  Governors of Polk Museum of Art. He serves on the
Commission on Economic and Workforce Development for the American Association of
Community Colleges and is a graduate of the AACC President's Academy.

Stephen A. Moore, Jr., 60, is President,  Chief Executive Officer and a Director
of Moore Business Service, Inc., an accounting firm and major franchisee for H&R
Block in central  Florida with corporate  offices in Lakeland,  Florida.  He has
been with Moore  Business  Service,  Inc.  since 1974. Mr. Moore is a member and
Past President of the Lakeland Rotary Club. He has been active as a board member
of the Polk Community College Foundation,  as an officer and board member of the
Central Florida Speech and Hearing Center,  as a board member and Past President
of  Goodwill  Industries,  Heart of  Florida,  Inc.,  as a board  member  of the
Lakeland  Area  Chamber of  Commerce  and as a member of the  Lakeland  Regional
Medical Center Community Counselor program.

Nis H.  Nissen,  III,  61, is President  and Chief  Executive  Officer of Nissen
Advertising, Inc., an advertising and public relations firm located in Lakeland,
Florida that he has been  affiliated with since 1971. He also is a member of the
Rotary  Club,  a Director  of the Central  Florida  Speech & Hearing  Center,  a
Director  of  Crimestoppers  of  Polk  County,   Vice  Chairman  of  the  Public
Information  Committee,  Community  Foundation of Lakeland, a member of the Fine
Arts Council of the Florida Southern Foundation of Lakeland, and a member of the
Board of Governors of Florida Southern College.

Arthur J. Rowbotham, 54, is an attorney and is President of Hall Communications,
Inc., a company that operates four radio stations in Lakeland, Florida, which he
has been with  since 1977 as a director  and since 1983 as General  Manager.  He
currently serves as a director for Cross Country  Communications,  LLC, Imperial
Symphony Orchestra Advisory Board, City of Lakeland Civil Service Board, City of
Lakeland Pension Board, and Florida Association of Broadcasters.  He is a member
of the  Broadcasters'  Foundation  and  the  Lakeland  Regional  Medical  Center
Community Counselor.

Gregory C. Wilkes,  54, has been  FloridaFirst  Bank's  President,  Director and
Chief  Executive  Officer since 1995. From 1990 to 1995, Mr. Wilkes was employed
by Home Federal  Savings Bank in Rome,  Georgia,  where he served as  President,
Director and Chief  Executive  Officer.  He is the Past Chairman of the Lakeland
Chamber of

                                       73
<PAGE>

Commerce and also serves as a board member for the Lakeland Chamber of Commerce,
Lakeland  Rotary Club,  Polk Theater,  the YMCA, the Salvation Army, the Florida
Southern  College  President's  Council,  and  the  Lakeland  Regional  Hospital
Foundation.  In addition,  Mr.  Wilkes is the elected  director for the State of
Florida for the  Federal  Home Loan Bank of Atlanta and is a member of the board
of the Florida  Bankers  Association and board and faculty member of the Florida
School of Banking.

G. F. Zimmermann,  III, 58, is President and majority  stockholder of Zimmermann
Associates,  Inc., a building design firm located in Lakeland, Florida, which he
has been with since  1974.  He has been  active  with the  Salvation  Army,  the
Kiwanis Club of Lakeland,  the Lakeland  Kiwanis  Foundation  and the Chamber of
Commerce.  He also has served as a member of the Habitat for  Humanity  Board of
Directors,  the City of Lakeland  Civil Service Board,  the Pension  Board,  the
Arbitration Board and the Lakeland Regional Medical Center Community Board.

Named Executive Officers Who Are Not Directors

Don A.  Burdett,  57,  has been  Senior  Vice  President  of Retail  Banking  of
FloridaFirst Bank since November 1998. Prior to joining  FloridaFirst  Bank, Mr.
Burdett served as a market executive and held various sales management positions
at Barnett Bank from 1979 to 1998.

Kerry P.  Charlet,  49,  has been  Chief  Financial  and  Operations  Officer of
FloridaFirst  Bank since March 1998.  Prior to joining  FloridaFirst  Bank,  Mr.
Charlet  served in various  positions  from 1986 to 1994 at Florida  Bank,  FSB,
including  Executive Vice  President and Chief  Financial  Officer.  He was also
employed by AmSouth Bank of Florida from 1995 to 1998, where he served as Senior
Vice President and Chief  Financial  Officer.  Mr. Charlet has also served as an
officer  and  committee  chairman  for the Gator Bowl  Association,  Chairman of
Payment  Systems  Network,  and  president  and board  member of  various  youth
basketball organizations.

