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, 2003
                                   ------------------------------

                                     - or -

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For the transition period from                     to
                                        ------------------    ------------------

                         Commission File 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]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act):

   YES   X           NO
        ---             ---

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 March 31, 2003 of $21.56 per share,  was
$98.6 million. For purposes of this statement,  affiliates include the executive
officers and directors, 10% stockholders, if any, and employee benefit plans.

As of December 5, 2003 there were issued and outstanding 5,374,115 shares of the
Registrant's Common Stock.

<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  nineteen  offices  located in Florida's  Highlands,  Manatee,  Polk 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, 2003,  the
Company had total assets, deposits and equity of $818.5 million, $552.9 million,
and $102.0 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 (the "Branch
Acquisition")  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  within three years of its second
step conversion pursuant to regulatory guidelines.  The application was filed on
November  4, 2002 with the Office of Thrift  Supervision  ("OTS").  On March 17,
2003, BB&T withdrew its application to acquire control of the Company within the
three-year period,  citing rigorous regulatory  standards that are being applied
to recently converted  thrifts.  As a result of the application being withdrawn,
the Company wrote-off  capitalized merger costs of $504,000 ($312,000 after tax)
which were not recoverable or refundable.

<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,  Manatee,
Polk 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,
which  varies  depending  upon  market  conditions,  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>
                                                                         September 30,
                                 -------------------------------------------------------------------------------------------------
                                        2003               2002               2001                2000               1999
                                 ----------------- -----------------  ------------------  ------------------ ---------------------
                                    Amount Percent    Amount Percent     Amount  Percent     Amount  Percent    Amount  Percent
                                    ------ -------    ------ -------     ------  -------     ------  -------    ------  -------
<S>                            <C>        <C>    <C>         <C>    <C>          <C>    <C>         <C>    <C>          <C>
Mortgage loans:
    Residential:
       Permanent................ $ 270,463  51.3%  $ 301,622   57.7%  $ 312,309    61.7%  $ 304,419   66.1%  $ 276,115    65.6%
       Construction.............    32,871   6.2      29,058    5.6      35,516     7.0      27,996    6.1      32,974     7.8
    Commercial real estate......    56,078  10.6      58,177   11.1      58,371    11.6      31,786    6.9      25,570     6.1
    Land........................    18,699   3.6      15,806    3.0       8,907     1.8      12,886    2.8       9,548     2.3

Commercial......................    11,600   2.2      10,806    2.1       5,061     1.0       2,533     .5       1,374      .3

Consumer loans:
    Home equity loans (1).......    73,184  13.9      50,240    9.6      33,200     6.5      28,926    6.3      22,545     5.4
    Auto loans..................    32,921   6.3      39,989    7.6      42,293     8.3      40,717    8.8      42,181    10.0
    Other.......................    31,293   5.9      17,352    3.3      10,439     2.1      11,396    2.5      10,318     2.5
                                   ------- -----    --------  -----     -------   -----    --------  -----     -------   -----

Total loans.....................   527,109 100.0%    523,050  100.0%    506,096   100.0%    460,659  100.0%    420,625   100.0%
                                           =====              =====               =====              =====               =====

Net deferred loan costs.........        23                69                  -                   -                 -

Less:
    Construction loans in
       process..................    25,969            19,167             28,289              16,952             19,774
    Allowance for loan losses...     4,479             4,519              3,652               3,321              2,941
                                 ---------          --------           --------            --------          ---------

Total loans, net................ $ 496,684         $ 499,433          $ 474,155           $ 440,386          $ 397,910
                                   =======           =======            =======             =======            =======
</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, 2003.  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...............       $   33,954        34,543         16,589          7,392     92,478
                                    ---------        ------        -------         ------     -------
After 1 Year:
   1 to 3 years.............           19,237         8,727         13,344          2,272      43,580
   3 to 5 years.............            6,625        10,934         35,032          1,811      54,402
   Over 5 years.............          243,518        20,573         72,433            125     336,649
                                    ---------        ------        -------         ------     -------

Total due after one year....          269,380        40,234        120,809          4,208     434,631
                                    ---------        ------        -------         ------     -------

Total amount due............        $ 303,334        74,777        137,398         11,600     527,109
                                    =========        ======        =======         ======     =======
</TABLE>
----------
(1)  Includes $32,871 in construction loans.

The  following  table  sets  forth  the  dollar  amount  of all  loans due after
September  30,  2004,  which  have  predetermined  interest  rates or which have
floating or adjustable interest rates.

                                                      Floating or
                                       Fixed          Adjustable
                                       Rates             Rates         Total
                                       -----             -----         -----
                                                    (In thousands)
Residential......................... $ 244,813           24,567      269,380
Commercial real estate and land.....    38,772            1,462       40,234
Consumer............................   120,809                -      120,809
Commercial..........................     4,208                -        4,208
                                     ---------           ------      -------

Total............................... $ 408,602           26,029      434,631
                                     =========           ======      =======

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  "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.

                                       4
<PAGE>

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, 2003,  86% 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, 2003,  approximately  14% 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  $275,000 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 $4.8 million on September 30, 2003 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 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

                                       5
<PAGE>

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, 2003, the commercial business loans ranged from
$1,000 to $4.8 million, with an average balance outstanding of $188,000.

Consumer  Loans.   Consumer  loans  consist  primarily  of  home  equity  loans,
manufactured  housing loans and automobile  loans.  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.

During the past two years the Company has  focused  its  origination  efforts on
home equity loans to attract  additional  loan  customers.  In fiscal 2003,  the
Company  revamped its home equity program through special rate incentives  based
on the term of the loan and concentrated its marketing  efforts for these loans.
The additional  advertising and special pricing  contributed to the 45.7% growth
in the home equity loan balances in fiscal 2003.

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 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.

                                       6
<PAGE>

At September 30, 2003, 57% 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, 2003 was $62.5 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 document preparation.  The Company believes these fees approximate the costs
to originate the loans.  Therefore,  net deferred  costs or fees are minimal and
deferrals 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.

                                       7
<PAGE>

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>
                                                                      September 30,
                                                     -----------------------------------------------
                                                       2003      2002      2001      2000      1999
                                                      ------    ------    ------    ------    ------
                                                                      ($ in thousands)
<S>                                                 <C>        <C>       <C>       <C>       <C>
Loans accounted for on a nonaccrual basis:
Mortgage loans:
    Residential loans .............................   $  406       483       320        33       581
    Other mortgage loans ..........................      153       190       489       638       103
Commercial loans ..................................       41         -         -        45         -
Consumer loans:
    Home equity loans .............................      181       210        69         -         -
    Other consumer loans ..........................      259       190        82        46       146
                                                      ------    ------    ------    ------    ------
Total .............................................   $1,040     1,073       960       762       830
                                                      ======    ======    ======    ======    ======
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 .........................   $1,040     1,073       960       762       830
                                                      ======    ======    ======    ======    ======
Foreclosed assets .................................   $  418       347       276       203       203
                                                      ======    ======    ======    ======    ======
Total nonperforming assets ........................   $1,458     1,420     1,236       965     1,033
                                                      ======    ======    ======    ======    ======
Total nonperforming loans to gross loans
    less LIP ......................................      .21%      .22%      .20%      .17%      .21%
                                                      ======    ======    ======    ======    ======
Total nonperforming loans to total assets .........      .13%      .13%      .15%      .13%      .17%
                                                      ======    ======    ======    ======    ======
Total nonperforming assets to total assets ........      .18%      .17%      .19%      .17%      .21%
                                                      ======    ======    ======    ======    ======
</TABLE>

During the year ended  September  30,  2003,  approximately  $59,000 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.  Approximately  $27,000 of interest  was  recognized  as income on these
nonaccrual loans during the year.

                                       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, 2003,
the Company's classified assets were as follows (in thousands):


                  Special mention.............     $ 5,483
                  Substandard.................       3,622
                  Doubtful....................           -
                  Loss........................           -
                                                   -------

                  Total.......................     $ 9,105
                                                   =======

A brief  description of the significant  items in classified assets at September
30, 2003 follows:

Special Mention
---------------
>    $1.3 million of commercial  loans  (consisting of 12 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.
>    $3.3 million,  consisting of seven commercial  loans,  have been classified
     due  to  certain   concerns   involving  the  lack  of  current   financial
     information, vacancy rates or potentially inadequate cash flows.

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.
>    $1.3 million of commercial  loans  (consisting  of 34 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.

                                       10
<PAGE>

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.

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,
                                                   -------------------------------------------------------------
                                                     2003         2002         2001         2000         1999
                                                   --------     --------     --------     --------     --------
                                                                        ($ in thousands)
<S>                                             <C>             <C>          <C>          <C>          <C>
Allowance for loan losses, beginning of year....   $  4,519        3,652        3,321        2,941        2,564
                                                   --------     --------     --------     --------     --------
Provision for loan losses ......................        660          680          615          630          540
                                                   --------     --------     --------     --------     --------
Allowance acquired during Branch
         Acquisition ...........................          -        1,000            -            -            -
                                                   --------     --------     --------     --------     --------

Charge-offs:
    Residential ................................          -          (25)         (15)         (32)         (37)
    Commercial and commercial real estate ......       (221)        (450)         (45)           -            -
    Consumer ...................................       (673)        (433)        (326)        (256)        (214)
                                                   --------     --------     --------     --------     --------
Total charge-offs ..............................       (894)        (908)        (386)        (288)        (251)

Recoveries .....................................        194           95          102           38           88
                                                   --------     --------     --------     --------     --------
Net charge-offs ................................       (700)        (813)        (284)        (250)        (163)
                                                   --------     --------     --------     --------     --------

Allowance for loan losses, end of year..........   $  4,479        4,519        3,652        3,321        2,941
                                                   ========     ========     ========     ========     ========

Total loans less LIP outstanding................   $501,140      503,883      477,807      443,707      400,851
                                                   ========     ========     ========     ========     ========

Average loans less LIP outstanding..............   $490,973      482,809      463,569      423,409      368,513
                                                   ========     ========     ========     ========     ========

Allowance for loan losses as a percent
    of total loans less LIP outstanding ........        .89%         .90%         .76%         .75%         .73%

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

</TABLE>

                                       11

<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 net loans 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>
                                                                           September 30,
                                     --------------------------------------------------------------------------------------------
                                           2003             2002               2001               2000               1999
                                     ----------------- ----------------- ------------------  ----------------- ------------------
                                              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........................  $ 1,888    57.5%  $ 1,796    63.3%  $ 1,846     68.7%   $ 1,804    72.2%  $ 1,689    73.4%
Commercial real estate and land....      806    14.2       727    14.1       748     13.4        568     9.7       309     8.4
Commercial.........................      395     2.2       826     2.1        76      1.0         25      .5        17      .3
Consumer ..........................    1,390    26.1     1,170    20.5       982     16.9        924    17.6       926    17.9
                                     -------   -----   -------   -----   -------    -----    -------   -----   -------   -----

Total allowance....................  $ 4,479   100.0%  $ 4,519   100.0%  $ 3,652    100.0%   $ 3,321   100.0%  $ 2,941   100.0%
                                     =======   =====   =======   =====   =======    =====    =======   =====   =======   =====
</TABLE>

                                       12

<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:

>    yields on investment alternatives,
>    management's judgment as to the attractiveness of the yields then available
     in relation to other opportunities,
>    expectation of future yield levels, and
>    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, 2003, the Company had a securities  portfolio of $252.9 million
(30.9% 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, 2003, 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  93%  of  the  Company's  U.S.  government  agency  obligations  at
September  30,  2003,  could  reduce  the  Company's  investment  yield if these
securities are called prior to maturity.

                                       13

<PAGE>

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

MBSs  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 MBSs 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  MBSs  as  opposed  to  MBSs  where  cash  flows  are
distributed pro rata to all security  holders.  Unlike MBSs from which cash flow
is received and prepayment  risk is shared pro rata by all  securities  holders,
cash flows from the  mortgages and MBSs  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 MBSs.
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 remaining  maturities from 7 to 25 years
with premium call  provisions  after two to eight 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  Interest-Earning  Assets.  Other  interest-earning  assets  owned  by the
Company,  but not  included in the  security  portfolio,  consist of FHLB stock,
interest-earning  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.

                                       14
<PAGE>

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


                                                            September 30,
                                                   -----------------------------
                                                      2003       2002     2001
                                                      ----       ----     ----
                                                           (In thousands)

Securities available for sale (at fair value):

U.S. government agency securities...............  $  40,749     28,184     8,850
Collateralized mortgage obligations.............     28,377     46,391    44,045
Mortgage-backed securities......................    136,270    145,982    29,551
Corporate bonds.................................     25,722     31,341    29,554
Municipal bonds.................................     21,216     20,345    17,533
Common stock....................................        563        381         -
                                                  ---------    -------   -------

Total...........................................  $ 252,897    272,624   129,533
                                                  =========    =======   =======

                                       15
<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, 2003.
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>
                                                                    September 30, 2003
                             ------------------------------------------------------------------------------------------------------
                               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..............   $  4,992     3.38%  $ 20,275   4.09%  $ 10,377      2.98% $   5,105     3.65% $  40,749     3.66%

Collateralized mortgage
   obligations.............          -                   -                 -               28,377     3.54     28,377     3.54

Mortgage-backed
   securities..............     11,160     3.14     36,713   3.23     47,505      4.46     40,892     4.61    136,270     4.06

Corporate bonds............      7,063     4.48      3,029   4.40        602      8.04     15,028     8.50     25,722     6.91

Municipal bonds............          -                   -             3,027      5.76     18,189     7.49     21,216     7.24

Common stock...............        563      .81          -                 -                    -     -           563      .81
                              --------            --------          --------            ---------           ---------

Total......................   $ 23,778     3.53%  $ 60,017   3.58%  $ 61,511      4.31% $ 107,591     5.31% $ 252,897     4.49%
                              ========            ========          ========            =========           =========
</TABLE>

                                       16
<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 and to
adjust  the  maturities  of  its  liabilities  for  asset-liability   management
purposes. In addition to deposits and borrowing,  the Company derives funds from
loan and MBSs  principal  repayments,  and proceeds from the maturity,  call and
sale of MBSs and  other  securities.  Loan and MBSs  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,  Manatee,  Polk 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,  print  media
advertising  and the posting of certain rate  information  on its  website.  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
nonresidents 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
(54% at September  30,  2003),  the  Company's  liquidity  could be reduced if a
significant  amount of these  accounts,  maturing within a short period of time,
were  not  renewed.  Historically,  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, 2003.

