SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

                        Commission file number 001-14417

                              BANKFIRST CORPORATION
             (Exact name of registrant as specified in its charter)

         Tennessee                                             58-1790903
(State or other jurisdiction of                               (IRS Employer
incorporation of organization)                            Identification Number)

           625 Market Street                                     37902
         Knoxville, Tennessee                                  (Zip Code)
(Address of principal executive offices)

               Registrant's telephone number, including area code:
                                 (865) 595-1100

                                   ----------
           Securities registered pursuant to Section 12(b) of the Act:
                                      None

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

                                  Common Stock
                                (Par Value $2.50)

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. [X]

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]

There were 11,220,100 shares of the registrant's  Common Stock outstanding as of
February  29,  2000.  The  aggregate  market  value  of  voting  stock  held  by
non-affiliates  of the registrant  was  $53,265,280 as of February 29, 2000. For
purposes of the foregoing calculation only, all directors and executive officers
and the Registrant have been deemed affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  definitive Proxy Statement for its Annual Meeting
of  Shareholders  to be held April 17, 2000 are  incorporated  by reference into
Part III of this Report.
<PAGE>

Table of Contents
================================================================================
                                                                            PAGE
                                                                            ----

                                     PART I

ITEM 1.    Business......................................................      2
ITEM 2.    Properties....................................................      3
ITEM 3.    Legal Proceedings.............................................      6
ITEM 4.    Submission of Matters to a Vote of Security Holders...........      6
ITEM 4.A   Executive Officers of the Company.............................      6

                                  PART II

ITEM 5.    Market for the Registrant's Common Stock and
             Related Stockholder Matters.................................      7
ITEM 6.    Selected Financial Data.......................................      7
ITEM 7.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations.........................     10
ITEM 7.A   Quantitative and Qualitative Disclosures about Market Risk....     26
ITEM 8.    Financial Statements and Supplementary Data...................     28
ITEM 9.    Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure....................     51

                                 PART III

ITEM 10.   Directors and Executive Officers of the Company...............     51
ITEM 11.   Executive Compensation........................................     51
ITEM 12.   Security Ownership of Certain Beneficial
             Owners and Management.......................................     51
ITEM 13.   Certain Relationships and Related Transactions................     51

                                  PART IV

ITEM 14.   Exhibits, Financial Statement Schedules, and
             Reports on Form 8-K.........................................     52


Forward-Looking Statements
================================================================================

Forward-looking  statements  in this Report are made in  reliance  upon the safe
harbor provisions of the Private  Securities  Litigation Reform Act of 1995 with
respect to credit quality  (including  delinquency  trends and the allowance for
credit  losses),  the ability of BankFirst  Corporation  (the "Company") and its
vendors to adequately address post-Year 2000 issues,  corporate objectives,  and
other  financial  and business  matters.  The words  "anticipates",  "projects",
"intends", "estimates", "expects", "believes", "plans", "may", "will", "should",
"could",   and  other  similar   expressions   are  intended  to  identify  such
forward-looking  statements.  The Company  cautions  that these  forward-looking
statements are  necessarily  speculative and speak only as of the date made, and
are subject to numerous assumptions,  risks and uncertainties,  all of which may
change  over  time.   Actual   results   could  differ   materially   from  such
forward-looking statements.

In addition to the factors  disclosed by the Company elsewhere in this document,
the following factors, among others, could cause the Company's actual results to
differ materially and adversely from such  forward-looking  statements:  pricing
pressures  on loan  and  deposit  products;  competition;  changes  in  economic
conditions  nationally,  regionally and in the Company's markets; the extent and
timing of  actions of the  Federal  Reserve  Board;  changes in levels of market
interest  rates;  clients'  acceptance of the  Company's  products and services;
credit risks of lending activities and competitive  factors;  and the extent and
timing of legislative and regulatory actions and reforms.

The above-listed risk factors are not necessarily exhaustive, particularly as to
possible  future  events,  and new risk  factors  may emerge  from time to time.
Certain occurrences may happen that can cause the Company's actual results to be
materially different than those described in the Company's periodic filings with
the  Securities and Exchange  Commission  ("SEC").  Any  statements  made by the
Company that are not historical facts should be considered to be forward-looking
statements.  The Company is not  obligated  to update and does not  undertake to
update any of its forward-looking statements made herein.


                                                       BankFirst Corporation | 1
<PAGE>

                                     PART I

ITEM 1. BUSINESS
================================================================================

BankFirst   Corporation  is  a  multi-bank  holding  company   headquartered  in
Knoxville, Tennessee that focuses on meeting the banking needs of East Tennessee
businesses  and  residents  through  a  relationship-oriented,   community  bank
business strategy.  The Company's operations  principally involve commercial and
residential real estate lending,  commercial business lending, consumer lending,
mortgage servicing, construction lending and other financial services, including
trust operations, credit cards services and brokerage services.

During the last five years,  the  organization has grown from a single community
bank with less than $150 million in assets, to a multi-bank organization with an
established  local  banking  presence in six  counties  and over $800 million in
assets.  The Company has broadened its mix of products and expanded its customer
base  through  a  combination  of  internal  growth  and  the  consolidation  of
well-established  East  Tennessee  banks and financial  service  companies.  The
Company completed an initial public offering of 1,270,000 shares of Common Stock
in 1998 and began trading its Common Stock on the NASDAQ Stock Market's National
Market under the symbol "BKFR".

The Company's  most recent merger and  acquisition  activities  occurred in 1998
with  two  separate   business   combinations.   First,  the  Company's  largest
subsidiary,  BankFirst,  purchased Knoxville-based Curtis Mortgage Company, Inc.
as an  opportunity  to  increase  mortgage  originations,  which  had not been a
significant  line of  business,  and as an  opportunity  to  diversify  revenues
through loan servicing.  Second, the Company acquired First Franklin Bancshares,
Inc., a single-bank holding company based in Athens,  Tennessee.  First Franklin
Bancshares,  Inc.  was  dissolved  and its  Athens-based  subsidiary,  The First
National Bank and Trust  Company,  became a separate  subsidiary of the Company,
adding risk  diversification  and trust  expertise to the combined  entity.  The
Company's long-term strategic plans include expanding through  acquisitions that
will enhance its market presence and product lines.

Recent Developments

In June 1999 the Company  initiated a stock repurchase plan, and over the second
half of 1999  acquired an aggregate of 100,000  shares of its Common Stock at an
average  purchase  price of $8.95.  On January 11,  2000 the Company  approved a
second stock repurchase plan to acquire up to 500,000  additional  shares of its
Common Stock,  which would reduce total Common Stock outstanding from 11,275,600
at December 31, 1999 to 10,775,600 shares,  assuming the Company repurchased all
500,000  shares.  As of February 29, 2000 the Company had acquired 55,500 shares
as part of its second stock repurchase plan.