William H. Cloyd, 45, has been Chief Lending Officer of FloridaFirst  Bank since
January 1998. Previously,  Mr. Cloyd was Senior Vice President of Sun Trust Bank
Mid-Florida,  N.A.  He has also  been  active  with the  United  Way,  the North
Lakeland  Rotary  Club,  the  Lakeland  Chamber of  Commerce,  and has served as
Chairman of the Lakeland Downtown Development Authority.

Certain Other Executive Officer Who Is Not A Director

Marion L. Moore,  63, has been Senior Vice  President of Deposit  Operations  of
FloridaFirst  Bank since 1984. He has also been active with the Rotary Club, the
Boy Scouts of America,  the  Lakeland  Chamber of Commerce  and the Winter Haven
Chamber of Commerce.

                                       74
<PAGE>

Item 11.  Executive Compensation
--------  ----------------------

Director  Compensation.  During the fiscal year ended  September 30, 2002,  each
director was paid a fee of $1,000 for each board annual  meeting  attended.  The
chairman  of  the  board  receives  an  additional   $1,500  monthly  fee.  Each
non-management  director  was  paid  $200  for  each  committee  annual  meeting
attended.  The total  fees  paid to the  directors  for the  fiscal  year  ended
September 30, 2002 were approximately $156,000.

In addition, the Bank maintains a Directors Consultant and Retirement Plan. If a
director  agrees to become a consulting  director to our Board after  retirement
and  completion  of at least 10 years of  service,  he will  receive  a  monthly
payment  equal to the Board fee in effect at the date of  retirement,  currently
$1,000  per month,  for a period of 120  months.  Benefits  under such plan will
begin  after a  director's  retirement.  If there is a change  in  control,  all
directors  will be presumed to have completed not less than 10 years of service,
and each  director will receive a lump sum payment equal to the present value of
future  benefits  payable.  During the fiscal  year ended  September  30,  2002,
$24,000 was paid to former directors under the Plan.

1999 Option Plan and  Restricted  Stock Plan.  Under the 1999 Option Plan,  each
non-employee  director,  except Messrs.  Durrence and Rowbotham,  was previously
granted  11,146  options to purchase  shares of common stock at $8.24 per share.
Under the 1999 Restricted Stock Plan ("RSP"), each non-employee director, except
Messrs.  Durrence and Rowbotham,  was previously  awarded 4,783 shares of common
stock.  Option shares and  restricted  stock plan shares are  exercisable at the
rate of 20% per year commencing on October 19, 2000.  Under the 1999 Option Plan
and RSP, Mr. Wilkes received 65,832 options and 27,905 RSP shares, respectively.
In accordance with the RSP,  dividends are paid on shares awarded or held in the
plan

2002 Option Plan and RSP. The 2002 Option Plan was ratified by  shareholders  on
January 29, 2002.  Under the 2002 Option Plan,  each  non-employee  director was
previously  granted 15,750 options to purchase  shares of common stock at $16.03
per share.  Under the 2002  Restricted  Stock Plan,  which was also  ratified by
shareholders  on January 29, 2002,  each  non-employee  director was  previously
awarded 6,250 shares of common stock.  These option shares and restricted  stock
plan  shares  are  exercisable  at the rate of 33 1/3% per  year  commencing  on
September 30, 2002.  Under the 2002 Option Plan and  Restricted  Stock Plan, Mr.
Wilkes  received   60,000  options  and  25,000  shares  of  restricted   stock,
respectively.  In accordance with the 2002 Restricted Stock Plan,  dividends are
paid on shares awarded or held in the plan.

Executive  Compensation.  The  following  table sets forth the cash and non-cash
compensation  awarded to or earned, for services rendered by the named executive
officers of the Company for each of the three years ended September 30, 2002. No
other  executive  officer of the  Company or the Bank had a combined  salary and
bonus that exceeded $100,000.