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

         Within three months..........................        $   5,386
         Three through six months.....................            8,438
         Six through twelve months....................           38,614
         Over twelve months...........................           36,968
                                                               --------

                  Total...............................         $ 89,406
                                                               ========

                                       17
<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 MBSs
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>
                                                                       Year Ended September 30,
                                                             ------------------------------------------------
                                                                 2003             2002              2001
                                                                 ----             ----              ----
                                                                            ($ in thousands)
<S>                                                         <C>                <C>               <C>
     Borrowings outstanding at the end of reporting period:
           Advances from FHLB..............................   $ 136,175          129,500           149,500
           Weighted interest rate..........................        4.68%            5.23%             5.22%

           Short-term Federal Reserve borrowings...........       6,309           15,000            11,048
           Weighted interest rate..........................         .78%            1.51%             2.50%

           Reverse repurchase agreements...................      14,334           19,834                 -
           Weighted interest rate..........................        2.38%            2.26%                -

     Maximum amount of borrowings outstanding at any month end:
           Advances from FHLB..............................     136,175          149,500           151,250
           Short-term Federal Reserve borrowings...........      12,368           15,000            11,049
           Reverse repurchase agreements...................      19,834           19,834                 -

     Average borrowings outstanding:
           Advances from FHLB..............................     120,604          130,430           140,120
           Weighted interest rate..........................        5.39%            5.45%             5.74%

           Short-term Federal Reserve borrowings...........       2,618            6,031             1,670
           Weighted interest rate..........................         .98%            1.61%             3.46%

           Reverse repurchase agreements...................      18,153            3,004                 -
           Weighted interest rate..........................        2.32%            2.27%                -
</TABLE>

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


Personnel

As of  September  30,  2003  the  Company  had 238  full-time  employees  and 15
part-time  employees.   The  employees  are  not  represented  by  a  collective
bargaining unit. The Company believes its relationship  with its employees to be
satisfactory.

                                       18

<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 is required to file reports with the OTS and is subject to
supervision  and  periodic  examination  by the OTS.  In  addition,  the OTS has
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. 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.

                                       19
<PAGE>

The  FDIC  has set the  deposit  insurance  assessment  rates  for  SAIF  member
institutions  for the second half of 2003 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 with FDIC-insured deposits are required to
pay  assessments  to the FDIC 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,  the current annual
rate of which is approximately  .0152% of insured deposits,  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 at least 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 core deposit intangibles, certain
servicing  rights,  purchased  credit card  relationships  and other  qualifying
intangible  assets.  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.  Total
risk-based  capital equals the sum of core capital plus  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 certain other assets.

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;

                                       20
<PAGE>

>    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  that has converted from mutual to
stock  form  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, 2003 and in each of the
     last 12 months and, therefore, qualifies as a qualified thrift lender.

                                       21
<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, 2003,  the Bank's legal  lending  limit to one borrower was
$11.4 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, 2003 the Bank was in compliance with these requirements.

                                       22

<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 nineteen offices, which are located in
Highlands,  Manatee,  Polk 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, 2003
                  ------------------------                --------           -----         ------------------
<S>                                                       <C>           <C>                       <C>
        Corporate Headquarters and Downtown Lakeland
        Office                                              1957            Owned                   $ 2,531

        Offices:

             Avon Park                                      2002            Owned                       363

             Combee                                         2002            Owned                       366

             Cortez (Bradenton)                             1972          Leased (1)                     31

             Edgewood                                       2002            Owned                       480

             Grove Park                                     1961            Owned                       348

             Harden                                         2002            Owned                       531

             Highlands                                      1972            Owned                       557

             Interstate                                     1985            Owned                       412

             Lakewood Ranch                                 2001            Owned (2)                 2,389

             Marcum                                         2002            Owned                       431

             Plantation                                     2002            Owned                     1,796

             Scott Lake                                     1997            Owned                       483

             Sebring                                        2002            Owned                       522

             Town and Country                               2000          Leased (3)                    179

             West Bradenton                                 1989            Owned                       815

             Wildwood                                       2002            Owned                       360

             Winter Haven North                             1978            Owned                       413

             Winter Haven South                             1995            Owned                       718

        Operations Center                                   1964            Owned                       221

        Residential Lending Office                          1999          Leased (4)                     32
</TABLE>

------------
(1)  First renewal option has been exercised, extending the lease termination to
     December 31, 2006, and there is one additional three-year renewal option.
(2)  Approximately  one-third  of the usable  square  footage is occupied by the
     Company's   retail  office  and  the  remainder  is  available  for  lease.
     Approximately  one-half  of the  leasable  space  has been  leased  and the
     Company is  seeking  additional  tenants.
(3)  Ten year lease with two five year options.
(4)  Three-year  lease that  terminates  April 30, 2005,  but has five  one-year
     renewal options.

                                       23

<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.


                                     PART II


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


The Company's  common stock has traded on the Nasdaq  National  Market under the
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.

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

Fiscal 2003
-----------
First Quarter..................   $ 24.51       $ 17.46            $ .06
Second Quarter.................     24.30         20.46              .07
Third Quarter..................     24.00         21.70              .07
Fourth Quarter.................     27.16         23.47              .07

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

The number of  stockholders  of record of common stock as of September  30, 2003
was approximately  800, which does not include the number of persons or entities
who held stock in nominee or "street" name through various brokerage firms.

                                       24

<PAGE>

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

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

At September 30:                                        2003          2002         2001         2000            1999
                                                        ----          ----         ----         ----            ----
<S>                                             <C>             <C>          <C>          <C>             <C>
   Assets...................................        $ 818,482       859,446      660,369      582,180         498,358
   Loans, net...............................          496,684       499,433      474,155      440,386         397,910
   Securities...............................          252,897       272,624      129,534      106,348          80,876
   Cash and cash equivalents................           13,775        30,628       21,676        6,734           2,598
   Deposits.................................          552,909       587,431      399,537      354,554         339,224
   FHLB advances and other borrowings.......          156,818       164,334      160,548      160,937          92,472
   Stockholders' equity.....................          101,972        98,978       93,814       61,081          61,337
   Full service offices.....................               19            18           11            9               9
For the year ended September 30:
   Interest income..........................        $  45,730        48,910       44,846       39,840          32,648
   Interest expense.........................           20,843        24,948       25,895       23,575          17,128
                                                    ---------       -------      -------      -------          ------
   Net interest income......................           24,887        23,962       18,951       16,265          15,520

   Provision for loan losses................              660           680          615          630             540
                                                    ---------       -------      -------      -------          ------
   Net interest income after provision
     for loan losses........................           24,227        23,282       18,336       15,635          14,980
   Noninterest income.......................            7,060         5,196        2,487        2,114           1,473
   Noninterest expenses.....................           22,527        20,517       13,776       11,813          11,448
                                                    ---------       -------      -------      -------          ------
   Income before income taxes...............            8,760         7,961        7,047        5,936           5,005

   Income taxes.............................            2,739         2,357        2,178        2,094           1,748
                                                    ---------       -------      -------      -------          ------
   Net income...............................        $   6,021         5,604        4,869        3,842           3,257
                                                    =========       =======      =======      =======         =======

   Basic earnings per share (1) (2).........        $    1.19          1.10          .92          .71            .33
                                                    =========       =======      =======      =======         =======
   Diluted earnings per share (1) (2).......        $    1.13          1.05          .90          .70            .33
                                                    =========       =======      =======      =======         =======
   Weighted average common and common
     equivalent shares outstanding: (1) (2)
         Basic (3)..........................            5,062         5,095        5,293        5,424           5,727
         Diluted (3)........................            5,322         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)  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.

                                       25
<PAGE>

                            Selected Financial Ratios

<TABLE>
<CAPTION>
                                                               At or For the Year Ended September 30,
                                                       --------------------------------------------------------------
                                                         2003          2002         2001         2000            1999
                                                         ----          ----         ----         ----            ----
<S>                                                   <C>            <C>          <C>          <C>            <C>
Performance Ratios:
Return on average assets (net income
    divided by average total assets)..............        .73%           .74%         .80%         .70%           .72%
Return on average equity (net income
    divided by average equity)....................       5.94           5.92         5.61         6.43           6.65
Net interest-rate spread (1)......................       3.07           3.04         2.51         2.54           2.95
Net interest margin on average
    interest-earnings assets (1)..................       3.36           3.47         3.30         3.13           3.56
Average interest-earning assets to
    average interest-bearing liabilities..........        110            112          118          113            116

Efficiency ratio..................................         70             67           64           64             67

Asset Quality Ratios:
Nonperforming loans to total loans, net...........        .21            .22          .20          .17            .21
Nonperforming assets to total assets..............        .18            .17          .30          .17            .21
Net charge-offs to average loans less LIP
    outstanding...................................        .14            .17          .06          .06            .04
Allowance for loan losses to total loans
    less LIP......................................        .89            .90          .76          .75            .74

Capital Ratios:
Average equity to average assets
    (average equity divided by average
    total assets).................................      12.32          12.57        14.17        10.94          10.84
Equity to assets at period end....................      12.46          11.52        14.21        10.49          12.31
Dividend payout ratio.............................         24             22           19           10             12

Book value at year end............................    $ 18.93          18.38        17.10        11.07          10.33
</TABLE>

(1)  Presented on taxable equivalent basis.

                                       26

<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 February 15, 2002, the Company finalized the purchase of seven Florida retail
sales offices 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.

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  within three years of its second
step conversion pursuant to regulatory guidelines.  The application was filed on
November  4, 2002 with the Office of Thrift  Supervision  ("OTS").  On March 17,
2003, BB&T withdrew its application to acquire control of the Company within the
three-year period,  citing rigorous regulatory  standards that are being applied
to recently converted thrifts.  As a result of application being withdrawn,  the
Company  wrote-off  capitalized  merger costs of $504,000  ($312,000  after tax)
which were not recoverable or refundable.

Application of Critical Accounting Policies

Management's  discussion and analysis of the Company's  financial  condition and
results of operations are based on the consolidated  financial  statements which
are prepared in accordance with accounting  principles generally accepted in the
United States of America.  The preparation of such financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities,  revenues and expenses and related disclosure of contingent
assets and liabilities. On an ongoing basis, management evaluates its estimates,
including those related to the allowance for loan losses.  Management  bases its
estimates on historical  experience  and on various other  assumptions  that are
believed to be reasonable under the circumstances, the results of which form the
basis in making  judgments  about  the  carrying  values of assets  that are not
readily apparent from other

                                       27
<PAGE>

sources.  Actual results could differ from the amount derived from  management's
estimates and assumptions under different assumptions or conditions.

Management  believes  the  allowance  for  loan  losses  policy  is  a  critical
accounting  policy that required the most significant  estimates and assumptions
used in the preparation of the consolidated financial statements.  The allowance
for  loan  losses  is  based  on  management's  evaluation  of the  level of the
allowance  required  in  relation  to the  estimated  loss  exposure in the loan
portfolio.  Management  believes the  allowance for loan losses is a significant
estimate  and  therefore  regularly  evaluates  it for  adequacy  by taking into
consideration factors such as prior loan loss experience, the character and size
of the  loan  portfolio,  business  and  economic  conditions  and  management's
estimation of future losses. The use of different estimates or assumptions could
produce  different  provisions  for  loan  losses.  Refer to the  discussion  of
allowance for loan losses in the Lending Activities section and Notes 1 and 4 to
consolidated  financial  statements for a detailed  description of  management's
estimation process and methodology related to the allowance for loan losses.


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.


Comparison of Financial Condition at September 30, 2003 and September 30, 2002

Assets.  Total assets  decreased  $41.0  million,  or 4.8%, to $818.5 million at
September 30, 2003 from $859.4  million at September  30, 2002.  The decrease in
total assets resulted primarily from:

>    a $19.7 million decrease in securities  available for sale. Strong mortgage
     refinancing activities, resulting from the continued decline in longer-term
     interest rates,  has  accelerated  the repayments on many  mortgage-related
     securities.  The Company  elected not to reinvest  certain funds to provide
     the liquidity to repay FHLB advances in January 2003,

>    a $2.7  million net decrease in the loan  portfolio.  The decrease in loans
     resulted from increased refinance activity in the residential mortgage loan
     portfolio throughout the year,  resulting in increased loan repayments,  as
     longer-term  interest rates continued to decline.  In addition,  during the
     first  three  months of the  period,  the  Company's  residential  mortgage
     strategy was to originate and sell  longer-term,  fixed-rate loans in order
     to minimize  future  interest rate risk.  The reduction in the  residential
     mortgage loan portfolio was almost entirely  offset by continued  growth in
     the  consumer  and  commercial  loans  outstanding.  While new  residential
     mortgage loan originations  achieved a record level of production at $149.2
     million  for the year,  $133.2  million in loans were  paid-off  during the
     period.  Management  continues to focus on  commercial  and  consumer  loan
     originations,  where new loan  production  totaled  $122.1  million for the
     period.

>    a $16.9  million  decrease in cash and cash  equivalents.  The  decision to
     retain the majority of residential  mortgage  originations  during the last
     two  quarters,   together  with  increased  commercial  and  consumer  loan
     originations  has  caused  the  decline  in the  balance  of cash  and cash
     equivalents.

>    core  deposit  intangible  decreased  $1.6  million  during the year due to
     normal amortization.

                                       28
<PAGE>

Liabilities.  Total  liabilities  decreased  $44.0  million,  or 5.8%, to $716.5
million at September  30, 2003 from $760.5  million at September  30, 2002.  The
decrease in total liabilities resulted primarily from:

>    a $34.5  million  decrease  in  deposits.  The  decrease  in  deposits  was
     primarily attributable to a $59.0 million decrease in certificate accounts,
     partially  offset by a $24.5 million increase in transaction  accounts.  We
     believe that the decrease in certificate accounts in recent months has been
     caused by certain retail  customers  moving maturing  certificate  accounts
     into more liquid checking and  money-market  accounts due to due to the low
     interest-rate   environment,   or  seeking  higher   yielding   alternative
     investments.   In  addition,  $22.5  million  from  the  State  of  Florida
     certificate program matured during the period.

>    a $7.5 million  decrease in FHLB advances and other  borrowings,  primarily
     due to the maturity and  repayment of $15.0  million of FHLB term  advances
     and maturity of $5.5 million of reverse repurchase agreements. In addition,
     an $8.7 million  decrease of funds borrowed  under the Treasury  Investment
     Program was replaced with $21.7 million of FHLB overnight borrowings.