Competition
================================================================================

The Company and its subsidiaries have substantial  competition in attracting and
retaining  deposits and in lending funds.  The primary  factors in competing for
deposits are the range and quality of financial  services offered the ability to
offer  attractive  rates and the  availability of convenient  office  locations.
There is direct competition for deposits from credit unions and commercial banks
and other savings institutions.  Additional significant  competition for savings
deposits comes from other investment  alternatives,  such as money market mutual
funds and corporate and government securities.  The primary factors in competing
for loans are the range and quality of lending services offered,  interest rates
and loan  origination  fees.  Competition  for the origination of loans normally
comes from other savings and financial  institutions,  commercial banks,  credit
unions,  insurance companies and other financial service companies.  The Company
believes that its strategy of relationship  banking in the communities it serves
allows flexibility in rates and products offered in response to local needs. The
Company  believes this strategy is its most  effective  method of competing with
both the larger  regional  bank holding  companies  and with  smaller  community
banks.

Employees
================================================================================

As of December 31 1999, the Company and its subsidiaries  employed 380 full-time
equivalent employees.  Management believes that its relations with its employees
are good. The Company does not have any collective bargaining agreements.


                                                       BankFirst Corporation | 2
<PAGE>

Supervision and Regulation
================================================================================

The Company is a registered  bank holding company under the Bank Holding Company
Act of 1956 (the  "BHCA").  Under the BHCA,  the  Company is subject to periodic
examination by the Federal  Reserve and is required to file periodic  reports of
its  operations  and such  additional  information  as the  Federal  Reserve may
require.  The Company's activities are limited to managing or controlling banks,
furnishing services to or performing services for its subsidiaries, and engaging
in other activities that the Federal Reserve determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.

The Company's  BankFirst  ("BankFirst") and BankFirst Trust Company  ("BankFirst
Trust")  subsidiaries  are  incorporated  under the banking laws of the State of
Tennessee and, as such, are subject to the applicable  provisions of those laws.
BankFirst and BankFirst  Trust are subject to the  supervision  of the Tennessee
Department  of  Financial  Institutions  and  to  regular  examination  by  that
department.  The Company's  First  National  Bank and Trust  Company  ("Athens")
subsidiary  is  incorporated  under the  National  Bank Act, as amended,  and is
subject to the applicable  provisions of that law. Athens is also subject to the
supervision  of the Office of the  Comptroller  of the  Currency  and to regular
examination by that agency. Both BankFirst's and Athens' deposits are insured by
the  Federal  Deposit  Insurance  Corporation  (the  "FDIC")  through  the  Bank
Insurance Fund ("BIF"),  and they are therefore subject to the provisions of the
Federal Deposit Insurance Act and to examination by the FDIC.

The  Tennessee  Department  of  Financial   Institutions,   the  Office  of  the
Comptroller of the Currency,  and the FDIC (the "Bank  Regulatory  Authorities")
will  regulate or monitor  virtually  all areas of the  Company's  BankFirst and
Athens  (collectively,  the "Banks") operations,  including security devices and
procedures,  adequacy of capitalization and loss reserves,  loans,  investments,
borrowings,  deposits,  mergers,  issuance of securities,  payment of dividends,
interest rates payable on deposits,  interest rates or fees chargeable on loans,
establishment of branches,  corporate reorganizations,  maintenance of books and
records,  and  adequacy of staff  training to carry on safe  lending and deposit
gathering  practices.  The federal Bank Regulatory  Authorities have established
regulatory  standards for all insured  depository  institutions  and  depository
institution  holding companies  relating,  among other things,  to: (i) internal
controls, information systems, and audit systems; (ii) loan documentation; (iii)
credit  underwriting;  (iv) interest rate risk exposure;  and (v) asset quality.
The Bank  Regulatory  Authorities  also  require the Banks to  maintain  certain
capital  ratios.  The Banks are  required to prepare  periodic  reports on their
financial condition and to conduct an annual audit of their financial affairs in
compliance  with  minimum  standards  and  procedures  prescribed  by  the  Bank
Regulatory  Authorities.  The Banks undergo regular on-site examinations by each
Bank Regulatory Authority having jurisdiction over them.

ITEM 2. PROPERTIES
================================================================================

The following  provides certain  information as of December 31, 1999 with regard
to the Company's properties and facilities.


<TABLE>
<CAPTION>
                                                                        Owned/Leased
BankFirst Locations                Address                            Type of Facility
-------------------                -------                            ----------------
<S>                              <C>                                  <C>
Lenoir City Branch               391 Highway 321/95 North             Owned
                                 Lenoir City, TN 37771                Bank Branch

Loudon Branch                    406 Grove Street                     Owned
                                 Loudon, TN 37774                     Bank Branch

Philadelphia Branch              22730 West Lee Highway               Owned
                                 Philadelphia, TN 37846               Bank Branch

Tellico Village Branch           302 Village Square                   Owned
                                 Loudon, TN 37774                     Bank Branch

Main Office Branch               625 Market Street                    Owned
                                 Knoxville, TN 37902                  Bank Branch
</TABLE>


                                                       BankFirst Corporation | 3
<PAGE>

<TABLE>
<CAPTION>

                                                                     Owned/Leased
BankFirst Locations, continued   Address                           Type of Facility
------------------------------   -------                           ----------------
<S>                              <C>                                  <C>
Farragut Branch                  11140 Kingston Pike                  Owned
                                 Knoxville, TN 37922                  Bank Branch

Knoxville Center Branch          3013-A Mall Road N                   Leased
                                 Knoxville, TN 37924                  Bank Branch

Bearden Branch                   4611 Kingston Pike                   Owned
                                 Knoxville, TN 37919                  Bank Branch

Halls Branch                     7108 Maynardville Hwy                Leased
                                 Knoxville TN 37918                   Bank Branch

Cedar Bluff Branch               330 N Cedar Bluff Road               Leased
                                 Knoxville, TN 37923                  Bank Branch

Rocky Hill Branch                7709 Northshore Drive                Leased
                                 Knoxville, TN 37919                  Bank Branch

Weisgarber Branch                1235 Weisgarber Road                 Owned
                                 Knoxville, TN 37909                  Bank Branch

Maryville Branch                 710 South Foothills Plaza Drive      Owned
                                 Maryville, TN 37801                  Bank Branch

Alcoa Branch                     109 Associates Boulevard             Owned
                                 Alcoa, TN 37701                      Bank Branch

Seymour Branch                   10232 Chapman Highway                Owned
                                 Seymour, TN 37865                    Bank Branch

Gatlinburg Branch                811 Parkway                          Owned
                                 Gatlinburg, TN 37738                 Bank Branch