                                       75
<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                    Long-Term Compensation
                                            Annual Compensation                             Awards
                                      -------------------------------           -------------------------------
                                                                                    Restricted       Securities
Name and                     Fiscal                          Other Annual            Stock          Underlying         All Other
Principal Position            Year    Salary($)   Bonus($)  Compensation($)     Awards(s)($)(1)      Options#(3)     Compensation($)
------------------            ----    ---------   --------  ---------------     ---------------      -----------     ---------------
<S>                        <C>      <C>        <C>           <C>               <C>                   <C>             <C>
Gregory C. Wilkes,            2002   $262,000     $60,000       $3,000            $400,625 (1)          60,000          91,864(4)
President and                 2001    229,277           -       13,000                                       -          78,622
Chief Executive Officer       2000    201,440           -       13,000             229,823 (2)          65,832          79,608

Don A. Burdett                2002    116,250      18,914                          192,300 (1)          25,000          22,788(5)
Senior Vice President         2001    106,750       7,500            -                                       -          12,780
                              2000     98,750      10,000            -              85,000 (2)          18,061           2,963

Kerry P. Charlet,             2002    156,250      26,914                          288,450 (1)          30,000          70,285(6)
Senior Vice President and     2001    139,076      10,000            -                                       -          49,129
Chief Financial Officer       2000    127,370      10,000            -             153,000 (2)          33,543          50,628


William H. Cloyd,             2002    141,000      12,000                          240,375 (1)          25,000          71,065(7)
Senior Vice President and     2001    129,508       7,500            -                                       -          47,816
Chief Lending Officer         2000    113,500       5,000            -             127,500 (2)          25,802          47,221
</TABLE>

-----------------
(1)    For  Messrs.  Wilkes,  Burdett,  Charlet and Cloyd  represents  awards of
       25,000,  12,000, 18,000 and 15,000 shares of Common Stock,  respectively,
       under the 2002  Restricted  Stock Plan as of  December  21, 2001 on which
       date the market  price of such  stock was  $16.03  per share.  Such stock
       awards  become  non-forfeitable  at the  rate of 33  1/3%shares  per year
       commencing on September 30, 2002.  Dividend  rights  associated with such
       stock are  accrued  and held in  arrears to be paid at the time that such
       stock  becomes  non-forfeitable.  Based upon a market price of $17.64 per
       share as of September 30, 2002, such unvested shares for Messrs.  Wilkes,
       Burdett,  Charlet  and Cloyd had a market  value of  $294,000,  $141,000,
       $212,000 and $176,000, respectively.
(2)    For  Messrs.  Wilkes,  Burdett,  Charlet and Cloyd  represents  awards of
       27,905,  10,320, 18,577 and 15,481 shares of common stock,  respectively,
       under the 1999 Restricted Stock Plan as of October 19, 1999 on which date
       the market  price of such stock was $8.24 per  share.  Such stock  awards
       become  non-forfeitable at the rate of 20% per year commencing on October
       19, 2000. Dividend rights associated with such stock are accrued and held
       in   arrears   to  be  paid  at  the  time   that  such   stock   becomes
       non-forfeitable.  Based  upon a market  price of  $17.64  per share as of
       September 30, 2002,  such unvested  shares for Messrs.  Wilkes,  Burdett,
       Charlet and Cloyd had a market value of $295000,  $109,000,  $197,000 and
       $164,000, respectively.
(3)    Such awards under the 1999 Option Plan are first  exercisable at the rate
       of 20% per year commencing on October 19, 2000, and such awards under the
       2002  Option Plan are first  exercisable  at the rate of 33 1/3% per year
       commencing on September 30, 2002. See "Stock Awards" below.
(4)    Includes $64,000 related to an accrual under the  supplemental  executive
       retirement plan; 1,573 shares of common stock allocated under the ESOP at
       a cost basis of $13.26 per share  (such  shares had an  aggregate  market
       value at  September  30, 2002 of  $27,748);  and $7,006 in the  Company's
       matching funds in the 401(k) retirement plan.
(5)    Includes 1,386 shares of common stock  allocated under the ESOP at a cost
       basis of $13.26 per share (such shares had an  aggregate  market value at
       September  30, 2002 of  $24,449);  and $4,410 in the  Company's  matching
       funds in the 401(k) retirement plan.
(6)    Includes $45,000 related to an accrual under the  supplemental  executive
       retirement plan; 1,573 shares of common stock allocated under the ESOP at
       a cost basis of $13.26 per share  (such  shares had an  aggregate  market
       value at  September  30, 2002 of  $27,748);  and $4,427 in the  Company's
       matching funds in the 401(k) retirement plan.
(7)    Includes $46,000 related to an accrual under the  supplemental  executive
       retirement plan;  approximately 1,573 shares of common stock scheduled to
       be  allocated  under the ESOP at a cost basis of $13.26  per share  (such
       shares had an aggregate  market value at September  30, 2002 of $27,748);
       and $4,207 in the Company's matching funds in the 401(k) retirement plan.