Stockholder's  Equity.  The $3.0 million  increase in the  stockholders'  equity
includes:

>    $6.0 million in net income;
>    repurchase shares of Company stock at a cost of $126,000;
>    net  distribution of $971,000 from the restricted stock plan for vesting of
     certain awards;
>    decrease in accumulated other comprehensive income of $3.5 million;
>    additional  paid-in-capital  of $566,000  resulting  from exercise of stock
     options and capital adjustments related to stock plans;
>    repayment of $541,000 on the Employee  Stock  Ownership Plan ("ESOP") loan;
     and
>    dividends paid totaling $1.5 million.

The decreased 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 sales 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.

                                       29

<PAGE>

Cash and cash equivalents  decreased $16.9 million to $13.8 million for the year
ended  September  30, 2003.  Significant  cash flows or uses  (amounts  shown in
parentheses) were as follows (in millions):

Cash provided by operations............................................ $  13.3

Net repayment of Federal Home Loan Bank advances and other borrowings..    (7.5)

Decrease in deposits...................................................   (34.5)

Sales, maturities of and repayments on securities......................   197.7

Purchases of securities................................................  (183.2)

Purchases of premises and equipment....................................     (.8)

Net increase in loans..................................................    (1.4)

Dividends paid.........................................................    (1.5)

Other, net.............................................................     1.0
                                                                        -------

Net decrease in cash and cash equivalents.............................. $ (16.9)
                                                                        =======


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.

                                       30

<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.  Average  balances  are
derived from daily average balances.

<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                        ---------------------------------------------------------------------------------------------------------
                                           2003                            2002                                2001
                        --------------------------------------   -------------------------------  -------------------------------
                                Average               Average    Average                Average   Average              Average
                                Balance  Interest   Yield/Cost   Balance  Interest    Yield/Cost  Balance    Interest Yield/Cost
                                -------  --------   ----------   -------  --------    ----------  -------    -------- ----------
<S>                         <C>         <C>           <C>     <C>         <C>           <C>    <C>           <C>     <C>
Interest-earning assets:
Residential                   $ 293,520   19,531        6.65%   $ 314,686   23,066        7.33%  $ 322,388     24,544  7.61%
Consumer                        114,965    8,674        7.54       95,926    7,838        8.17      82,966      7,233  8.72
Commercial                       82,488    5,341        6.47       72,197    5,344        7.40      58,215      4,894  8.41
                              ---------   ------                ---------   ------               ---------     ------
   Total loans (1)              490,973   33,546        6.83      482,809   36,248        7.51     463,569     36,671  7.91
Securities and other (2)(6)     263,912   12,671        4.80      220,793   13,128        5.95     121,925      8,552  7.01
                              ---------   ------                ---------   ------               ---------     ------
   Total interest-earning
     assets                     754,885   46,217        6.12      703,602   49,376        7.02     585,494     45,223  7.72
                                          ------                            ------                             ------
Noninterest-earning assets       68,052                            49,113                           26,915
                              ---------                         ---------                        ---------
   Total assets               $ 822,937                         $ 752,715                        $ 612,409
                              =========                         =========                        =========

Interest-bearing liabilities:
Checking accounts             $  81,592      706        0.87    $  58,195      844        1.45   $  32,937        590  1.79
Savings accounts                 54,716      578        1.06       44,832      722        1.61      27,940        486  1.74
Money-market accounts            77,082    1,117        1.45       54,762    1,404        2.56      28,766      1,205  4.19
Certificate accounts            329,084   11,579        3.52      329,291   14,874        4.52     263,512     15,519  5.89
                              ---------   ------                ---------   ------               ---------     ------
   Total interest-bearing
     deposits                   542,474   13,980        2.58      487,080   17,844        3.66     353,155     17,800  5.04
FHLB advances and other
  borrowings                    141,375    6,863        4.85      139,482    7,104        5.09     142,536      8,018  5.63
                              ---------   ------                ---------   ------               ---------     ------
   Total interest-bearing
     liabilities                683,849   20,843        3.05      626,562   24,948        3.98     495,691     25,818  5.21
                                          ------                            ------
Noninterest-bearing
  liabilities (3)(7)             37,664                            31,534                           29,960         77
                              ---------                         ---------                        ---------
   Total liabilities            721,513                           658,096                          525,651     25,895
                                                                                                               ------
Stockholders' equity            101,424                            94,619                           86,758
                              ---------                         ---------                        ---------
   Total liabilities and
     stockholders' equity     $ 822,937                         $ 752,715                        $ 612,409
                              =========                         =========                        =========

Net interest income (6)                 $ 25,374                          $ 24,428                           $ 19,328
                                          ======                            ======                             ======
Interest rate spread (4)                                3.07%                             3.04%                        2.51%
                                                        ====                              ====                         ====
Net margin on interest-
  earning assets (5)                                    3.36%                             3.47%                        3.30%
                                                        ====                              ====                         ====
Average interest-earning
  assets to average
  interest-bearing
  liabilities                                           110%                              112%                          118%
                                                        ===                               ===                           ===
</TABLE>
--------------
(1)  Average balances include nonaccrual loans.
(2)  Securities  and other  includes  securities  available for sale and held to
     maturity, interest-earning 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.

                                       31
<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,
                          ----------------------------------------------------------------
                                    2003 vs. 2002                    2002 vs. 2001
                          -------------------------------  -------------------------------
                             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 ............   $(1,491)    (2,044)    (3,535)      (578)      (900)    (1,478)
Consumer ...............     1,470       (634)       836      1,079       (474)       605
Commercial .............       711       (714)        (3)     1,086       (636)       450
                           -------    -------    -------    -------    -------    -------
   Total loans .........       690     (3,392)    (2,702)     1,587     (2,010)      (423)

Securities and other ...     2,350     (2,807)      (457)     6,034     (1,458)     4,576
                           -------    -------    -------    -------    -------    -------

Total interest income ..   $ 3,040     (6,199)    (3,159)     7,621     (3,468)     4,153
                           =======    =======    =======    =======    =======    =======

Interest expense:
Checking accounts ......   $   270       (408)      (138)       384       (130)       254
Savings accounts .......       138       (282)      (144)       274        (38)       236
Money-market accounts ..       452       (739)      (287)       796       (597)       199
Certificates of deposit         (9)    (3,286)    (3,295)     3,407     (4,052)      (645)
                           -------    -------    -------    -------    -------    -------
   Total deposits ......       851     (4,715)    (3,864)     4,861     (4,817)        44
                           -------    -------    -------    -------    -------    -------

FHLB advances and other
  borrowings ...........        97       (338)      (241)      (170)      (821)      (991)
                           -------    -------    -------    -------    -------    -------

Total interest expense .   $   948     (5,053)    (4,105)     4,691     (5,638)      (947)
                           =======    =======    =======    =======    =======    =======

Change in net interest
  income ...............   $ 2,092     (1,146)       946      2,930      2,170      5,100
                           =======    =======    =======    =======    =======    =======
</TABLE>

                                       32
<PAGE>

Comparison  of  Operating  Results  for the Years Ended  September  30, 2003 and
September 30, 2002

Net Income. Net income for the year ended September 30, 2003 increased $417,000,
or 7.4% to $6.0 million,  compared to $5.6 million for the year ended  September
30, 2002.

>    Net  interest  income  increased  $925,000,  or 3.9%,  for the  year  ended
     September  30,  2003  compared to the same  period in 2002.  This  increase
     resulted  primarily  from a $4.1  million  decrease  in  interest  expense,
     partially offset by $3.2 million decrease in interest income.

>    Noninterest  income  increased by $1.9 million from 2002 to 2003 due mainly
     to:
     o    increased  fees and  service  charges  mainly  related  to the  Branch
          Acquisition;
     o    gains on sale of mortgage loans;
     o    net gains on sale of securities.

>    Noninterest  expenses  increased $2.0 million to $22.5 million for the year
     ended  September 30, 2003 from $20.5  million for the year ended  September
     30,  2002,  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, 2003
compared  to the prior  year.  Detailed  changes  are  contained  in the Average
Balance  Sheet  table.

>    While the amount of residential loans outstanding decreased,  consumer loan
     balances increased significantly, due to a special home equity loan program
     during  the  year,  and  commercial  loan  balances  showed  steady  growth
     throughout the year. While average consumer and commercial loans grew $29.3
     million  during the year,  approximately  $9.8  million,  or 33.4%,  of the
     growth was attributable to loans acquired in the Branch  Acquisition  being
     included in the average  balances for the entire year compared to seven and
     one-half months for 2002.

>   The average  yield on loans  decreased  68 basis points to 6.83% during the
     year. The decrease in loan yields is directly attributable to the continued
     decline  in  market  rates of  interest  for  loans  that we  retain in our
     portfolio.  The high  level of  refinance  activity  not only  impacts  the
     residential  loan  yields,  it also  creates  pricing  pressure  on new and
     existing loans in the commercial area. Consumer loans have relatively short
     average lives historically;  therefore, the lower interest rate environment
     has caused yield on the consumer loan  portfolio to decline from last year,
     as new loans are  generated  in this lower  interest  rate  environment  to
     replace the loans being paid off.

>    The average  balances in the  securities  portfolio grew 20% as the Company
     invested  approximately $85 million from the funds received from the Branch
     Acquisition.

>    The  lower  yield  in the  securities  portfolio  resulted  from a shift to
     shorter  duration and  adjustable-rate  securities in fiscal 2003 to manage
     the  interest-rate  risk  profile of the  Company,  as well as the  overall
     reduction in interest rates as previously discussed.


Interest  Expense.  The following  discussion  highlights the major factors that
impacted the changes in interest  expense  during the year ended  September  30,
2003 when  compared to the prior year.  Detailed  changes are  contained  in the
Average  Balance  Sheet  table.

>    The increase in average  deposits is mainly  attributable to $162.0 million
     in deposits  assumed in the Branch  Acquisition.  Also, the increased sales
     effort to attract and retain new  deposits,  as well as  customer  concerns
     about equity  investments,  provided  additional  deposit growth.  Although
     average deposits grew,  interest expense was lower due to the change in the
     mix of deposits and the overall  reduction in market  interest  rates.  The
     average balances in interest  checking,  savings and money-market  accounts
     grew 35%. Since these deposit typically pay lower interest rates,  together
     with certificate  accounts  renewing at lower rates in the current interest
     rate environment, the overall cost of interest-bearing deposits declined by
     108 basis points.

>    Average FHLB  advances  and other  borrowings  increased  slightly in 2003,
     compared to 2002.  Certain FHLB fixed-rate  advances were either prepaid or
     repaid at  maturity,  causing  the advance  balances  to decline.  However,
     leveraging  transactions  involving U.S. agency securities were funded with
     borrowings through

                                       33
<PAGE>

     lower-cost reverse repurchase agreements.

>    Actions by the Federal Reserve to decrease  short-term  interest rates over
     the  past  two  years  has  provided  immediate  reduction  in the  cost of
     deposits, as well as advances and other borrowings.


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 ability to collect on 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 $660,000 for the year ended September 30, 2003
compared to $680,000 for fiscal 2002.  The provision  for loan losses  decreased
for the current year  primarily due to lower than expected net  charge-offs  for
the year.  The  allowance for loan losses was $4.5 million at September 30, 2003
and 2002,  since current year provision for loan losses and net charge-offs were
comparable.  The  current  allowance  represents  .89% of loans  outstanding  at
September 30, 2003. The Company had net  charge-offs of $700,000,  approximately
17% of which related to loans acquired in the Branch  Acquisition,  for the year
ended  September  30, 2003  compared to net  charge-offs  of $813,000 for fiscal
2002. In addition,  while Classified Assets increased $311,000,  special mention
assets increased  $438,000 and substandard  assets decreased $127,000 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 $1.9 million to $7.1 million
for the year ended September 30, 2003. The major  components of the increase was
due to the  following:

>    gains of  $712,000  recognized  on the sale of $39.0  million  in long term
     fixed-rate  mortgage  loans,  an increase of $438,000,  or 160% from fiscal
     2002,

>    an increase in net gain on sale of  securities  available  for sale of $1.2
     million.  During  fiscal 2003 the Company  recognized  $1.9  million in net
     gains on the sales of $52.2 million securities available for sale.

>    a decrease of $260,000 in earnings on bank-owned life insurance.  In fiscal
     2002 the  Company  recognized  income of  $381,000  related to the value of
     equity securities  received in the  demutualization of an insurance company
     where the Company was a policyholder. This was offset by increased earnings
     on premiums of $4.5 million for additional  policies purchased in March and
     April 2002,

>    an  increase of $313,000  in account  fees and service  charges,  primarily
     related to the overall increase in accounts from the Branch Acquisition.

>    an  increase  of $175,000 in other  noninterest  income,  primarily  due to
     $558,000 of commission income from the Company's annuity sales program that
     began in  September  2002.  The  commission  income  more than  offset  the
     following 2002 income items:
     o    $140,000 in loan related fees,
     o    $201,000 gain on the sale of a former bank  property  during the prior
          period.


Noninterest  Expense.  Noninterest  expense  increased  by $2.0 million to $22.5
million for the year ended  September  30, 2003 from $20.5  million for the year
ended  September 30, 2002.  The major  components of the increase was due to the
following:

>    Compensation and employee benefits increased $179,000 due primarily to:
     o    increase of $590,000  due to the  addition of the seven  retail  sales
          offices  (66 staff  members)  related to the Branch  Acquisition,  and
          $110,000 in  additional  costs for the full year  operation of one new
          branch office opened during the past year;

                                       34
<PAGE>

     o    4%  average  salary   increases  due  to  merit  and  cost  of  living
          adjustments, partially offset by staff reductions;
     o    increase  in  commissions  of $724,000 as  residential  mortgage  loan
          origination  production increased over 47%, a revised retail incentive
          plan resulted in increased sales of products and services, and annuity
          sales generated incentive payments during the year;
     o    a $465,000  increase for health  insurance  costs due to the growth in
          the  employee  base,  including  the  Branch  Acquisition,  as well as
          increased claims experience.

>    The increases noted above were partially offset by:
     o    a $69,000 decrease in overtime compensation;
     o    the deferral of an additional $1.4 million in estimated direct cost of
          originating  loans due to increased  loan volume and  estimates of the
          costs.

>    Occupancy  and equipment  costs  increased  $397,000,  due primarily to the
     addition of seven new offices in the Branch  Acquisition and the opening of
     one new retail sales office in November 2002.

>    Data  processing  expense  increased  $131,000 due to the  expanded  branch
     network  resulting from the Branch  Acquisition  and the opening of one new
     retail sales office in November.

>    Professional  fees  increased  $199,000,  primarily due to the write-off of
     $242,000 in merger-related  legal expenses  resulting from the cancellation
     of the merger agreement between the Company and BB&T.