Dudley Creek Branch              912 E. Parkway                       Owned
                                 Gatlinburg, TN 37738                 Bank Branch

Pigeon Forge Branch              3416 South River Road                Owned
                                 Pigeon Forge, TN 37863               Bank Branch
                                 Adjacent parking lot

Townsend Branch                  7971 E. Lamar Alexander Parkway      Owned
                                 Townsend, TN  37882                  Bank Branch

Sevierville Branch               East Main                            Owned
                                 Sevierville TN 37862                 Bank Branch

Dolly Parton Branch              710 Dolly Parton Parkway             Owned
                                 Sevierville, TN 37862                Bank Branch
</TABLE>


                                                       BankFirst Corporation | 4
<PAGE>

<TABLE>
<CAPTION>
                                                                    Owned/Leased
BankFirst Locations, continued   Address                          Type of Facility
------------------------------   -------                          ----------------
<S>                              <C>                                  <C>
Kodak Branch                     2950 Winfield Dunn Parkway           Owned
                                 Kodak, TN 37764                      Bank Branch

Governors Crossing               186 Collier Drive                    Owned
                                 Sevierville, TN 37862                Bank Branch

Merchants Road Branch            310 Merchants Drive                  Owned
                                 Knoxville, TN  37912                 Bank Branch

Jefferson City Branch            263 East Broadway Blvd               Owned
                                 Jefferson City, TN 37760             Bank Branch

Dandridge Branch                 858 S. Hwy 92                        Owned
                                 Dandridge, TN 37725                  Bank Branch

Curtis Mortgage                  249 Peters Road                      Leased
                                 Knoxville, TN 37939                  Mortgage Company

The First National Bank and Trust Company Locations
---------------------------------------------------

Main Office                      204 Washington Ave.                  Owned
                                 Athens, TN  37303                    Bank Branch

Operations Center                3 South Hill Street                  Leased
                                 Athens, TN  37303                    Operations Facility

Plaza Branch                     1604 Decatur Pike                    Leased
                                 Athens, TN  37303                    Bank Branch

Etowah Branch                    601 Tennessee Ave.                   Owned
                                 Etowah TN  37331                     Bank Branch

Riceville Branch                 3809 Highway 11                      Owned
                                 Riceville, TN  37370                 Bank Branch

Calhoun Branch                   3099 Highway 11                      Owned
                                 Calhoun, TN  37309                   Bank Branch

Englewood Branch                 111 S. Niota Road                    Leased
                                 Englewood, TN  37329                 Bank Branch

Friendly Finance Co., Inc.       620 Decatur Pike                     Leased
                                 Athens, TN  37303                    Finance Company (a
                                                                      wholly-owned
                                                                      subsidiary of Athens)
</TABLE>

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


                                                       BankFirst Corporation | 5
<PAGE>

ITEM 3. LEGAL PROCEEDINGS
================================================================================

The nature of the  banking  business  generates a certain  amount of  litigation
against the  Company  and its  subsidiaries  involving  matters in the  ordinary
course  of  business.  None  of  the  legal  proceedings  currently  pending  or
threatened to which the Company or its  subsidiaries  is a party or to which any
of  their  properties  are  subject  will  have,  or  have,  in the  opinion  of
management,  a material  effect on the  business or  financial  condition of the
Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
================================================================================

No  matters  were  submitted  to  a  vote  of  security  holders,   through  the
solicitation of proxies or otherwise, during the fourth quarter of 1999.

ITEM 4.A. EXECUTIVE OFFICERS OF THE COMPANY
================================================================================

Set forth below is  information  as of February 29, 2000 regarding the executive
officers of the Company.

<TABLE>
<CAPTION>

Officer                             Age                       Position With Company
-------                             ---                       ---------------------
<S>                                 <C>                       <C>
James L. Clayton                    65                        Chairman of the Board of Directors since 1996 and
                                                              Chairman of the Board of Directors of BankFirst
                                                              since 1992.

Fred R. Lawson                      63                        Director, President and Chief Executive Officer since
                                                              1996; Director,  President and Chief Executive Officer of
                                                              BankFirst since 1993.

L. A. Walker, Jr.                   64                        Director, Executive Vice President since 1998; Chairman of
                                                              the Board of Directors and Chief Executive Officer of The
                                                              First National Bank and Trust Company since 1980.

R. Stephen Hagood                   49                        Executive Vice President since 1998;
                                                              Executive Vice President of BankFirst since 1993.

C. David Allen                      49                        Chief Financial Officer and Secretary since 1998; Senior Vice
                                                              President and Chief Financial Officer of BankFirst since 1993.
</TABLE>


                                                       BankFirst Corporation | 6
<PAGE>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
================================================================================

Since the initial public  offering  ("IPO") in August 1998, the Common Stock has
been traded on The NASDAQ  National  Market  System  ("NASDAQ")  with the symbol
BKFR.  There were 578 holders of Common  Stock of record on February  29,  2000,
excluding  ownership  held by brokers and dealers.  Prior to the IPO,  there had
been no established public trading market for the Common Stock.

The  following  table  sets  forth for the  indicated  periods  the high and low
closing prices of the Common Stock as traded on NASDAQ:

                                              1999                  1998
                                              ----                  ----
                                        High         Low      High         Low
        ------------------------------------------------------------------------
        Quarters:

        First.....................     $11.250    $ 8.625    $ N/A       $ N/A
        Second....................      19.750      8.563      N/A         N/A
        Third.....................       9.750      8.250      N/A         N/A
        Fourth....................       9.750      8.125      11.875      8.125

          N/A = not applicable

The Company has paid no cash dividends on its Common Stock since the IPO and has
not  announced or declared any  dividends to be paid during the first quarter of
2000.

ITEM 6. SELECTED FINANCIAL DATA
================================================================================

The following selected financial data table presented below has been prepared in
part from, and should be read in conjunction  with, the  consolidated  financial
statements  and schedules  included  elsewhere in this Report.  The  information
contained in the  financial  data table has also been adjusted for the following
business combinations and stock activity:

1996

In  December  1996,  the Company  acquired  BankFirst  through a share  exchange
transaction.  BankFirst  had $213  million in assets and total  capital of $20.6
million.  The  Company  then  merged  BankFirst  with the  Company's  other bank
subsidiary, First National Bank of Gatlinburg,  during March 1997. The surviving
name of the two merged banks was BankFirst, with combined assets of $423 million
and total capital of $34.4 million.

1997

In  December  1997,  the  Company  issued  a  five-for-four  stock  split on its
1,014,230 shares of Common Stock outstanding.

1998

In January 1998,  BankFirst  purchased Curtis Mortgage  Company,  Inc.  ("Curtis
Mortgage") for $7.5 million. Curtis Mortgage had total assets of $8.5 million as
of the purchase  date.  The  transaction  was accounted  for as a purchase,  and
therefore,  it is not reflected in the  historical  financial  statements of the
Company for periods prior to that time.