                                       76
<PAGE>

Stock  Awards.  The  following  tables sets forth  information  with  respect to
options granted to the named executive officers and held by them as of September
30, 2002. The Company has not granted to the named executive  officers any stock
appreciation rights.

<TABLE>
<CAPTION>
                                                  OPTION GRANTS TABLE
                                           Option Grants in Last Fiscal Year
                                           ---------------------------------
                                                                                                     Potential Realizable
                                                                                                       Value at Assumed
                                                                                                    Annual Rates of Stock
                                                                                                    Price Appreciation for
                                       Individual Grants                                                  Option Term
                                       -----------------                                          --------------------------
                            Number of        % of Total
                            Securities         Option
                            Underlying       Granted to      Exercise or
                              Option        Employees in      Base Price      Expiration
          Name              Granted (#)      Fiscal Year       ($/Sh)(1)         Date                 5% ($)        10% ($)
          ----              -----------      -----------       ---------     -----------------       --------     ----------
<S>                          <C>             <C>             <C>           <C>                    <C>
Gregory C. Wilkes               60,000          27.6%           $16.03       December 20, 2010       $605,000     $1,532,000
Don A. Burdett                  25,000          11.5%           $16.03       December 20, 2010        252,000        638,500
Kerry P. Charlet                30,000          13.8%           $16.03       December 20, 2010        302,000        766,000
William H. Cloyd                25,000          11.5%           $16.03       December 20, 2010        252,000        638,500

</TABLE>

--------------
(1)    The amounts  represent  certain assumed rates of appreciation only over a
       ten-year  period.  Actual  gains,  if any, on stock option  exercises and
       Common Stock  holdings are  dependent  on the future  performance  of the
       Common  Stock  and  overall  stock  market  conditions.  There  can be no
       assurance  that the amount  reflected in the table will be achieved.  The
       values in the table are based upon the exercise price of $16.03.

                                       77
<PAGE>

<TABLE>
<CAPTION>
                                            OPTION EXERCISES AND YEAR END VALUE TABLE
                            Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
                            ------------------------------------------------------------------------

                                                                   Number of Securities               Value of Unexercised
                                                                  Underlying Unexercised                  In-The-Money
                                                                    Options at FY-End(#)              Options at FY-End($)
                                                                    --------------------              --------------------
                          Shares Acquired         Value
Name                       on Exercise(#)      Realized($)       Exercisable/Unexercisable         Exercisable/Unexercisable
----                       --------------      -----------       -------------------------         -------------------------
<S>                       <C>                 <C>                <C>                            <C>
Gregory C. Wilkes
1999 Option Plan                 __                __                26,332 / 39,500                 $247,600 / $371,500(1)
2002 Option Plan                 __                __                20,000 / 40,000                    32,300 / 64,600(2)

Don A. Burdett
1999 Option Plan                 __                __                 7,224 / 10,837                  67,900 / 101,900(1)
2002 Option Plan                 __                __                 8,333 / 16,667                   13,500 / 26,900(2)

Kerry P. Charlet
1999 Option Plan                 __                __                13,418 / 20,125                  126,200 / 189,300(1)
2002 Option Plan                 __                __                10,000 / 20,000                   16,100 / 32,300(2)

William H. Cloyd
1999 Option Plan                 __                __                10,320 / 15,482                  97,100 / 145,600(1)
2002 Option Plan                 __                __                 8,333 / 16,667                   13,500 / 26,900(2)

</TABLE>

(1)    Based on the exercise  price of $8.24 and the closing  price on September
       30, 2002 of $17.64.
(2)    Based on the exercise  price of $16.03 and the closing price on September
       30, 2002 of $17.64.