>    Amortization  of  core  deposit   intangible   resulting  from  the  Branch
     Acquisition  increased $480,000 as a full year's  amortization was recorded
     in 2003 versus the partial year amortization in 2002

>    Other expenses  increased by $581,000  primarily due to:
     o    the  write-off  of  $262,000  of  merger-related   investment  banking
          expenses  resulting  from the  cancellation  of the  merger  agreement
          between the Company and BB&T;
     o    a $251,000  increase in loan expenses,  primarily  attributable to the
          "no closing costs" consumer loan program during the year;
     o    a  $119,000  increase  in  telecommunication  expenses  related to the
          expanded branch network and communication channel upgrades;
     o    a $102,000  increase in marketing costs due primarily to the promotion
          of the "no closing costs" consumer loan program during the year.
     o    a $110,000  increase in insurance  expense due to higher premiums that
          prevail in the commercial insurance marketplace;
     o    a $239,000 decrease in deposit  charge-offs and miscellaneous  deposit
          losses primarily  attributable to the Branch Acquisition and the proof
          of deposit (POD) conversion in 2002;
     o    a $63,000 increase in security guard expense for increased  protection
          of customers and employees  after the Company  experienced a series of
          robberies  during  fiscal  2002.  The actual  dollar  losses  from the
          robberies were not significant;
     o    increase of $63,000 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    decrease of $324,000 in other operating  expense  primarily due to the
          2002  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  $106,000  in debit card  expenses  related to  increased
          volume from additional cardholders acquired in the Branch Acquisition.

                                       35

<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.

                                       36
<PAGE>

Provision  for Loan Losses.  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  Expense.  Noninterest  expense  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  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.

                                       37
<PAGE>

>    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 $1.4 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.

                                       38
<PAGE>

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

The Company is a party to financial instruments with  off-balance-sheet  risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These financial  instruments include commitments to extend credit,  unused lines
of  credit  and  construction  loans  and  standby  letters  of  credit.   These
instruments  involve,  to varying degrees,  elements of credit and interest-rate
risk in excess of the amounts recognized in the consolidated  balance sheet. The
contract  or  notional  amounts of those  instruments  reflect the extent of the
Company's involvement in particular classes of financial instruments.

The  Company's  exposure  to credit loss in the event of  nonperformance  by the
other party to the financial instrument for commitments to extend credit, unused
lines of  credit  and  construction  loans  and  standby  letters  of  credit is
represented by the contractual amount of those instruments. The Company uses the
same  credit  policies  in making  commitments  as it does for  on-balance-sheet
instruments.

Purchase obligations represent commitments to purchase securities.

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. Since certain  commitments  expire without being drawn
upon,  the total  committed  amounts do not  necessarily  represent  future cash
requirements.  The Company  evaluates  each  customer's  credit  worthiness on a
case-by-case basis. The amount of collateral obtained, if it is deemed necessary
by the  Company  upon  extension  of  credit,  is based on  management's  credit
evaluation of the counter party.

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 loans to customers.

The Company also has recourse obligations on loans sold in the secondary market.
These  recourse  obligations  require the Company to repurchase the 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 following is a summary of the Company's contractual  obligations,  including
certain on-balance sheet obligations, at September 30, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                      Payments Due by Period
                                           -------------------------------------------
                                                           Less                 More
                                                          Than 1      1-3        3-5        Than 5
Contractual Obligations                       Total        Year      Years      Years        Years
                                              -----        ----      -----      -----        -----
<S>                                       <C>          <C>        <C>        <C>        <C>
FHLB advances ...........................   $136,175     26,675     25,000     20,000     64,500
Other borrowings ........................     20,643     20,643          -          -          -
Operating leases ........................        964        190        352        270        152
Purchase obligations ....................     10,000     10,000          -          -          -
Loan commitments ........................      7,938      7,938          -          -          -
Standby letters of credit ...............        751        751          -          -          -
Loans sold with recourse obligations ....     38,039     38,039          -          -          -
Undisbursed construction and line of
     credit loans .......................     53,765     53,765          -          -          -
                                            --------   --------   --------   --------   --------

Total ...................................   $268,275    158,001     25,352     20,270     64,652
                                            ========   ========   ========   ========   ========
</TABLE>

                                       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;

>    when market  conditions  permit,  to  originate  and hold in its  portfolio
     adjustable-rate   mortgage   loans  which  have   periodic   interest  rate
     adjustments; and

>    maintaining  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, 2003, the
Company had 46% 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

                                       40
<PAGE>

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 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, 2003.  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       54,570   (42,998)      (44)%            6.92%          (452) bp
+200 bp       70,099   (27,469)      (28)%            8.65%          (279) bp
+100 bp       85,358   (12,210)      (13)%           10.25%          (119) bp
   0 bp       97,568                                 11.45%
-100 bp      101,945     4,376         4%            11.78%            33 bp



The OTS  defines the  sensitivity  measure as the change in NPV ratio with a 200
basis point shock. Our sensitivity measure reflects a 279 basis point decline in
NPV ratio as of  September  30, 2003  compared to a  sensitivity  measure of 197
basis points as of September 30, 2002. The increase in our  sensitivity  measure
at September 30, 2003 primarily  reflects the increase in  longer-term  interest
rates in the last few months of the fiscal year.

                                       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, 2003 and 2002...............    44

Consolidated Statements of Earnings for the Years Ended
    September 30, 2003, 2002 and 2001....................................    45

Consolidated Statements of Stockholders' Equity for the Years Ended
    September 30, 2003, 2002 and 2001.................................... 46-47

Consolidated Statements of Cash Flows for the Years Ended
    September 30, 2003, 2002 and 2001.................................... 48-49

Notes to Consolidated Financial Statements............................... 50-74

                                       42

<PAGE>



                          Independent Auditors' Report




FloridaFirst Bancorp, Inc.
Lakeland, Florida:

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
FloridaFirst  Bancorp, Inc. and Subsidiary (the "Company") at September 30, 2003
and 2002,  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, 2003.  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, 2003 and 2002,  and the results of its  operations and its cash
flows for each of the years in the three-year period ended September 30, 2003 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 14, 2003


<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

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


<TABLE>
<CAPTION>
                                                                        September 30,
                                                                   ----------------------
    Assets                                                            2003         2002
                                                                   ---------    ---------
<S>                                                              <C>           <C>
Cash and due from banks                                            $  13,403       14,119
Interest-earning deposits                                                372       16,509
                                                                   ---------    ---------

         Total cash and cash equivalents                              13,775       30,628

Securities available for sale                                        252,897      272,624
Loans, net of allowance for loan losses of $4,479 and $4,519         496,684      499,433
Premises and equipment, net                                           13,978       14,721
Federal Home Loan Bank stock, at cost                                  6,955        6,966
Cash surrender value of bank-owned life insurance                     17,082       16,128
Core deposit intangible, net                                          10,016       11,576
Other assets                                                           7,095        7,370
                                                                   ---------    ---------

              Total assets                                         $ 818,482      859,446
                                                                   =========    =========

     Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing deposits                                   $  33,741       31,265
    Interest-bearing deposits                                        519,168      556,166
                                                                   ---------    ---------

              Total deposits                                         552,909      587,431

    Federal Home Loan Bank advances                                  136,175      129,500
    Other borrowings                                                  20,643       34,834
    Other liabilities                                                  6,783        8,703
                                                                   ---------    ---------

              Total liabilities                                      716,510      760,468
                                                                   ---------    ---------

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,
         5,541,643 and 5,528,452 issued                                  554          553
    Additional paid-in capital                                        52,610       52,044
    Retained earnings                                                 55,377       50,809
    Treasury stock, at cost, 155,261 and 150,000 shares               (2,806)      (2,680)
    Unallocated shares held by the employee stock ownership plan      (4,328)      (4,869)
    Unallocated shares held by the restricted stock plan              (1,111)      (2,082)
    Accumulated other comprehensive income                             1,676        5,203
                                                                   ---------    ---------

              Total stockholders' equity                             101,972       98,978
                                                                   ---------    ---------

              Total liabilities and stockholders' equity           $ 818,482      859,446
                                                                   =========    =========
</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,
                                                           ---------------------------
                                                             2003      2002      2001
                                                           -------   -------   -------
<S>                                                      <C>        <C>       <C>
Interest income:
    Loans                                                  $33,546    36,248    36,671
    Securities                                              11,784    12,082     7,526
    Other                                                      400       580       649
                                                           -------   -------   -------

         Total interest income                              45,730    48,910    44,846
                                                           -------   -------   -------

Interest expense:
    Deposits                                                13,980    17,844    17,800
    Federal Home Loan Bank advances and other borrowings     6,863     7,104     8,095
                                                           -------   -------   -------

         Total interest expense                             20,843    24,948    25,895
                                                           -------   -------   -------

Net interest income                                         24,887    23,962    18,951

         Provision for loan losses                             660       680       615
                                                           -------   -------   -------

Net interest income after provision for loan losses         24,227    23,282    18,336
                                                           -------   -------   -------

Noninterest income:
    Fees and service charges                                 2,672     2,359     1,546
    Net gain on sale of loans held for sale                    712       274       209
    Net gain (loss) on sale of securities                    1,883       685      (234)
    Earnings on bank-owned life insurance                      954     1,214       563
    Other                                                      839       664       403
                                                           -------   -------   -------

         Total noninterest income                            7,060     5,196     2,487
                                                           -------   -------   -------

Noninterest expense:
    Salaries and employee benefits                          10,960    10,781     7,689
    Occupancy expense                                        3,400     3,003     2,165
    Data processing                                            729       598       500
    Professional fees                                          691       492       437
    Postage and office supplies                                622       579       415
    Amortization of core deposit intangible                  1,560     1,080         -
    Other                                                    4,565     3,984     2,570
                                                           -------   -------   -------

         Total noninterest expense                          22,527    20,517    13,776
                                                           -------   -------   -------

Income before income taxes                                   8,760     7,961     7,047

         Income taxes                                        2,739     2,357     2,178
                                                           -------   -------   -------

Net income                                                 $ 6,021     5,604     4,869
                                                           =======   =======   =======

Earnings per share:

    Basic                                                  $  1.19      1.10      0.92
                                                           =======   =======   =======

    Diluted                                                $  1.13      1.05      0.90
                                                           =======   =======   =======

Weighted-average common and common equivalent
  shares outstanding (in thousands):

    Basic                                                    5,062     5,095     5,293
                                                           =======   =======   =======

    Diluted                                                  5,322     5,339     5,429
                                                           =======   =======   =======
</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
                                                                                  Unallocated                Other
                                                                                     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, 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 of tax              -        -          -          -          -         -          -       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 acquired for
   treasury, at cost                   -        -          -          -       (481)        -          -           -          (481)

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

251,836 and 51,723 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
                                                                                                                           ------

Comprehensive income:
   Net income                          -        -          -      5,604          -         -          -           -         5,604
   Change in unrealized gain
     on securities available
     for sale, net of tax              -        -          -          -          -         -          -       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>

                                       46
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

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

<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                                                                  Unallocated                Other
                                                                                     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, 2002  5,528,452    $ 553     52,044     50,809     (2,680)   (4,869)    (2,082)      5,203        98,978
                                                                                                                          -------

Comprehensive income:
   Net income                          -        -          -      6,021          -         -          -           -         6,021
   Change in unrealized gain
     on securities available
     for sale, net of tax benefit      -        -          -          -          -         -          -      (3,527)       (3,527)
                                                                                                                          -------

Total comprehensive income                                                                                                  2,494
                                                                                                                          -------

Proceeds from exercise of
   stock options                  13,191        1        122          -          -         -          -           -           123

Fair value of ESOP and RSP
   shares allocated                    -        -        139          -          -       541        971           -         1,651

Tax benefit from stock options
   and RSP shares                      -        -        305          -          -         -          -           -           305

5,261 shares acquired for
   treasury, at cost                   -        -          -          -       (126)        -          -           -          (126)

Cash dividends ($.27 per share)        -        -          -     (1,453)         -         -          -           -        (1,453)
                               ---------    -----     ------     ------     ------    ------     ------       -----       -------

Balance at September 30, 2003  5,541,643    $ 554     52,610     55,377     (2,806)   (4,328)    (1,111)      1,676       101,972
                               ---------    -----     ------     ------     ------    ------     ------       -----       -------
</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,
                                                                           ------------------------------------
                                                                              2003         2002         2001
                                                                           ---------    ---------    ---------
<S>                                                                      <C>              <C>          <C>
Cash flows from operating activities:
    Net income                                                             $   6,021        5,604        4,869
    Adjustments to reconcile net income to net cash provided by
      operating activities:
         Provision for loan losses                                               660          680          615
         Depreciation                                                          1,502        1,004          995
         Amortization of core deposit intangible                               1,560        1,080            -
         Net amortization of premiums and discounts on securities              1,506          270         (129)
         Deferred income tax benefit                                            (275)         (62)        (278)
         Net (gain) loss on sale of securities                                (1,883)        (685)         234
         Tax benefit from stock options and RSP shares                           305          101            -
         Net gain on sale of loans held for sale                                (712)        (274)        (209)
         Proceeds from sales of loans held for sale                           39,690       19,631       15,258
         Loans originated for sale                                           (36,612)     (21,200)     (14,989)
         Earnings on bank-owned life insurance                                  (954)      (1,214)        (563)
         Net decrease (increase) in other assets                               1,314       (1,186)         (76)
         Net increase in other liabilities                                     1,156        2,370        1,323
                                                                           ---------    ---------    ---------

              Net cash provided by operating activities                       13,278        6,119        7,050
                                                                           ---------    ---------    ---------

Cash flows from investing activities:
    Proceeds from calls, sales, maturities and repayments of securities
         available for sale                                                  197,703      103,062       37,008
    Proceeds from sales, maturities and repayments of securities
         held to maturity                                                          -            -        9,675
    Purchase of securities available for sale                               (183,198)    (239,677)     (65,440)
    Net (increase) decrease in loans, exclusive of branch acquisition         (1,380)       1,038      (34,742)
    Net redemption of FHLB stock                                                  11          704          255
    Purchase of bank-owned life insurance                                          -       (4,500)      (5,000)
    Purchases of premises and equipment, exclusive of branch
         acquisition                                                            (759)      (3,531)      (3,408)
    Net proceeds from sales of foreclosed assets                                 986          937            -
    Net proceeds from sale of premises and equipment                               -            -          404
                                                                           ---------    ---------    ---------

              Net cash provided by (used in) investing activities             13,363     (141,967)     (61,248)
                                                                           ---------    ---------    ---------