In July 1998,  the Company  acquired  First Franklin  Bancshares,  Inc.  ("First
Franklin")  in a  statutory  merger  accounted  for as a  pooling  of  interests
transaction and simultaneously  effected a five-for-one stock split. At year-end
1997,  First  Franklin  had total  assets of $182  million,  total equity of $21
million, and net income of $2.6 million. Shareholders of First Franklin received
22.05 shares of the  Company's  Common Stock for each share of First  Franklin's
common stock, giving effect to the subsequent five-for-one stock split.


                                                       BankFirst Corporation | 7
<PAGE>

In August 1998,  the Company  completed  its IPO and began trading its shares of
Common  Stock on NASDAQ  under the  symbol  "BKFR".  The  Company  received  net
proceeds of $13.5 million from its offering of 1,270,000 shares.

1999

In June 1999,  the  Company  initiated a stock  repurchase  plan and during 1999
acquired a total of 100,000  shares of its Common  Stock at an average  purchase
price of $8.95.

<TABLE>
<CAPTION>
                                                                             For the years ended December 31,
    (Dollars in thousands except share data)                1999            1998             1997            1996            1995
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>             <C>             <C>
              Summary of operations
Interest income - tax equivalent ...................   $     59,413    $     56,745    $     51,893    $     47,311    $     42,677
Interest expense ...................................         25,136          24,927          22,652          21,238          19,082
                                                       ----------------------------------------------------------------------------
   Net interest income .............................         34,277          31,818          29,241          26,073          23,595
Tax equivalent adjustment (1) ......................           (805)           (830)           (606)           (613)           (558)
                                                       ----------------------------------------------------------------------------
  Net interest income ..............................         33,472          30,988          28,635          25,460          23,037
Provision for credit losses ........................         (1,996)         (1,706)         (2,935)           (667)           (553)
Noninterest income .................................         10,737           9,303           5,657           5,243           4,369
Noninterest expense ................................        (28,821)        (28,218)        (21,323)        (20,799)        (19,157)
                                                       ----------------------------------------------------------------------------
Income before income tax ...........................         13,392          10,367          10,034           9,237           7,696
Income tax expense .................................          4,506           3,558           3,406           3,188           2,517
                                                       ----------------------------------------------------------------------------
Net income .........................................   $      8,886    $      6,809    $      6,628    $      6,049    $      5,179
                                                       ----------------------------------------------------------------------------
Basic earnings per share ...........................   $       0.77    $       0.64    $       0.66    $       0.63    $       0.63
Diluted earnings per share .........................           0.73            0.59            0.61            0.59            0.59
Dividends per common share .........................             --            0.01            0.12            0.09            0.14

Cash dividends declared - common ...................   $         --    $        115    $      1,214    $        876    $      1,152
Cash dividends declared - preferred ................            132             146             161             162              74

           Selected year-end balances

Total assets .......................................   $    812,899    $    748,301    $    650,717    $    595,284    $    545,718
Earning assets .....................................        737,283         677,397         604,031         559,927         504,430
Intangible assets ..................................          1,845           2,002             289             406             274
Total securities ...................................        133,596         127,862         127,736         134,781         135,127
Loans - net of unearned income .....................        585,616         508,552         464,572         412,793         350,652
Mortgage loans held for sale .......................         12,205          25,642             395              --              --
Allowance for credit losses ........................          7,400           6,602           6,098           4,723           4,690
Total deposits .....................................        630,379         617,966         549,769         516,339         480,346
Repurchase agreements and other borrowed funds .....         59,603          36,374          18,261           5,966           7,632
Long-term debt .....................................         29,159           1,884          12,121          12,154           8,407
Stockholders' equity ...............................         86,526          82,841          61,432          55,215          44,222
Common shares outstanding ..........................     11,275,600      11,375,600       9,985,415       9,848,034       8,641,914
Preferred shares outstanding "if converted" to
common shares at a 3.0875-to-1 ratio ...............        558,992         558,992         674,643         696,413         396,009
Tangible book value per common share (2) ...........           7.16            6.77            5.74            5.20            4.86
Book value per common share (3) ....................           7.31            6.94            5.76            5.24            4.89
</TABLE>

                   (This table is continued on the next page.)


                                                       BankFirst Corporation | 8
<PAGE>


<TABLE>
<CAPTION>
                                                                             For the years ended December 31,
    (Dollars in thousands except share data)                1999            1998             1997            1996            1995
-----------------------------------------------------------------------------------------------------------------------------------

            Selected average balances
<S>                                                    <C>             <C>             <C>             <C>             <C>
Total assets .......................................   $    782,302    $    703,826    $    621,719    $    566,616    $    527,495
Earning assets .....................................        712,384         642,233         577,178         528,179         488,834
Total securities ...................................        132,098         128,833         128,796         136,600         135,509
Loans - net of unearned income .....................        554,997         487,490         442,098         379,930         339,989
Mortgage loans held for sale .......................         15,182          14,179             198              --              --
Allowance for credit losses ........................          7,197           6,613           4,796           4,802           4,541
Total deposits .....................................        623,036         586,049         529,820         492,435         468,068
Stockholders' equity ...............................         85,249          69,099          57,082          49,176          39,992

               Performance Ratios

Avg. loans to avg. deposits ........................          89.08%          83.18%          83.44%          77.15%          72.64%
Allowance to year end loans (5) ....................           1.26            1.30            1.31            1.14            1.34
Avg. equity to avg. assets .........................          10.90            9.82            9.18            8.68            7.58
Leverage capital ratio .............................          10.75           10.71            9.73            9.60            7.80
Return on avg. assets ..............................           1.14            0.97            1.07            1.07            0.98
Return on avg. equity ..............................          10.42            9.85           11.61           12.30           12.95
Dividends payout ratio (4) .........................             --            1.71           18.77           14.88           22.56
</TABLE>

(1)   Tax equivalent  basis was  calculated  using 38% for 1999 and 1998 and 34%
      for all other periods presented.

(2)   Total equity,  excluding  intangible assets,  divided by sum of: a) common
      shares outstanding,  and b) preferred shares assuming 100% of these shares
      were converted into common shares at a 3.0875-to-1 ratio.

(3)   Total equity,  including  intangible assets,  divided by sum of: a) common
      shares outstanding,  and b) preferred shares assuming 100% of these shares
      were converted into common shares at a 3.0875-to-1 ratio.

(4)   Dividends  declared on common  shares  divided by net income  available to
      common shareholders.

(5)   Mortgage loans held for sale are not included in this calculation.

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


                                                       BankFirst Corporation | 9
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
================================================================================

The consolidated  financial  information  discussed herein primarily  identifies
trends and material changes that occurred during the reported periods and should
be  read  in  conjunction  with  the  consolidated   financial   statements  and
accompanying notes appearing elsewhere herein.