Other Benefits

Employment Agreements.  The Bank has entered into separate employment agreements
with Messrs. Wilkes,  Burdett,  Charlet and Cloyd. Messrs. Wilkes' and Charlet's
employment  agreements have a term of three years,  while Messrs.  Burdett's and
Cloyd's  agreement have a term of two years. The agreements may be terminated by
the Bank for "just cause" as defined in the  agreement.  If the Bank  terminates
any of  these  individuals  without  just  cause,  they  will be  entitled  to a
continuation of their salary from the date of termination  through the remaining
term of the  agreement,  but in no event for a period of less than one year. The
employment  agreements  contain a provision stating that after Messrs.  Wilkes',
Burdett's,  Charlet's or Cloyd's employment is terminated in connection with any
change in control,  the individual  will be paid a lump sum amount equal to 2.99
times his five-year average annual taxable cash compensation.  In the event of a
change in control as of September 30, 2002, Messrs. Wilkes, Burdett, Charlet and
Cloyd  would  have  received  approximately  $750,000,  $360,000,  $525,000  and
$450,000, respectively.

Supplemental  Executive Retirement Plan. The Bank has implemented a supplemental
executive retirement plan for the benefit of Messrs.  Wilkes, Charlet and Cloyd.
The supplemental  executive retirement plan will provide benefits at age 65 that
would be comparable to approximately 83% of the benefits that would have accrued
under the terminated  pension plan after  retirement at age 65. If a participant
terminates  employment prior to age 65, then the target retirement benefits will
be reduced. The accumulated  deferred  compensation account for each participant
will  be  payable  to such  participant  at  anytime  following  termination  of
employment  after  attainment  of  age  55,  the  death  or  disability  of  the
participant,  or termination of employment  following a change in control of the
Bank whereby the Bank or its parent company is not the resulting  entity.  As of
the fiscal year ended September 30, 2002, Messrs.  Wilkes, Charlet and Cloyd had
aggregate benefit accruals under the supplemental  executive  retirement plan of
approximately $248,000, $154,000, and $156,000,  respectively, and such benefits
for the individuals were not vested.

                                       78
<PAGE>

Item 12.   Security  Ownership of Certain  Beneficial  Owners and Management and
--------   ---------------------------------------------------------------------
           Related Stockholder Matters
           ---------------------------

Securities Authorized for Issuance Under Equity Compensation Plans

Set  forth  below is  information  as of  September  30,  2002 with  respect  to
compensation   plans  under  which  equity  securities  of  the  Registrant  are
authorized for issuance.

<TABLE>

                                          EQUITY COMPENSATION PLAN INFORMATION

                                                     (a)                    (b)                        (c)
                                                                                               Number of securities
                                            Number of securities      Weighted-average       remaining available for
                                              to be issued upon      exercise price of     future issuance under equity
                                                 exercise of            outstanding       compensation plans (excluding
                                            outstanding options,     options, warrants       securities reflected in
                                            warrants and rights         and rights                 column (a))
                                            -------------------         ----------                 -----------
<S>                                             <C>                     <C>                        <C>

Equity compensation plans approved by shareholders:
    1999 Stock Option Plan                         270,221                 $ 8.23                     3,200
    2002 Stock Option Plan                         311,750                 $16.06                     3,045
    1999 Restricted Stock Plan (1)                  63,995                     __                        __
    2002 Restricted Stock Plan (1)                  84,400                     __                        __
Equity compensation plans not
    approved by shareholders:                           __                     __                        __
                                                   -------                                            -----
     TOTAL                                         730,366                 $12.45                     6,245
                                                   =======                 ======                     =====
</TABLE>
-------------------
(1)    Represents the shares that have previously been awarded under these plans
       but have not vested as of September 30, 2002. The restricted  stock trust
       has purchased and currently owns sufficient  shares to satisfy the shares
       that will be required for future vesting periods.

                                       79
<PAGE>

Security  Ownership  of Certain  Beneficial  Owners and  Management  and Related
--------------------------------------------------------------------------------
Stockholder Matters
-------------------

<TABLE>
<CAPTION>
                                                                                                     Percent of Shares of
                                                                     Amount and Nature of                Common Stock
Name and Address of Beneficial Owner                                  Beneficial Ownership (4)         Outstanding (%)
------------------------------------                                  ------------------------         ---------------
<S>                                                                          <C>                         <C>
FloridaFirst Bank Employee Stock Ownership Plan ("ESOP")                        467,799(1)                  8.29%
205 East Orange Street
Lakeland, Florida

Wellington Management Company, LLP                                              313,300(2)                  5.55%
75 State Street
Boston, MA 02109

Thomson Horstmann & Bryant, Inc.                                                295,607(3)                  5.24%
Park 80 West, Plaza Two
Saddle Brook, NJ 07663