Cash flows from financing activities:
    Cash received upon purchase of deposits                                        -      120,922            -
    Net (decrease) increase in deposits, exclusive of branch acquisition     (34,522)      25,772       44,983
    Net increase (decrease) in FHLB advances                                   6,675      (20,000)      (8,500)
    Net (decrease) increase in other borrowings                              (14,191)      23,786        8,111
    Payments to acquire treasury stock                                          (126)      (2,199)        (481)
    Payments to acquire shares held by the ESOP                                    -            -       (3,897)
    Payments to acquire shares held by the RSP                                     -       (2,286)        (733)
    Dividends paid                                                            (1,453)      (1,249)        (921)
    Net proceeds received from issuance of common stock                          123           54       30,578
                                                                           ---------    ---------    ---------

              Net cash (used in) provided by financing activities            (43,494)     144,800       69,140
                                                                           ---------    ---------    ---------

Net (decrease) increase in cash and cash equivalents                         (16,853)       8,952       14,942

Cash and cash equivalents at beginning of year                                30,628       21,676        6,734
                                                                           ---------    ---------    ---------

Cash and cash equivalents at end of year                                   $  13,775       30,628       21,676
                                                                           =========    =========    =========

                                                                                                   (continued)
</TABLE>
                                       48
<PAGE>

                    FLORIDAFIRST BANCORP, INC. and SUBSIDIARY

                Consolidated Statements of Cash Flows, Continued
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                     Year Ended September 30,
                                                                     ------------------------
                                                                       2003     2002     2001
                                                                    ---------   ------   ------
<S>                                                               <C>         <C>      <C>
Supplemental disclosure of cash flow information:
   Cash paid during the year for:
         Interest                                                   $  21,237   24,808   25,948
                                                                    =========   ======   ======

         Income taxes                                               $   1,780    2,894    2,374
                                                                    =========   ======   ======

Supplemental disclosure of noncash information:
    Transfer loans to foreclosed assets                             $   1,164    1,011      298
                                                                    =========   ======   ======

    Loans originated on sales of foreclosed assets                  $     107        -        -
                                                                    =========   ======   ======

    Accumulated other comprehensive income, unrealized
         gain (loss) on securities available for sale, net of tax   $  (3,527)   3,577    2,857
                                                                    =========   ======   ======

    Fair value of restricted stock plan shares distributed          $     850      967      177
                                                                    =========   ======   ======

    Fair value of ESOP shares allocated                             $     801      595      284
                                                                    =========   ======   ======

    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, 2003 and 2002 and each of the years in the
                   three-year period ended September 30, 2003

(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 nineteen 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 securities.  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's common stock.

       At the time of the Conversion, the Bank established a liquidation account
       in an amount  equal to the MHC's  applicable  equity as  discussed in the
       rules of the OTS.  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 consolidated 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.  Actual results could differ from these estimates.  The
       major  estimate made by management  that is critical to the  consolidated
       financial  statements is the appropriate  level of the allowance for loan
       losses which can be significantly impacted by future industry, market and
       economic trends and conditions.  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-earning  accounts  with
       original   maturities  of  three  months  or  less  in  other   financial
       institutions  to be cash and cash  equivalents.  The Bank is  required to
       maintain  average  balances on hand or with the Federal  Reserve  Bank or
       with a qualified  bank  correspondent.  At  September  30, 2003 and 2002,
       these  reserve  balances  amounted  to $7.8  million  and  $6.4  million,
       respectively.

       Securities.  Securities  available  for sale are  stated  at fair  value.
       Purchase premiums and discounts are recognized into interest income using
       the  interest-method  over the terms of the securities.  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  settlement  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  in the FHLB is carried at cost and serves as  collateral  for
       FHLB advances (see Note 7).

       Loans  Held For  Sale.  Loans  originated  and  intended  for sale by the
       Company are carried at the lower of cost or  estimated  fair value in the
       aggregate.  Gains  and  losses on the sale of such  loans are  recognized
       using the specific identification method.

       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.

       Loan   origination  fees  and  certain  direct   origination   costs  are
       capitalized  and  recognized  as an  adjustment  of the yield of the loan
       portfolio.

       The Company follows a consistent  procedural  discipline and accounts for
       loan  losses  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

                                       51
<PAGE>

       for an allowance  for  losses  in  the portfolio by the above categories,
       which consists of two components: general loss  percentages  and specific
       loss analysis.

       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  effectiveness  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.  Land is carried at cost.  Other  premises  and
       equipment   are   carried  at  cost,   less   accumulated   depreciation.
       Depreciation   of  premises   and   equipment   is  computed   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 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 $418,000 and $347,000 at September 30,
       2003 and 2002 and is included in Other assets in the consolidated balance
       sheets.  The Company  reported net expenses  related to these  foreclosed
       assets of  $89,000,  $70,000 and  $47,000  during the fiscal  years ended
       September 30, 2003, 2002 and 2001, respectively.

       Transfer of Financial Assets. Transfers of financial assets are accounted
       for as sales, when control over the assets has been surrendered.  Control
       over  transferred  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.  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, 2003,  2002 and 2001,  the Company
       recognized  expenses,  including claims and  administrative  fees, net of
       amounts  received under the  reinsurance  contract and premiums  received
       from employees, of $1.5 million, $1.1 million and $750,000, respectively.


       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.

                                       53
<PAGE>

       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. For purposes of pro forma disclosures,  the estimated fair value was
       included  in  expense  over  the  period  vesting  occurs.  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,
                                                                      --------------------------------------
                                                                          2003          2002           2001
                                                                          ----          ----           ----
<S>                                                                 <C>          <C>            <C>
          Risk-free rate of return                                         N/A         5.43%            N/A
          Annualized dividend                                              N/A         1.50%            N/A
          Estimated volatility                                             N/A           22%            N/A
          Expected life of options granted                                 N/A      10 years            N/A
          Weighted-average grant-date fair value of options issued
              during the year                                              N/A          5.75            N/A
                                                                           ===       =======            ===

          Net income, as reported                                     $  6,021         5,604          4,869
          Deduct:  Total stock-based employee compensation
              determined under the fair value based method for
              stock options awarded, net of related tax benefit           (380)         (771)          (214)
                                                                        ------        ------         ------ -
          Proforma net income                                         $  5,641         4,833          4,655
                                                                         =====         =====          =====
          Basic earnings per share:
              As reported                                             $   1.19          1.10           0.92
                                                                        ======        ======         ======
              Proforma                                                $   1.11          0.95           0.88
                                                                        ======        ======         ======
          Diluted earnings per share:
              As reported                                             $   1.13          1.05           0.90
                                                                         =====        ======         ======
              Proforma                                                $   1.06          0.91           0.86
                                                                        ======        ======         ======
</TABLE>

       Both net income,  as reported and  proforma  net income,  were reduced by
       approximately  $523,000,  $539,000  and  $113,000  for  the  years  ended
       September 30, 2003, 2002 and 2001, respectively,  relating to the vesting
       of shares awarded under the RSPs.

                                       54

<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, 2003 and
       2002,  shares  released for  allocation to  participants  each month were
       3,400.  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 (see Note 12), 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,
                                                                             ------------------------
                                                                              2003      2002      2001
                                                                            ------    ------    ------
<S>                                                                       <C>       <C>       <C>
        Weighted-average shares of common stock outstanding
          before adjustments for ESOP and stock options                      5,378     5,457     5,520
        Adjustment to reflect the effect of unallocated ESOP shares           (316)     (362)     (227)
                                                                            ------    ------    ------

        Weighted-average shares for basic earnings per share                 5,062     5,095     5,293
                                                                            ======    ======    ======

        Basic earnings per share                                            $ 1.19      1.10       .92
                                                                            ======    ======    ======

        Weighted-average shares for basic earnings per share                 5,062     5,095     5,293
        Additional dilutive shares using the average market
          value for the period utilizing the treasury stock method
          regarding stock options and outstanding restricted stock shares      260       244       136
                                                                            ------    ------    ------
        Weighted-average shares and equivalents
          outstanding for diluted earnings per share                         5,322     5,339     5,429
                                                                            ======    ======    ======

        Diluted earnings per share                                          $ 1.13      1.05       .90
                                                                            ======    ======    ======
        </TABLE>

       Recent   Pronouncements.   In  November   2002,   the  FASB  issued  FASB
       Interpretation   No.   45,   "Guarantor's   Accounting   and   Disclosure
       Requirements   for   Guarantees,   Including   Indirect   Guarantees   of
       Indebtedness  to Others"  ("FIN 45"),  which  expands  previously  issued
       accounting  guidance and disclosure  requirements for certain guarantees.
       FIN 45 requires  the Company to recognize  an initial  liability  for the
       fair value of an obligation assumed by issuing a guarantee. The provision
       for initial  recognition and measurement of the liability is applied on a
       prospective  basis to guarantees  issued or modified  after  December 31,
       2002.  The  adoption  of FIN 45 did not  have a  material  affect  on the
       consolidated financial statements of the Company.

       In  January   2003,   the  FASB   issued  FASB   Interpretation   No.  46
       "Consolidation of Variable Interest  Entities" ("FIN 46") which addresses
       consolidation by business enterprises of variable interest entities.  FIN
       46 applies to variable  interest entities created after January 31, 2003.
       The Company has no variable  interest  entities,  therefore FIN 46 had no
       effect on the consolidated financial statements of the Company.

       In May 2002 the FASB issued SFAS No. 145,  "Recission  of FASB  Statement
       No. 4, 44, and 64,  Amendment  of FASB  Statement  No. 13, and  Technical
       Corrections as of April 2002." This Statement rescinds SFAS No. 4 and 64,
       "Reporting   Gains  and   Losses   from   Extinguishment   of  Debt"  and
       "Extinguishments  of Debt  Made to  Satisfy  Sinking-Fund  Requirements,"
       respectively, and restricts the classification of early extinguishment of
       debt as an  extraordinary  item to the  provisions of APB Opinion No. 30.
       This  Statement  also rescinds SFAS No. 44,  "Accounting  for  Intangible
       Assets of Motor  Carriers,"  which is no  longer  necessary  because  the
       transition  to the  provisions  of the  Motor  Carrier  Act  of  1980  is
       complete. The Statement also amends SFAS No. 13, "Accounting for Leases,"
       to  eliminate  an  inconsistency  between  the  required  accounting  for
       sale-leaseback transactions and the required accounting for certain lease
       modifications   that  have   economic   effects   that  are   similar  to
       sale-leaseback   transactions.   Finally,  the  Statement  makes  various
       technical   corrections  to  existing

                                       55

<PAGE>

       pronouncements,  which are not considered substantive.  This Statement is
       effective for financial  statements  issued on or after May 15, 2002. The
       adoption of this  Statement had no effect on the  Company's  consolidated
       financial statements.

       In June  2002,  the FASB  issued  SFAS No.  146,  "Accounting  for  Costs
       Associated  with Exit or  Disposal  Activities."  SFAS No.  146  provides
       guidance on the  recognition  and  measurement of  liabilities  for costs
       associated  with exit or disposal  activities.  SFAS No. 146 is effective
       for exit and disposal  activities  that are initiated  after December 31,
       2002.  The  adoption  of this  Statement  had no effect on the  Company's
       consolidated financial statements.

       SFAS No. 148,  "Accounting  for Stock-Based  Compensation-Transition  and
       Disclosure"  was issued in  December  2002.  SFAS No. 148 amends SFAS No.
       123,   "Accounting  for  Stock-Based   Compensation,"  to  provide  three
       alternative  methods of  transition  to SFAS 123's  fair-value  method of
       accounting for stock-based compensation.  This Statement is effective for
       fiscal years ending after  December 15, 2002.  The Company has elected to
       continue to use the Intrinsic Value Method,  therefore the only effect to
       the Company was additional  disclosure  requirements  in the footnotes to
       the consolidated financial statements.


       Comprehensive  Income.   Accounting  principles  generally  require  that
       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>
                                                                                    2003             2002         2001
                                                                                    ----             ----         ----
<S>                                                                             <C>               <C>          <C>
        Unrealized holding gain (loss) on securities available for sale arising
           during year, net of tax                                                $(2,341)          4,009        2,710
                                                                                  -------           -----        -----
        Less- reclassification adjustment for gain (loss) included in
           net income                                                               1,883             685         (234)
           Income taxes (benefit)                                                     697             253          (87)
                                                                                  -------           -----        -----

           Reclassification adjustment for realized gain (loss), net of tax         1,186             432         (147)
                                                                                  -------           -----        -----
        Unrealized gain (loss) on securities available for sale,
           net of tax                                                             $(3,527)          3,577        2,857
                                                                                  =======           =====        =====
</TABLE>

       Reclassifications.  Certain  amounts  in the 2002  and 2001  consolidated
       financial  statements  have  been  reclassified  to  conform  to the 2003
       presentation.

                                       56

<PAGE>

(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, 2003:
                Obligations of U.S. government agencies         $   40,427           381             (59)       40,749
                Collateralized mortgage obligations                 29,006            42            (671)       28,377
                Mortgage-backed securities                         135,387         1,686            (803)      136,270
                Corporate bonds                                     24,834         1,005            (117)       25,722
                Municipal bonds                                     20,202         1,054             (40)       21,216
                Common stock                                           381           182               -           563
                                                                 ---------         -----          ------       -------

                   Total                                         $ 250,237         4,350          (1,690)      252,897
                                                                 =========         =====          ======       =======

             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
                                                                 =========         =====          ======       =======
</TABLE>
                                       57

<PAGE>

       The maturity  distribution for the portfolio of securities  available for
       sale at September 30, 2003 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                             Amortized         Fair
                                                               Cost            Value
                                                            ---------         -------
<S>                                                      <C>                <C>
             Due in one year or less                        $   4,018            4,065
             Due after one year through five years             14,050           14,367
             Due after five years through ten years            18,803           18,994
             Due after ten years                               48,592           50,261
                                                            ---------         -------

                                                               85,463           87,687

             Collateralized mortgage obligations               29,006           28,377
             Mortgage-backed securities                       135,387          136,270
             Common stock                                         381              563
                                                            ---------         --------

             Total                                          $ 250,237          252,897
                                                            =========         ========
</TABLE>

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



                                             Year Ended September 30,
                                     --------------------------------------
                                       2003            2002         2001
                                     --------           ------       ------


       Proceeds from sales           $ 54,079           48,696       10,349
                                     ========           ======       ======

       Gross gains                   $  1,883              828           39

       Gross losses                     -                 (143)          (4)
                                     --------           ------       ------

       Net gain                      $  1,883              685           35
                                     ========           ======       ======



       During fiscal 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 fiscal 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 $49.8 million and
       $68.6 million were pledged as collateral to secure public funds, Treasury
       Investment Program funds, Federal Reserve discount advances,  and reverse
       repurchase agreements at September 30, 2003 and 2002, 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 prohibited 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.