Forward-looking  statements  in this Report are made in  reliance  upon the safe
harbor provisions of the Private Securities  Litigation Reform Act of 1995, with
respect to credit quality  (including  delinquency  trends and the allowance for
credit  losses),  the ability of BankFirst  Corporation  (the "Company") and its
vendors to adequately address Year 2000 issues, corporate objectives,  and other
financial and business matters. The words "anticipates",  "projects", "intends",
"estimates",  "expects",  "believes", "plans", "may", "will", "should", "could",
and other  similar  expressions  are intended to identify  such  forward-looking
statements.  The Company  cautions  that these  forward-looking  statements  are
necessarily  speculative  and speak only as of the date made, and are subject to
numerous  assumptions,  risks and  uncertainties,  all of which may change  over
time.  Actual  results  could  differ   materially  from  such   forward-looking
statements.

In addition to the factors  disclosed by the Company elsewhere in this document,
the following factors, among others, could cause the Company's actual results to
differ materially and adversely from such  forward-looking  statements:  pricing
pressures  on loan  and  deposit  products;  competition;  changes  in  economic
conditions  nationally,  regionally and in the Company's markets; the extent and
timing of  actions of the  Federal  Reserve  Board;  changes in levels of market
interest  rates;  clients'  acceptance of the  Company's  products and services;
credit risks of lending activities and competitive  factors;  and the extent and
timing of legislative and regulatory actions and reforms.

The above-listed risk factors are not necessarily exhaustive, particularly as to
possible  future  events,  and new risk  factors  may emerge  from time to time.
Certain occurrences may happen that can cause the Company's actual results to be
materially different than those described in the Company's periodic filings with
the  Securities and Exchange  Commission  ("SEC").  Any  statements  made by the
Company that are not historical facts should be considered to be forward-looking
statements.  The Company does not undertake to update any of its forward-looking
statements made herein.

Introduction
================================================================================

The Company is a community  banking  organization,  headquartered  in Knoxville,
Tennessee,  which  generates  loans and deposits  through its 31 branch  offices
throughout  East  Tennessee.   The  Company's  operations   principally  involve
commercial and residential  real estate lending,  commercial  business  lending,
mortgage servicing,  consumer lending,  construction lending and other financial
services,  including  trust  operations,  credit  card  services  and  brokerage
services.

The Company  desires to enhance its market  share in Eastern  Tennessee  through
branch expansion and  acquisitions  that would provide synergy to the franchise.
Management will pursue internal growth by introducing new products and services,
adding  new  customers,  and  cross-selling  existing  product  lines to current
customers.  Total asset growth has increased at an annualized  rate of more than
13% over the past five years,  while net income has  increased  at more than 14%
annually over the same period. The Company believes that its future success will
depend  upon its  ability to enter new  markets,  increase  its market  share in
existing markets, and become more efficient in its operations.

In January  1998,  BankFirst  purchased  Curtis  Mortgage as an  opportunity  to
increase  mortgage  originations,  which  had  not  been a  significant  line of
business, and to diversify revenues through loan servicing. Curtis Mortgage is a
56-year-old  mortgage  company that originates and purchases  mortgage loans. At
the purchase date Curtis  Mortgage's  loan  portfolio,  which consisted of loans
held for sale and loans serviced for others,  totaled $451 million.  At year-end
1999 this loan portfolio totaled approximately $612 million.

On July 2, 1998 the  Company  acquired  First  Franklin  in a  statutory  merger
accounted for as a pooling of interests and effected a five-for-one stock split.
At year-end 1997, First Franklin had total assets of $182 million,  total equity
of $21 million,  and net income of $2.6 million.  Shareholders of First Franklin
received  22.05 shares of Common Stock for each share of First  Franklin  common
stock,  giving  effect  to  the  subsequent   five-for-one  stock  split.  As  a
consequence of the merger,  The First National Bank and Trust Company located in
McMinn  County,  Tennessee,  a subsidiary of First  Franklin,  became a separate
subsidiary of the Company,  adding risk  diversification  and trust expertise to
the combined entity.


                                                      BankFirst Corporation | 10
<PAGE>

On August 27, 1998 the Company completed its initial public offering (the "IPO")
and began  trading  its  shares of Common  Stock on the  NASDAQ  Stock  Market's
National  Market under the symbol "BKFR".  The Company  received net proceeds of
$13.5 million from its offering of 1,270,000 shares.

The  BankFirst  Trust  Company was formed on December 21, 1998 as a wholly owned
subsidiary of the Company and consolidated First National Bank and Trust Company
and BankFirst trust departments.  It was capitalized at $1.0 million.  BankFirst
Trust Company provides a full array of trust services  including personal trusts
and estates, employee benefit programs and individual retirement accounts

On June 17, 1999 the  Company  initiated a stock  repurchase  plan and  acquired
100,000 shares of its Common Stock at an average  purchase  price of $8.95.  The
stock buyback was part of an overall  capital  utilization  plan to leverage its
capital through the expansion of its business franchise. On January 11, 2000 the
Company  approved  a second  stock  repurchase  plan to  acquire  up to  500,000
additional  shares of its Common  Stock,  which would  reduce total Common Stock
outstanding  from  11,275,600  shares   outstanding  at  December  31,  1999  to
10,775,600  shares  outstanding,  assuming the Company  repurchased  all 500,000
shares.  As of February 29, 2000 the Company had acquired  55,500 shares as part
of its second stock repurchase plan.

Total assets grew from $748 million at year-end 1998 to $813 million at year-end
1999,  a 9%  increase.  The  primary  changes in assets  included a $77  million
increase in loans,  offset by a $13 million  decrease in mortgage loans held for
sale. Total assets grew 15.0% from $651 million at year-end 1997 to $748 million
at year-end  1998, a $97 million  increase.  The primary  changes in assets from
1997 to 1998  included a $25  million  increase  in loans  held for sale,  a $44
million  increase  in net loans,  and an  addition  of $7  million  of  mortgage
servicing assets.

Total  liabilities  grew from $665  million at year-end  1998 to $726 million at
year-end  1999, a 9% increase.  Of this  increase,  deposits  accounted  for $12
million,   repurchase  agreements  accounted  for  $10  million,  federal  funds
represented  $24 million,  and Federal Home Loan Bank advances  represented  $17
million.  Total  liabilities  grew from $589  million at  year-end  1997 to $665
million at  December  31,  1998,  an increase of $76  million.  Of this  growth,
deposits accounted for $68 million, federal funds purchased were $2 million, and
repurchase agreements accounted for $6 million.