Llewellyn N. Belcourt (5) (6)                                                    19,011                       *

Don A. Burdett                                                                   30,650                       *

Kerry P. Charlet                                                                 74,433                     1.32%

William H. Cloyd                                                                 42,117                       *

J. Larry Durrence (5) (6)                                                         7,939                       *

Stephen A. Moore, Jr. (5) (6)                                                    64,705                     1.15%

Nis H. Nissen, III (5) (6)                                                       53,737                       *

Arthur J. Rowbotham (5) (6)                                                       7,533                       *

Gregory C. Wilkes                                                               125,228                     2.22%

G. F. Zimmermann, III (5) (6)                                                    28,320                       *

All directors and named executive officers                                      473,131                     8.39%
Of the Company as a group (11 persons)
</TABLE>

----------------
(1)    The  ESOP  purchased  such  shares  for  the  exclusive  benefit  of plan
       participants with funds borrowed from the Company.  These shares are held
       in a suspense  account  and will be  allocated  among  ESOP  participants
       annually  as  the  ESOP  debt  is  repaid.  The  board  of  directors  of
       FloridaFirst  Bank has appointed a committee  consisting of  non-employee
       directors  Llewellyn N. Belcourt,  J. Larry  Durrence,  Stephen A. Moore,
       Jr., Nis H. Nissen, III, Arthur J. Rowbotham and G.F. Zimmermann,  III to
       serve as the ESOP  administrative  committee  ("ESOP  Committee")  and to
       serve as the ESOP trustees  ("ESOP  Trustee").  The ESOP Committee or the
       Board  instructs  the ESOP  Trustee  regarding  investment  of ESOP  plan
       assets.  The ESOP Trustee must vote all shares  allocated to  participant
       accounts under the ESOP as directed by participants.  Unallocated  shares
       and shares for which no timely voting direction is received will be voted
       by the ESOP  Trustee as directed by the ESOP  Committee.  As of September
       30, 2002, 99,945 shares have been allocated under the ESOP to participant
       accounts.
(2)    Pursuant to an amended Schedule 13G dated December 31, 2000 by Wellington
       Management Company, LLP ("WMC"). WMC has shared voting power with respect
       to 58,000  shares and shared  dispositive  power with  respect to 300,000
       shares.
(3)    Pursuant to a Schedule 13G dated February 5, 2001 by Thomson  Horstmann &
       Bryant, Inc. ("TH&B").  TH&B has sole voting power with respect to 98,407
       shares and sole dispositive power with respect to 295,067 shares.

                                       80
<PAGE>

(4)    The share  amounts  include  shares of common  stock  that the  following
       persons may acquire  through the exercise of stock options under the 1999
       and 2002  Option  Plan within 60 days of the record  date:  Llewellyn  N.
       Belcourt - 11,938,  Don A.  Burdett - 19,170,  Kerry P. Charlet - 30,126,
       William H. Cloyd - 23,815, J. Larry Durrence 5,250, Stephen A. Moore, Jr.
       - 11,938,  Nis H.  Nissen,  III - 11,938,  Arthur J.  Rowbotham  - 5,250,
       Gregory C. Wilkes - 59,499, and G. F. Zimmermann, III - 9,709.
(5)    Excludes  467,799  shares  under  the ESOP  for  which  such  individuals
       exercise  shared voting and investment  power with respect to such shares
       as an ESOP trustee.  Such individuals  disclaim beneficial ownership with
       respect to such shares held in a fiduciary capacity.
(6)    Excludes  63,995  1999 RSP shares and 85,400  2002 RSP shares  which were
       previously  awarded but subject to forfeiture for which such  individuals
       exercise  shared voting and investment  power with respect to such shares
       as a member  of the 1999 RSP and  2002 RSP  committee.  Such  individuals
       disclaim  beneficial  ownership  with  respect to such  shares  held in a
       fiduciary capacity.
*      Less than 1% of the common stock outstanding.

Item 13.  Certain Relationships and Related Transactions
--------  ----------------------------------------------

The Bank,  like many financial  institutions,  has followed a policy of granting
various types of loans to officers,  directors,  and  employees.  The loans have
been made in the  ordinary  course of  business  and on  substantially  the same
terms, including interest rates and collateral,  as those prevailing at the time
for comparable transactions with the Bank's other customers,  and do not involve
more than the normal risk of collection, or present other unfavorable features.