                                       58
<PAGE>

(4)    Loans

       Loans consist of the following ($ in thousands):


                                                             September 30,
                                                       -----------------------
                                                          2003          2002
                                                       ---------     ---------
         Loans secured by mortgages on real estate:
            Residential 1-4: (1)
               Permanent                               $ 270,463       301,622
               Construction                               32,871        29,058
            Commercial real estate                        56,078        58,177
            Land                                          18,699        15,806
                                                       ---------     ---------

               Total mortgage loans                      378,111       404,663
                                                       ---------     ---------

         Consumer loans:
            Home equity                                   73,184        50,240
            Auto                                          32,921        39,989
            Other                                         31,293        17,352
                                                       ---------     ---------

               Total consumer loans                      137,398       107,581
                                                       ---------     ---------

         Commercial loans                                 11,600        10,806
                                                       ---------     ---------

         Total loans                                     527,109       523,050

         Allowance for loan losses                        (4,479)       (4,519)
         Net deferred loan costs                              23            69
         Construction loans in process                   (25,969)      (19,167)
                                                       ---------     ---------

         Loans, net                                    $ 496,684       499,433
                                                       =========     =========

         Weighted-average yield on loans at year end        6.38%         7.20%
                                                       =========     =========


       (1)    Includes  loans held for sale of $670 and $3,036 at September  30,
              2003 and 2002, respectively.

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

                                                    Year Ended September 30,
                                                    ------------------------
                                                    2003       2002      2001
                                                    ----       ----      ----

              Balance at beginning of year       $ 4,519      3,652     3,321

                 Provision for loan losses           660        680       615
                 Allowance acquired                    -      1,000         -
                 Charge-offs                        (894)      (908)     (386)
                 Recoveries                          194         95       102
                                                 -------      -----     -----

              Balance at end of year             $ 4,479      4,519     3,652
                                                 =======      =====     =====

         The  Company was also  servicing  approximately  $4.1  million and $7.8
         million in loans for the  benefit of others at  September  30, 2003 and
         2002,  respectively.  The Company holds  custodial  escrow deposits for
         these  serviced  loans  totaling  approximately  $72,000 and $89,000 at
         September 30, 2003 and 2002, respectively.


                                       59
<PAGE>

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

                                                   Year Ended September 30,
                                                   ------------------------
                                                     2003            2002
                                                     ----            ----

           Balance at beginning of year             $ 306             317
           New loans originated                       210             -
           Principal repayments                       (31)            (11)
                                                    -----             ---

           Balance at end of year                   $ 485             306
                                                    =====             ===

       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 (in thousands):

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                                         -------------------------------------
                                                                            2003          2002            2001
                                                                            ----          ----            ----
<S>                                                                    <C>             <C>               <C>
           Impaired loans at year end                                    $ 1,040         1,073             960
                                                                           =====         =====           =====

           Allowance for loan losses for impaired loans at year-end          208           215             192
                                                                          ======         =====           =====

           Average balance of impaired loans during the year               1,057         1,221           1,028
                                                                          ======         =====           =====

           Interest income received and recognized during the year            30            47              14
                                                                          ======         =====           =====

</TABLE>

       Nonaccrual and accruing loans past due ninety or more days are as follows
       (in thousands):

                                                               September 30,
                                                            -------------------
                                                              2003        2002
                                                            -------       -----

           Nonaccrual loans                                 $ 1,040       1,073
           Accruing loans past due ninety or more days            -           -
                                                            -------       -----

           Total                                            $ 1,040       1,073
                                                            =======       =====

(5)    Premises and Equipment

       Premises and equipment consists of the following (in thousands):

                                                                September 30,
                                                            -------------------
                                                               2003       2002
                                                            --------     ------

           Land                                             $  4,151      4,151
           Buildings and leasehold improvements               11,916     11,219
           Furniture, fixtures and equipment                   6,389      6,187
           Construction in progress                                -        486
                                                            --------     ------

           Total, at cost                                     22,456     22,043

           Less accumulated depreciation and amortization     (8,478)    (7,322)
                                                            --------     ------

           Premises and equipment, net                      $ 13,978     14,721
                                                            ========     ======


                                       60
<PAGE>

       The  Company  conducts a portion  of its  operations  from  three  leased
       facilities and leases certain  equipment  under operating  leases.  As of
       September 30, 2003, the Company was committed to noncancelable  operating
       leases with annual minimum lease payments  approximating $190,000 through
       September  30, 2004,  $182,000 in fiscal  2005,  $170,000 in fiscal 2006,
       $100,000 in fiscal 2007 and $76,000 per year  thereafter  through  fiscal
       year 2010.  All leases contain  options to renew.  Rent expense under all
       operating leases was  approximately  $176,000,  $172,000 and $159,000 for
       the years ended September 30, 2003, 2002 and 2001, respectively.


(6)    Deposits

       Deposits and weighted-average interest rates are as follows:

<TABLE>
<CAPTION>
                                                                       September 30,
                                                  --------------------------------------------------------
                                                             2003                        2002
                                                  ---------------------------    -------------------------
                                                                   Weighted                      Weighted
                                                                    Average                       Average
                                                      Amount         Rate          Amount          Rate
                                                      ------         ----          ------          ----
                                                                      ($ in thousands)
<S>                                              <C>              <C>         <C>              <C>
           Noninterest-bearing checking            $  33,741             -%     $   31,265            -%
                                                   ---------                     ---------
           Interest-bearing checking                  85,084           .60          74,923         1.31
                                                   ---------                     ---------
           Savings accounts                           55,513           .77          54,432         1.58
                                                   ---------                     ---------
           Money-market accounts                      79,361          1.01          68,634         1.99
                                                   ---------                     ---------

           Certificate accounts:
                1.00% - 1.99%                         83,590                        21,146
                2.00% - 2.99%                         63,363                       101,169
                3.00% - 3.99%                         49,412                        64,047
                4.00% - 4.99%                         40,879                        65,813
                5.00% - 5.99%                         47,294                        73,927
                6.00% and above                       14,672                        32,075
                                                   ---------                     ---------

                    Total certificates accounts      299,210          3.24         358,177         3.94
                                                   ---------                     ---------

                    Total deposits                 $ 552,909          2.06%      $ 587,431         2.95%
                                                   =========          ====       =========         ====
</TABLE>

       Certificate accounts in amounts of $100,000 or more totaled approximately
       $89.4  million  and  $112.9  million  at  September  30,  2003 and  2002,
       respectively.  Deposits in excess of $100,000 are not federally  insured.
       The Company had  certificate  accounts  totaling  $34.2 million and $50.2
       million  under  public  deposits  programs,  primarily  with the State of
       Florida,  at September 30, 2003 and 2002,  respectively.  Deposits  under
       these programs are  collateralized  with securities with a carrying value
       of $20.7  million  and $31.0  million  at  September  30,  2003 and 2002,
       respectively, in accordance with applicable regulations.

       Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
                                                                           Year Ended September 30,
                                                                   -----------------------------------------
                                                                        2003            2002         2001
                                                                        ----            ----         ----
                                                                            (In thousands)
<S>                                                              <C>               <C>          <C>
           Interest on interest-bearing checking and money-market
               accounts                                              $  1,823          2,234        1,795
           Interest on savings and certificate accounts                12,224         15,673       16,086
           Less early withdrawal penalties                                (67)           (63)         (81)
                                                                     --------       --------      -------

           Total interest expense on deposits                        $ 13,980         17,844       17,800
                                                                       ======         ======       ======
</TABLE>

                                       61
<PAGE>

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


                                                         September 30,
           Fiscal Year Ending September 30,               2003         2002
           --------------------------------               ----         ----

                2003                                  $       -      204,071
                2004                                    174,909       79,991
                2005                                     59,094       28,963
                2006                                     12,745        6,916
                2007                                     38,106       37,494
                2008 and thereafter                      14,356          742
                                                      ---------      -------

                Total                                 $ 299,210      358,177
                                                      =========      =======

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

       The Company had $136.2  million and $129.5  million in FHLB advances with
       weighted-average  interest rates of 4.68% and 5.23% at September 30, 2003
       and 2002,  respectively.  The balances as of  September  30, 2003 include
       $21.7 million in overnight  advances that reprice on a daily basis (which
       was 1.23% at September 30). The balances as of September 30, 2003 include
       $114.5  million in fixed-term  advances,  which includes $94.5 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):

<TABLE>
<CAPTION>
                                                                                          Balance at
                                                                           Fixed           September 30,
             Maturing in Year                                            Interest     ---------------------------
             Ending September 30,                                          Rate             2003           2002
             ---------------------                                         ----             ----           ----
<S>                                                                     <C>        <C>                 <C>
                  Overnight                                                1.23%      $   21,675                 -

                  Advances repaid in 2003                                                      -            15,000

                  Advances subject to quarterly conversion
                    option in fiscal 2004:
                          2005                                             6.49           10,000            10,000
                          2008                                             5.09           10,000            10,000
                          2010                                             6.11           21,000            21,000
                          2011                                             5.21           10,000            10,000
                          2012                                             4.05           10,000            10,000

                  Advances subject to one time conversion option:
                          2006 (conversion option in 2004)                 5.13            5,000             5,000
                          2007 (conversion option in 2005)                 4.09            5,000             5,000
                          2010 (conversion option in 2005)                 6.10            5,000             5,000
                          2011 (conversion option in 2006)                 4.94           13,500            13,500
                          2012 (conversion option in 2007)                 4.66            5,000             5,000

                  Advances not subject to a conversion option:
                          2004                                             5.72            5,000             5,000
                          2006                                             5.43           10,000            10,000
                          2008                                             5.02            5,000             5,000
                                                                                       ---------           -------

                  Total                                                                $ 136,175           129,500
                                                                                       =========           =======
</TABLE>
                                       62
<PAGE>

       As of  September  30, 2003 and 2002,  respectively,  the Company had $6.3
       million and $15.0 million in overnight  borrowings utilizing the Treasury
       Investment  Program (TIP) through the Federal Reserve bearing interest at
       .78%  and  1.51%,   respectively   per  annum.   These   borrowings   are
       collateralized  by securities  with carrying  values of $12.8 million and
       $17.1 million at September 30, 2003 and 2002, respectively.

       As of September 30, 2003 and 2002, respectively,  the Company had reverse
       repurchase agreements with third parties totaling $14.3 million and $19.8
       million at an average rate of 2.38% and 2.26%,  respectively,  per annum.
       The Company has pledged  $15.3 million and $20.5 million in securities at
       September 30, 2003 and 2002, respectively, related to these agreements.

(8)    Income Taxes

       Income taxes consists of the following (in thousands):


                                                   Current    Deferred    Total
                                                   -------    --------    -----
          Year Ended September 30, 2003:
               Federal                             $ 2,574       (235)   2,339
               State                                   440        (40)     400
                                                   -------       ----    -----

                                                   $ 3,014       (275)   2,739
                                                   =======       ====    =====

          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
                                                   =======       ====    =====

                                       63

<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):

                                                                September 30,
                                                            --------------------
                                                               2003       2002
                                                               ----       ----
    Deferred tax assets:
        Allowance for loan losses                           $ 1,286      1,278
        Deferred compensation plans                             507        442
        Core deposit intangible                                 464        195
        Self-insurance reserve                                  195        135
        Other real estate owned                                 136        122
        Other                                                    18         13
                                                            -------    -------

            Total deferred tax assets                         2,606      2,185
                                                            -------    -------

    Deferred tax liabilities:
        Unrealized gain on securities available for sale       (984)    (3,056)
        FHLB stock                                             (195)      (267)
        Other securities                                       (144)      (144)
        Depreciation                                           (361)      (143)
                                                            -------    -------

            Total deferred tax liabilities                   (1,684)    (3,610)
                                                            -------    -------

        Net deferred tax asset (liability)                 $    922     (1,425)
                                                           ========    =======

       The net  deferred  tax asset at  September  30, 2003 is included in other
       assets and the net  deferred  tax  liability  at  September  30,  2002 is
       included in other liabilities 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,
                                         ----------------------------------------------------------------------------
                                             2003          %           2002          %           2001          %
                                             ----        -----         ----        -----         ----        ------

<S>                                      <C>              <C>     <C>              <C>      <C>               <C>
       Taxes at federal statutory
             rate                          $ 2,978          34%     $ 2,707          34%      $ 2,396           34%
       Increase (decrease) in tax
          resulting from:
              Tax-exempt income, net          (627)         (7)        (565)         (7)         (356)          (5)
              State income taxes, net of
                Federal income tax benefit     264           3          255           3           234            3
              Other, net                       124           1          (40)          -           (96)          (1)
                                           -------          --      -------          --       -------           --

       Total                               $ 2,739          31%     $ 2,357          30%      $ 2,178           31%
                                           =======          ==      =======          ==       =======           ==
</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.

                                       64

<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, 2003 and 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 rates. The unrecorded  deferred income
       tax  liability  on the above  amounts was  approximately  $2.2 million at
       September 30, 2003 and 2002.  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  or the  Company'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,  2003,  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.

                                       65

<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, 2003:
           Risk-based capital
              (to risk-weighted assets)     $ 76,012         14.2%    $ 42,699         8.0%       $ 53,374      10.0%
           Tier I capital (to risk-
              weighted assets)                71,533         13.4       21,350         4.0          32,025       6.0
           Tier I capital
              (to adjusted total assets)      71,533          8.9       32,213         4.0          40,266       5.0

         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
</TABLE>

       The payment of  dividends by the Bank to the Company is  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 the years ended September 30, 2003, 2002 and 2001, the
       Company  recognized costs of approximately  $34,000,  $25,000 and $25,000
       related  to  this  Director  Plan.   These  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%.

                                       66
<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, 2003 and 2002,  30,600 shares were
       committed for release and the Company recorded  employee benefits expense
       of $935,000,  $700,000 and  $480,000  for the years ended  September  30,
       2003, 2002 and 2001, 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, 2003, the fair value of
       the 326,400 unallocated shares held by the ESOP was $8.6 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 100% of their annual  compensation  and the
       Company   may   authorize   discretionary   contributions   to   eligible
       participants.  For the years ended  September 30, 2003, 2002 and 2001 the
       Company  recognized  $126,000,  $134,000 and $117,900,  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, 2003,  2002 and 2001 the Company  recognized  $184,500,  $191,000 and
       $144,000, respectively, of employee benefits expense related to the SERP.