Total  stockholders'  equity at December 31, 1999 was $87 million, up $4 million
from year-end 1998. This increase represents almost $9 million in earnings, less
the change in unrealized losses on securities held for sale of $4 million.  From
year-end  1997 to December 31, 1998,  equity grew $21 million,  due primarily to
the IPO and earnings of almost $7 million.

Results of Operations
================================================================================

1999 vs. 1998

Net income for the year ended  December 31, 1999 was $8.9  million,  compared to
$6.8 million for 1998. The increase in net income was primarily due to increases
in net interest income and noninterest income.  Noninterest expense increased by
less than $1  million,  due to normal  operating  costs  and  personnel  expense
resulting from both internal and external growth.

Basic earnings per share for 1999 were $0.77 compared to $0.64 for 1998. Diluted
earnings per share increased from $0.59 in 1998 to $0.73 in 1999.

Return on average assets  increased from 0.97% in 1998 to 1.14% in 1999.  Return
on average equity  increased from 9.85% in 1998 to 10.42% in 1999, due primarily
to an increase in earnings.

1998 vs. 1997

Net income  increased  $181,000,  or 2.7%,  to $6.8  million  for the year ended
December  31, 1998,  as compared to $6.6  million for 1997.  The increase in net
income was  primarily  due to  increases  in net  interest  income,  noninterest
income,  and a reduction in the provision for loan losses.  Noninterest  expense
grew due to increases in salaries and benefits  resulting from both internal and
external growth,  merger costs,  costs associated with the integration of Curtis
Mortgage and the opening of three additional branches.


                                                      BankFirst Corporation | 11
<PAGE>

Basic earnings per share for 1998 were $0.64 compared to $0.66 for 1997. Diluted
earnings  per share  decreased  from  $0.61 in 1997 to $0.59 in 1998.  Return on
average assets decreased from 1.07% in 1997 to 0.97% in 1998.  Return on average
equity  decreased  from 11.61% in 1997 to 9.85% in 1998.  These  decreases  were
largely a result of the additional shares issued and capital raised in the IPO.

Net Interest Income
================================================================================

1999 vs. 1998

Fully tax  equivalent  interest  income  increased from $56.7 million in 1998 to
$59.4 million in 1999, a 5% increase.  However,  the net interest margin dropped
from 4.95% to 4.81%  during the same  period,  due to lower  yields on loans and
securities  held for sale.  Borrowing costs increased from $24.9 million in 1998
to $25.1 million in 1999, an increase of $200,000.

1998 vs. 1997

Even though fully tax equivalent net interest income increased $2.5 million,  or
8.8%, from 1997 to 1998, net interest margin decreased  during the period,  from
5.07% in 1997,  to 4.95% in 1998.  The  increase  in net  interest  income,  and
decrease in net interest  margin,  is primarily  attributable  to an increase in
loan volume at lower  yields.  Changes  attributable  to the combined  impact of
volume and rate have been allocated proportionately to the changes due to volume
and the change due to rate.

<TABLE>
<CAPTION>

                                                              Volume/Rate Analysis

                                                       ----------------------------------------------------------------------------
                                                             1999 change from 1998 due to            1998 change from 1997 due to
                                                       ----------------------------------------------------------------------------
         (Dollars in thousands)                             Volume        Rate         Total       Volume        Rate        Total
                                                       ----------------------------------------------------------------------------
<S>                                                        <C>          <C>          <C>          <C>          <C>          <C>
Interest  income
---------------
 Loans ...............................................     $ 6,839      $(4,171)     $ 2,668      $ 5,840      $  (874)     $ 4,966
 Securities
   Taxable ...........................................         583         (244)         339       (1,001)        (243)      (1,244)
   Tax-exempt ........................................        (245)          32         (213)       1,168         (327)         841
       Total securities interest .....................         338         (212)         126          167         (570)        (403)
  Interest-bearing  deposits  with  other bank .......          20           33           53          202         (121)          81
  Federal funds sold .................................        (112)         (67)        (179)         274         (155)         119
                                                       ----------------------------------------------------------------------------

        Total interest income ........................       7,085       (4,417)       2,668        6,483       (1,720)       4,763

Interest expense
----------------
  Interest-bearing demand deposits ...................         650         (444)         206          392         (425)         (33)
  Saving deposits ....................................           4         (312)        (308)        (166)         207           41
  Time deposits ......................................         678       (1,377)        (699)       1,482          126        1,608
  Repurchase agreements ..............................         143         (254)        (111)         670          (48)         622
  Other borrowings ...................................         419          (10)         409           99          482          581
  Long-term borrowings ...............................       1,430         (718)         712         (282)        (262)        (544)
                                                       ----------------------------------------------------------------------------
          Total interest expense .....................       3,324       (3,115)         209        2,195           80        2,275
                                                       ----------------------------------------------------------------------------

          Net interest income ........................     $ 3,761      $(1,302)     $ 2,459      $ 4,288      $(1,800)     $ 2,488
                                                       ============================================================================
</TABLE>


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


                                                      BankFirst Corporation | 12
<PAGE>

Asset/Liability Management
================================================================================

1999 vs. 1998

Average earning assets increased from $642 million to $712 million, or 11%, from
1998 to 1999.  Loan growth,  which was 15% in 1999, was the primary cause of the
overall  growth in earning  assets.  Management  has been able to  achieve  this
growth  in  loans  because  of long  term  relationships  developed  by  current
management while at other financial  institutions and most recently, as a result
of strong economic conditions in the Banks' primary markets.

During 1998,  average loans  represented 78% of average  earning assets.  During
1999 this ratio increased to 80% while loan yields  decreased from 9.54% in 1998
to 8.86% in 1999.  Yields on securities also fell from 6.35% in 1998 to 6.31% in
1999.  The  decrease in loan and  security  yields was  consistent  with general
market rate pressures, and shortening of overall maturities in the portfolio.

Most of the  Company's  asset  growth has been  funded  with  deposits.  Average
noninterest-bearing  deposits grew from an average of $104 million in 1998 to an
average  of $110  million  in 1999.  These  sources  of  funding do not carry an
interest  cost,  and thus the amount of  interest-earning  assets  supported  by
noninterest-bearing  liabilities has increased.  This factor does not impact net
interest   spread,   but  has  a  positive   impact  on  net  interest   margin.
Interest-bearing  deposits  also  increased  from $482  million to $513  million
during this same  period.  The average  rate paid on  interest-bearing  deposits
decreased  from 4.71% in 1998 to 4.27% in 1999.  The Company is generally  asset
driven, managing funding to support assets gathered.

The increase in total deposits has been lower than the growth in earning assets.
As a result,  borrowed  funds  have  increased  from $40  million in 1998 to $66
million in 1999.  These funds are more costly than  deposits and their  increase
relative to total funding has put some downward  pressure on net interest margin
and spread.