                                       81
<PAGE>

PART IV

Item 14.  Controls and Procedures
--------  -----------------------


         (a) Evaluation of disclosure  controls and  procedures.  Based on their
             --------------------------------------------------
evaluation  as of a date within 90 days of the filing date of this Annual Report
on Form  10-K,  the  Registrant's  principal  executive  officer  and  principal
financial officer have concluded that the Registrant's  disclosure  controls and
procedures  (as defined in Rules  13a-14(c) and 15d-14(c)  under the  Securities
Exchange  Act of 1934  (the  "Exchange  Act"))  are  effective  to  ensure  that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms.

         (b) Changes in internal controls.  There were no significant changes in
             ----------------------------
the Registrant's  internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,  including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.


Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
--------  ---------------------------------------------------------------


(a) (1)           Financial Statements:
                  See Item 8.
(a) (2)           Financial Statement Schedules:
                  All  financial  statement  schedules  have been omitted as the
                  information is not required under the related  instructions or
                  is inapplicable.

(a) (3)           Exhibits:

           3(i)   Articles of Incorporation of FloridaFirst Bancorp, Inc.*
           3(ii)  Bylaws of FloridaFirst Bancorp, Inc.*
           4      Specimen Stock Certificate of FloridaFirst Bancorp, Inc.*
          10.1     Form of Employment Agreements entered into with the named
                     Executive Officers of FloridaFirst Bank*
          10.2     1999 Stock Option Plan **
          10.3     1999 Restricted Stock Plan **
          10.4     Supplemental Executive Retirement Plan for the benefit of
                     Certain Senior Officers*
          10.5     2002 Stock Option Plan***
          10.6     2002 Restricted Stock Plan***
          21       Subsidiaries of Registrant (See Item 1 - Description of the
                     Business)
          23       Consent of Accountants
          99       Certification  pursuant to 18 U.S.C.  Section 1150, as
                     adopted pursuant to Section 906 of the  Sarbanes-Oxley
                     Act of 2002.

*      Incorporated by reference to the Registrant's  Registration  Statement on
       Form S-1 initially  filed with the  Commission on September 5, 2000 (File
       No. 333-45150).

**     Incorporated  by reference to the  identically  numbered  exhibits to the
       Form 10-K filed by  FloridaFirst  Bancorp on December  29, 1999 (File No.
       0-25693).

***    Incorporated by reference to the Registrant's  Proxy Statement filed with
       the Commission on December 21, 2001.

                                       82
<PAGE>

(b)      Reports on Form 8-K:

       (i)    A report on Form 8-K was filed on October  3, 2002  under  items 5
              and 7  announcing  that the  Registrant  entered into a definitive
              Agreement and Plan of Reorganization with BB&T Corporation.
       (ii)   An  amended  Form 8-K was filed on October  10,  2002 under Item 5
              announcing a revision to the Agreement and Plan of  Reorganization
              filed with the 8-K on October 3, 2002.
       (iii)  A Form 8-K was  filed on  November  1,  2002  under  Items 5 and 7
              announcing   the   termination   of  the  Agreement  and  Plan  of
              Reorganization with BB&T Corporation.


                                       83
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                      FLORIDAFIRST BANCORP, INC.


 Date: December 24, 2002            By: /s/Gregory C. Wilkes
                                        -------------------------------------
                                        Gregory C. Wilkes
                                        President and Chief Executive Officer
                                        (Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed  below as of December  24,  2002,  by the  following  persons on
behalf of the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                            <C>

/s/Gregory C. Wilkes                             /s/Kerry P. Charlet
-----------------------------------------        --------------------------------------------
Gregory C. Wilkes                                Kerry P. Charlet
President and Chief Executive Officer            Senior Vice President and
                                                 Chief Financial Officer
                                                 (Principal Financial and Accounting Officer)

/s/Nis H. Nissen, III                            /s/Stephen A. Moore, Jr.
-----------------------------------------        --------------------------------------------
Nis H. Nissen, III                               Stephen A. Moore, Jr.
Chairman of the Board                            Director


/s/Llewellyn N. Belcourt                         /s/Arthur J. Rowbotham
-----------------------------------------        --------------------------------------------
Llewellyn N. Belcourt                            Arthur J. Rowbotham
Director                                         Director


/s/J. Larry Durrence                             /s/G. F. Zimmermann, III
-----------------------------------------        --------------------------------------------
J. Larry Durrence                                G. F. Zimmermann, III
Director                                         Director