(12)   Stock-Based Compensation Plans

       Restricted Stock Plans ("RSPs"). 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 restricted shares are earned at a rate of either 33%
       or 20% each year of continued  service to the Company.  The fair value of
       these shares was $2.0 million using the market closing price of $16.03 on
       the date of  grant.  This  amount  is being  amortized  over the  related
       vesting periods.

       During the years ended  September  30, 2003,  2002 and 2001,  the Company
       recognized  $837,000,  $862,000 and  $181,000,  respectively  in employee
       benefits expense related to the RSPs.

                                       67

<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 RSPs 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 acquired
       all shares for the plans through open market purchases in prior years. At
       September  30,  2003 the plan held 68,367  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, 2003 was 20,125.

       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, 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
              Exercised                            (13,191)        7.63-16.03         9.37
              Forfeited                            (13,713)        8.24-19.20        16.36
                                                  --------

          Outstanding, September 30, 2003          551,868       $ 7.63-16.03     $  12.42
                                                   =======       ============     ========
</TABLE>

       The  weighted  average  remaining  contractual  life  of the  outstanding
       options at September 30, 2003 was 7.6 years.  The outstanding  options at
       September 30, 2003 are exercisable as follows:

<TABLE>
<CAPTION>

                                                        Weighted        Weighted Average
                                         Number of       Average      Remaining Contractual
           Year Ending September 30,      Shares     Exercise Price           Life
           -------------------------      ------     --------------           ----

<S>                                    <C>          <C>                     <C>
                Already vested            384,321      $ 11.93                 7.4
                2004                      143,719        13.18                 7.9
                2005                       12,378        15.44                 8.8
                2006                       11,450        16.03                 9.0
                                          -------

                Total                     551,868      $ 12.42                 7.6
                                          =======        =====                 ===
</TABLE>

(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%

                                       68
<PAGE>

       declining  balance  method over twelve  years and the Company  recognized
       $1.6 million and $1.1 million of amortization expense for the years ended
       September   30,  2003  and  2002,   respectively.   Estimated   remaining
       amortization  expense relating to the core deposit intangible asset is as
       follows (in thousands):


           Year Ending September 30,                         Amount
           -------------------------                         ------

                2004                                       $  1,470
                2005                                          1,380
                2006                                          1,290
                2007                                          1,200
                2008                                          1,095
                2009 and thereafter                           3,581
                                                           --------

                Total                                      $ 10,016
                                                           ========


(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  stock's
       redemption value of $100 per share was 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,  2003 and  2002  (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.

                                       69
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     At September 30,
                                                   ---------------------------------------------------
                                                             2003                      2002
                                                   -------------------------     ---------------------
                                                                 Estimated                  Estimated
                                                     Carrying         Fair       Carrying     Fair
                                                       Amount        Value         Amount       Value
                                                       ------        -----         ------       -----
<S>                                              <C>              <C>            <C>         <C>
           Financial assets:
               Cash and cash equivalents           $   13,775       13,775         30,628      30,628
               Securities available for sale          252,897      252,897        272,624     272,624
               Federal Home Loan Bank stock             6,955        6,955          6,966       6,966
               Loans, net                             496,684      527,592        499,433     524,850
                                                      =======      =======        =======     =======

           Financial liabilities:
               Deposits:
                  Without stated maturities           253,699      253,699        229,254     229,254
                  With stated maturities              299,210      307,966        358,177     368,125
               Federal Home Loan Bank advances        136,175      148,232        129,500     142,851
               Other borrowings                        20,643       19,553         34,834      35,772
                                                     ========      =======        =======     =======
</TABLE>

       Commitments.  The  Company  is a  party  to  financial  instruments  with
       off-balance-sheet  risk in the  normal  course  of  business  to meet the
       financing  needs of its customers.  These financial  instruments  include
       commitments  to extend  credit,  unused lines of credit and  construction
       loans and  standby  letters  of credit.  These  instruments  involve,  to
       varying degrees,  elements of credit and interest-rate  risk in excess of
       the amounts recognized in the consolidated balance sheet. The contract or
       notional amounts of those instruments reflect the extent of the Company's
       involvement in particular classes of financial instruments.

       The Company's  exposure to credit loss in the event of  nonperformance by
       the other party to the financial  instrument  for  commitments  to extend
       credit, unused lines of credit and construction loans and standby letters
       of credit is represented by the contractual  amount of those instruments.
       The Company  uses the same credit  policies in making  commitments  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.  Since  certain  commitments
       expire  without  being drawn  upon,  the total  committed  amounts do not
       necessarily  represent future cash  requirements.  The Company  evaluates
       each customer's credit worthiness on a case-by-case  basis. The amount of
       collateral  obtained,  if it is  deemed  necessary  by the  Company  upon
       extension of credit,  is based on management's  credit  evaluation of the
       counter party.

       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 loans to customers.

       The Company also has recourse  obligations on loans sold in the secondary
       market.  These recourse obligations require the Company to repurchase the
       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.

                                       70

<PAGE>

       A summary of the Company's  commitments  with  off-balance-sheet  risk at
       September 30, 2003 is as follows (in thousands):

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

<S>                                                        <C>        <C>           <C>
       Loan commitments                                     $  7,938            -           -
                                                             =======     =========    ========

       Undisbursed construction and line of credit loans    $ 53,765            -           -
                                                              ======     =========    ========

       Standby letters of credit                            $    751            -           -
                                                            ========     =========    ========

       Loans sold with recourse obligations                 $ 38,039            -           -
                                                              ======     =========    ========
</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)   Other 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  within  three  years of its  second-step
       conversion pursuant to regulatory guidelines.  This application was filed
       on November 4, 2002. The Company had capitalized  approximately  $725,000
       in costs related to the acquisition.

       On March 17, 2003,  BB&T withdrew its  application to acquire  control of
       the Company  within the three year  period,  citing  rigorous  regulatory
       standards  that are being  applied to recently  converted  thrifts.  As a
       result of application being withdrawn,  the Company wrote-off capitalized
       merger costs of $504,000  ($312,000  after tax) which are not recoverable
       or refundable.

                                       71

<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
                            ------------------------

                                                                                               September 30,
                                                                                      ------------------------------
                                                                                           2003                 2002
                                                                                           ----                 ----
<S>                                                                                   <C>                <C>
         Assets

         Cash and cash equivalents                                                    $     184                  141
         Loans to subsidiary                                                             16,229               17,621
         Securities available for sale                                                    2,581                2,507
         Investment in subsidiary                                                        83,040               78,739
         Other assets                                                                        46                   59
                                                                                      ---------               ------

             Total assets                                                             $ 102,080               99,067
                                                                                      =========               ======

         Liabilities and Stockholders' Equity

         Other liabilities                                                            $       -                    8
         Deferred tax liability                                                             108                   81
         Stockholders' equity                                                           101,972               98,978
                                                                                      ---------               ------

             Total liabilities and stockholders' equity                               $ 102,080               99,067
                                                                                      =========               ======
</TABLE>

<TABLE>
<CAPTION>

                        Condensed Statements of Earnings
                        --------------------------------

                                                                                          Year Ended September 30,
                                                                                       -------------------------------
                                                                                          2003        2002       2001
                                                                                          ----        ----       ----
<S>                                                                                  <C>          <C>        <C>
         Interest income:
             Securities available for sale                                             $   213         213        209
             Loans to subsidiary                                                           665         852        976
                                                                                       -------      ------     ------

             Total income                                                                  878       1,065      1,185
                                                                                       -------       -----     ------

         Operating expenses                                                               (713)       (227)      (212)
                                                                                       -------      ------     ------

         Income before income taxes and equity in undistributed
             earnings of subsidiary                                                        165         838        973
         Income taxes                                                                      (63)       (317)      (340)
                                                                                       -------      ------     ------

         Income before equity in undistributed earnings of subsidiary                      102         521        633
         Equity in undistributed earnings of subsidiary                                  5,919       5,083      4,236
                                                                                       -------      ------     ------

         Net income                                                                    $ 6,021       5,604      4,869
                                                                                       =======      ======     ======
</TABLE>

                                       72

<PAGE>

                       Condensed Statements of Cash Flows
                       ----------------------------------
<TABLE>
<CAPTION>
                                                                      Year Ended September 30,
                                                                   -------------------------------
                                                                      2003       2002       2001
                                                                    -------    -------    -------
<S>                                                               <C>          <C>        <C>
Cash flows from operating activities:
    Net income                                                      $ 6,021      5,604      4,869
    Adjustments to reconcile net income to net cash provided by
       operating activities:
         Equity in undistributed earnings of subsidiary              (5,919)    (5,083)    (4,236)
         Net decrease (increase) in other assets and liabilities          5          2        (12)
                                                                    -------    -------    -------

         Net cash provided by operating activities                      107        523        621
                                                                    -------    -------    -------

Cash flows from investing activities:
    Capital contribution to subsidiary                                    -          -    (16,000)
    Repayment (issuance) of loans to subsidiary                       1,392      2,926    (13,761)
                                                                    -------    -------    -------

         Net cash provided by (used in) investing activities          1,392      2,926    (29,761)
                                                                    -------    -------    -------

Cash flows from financing activities:
    Payments to acquire treasury stock                                 (126)    (2,199)      (481)
    Dividends paid                                                   (1,453)    (1,249)      (921)
    Net proceeds from stock issuances                                   123         54     30,578
                                                                    -------    -------    -------

         Net cash (used in) provided by financing activities         (1,456)    (3,394)    29,176
                                                                    -------    -------    -------

Net increase in cash                                                     43         55         36

Cash at beginning of year                                               141         86         50
                                                                    -------    -------    -------

Cash at end of year                                                 $   184        141         86
                                                                    =======    =======    =======

Supplemental disclosure of noncash information:
    Accumulated other comprehensive income, unrealized gain
       on securities available for sale, net of tax                 $    47         66         71
                                                                    =======    =======    =======

    Change in investment in subsidiary due to:
       Accumulated other comprehensive income, unrealized
         gain (loss) on securities available for sale, net of tax   $(3,574)     3,511      2,785
                                                                    =======    =======    =======

       Tax benefit from stock options and RSP shares                $   305        101          -
                                                                    =======    =======    =======

       Fair value of ESOP shares allocated                          $   801        595        284
                                                                    =======    =======    =======

       Fair value of RSP shares distributed                         $   850        967        177
                                                                    =======    =======    =======
</TABLE>

                                       73
<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, 2003                   Year Ended September 30, 2002
                              -----------------------------------------       ----------------------------------------
                                 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        $ 12,505     11,637     11,164     10,424        11,266    11,825      12,948     12,871
       Interest expense          5,958      5,361      4,901      4,623         6,171     6,130       6,390      6,257
                              --------  ---------   --------   --------     ---------  --------   ---------   --------
       Net interest income       6,547      6,276      6,263      5,801         5,095     5,695       6,558      6,614
       Provision for loan
          losses                   180        180        180        120           150       170         180        180
                              --------  ---------   --------   --------     ---------  --------   ---------   --------
       Net interest income after
          provision for loan
          losses                 6,367      6,096      6,083      5,681         4,945     5,525       6,378      6,434
                              --------  ---------   --------   --------     ---------  --------   ---------   --------

       Noninterest income        1,562      1,441      2,093      1,964           834     1,051       1,588      1,723
       Noninterest expense       5,774      6,031      5,476      5,246         3,872     4,881       5,713      6,051
                              --------  ---------   --------   --------     ---------  --------   ---------   --------

       Income before income
          taxes                  2,155      1,506      2,700      2,399         1,907     1,695       2,253      2,106
       Income taxes                659        431        883        766           573       487         681        616
                              --------  ---------   --------   --------     ---------  --------   ---------   --------

       Net income             $  1,496      1,075      1,817      1,633         1,334     1,208       1,572      1,490
                              ========  =========   ========   ========     =========  ========   =========   ========
       Basic earnings per
          share               $    .30        .21        .36        .32           .26       .24         .31        .29
                              ========  =========   ========   ========     =========  ========   =========   ========
       Diluted earnings
          per share           $    .28        .20        .34        .31           .25       .22         .30        .28
                              ========  =========   ========   ========     =========  ========   =========   ========
</TABLE>

                                       74

<PAGE>

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

Not applicable.


Item 9A.  Controls and Procedures
--------  -----------------------

Evaluation  of Disclosure  Controls and  Procedures.  The  Company's  management
evaluated,  with the  participation of the Company's Chief Executive Officer and
Chief Financial Officer,  the effectiveness of the Company's disclosure controls
and  procedures,  as of the end of the period  covered by this report.  Based on
that  evaluation,  the  Chief  Executive  Officer  and Chief  Financial  Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure that  information  required to be disclosed by the Company in the reports
that it files or submits under the Securities  Exchange Act of 1934 is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange Commission's rules and forms.

Internal  Control  Over  Financial  Reporting.  There  were  no  changes  in the
Company's  internal  control over financial  reporting that occurred  during the
Company's last fiscal quarter that have materially  affected,  or are reasonably
likely to materially  affect,  the  Company's  internal  control over  financial
reporting.

                                       75


<PAGE>

                                    PART III

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


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,  71, is a  stockholder  of Carter,  Belcourt & Atkinson,
P.A., an accounting firm  headquartered  in Lakeland,  Florida since 1979. 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,  64,  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., 61, is President,  Chief Executive Officer and a Director
of Moore  Business  Service,  Inc.,  a business  services  firm and former major
franchisee of 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,  62, 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, 55, is an attorney and is President of Hall Communications,
Inc.,  a company  that  operates  seventeen  radio  stations  including  four in
Lakeland,  Florida.  He  currently  serves  as  a  director  for  Cross  Country
Communications,  LLC, Imperial Symphony  Orchestra 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 a  Lakeland
Regional Medical Center Community Counselor.