1998 vs. 1997

Average  earning assets  increased from $577 million to $642 million,  or 11.3%,
from 1997 to 1998.  Loan growth,  which was 13.4% in 1998, was the primary cause
of the overall growth in earning assets.

During 1997,  average loans represented 76.6% of average earning assets.  During
1998 this ratio  increased to 78.11% while loan yields  decreased  from 9.69% in
1997 to 9.54% in 1998.  Yields on  securities  also  fell from  6.66% in 1997 to
6.35% in 1998.  Average  interest-bearing  deposits grew 7.3% from 1997 to 1998,
outpaced  by an 11.3%  growth  in  earning  assets.  The  average  rate  paid on
interest-bearing deposits rose from 4.69% in 1997 to 4.71% in 1998.

The portion of earning  assets  funded by  noninterest-bearing  deposits,  other
liabilities and equity  increased from 24.9% in 1997 to 28.2% in 1998.  Borrowed
funds increased from 4.9% of average earning assets in 1997 to 6.3% in 1998.

         (Refer to the "Average Balance Sheets and Interest Rates" table
                            on the following page.)


                                                      BankFirst Corporation | 13
<PAGE>

<TABLE>
<CAPTION>
                    Average Balance Sheets and Interest Rates
                            Years ended December 31,

------------------------------------------------------------------------------------------------------------------------------------
        (Dollars in thousands)                         1999                        1998                           1997
------------------------------------------------------------------------------------------------------------------------------------
                                             Average            Average  Average               Average  Average              Average
ASSETS                                       Balance   Interest  Rate    Balance   Interest     Rate    Balance   Interest    Rate
                                             ---------------------------------------------------------------------------------------
<S>                                          <C>       <C>       <C>    <C>        <C>           <C>    <C>        <C>         <C>
Interest-earning assets
  Securities
    Taxable ..............................   $ 98,054  $  5,878  5.99% $  88,941   $  5,539      6.23%  $105,180   $  6,783    6.45%
    Tax-exempt (1) .......................     33,961     2,456  7.23     37,456      2,669      7.13     23,328      1,795    7.69
    Unrealized gain on  A.F.S ............         83        --    --      2,436         --        --        288         --      --
                                             --------  --------  ----   --------   --------      ----   --------   --------   ----
       Total securities ..................    132,098     8,334  6.31    128,833      8,208      6.35    128,796      8,578    6.66
  Loans (2) ..............................    570,179    50,514  8.86    501,669     47,846      9.54    442,296     42,880    9.70
  Interest-bearing deposits with
  other banks ............................      2,987       149  4.99      2,524         96      3.80        236         15    6.36
  Federal funds sold and other ...........      7,120       416  5.84      9,207        595      6.46      5,850        419    7.16
                                             --------  --------  ----   --------   --------      ----   --------   --------    ----
  Total earning assets ...................    712,384  $ 59,413  8.34%   642,233   $ 56,745      8.83%   577,178   $ 51,892    8.99%

Noninterest-earning assets
  Allowance for loan losses...............     (7,197)                   (6,613)                          (4,796)
  Premises and equipment..................     26,296                    23,022                           19,769
  Cash and due from banks.................     30,484                    25,545                           20,876
  Accrued interest and other assets.......     20,335                    19,639                            8,692
                                             --------                  --------                         --------
  Total assets............................   $782,302                  $703,826                         $621,719
                                             ========                  ========                         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities
 Deposits
   Interest-bearing demand deposits ......   $171,708  $  5,180  3.02% $ 152,645   $  4,974   3.26%     $141,941    $ 5,007    3.53%
   Savings deposits.......................     32,556       767  2.36     32,430      1,075   3.31        36,803      1,034    2.81
   Time deposits..........................    308,902    15,986  5.18    297,210     16,685   5.61       270,782     15,063    5.56
                                             --------  --------  ----  ---------   --------   ----     ---------    -------    ----
      Total interest-bearing deposits         513,166   21,933   4.27    482,285     22,734   4.71       449,526     21,104    4.69
 Borrowed funds
    Repurchase agreements.................     25,514       949  3.72     22,682      1,060   4.67         9,110        438    4.81
    Other borrowings......................     15,964       899  5.63      8,634        490   5.68         7,173        414    5.77
    Long-term borrowings..................     24,885     1,355  5.45      8,826        643   7.29        12,214        696    5.70
                                             --------  --------  ----  ---------   --------   ----     ---------    -------    ----
      Total borrowed funds ...............     66,363     3,203  4.83     40,142      2,193   5.46        28,497      1,548    5.43
                                             --------  --------  ----  ---------   --------   ----     ---------    -------    ----
  Total interest-bearing liabilities          579,529  $ 25,136  4.34%   522,427   $ 24,927   4.77%      478,023    $22,652    4.74%

Noninterest-bearing liabilities
  Noninterest-bearing demand deposits ....    109,870                    103,764                          80,294
  Other liabilities.......................      7,654                      8,536                           6,320
  Stockholders' equity  ..................     85,249                     69,099                          57,082
                                             --------                  ---------                        --------

Total liabilities and stockholders'
equity ...................................   $782,302                  $ 703,826                        $621,719
                                             ========                  =========                        ========

Interest margin recap
Net interest income and interest
rate spread...............................             $ 34,277  4.00%             $ 31,818   4.06%                 $29,240    4.25%
                                                       ========                    ========                         =======

  Net interest income margin..............                       4.81%                        4.95%                            5.07%
</TABLE>


(1)   Interest  income  on  tax-exempt  securities  has been  adjusted  to a tax
      equivalent basis using a marginal federal income tax rate of approximately
      38% for 1999 and 1998 and 34% for 1997. Tax equivalent adjustment was $805
      for 1999, $830 for 1998, and $606 for 1997.

(2)   Nonaccrual  loans are included in average loan  balances and loan fees are
      included in interest  income.  Loan fees were $1,644 for 1999,  $1,403 for
      1998, and $1,113 for 1997.

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


                                                      BankFirst Corporation | 14
<PAGE>

Provision for Credit Losses
================================================================================

1999 vs. 1998

The  provision  for credit  losses was $2.0  million  in 1999  compared  to $1.7
million in 1998. The Company experienced net charge-offs of $1.2 million in both
1999 and 1998, resulting in a ratio of net charge-offs to average loans of 0.22%
and 0.25%  respectively.  The  increase  in the  provision  in 1999 vs.  1998 is
reflective  of the  increase in loans  during the year.  Management  expects the
provision in 2000 to increase over 1999 due to loan growth and market conditions
impacted by higher  interest  rates.  Commercial and commercial real estate loan
charge-offs  increased  from  $468,000  in  1998  to  $688,000  in  1999,  while
charge-offs  of  residential  real estate loans dropped from $310,000 to $19,000
during the same period.  The Company  charges off any loan or portion of a loan,
when management determines that a loss is imminent irrespective of its due date.
All loans recommended for charge off are reviewed by the Senior Loan Officer and
approved by the  President  before final  approval by the Boards of Directors of
the Banks.  Prior  years'  accrued  interest is charged  off and current  years'
accrued interest is reversed against income.