</TABLE>

                                       84
<PAGE>

                            SECTION 302 CERTIFICATION

I, Gregory C. Wilkes of FloridaFirst Bancorp, Inc., certify that:

1.     I have reviewed this annual report on Form 10K of  FloridaFirst  Bancorp,
       Inc.;

2.     Based on my  knowledge,  this  annual  report does not contain any untrue
       statement of a material fact or omit to state a material  fact  necessary
       to make the statements  made, in light of the  circumstances  under which
       such  statements  were made,  not  misleading  with respect to the period
       covered by this annual report;

3.     Based on my knowledge,  the  financial  statements,  and other  financial
       information  included  in  this  annual  report,  fairly  present  in all
       material respects the financial condition, results of operations and cash
       flows of the  registrant  as of, and for,  the periods  presented in this
       annual report;

4.     The  registrant's  other  certifying  officers and I are  responsible for
       establishing  and  maintaining  disclosure  controls and  procedures  (as
       defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant  and
       have:

       (a)    designed such  disclosure  controls and  procedures to ensure that
              material  information  relating to the  registrant,  including its
              consolidated  subsidiaries,  is made known to us by others  within
              those  entities,  particularly  during  the  period in which  this
              annual report is being prepared;

       (b)    evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

       (c)    presented  in  this  annual  report  our  conclusions   about  the
              effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;

5.     The registrant's other certifying officer and I have disclosed,  based on
       our most recent  evaluation,  to the registrant's  auditors and the audit
       committee of registrant's  board of directors (or persons  performing the
       equivalent functions):

       (a)    all  significant  deficiencies  in  the  design  or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weaknesses in internal controls; and

       (b)    any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

6.     The registrant's  other  certifying  officer and I have indicated in this
       annual report whether there were significant changes in internal controls
       or in other factors that could  significantly  affect  internal  controls
       subsequent  to the  date of our most  recent  evaluation,  including  any
       corrective  actions with regard to significant  deficiencies and material
       weaknesses.



Date:  December 24, 2002                   /s/ Gregory C. Wilkes
       -----------------------             -------------------------------------
                                           Gregory C. Wilkes
                                           President and Chief Executive Officer

                                       85
<PAGE>

                            SECTION 302 CERTIFICATION

I, Kerry P. Charlet of FloridaFirst Bancorp, Inc., certify that:

1.     I have reviewed this annual report on Form 10K of  FloridaFirst  Bancorp,
       Inc.;

2.     Based on my  knowledge,  this  annual  report does not contain any untrue
       statement of a material fact or omit to state a material  fact  necessary
       to make the statements  made, in light of the  circumstances  under which
       such  statements  were made,  not  misleading  with respect to the period
       covered by this annual report;

3.     Based on my knowledge,  the  financial  statements,  and other  financial
       information  included  in  this  annual  report,  fairly  present  in all
       material respects the financial condition, results of operations and cash
       flows of the  registrant  as of, and for,  the periods  presented in this
       annual report;

4.     The  registrant's  other  certifying  officers and I are  responsible for
       establishing  and  maintaining  disclosure  controls and  procedures  (as
       defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant  and
       have:

       (a)    designed such  disclosure  controls and  procedures to ensure that
              material  information  relating to the  registrant,  including its
              consolidated  subsidiaries,  is made known to us by others  within
              those  entities,  particularly  during  the  period in which  this
              annual report is being prepared;

       (b)    evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

       (c)    presented  in  this  annual  report  our  conclusions   about  the
              effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;

5.     The registrant's other certifying officer and I have disclosed,  based on
       our most recent  evaluation,  to the registrant's  auditors and the audit
       committee of registrant's  board of directors (or persons  performing the
       equivalent functions):

       (a)    all  significant  deficiencies  in  the  design  or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weaknesses in internal controls; and

       (b)    any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

6.     The registrant's  other  certifying  officer and I have indicated in this
       annual report whether there were significant changes in internal controls
       or in other factors that could  significantly  affect  internal  controls
       subsequent  to the  date of our most  recent  evaluation,  including  any
       corrective  actions with regard to significant  deficiencies and material
       weaknesses.


Date: December 24, 2002                            /s/ Kerry P. Charlet
      -------------------                          -----------------------------
                                                   Kerry P. Charlet
                                                   Chief Financial Officer


                                       86