Gregory C. Wilkes, 55, has been FloridaFirst  Bank's President,  Chief Executive
Officer,  and Director since August 1995. Mr. Wilkes came to  FloridaFirst  from
Home  Federal  Savings  Bank in Rome,  Georgia,  where he was  President,  Chief
Executive Officer,  and Director from 1990-1995.  Mr. Wilkes was also formerly a
Regional  President  in North  Georgia  for  First  Union  National  Bank,  City
President in Rome,  Georgia for the Georgia Railroad Bank, and President,  Chief
Executive Office,  and Director of the National City Bank of Rome,  Georgia.  He
began his banking  career with the Citizens & Southern  National Bank of Atlanta
in 1971.  Mr. Wilkes  currently  serves on the boards of the Polk Theatre,  Polk
Museum of Art, and Florida Southern College  President's  council.  He is a past
Chairman of the  Lakeland  Area Chamber of Commerce and a former board member of
the Florida  Bankers  Association,  Lakeland Area Chamber of Commerce,  Lakeland
Rotary Club,  Lakeland YMCA,  Salvation Army, and the Lakeland Regional Hospital
Foundation.  He is also a past

                                       76
<PAGE>

director and  instructor of the Florida  School of Banking at the  University of
Florida.  Mr. Wilkes is currently the elected  director for the State of Florida
to the  Board of the  Federal  Home  Loan Bank of  Atlanta,  and is active  with
America's Community Bankers having served on the Mutual,  Government  Relations,
and Federal Home Loan Bank Committees.

G. F. Zimmermann,  III, 59, is President and majority  stockholder of Zimmermann
Associates,  Inc., a design/build firm in Lakeland, Florida, since 1974. He is a
life member of the Salvation Army Advisory Board, Past President and Life Member
of the Kiwanis Club and the Lakeland Kiwanis Foundation.  He currently serves on
the Board of the  Central  Florida  Speech  and  Hearing  Center,  the  Lakeland
Regional Medical Center  Community  Board,  the Small Business  Committee of the
Lakeland  Chamber of Commerce,  and the steering  committee  for the Ira Barnett
Heritage Center.  Mr.  Zimmermann is Director and Executive  Committee member of
Bentley Lumber Company and Zimmermann  Lands,  Inc. He has served as director of
Habitat  for  Humanity,  chaired  the  Lakeland  Civil  Service  Board  and  the
Arbitration Board, and is a Trustee of the City of Lakeland Pension Board.

Executive Officers Who Are Not Directors

Don A.  Burdett,  58,  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,  50,  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 is a Leadership Lakeland
graduate and serves on the Audit  Committee for the Polk County School Board and
as Treasurer for the Friends of the Library.  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, 46, 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 is a director of the Lakeland Area Chamber of Commerce and
Neighborhood Lending Partners, Inc. He has also been active with the United Way,
the North  Lakeland  Rotary  Club,  and has served as Chairman  of the  Lakeland
Downtown Development Authority.

Marion L. Moore,  64, 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.

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 2003  fiscal  year.  The Company is not
aware of other beneficial owners of more than ten percent of its common stock.

Code of Ethics

The  Company has adopted a Code of Ethics for  Financial  Professionals  that is
available,  at no charge,  to anyone who  requests  a copy.  Requests  should be
directed to the Corporate Secretary at FloridaFirst Bancorp, Inc., 205 E. Orange
Street, Lakeland, Florida 33801.

                                       77

<PAGE>

Audit Committee Financial Expert

The Board of Directors has determined  that the Chairman of the Company's  Audit
Committee,  Mr. Llewellyn Belcourt is an audit committee financial expert and he
is an independent  director within the meaning of the NASD listing  requirements
for the Nasdaq National Market.


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

Director  Compensation.  During the fiscal year ended  September 30, 2003,  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, 2003 were approximately $158,000.

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,  2003,
$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. 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 RSP, 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 RSP, Mr.  Wilkes  received
60,000  options  and  25,000  shares  of  restricted  stock,  respectively.   In
accordance  with the 2002 RSP,  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 each of the last three  fiscal  years for
services  rendered  by the Chief  Executive  Officer and by each  officer  whose
salary and bonus exceeded $100,000 during the last fiscal year.

                                       78

<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#(2)  Compensation($)
------------------            ----     ---------    --------     ---------------     ---------------    -----------  ---------------
<S>                         <C>       <C>          <C>             <C>               <C>                <C>         <C>
Gregory C. Wilkes,            2003      $262,000     $15,720         $     -           $       -              -           88,248(3)
President and                 2002       262,000      60,000           3,000             400,625 (1)     60,000           91,864
Chief Executive Officer       2001       229,277           -          13,000                   -              -           78,622


Don A. Burdett                2003       144,804       3,510               -                   -              -           22,660(4)
Senior Vice President         2002       116,250      18,914               -             192,300 (1)     25,000           22,788
                              2001       106,750       7,500               -                   -              -           12,780

Kerry P. Charlet,             2003       165,000       5,259               -                   -              -           67,158(5)
Senior Vice President and     2002       156,250      26,914               -             288,450 (1)     30,000           70,285
Chief Financial Officer       2001       139,076      10,000               -                   -              -           49,129



William H. Cloyd,             2003       144,000       4,320               -                   -              -           67,801(6)
Senior Vice President and     2002       141,000      12,000               -             240,375 (1)     25,000           71,065
Chief Lending Officer         2001       129,508       7,500               -                   -              -           47,816
</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 $26.31 per
       share as of September 30, 2003, such unvested shares for Messrs.  Wilkes,
       Burdett,  Charlet  and Cloyd had a market  value of  $219,000,  $105,000,
       $158,000 and $132,000, respectively.
(2)    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.
(3)    Includes $64,000 related to an accrual under the  supplemental  executive
       retirement plan; 1,396 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, 2003 of  $36,729);  and $5,738 in the  Company's
       matching funds in the 401(k) retirement plan.
(4)    Includes 1,396 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, 2003 of  $36,729);  and $4,149 in the  Company's  matching
       funds in the 401(k) retirement plan.
(5)    Includes $45,000 related to an accrual under the  supplemental  executive
       retirement plan; 1,396 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, 2003 of  $36,729);  and $3,647 in the  Company's
       matching funds in the 401(k) retirement plan.
(6)    Includes $46,000 related to an accrual under the  supplemental  executive
       retirement  plan;  approximately  1,396 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, 2003 of $36,729);  and $3,290 in
       the Company's matching funds in the 401(k) retirement plan.

Stock Awards. The following table sets forth information with respect to options
held by the named executive  officers as of September 30, 2003. No stock options
were granted  during the fiscal year ended  September 30, 2003.  The Company has
not granted to the named executive officers any stock appreciation rights.

                                       79
<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                 __                __                39,500 / 26,332         $713,900 / 475,900(1)
2002 Option Plan                 __                __                40,000 / 20,000          411,400 / 205,700(2)

Don A. Burdett
1999 Option Plan                 __                __                10,837 /  7,224          195,900 / 130,600(1)
2002 Option Plan                 __                __                16,667 /  8,333          171,400 /  85,700(2)

Kerry P. Charlet
1999 Option Plan               3,400            57,300(3)            16,725 / 13,418          302,300 / 242,500(1)
2002 Option Plan                 __                __                20,000 / 10,000          205,700 / 102,800(2)

William H. Cloyd
1999 Option Plan                 __                __                15,482 / 10,320          279,800 / 186,500(1)
2002 Option Plan                 __                __                16,667 /  8,333          171,400 /  85,700(2)
</TABLE>


(1)    Based on the exercise  price of $8.24 and the closing  price on September
       30, 2003 of $26.31.
(2)    Based on the exercise  price of $16.03 and the closing price on September
       30, 2003 of $26.31.
(3)    Based on the difference  between the exercise price and fair market value
       on the date of exercise.


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, 2003, Messrs. Wilkes, Burdett, Charlet and
Cloyd would have  received  approximately  $1,200,000,  $500,000,  $745,000  and
$635,000, 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, 2003, Messrs.  Wilkes, Charlet and Cloyd had
aggregate benefit accruals under the supplemental  executive  retirement plan of
approximately $325,000, $207,000, and $210,000,  respectively, and such benefits
for the individuals were not vested.

                                       80
<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,  2003 with  respect  to
compensation   plans  under  which  equity  securities  of  the  Registrant  are
authorized for issuance.

<TABLE>
<CAPTION>
                                          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                         255,468                 $ 8.24                     3,825
    2002 Stock Option Plan                         296,400                 $16.04                    16,300
    1999 Restricted Stock Plan (1)                  42,667                   __                         __
    2002 Restricted Stock Plan (1)                  46,050                   __                         __
Equity compensation plans not
  approved by shareholders:                          __                      __                         __
                                                   -------                                           ------

     TOTAL                                         640,585                 $12.42                    20,125
                                                   =======                                           ======
</TABLE>

(1)    Represents the shares that have previously been awarded under these plans
       but have not vested as of September 30, 2003. The restricted  stock trust
       has purchased and currently owns sufficient  shares to satisfy the shares
       that will be required for future vesting periods.

                                       81

<PAGE>

Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                       Percent of Shares of
                                                          Amount and Nature of             Common Stock
Name and Address of Beneficial Owner                       Beneficial Ownership (3)      Outstanding (%)
------------------------------------                      --------------------------     ---------------

<S>                                                             <C>                          <C>
FloridaFirst Bank Employee Stock Ownership Plan ("ESOP")          467,799(1)                   8.05%
205 East Orange Street
Lakeland, Florida

Bruce A. Sherman                                                  531,498(2)                   9.15%
Private Capital Management, LP
8889 Pelican Bay Blvd.
Naples, FL  34108

Llewellyn N. Belcourt (4) (5)                                       29,527                      *

Don A. Burdett                                                      50,055                      *

Kerry P. Charlet                                                    98,718                     1.70%

William H. Cloyd                                                    60,256                     1.04%

J. Larry Durrence (4) (5)                                           15,072                      *

Stephen A. Moore, Jr. (4) (5)                                       75,223                     1.30%

Nis H. Nissen, III (4) (5)                                          64,254                     1.11%

Arthur J. Rowbotham (4) (5)                                         14,866                      *

Gregory C. Wilkes                                                  168,648                     2.90%

G. F. Zimmermann, III (4) (5)                                       36,954                      *

All directors and named executive officers                         637,566                    10.98%
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.  Once allocated,  ESOP participants,
       under certain circumstances, may withdraw their shares from the Plan. 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, 2003,  140,161 shares have been
       allocated under the ESOP to participant accounts and remain in the Plan.
(2)    Pursuant to a Schedule 13G dated  February 14, 2003 by Bruce A.  Sherman,
       Gregg J. Powers and Private Capital Management,  LP ("PCM"),  Mr. Sherman
       has sole voting and  dispositive  power with respect to 40,000 shares and
       Messrs.  Sherman  and Powers and PCM have shared  voting and  dispositive
       power with respect to 491,398 shares.
(3)    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 - 16,417,  Don A.  Burdett - 31,116,  Kerry P. Charlet - 43,434,
       William H. Cloyd - 37,309,  J. Larry Durrence  10,500,  Stephen A. Moore,
       Jr. - 19,417, Nis H. Nissen, III - 19,417,  Arthur J. Rowbotham - 10,500,
       Gregory C. Wilkes - 92,666, and G. F. Zimmermann, III - 17,188.
(4)    Excludes  467,799  shares  under  the ESOP  for  which  such  individuals
       exercise  shared voting and investment

                                       82
<PAGE>

       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.
(5)    Excludes  42,667  1999 RSP shares and 46,050  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.

Item 14.  Principal Accounting Fees and Services
--------  --------------------------------------

Audit Fees

Fees paid to Hacker,  Johnson & Smith PA for each of the last two  fiscal  years
are set forth below.

      Fiscal              Audit       Audit-Related           Tax      All Other
      Year                Fees            Fees               Fees         Fees
      ----                ----            ----               ----         ----

      2003             $ 54,000            18,600           11,000         -
      2002               52,000            18,000           10,500         -

Audit fees include fees for services performed to comply with generally accepted
auditing standards,  including the recurring audit of the Company's consolidated
financial  statements.  This category also includes fees for audits  provided in
connection with statutory  filings or services that generally only the principal
auditor reasonably can provide to a client,  such as procedures related to audit
of income tax provisions and related reserves,  consents and assistance with and
review of documents filed with the Securities and Exchange Commission.

Audit-related  fees include fees associated with assurance and related  services
that are  reasonably  related to the  performance  of the audit or review of the
Company's  financial   statements.   This  category  includes  fees  related  to
assistance  in  financial  due  diligence  related to mergers and  acquisitions,
consultations  regarding generally accepted accounting  principles,  reviews and
evaluations of the impact of new regulatory  pronouncements,  general assistance
with  implementation of the new SEC and  Sarbanes-Oxley Act of 2002 requirements
and audit  services not required by statute or  regulation.  Audit-related  fees
also  include  audits  of  employee  benefit  plans,  as well as the  review  of
information  systems and general internal controls unrelated to the audit of the
financial statements.

Tax fees primarily include fees associated with tax audits, tax compliance,  tax
consulting,  as well as tax  planning.  This  category  also  includes  services
related to tax disclosure and filing requirements.

The Audit Committee has not authorized any non-audit services by the independent
auditor.  The  Audit  Committee  must  approve  any such  services  prior to the
services being performed.  The Audit  Committee's  considerations  would include
whether  such  services  are   consistent   with  the  SEC's  rules  on  auditor
independence.  The Audit Committee  would also consider  whether the independent
auditor is best positioned to provide the most effective and efficient  service,
for  reasons  such as its  familiarity  with  the  Company's  business,  people,
culture,  accounting systems, risk profile, and whether the services enhance the
Company's ability to manage or control risks and improve audit quality.

                                       83
<PAGE>

                                     PART IV


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
              31.1   Certification  of Chief Executive  Officer required by Rule
                     13a-14(a)/15d-14(a) under the Exchange Act.
              31.2   Certification  of Chief Financial  Officer required by Rule
                     13a-14(a)/15d-14(a) under the Exchange Act.
              32     Certification  pursuant  to  18  U.S.C.  Section  1350,  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 Form S-8 filed with the  Commission  on
       March 2, 2001 (File No. 333-56420).

***    Incorporated by reference to the Registrant's  Registration  Statement on
       Form  S-8  filed  with  the  Commission  on  March  19,  2002  (File  No.
       333-84516).

(b)    Reports on Form 8-K:
         (i)      A Form 8-K was filed on November 6, 2003 as notification under
                  Item 9 that the Company issued a press release  announcing the
                  Company's fourth quarter earnings.
         (ii)     A Form 8-K was filed on August 5, 2003 as  notification  under
                  Item 9 that the Company issued a press release  announcing the
                  Company's third quarter earnings.

                                       84

<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 19, 2003               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 on December 19, 2003 by the following persons on behalf of
the Registrant and in the capacities indicated.

<TABLE>
<CAPTION>
<S>                                     <C>
/s/Gregory C. Wilkes                       /s/Kerry P. Charlet
--------------------------------------     -------------------------------------------
Gregory C. Wilkes                          Kerry P. Charlet
President, Chief Executive Officer and     Senior Vice President and
Director                                   Chief Financial Officer
(Principal Executive 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 and Director         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>

                                       85