1998 vs. 1997

The  provision  for credit  losses was $1.7  million  in 1998  compared  to $2.9
million in 1997. The Company experienced net charge-offs of $1.2 million in 1998
and net  charge-offs  in 1997 of $1.6 million.  The decrease in the provision in
1998 vs. 1997 is  reflective  of the decline in  charge-offs  and  nonperforming
loans during the year.  Factors that gave rise to the 1997 provision  included a
36.6% increase in commercial  loans during the year and a 146.1% increase in net
charge-offs during the year, which increased  historical loss factors applied to
the portfolio.

<TABLE>
<CAPTION>
                                          Analysis of Allowance for Credit Losses
                                                    As of December 31,

          (Dollars in thousands)                             1999             1998            1997            1996            1995
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>             <C>             <C>             <C>             <C>
Balance at beginning of year .......................     $   6,602       $   6,098       $   4,723       $   4,690       $   4,526

Loans charged off
-----------------
  Commercial, financial, and agricultural...........          (618)           (353)         (1,079)           (182)           (203)
  Commercial real estate ...........................           (70)           (115)           (161)             (6)             --
  Real estate-construction .........................            --              --              --              --              --
  Real estate-residential ..........................           (19)           (310)            (76)            (55)            (44)
  Installment ......................................          (757)           (727)           (503)           (661)           (454)
  Lease financing ..................................            --             (19)            (14)             --              --
                                                         -------------------------------------------------------------------------
                    Total charge-offs ..............        (1,464)         (1,524)         (1,833)           (904)           (701)
                                                         -------------------------------------------------------------------------

Charge-offs recovered
---------------------

  Commercial, financial, and agricultural ..........            38              41              41              53             146
  Commercial real estate ...........................            12               1               2              --              --
  Real estate-construction .........................            --              --              33              12              --
  Real estate-residential ..........................             3              60              39              21              13
  Installment ......................................           213             217             158             184             153
  Lease financing ..................................            --               3              --              --              --
                                                         -------------------------------------------------------------------------
                    Total recoveries ...............           266             322             273             270             312

Net loans charged off ..............................        (1,198)         (1,202)         (1,560)           (634)           (389)
Current year provision .............................         1,996           1,706           2,935             667             553
                                                         -------------------------------------------------------------------------
Balance at end of year .............................     $   7,400       $   6,602       $   6,098       $   4,723       $   4,690
                                                         =========================================================================
Loans, net at year end .............................     $ 585,616       $ 508,552       $ 464,967       $ 412,793       $ 350,652

Ratio of allowance to loans at year end ............          1.26%           1.30%           1.31%           1.14%           1.34%

Average loans (1) ..................................     $ 554,997       $ 487,490       $ 442,296       $ 379,930       $ 339,989

Ratio of net loans charged off to
average loans ......................................          0.22%           0.25%           0.35%           0.17%           0.11%
</TABLE>

(1)   Excludes mortgage loans held for sale.

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


                                                      BankFirst Corporation | 15
<PAGE>

Nonperforming Assets
================================================================================

1999 vs. 1998

A banking company's credit risk profile is generally  reflected in the level and
types of loans held, since loans are usually the highest risk assets owned. Even
though the majority of the Company's  loans are  commercial,  which is typically
the highest risk loan type,  management  believes that two factors  mitigate the
credit  risk in this  portfolio.  First,  64% of  commercial  loans are  secured
primarily by  income-producing  real estate,  and  secondly,  BankFirst's  early
growth  was  generated  through  seasoned  loan  relationships.   The  Company's
relatively low levels of historical charge-offs and non-performing loans reflect
the effect of these mitigating factors.

Nonperforming  loans at December  31, 1999 were $6.2 million as compared to $2.5
million at year-end 1998.  Nonperforming  loans, as a percent of total loans was
1.07% at year-end  1999  compared to 0.49% at year-end  1998.  Nonaccrual  loans
amounted to $4.0  million of the  nonperforming  totals in 1999 and  $537,000 in
1998. The increase is mainly  attributable to one large credit representing $2.6
million.  Management  believes that it is  adequately  secured by real estate to
mitigate any losses that have not already been accounted for. A loan is reviewed
at least  when it becomes  90 days  delinquent  for  placement  on a  nonaccrual
status.  If the prospects for collection are good and the collateral is adequate
to cover both  principal  and  interest,  then the loan can  continue  to accrue
interest; otherwise it is placed on nonaccrual.  Should any loan become 180 days
delinquent, it is placed on nonaccrual. Accrued interest for the current year is
reversed  immediately  against  interest  income and prior  year's  interest  is
charged off.

1998 vs. 1997

Nonperforming  loans at December 31, 1998, were $2.5 million as compared to $2.8
million at year-end 1997.  Nonperforming  loans, as a percent of loans was 0.49%
at year-end 1998 and 0.61% at December 31, 1997.  Nonaccrual  loans  amounted to
$537,000 of the nonperforming total in 1998 and $1.1 million in 1997.

<TABLE>
<CAPTION>

                                                      Nonperforming Assets
                                                       as of December 31,

-----------------------------------------------------------------------------------------------------------------------------------
           (Dollars in thousands)                                 1999            1998          1997            1996           1995
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>            <C>            <C>            <C>
Principal balance
-----------------
Nonaccrual ..............................................        $3,981         $  537         $1,141         $  900         $  581
90 days or more past due and still
  accruing ..............................................         2,261          1,971          1,705          1,518            461
                                                                 ------------------------------------------------------------------
            Total nonperforming loans ...................        $6,242         $2,508         $2,846         $2,418         $1,042
                                                                 ==================================================================
Nonperforming as a percent of loans .....................          1.07%          0.49%          0.61%          0.59%          0.30%

Other real estate owned ("OREO") ........................        $1,893         $1,290         $  878         $  309         $  770

OREO as a percent of loans ..............................          0.32%          0.25%          0.19%          0.07%          0.22%

Allowance as a percent of nonperforming
loans ...................................................        118.55%        263.24%        214.27%        195.33%        450.10%
</TABLE>

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


                                                      BankFirst Corporation | 16
<PAGE>

Allocation of the Allowance for Credit Losses
================================================================================

Future provisions for credit losses will be dependent on loan growth,  loan mix,
portfolio credit risk and actual losses incurred. Management has determined that
a total  allowance of $7.4 million,  or 1.26% of total loans  exclusive of loans
held for sale for 1999,  is  adequate  for credit  losses  inherent in the total
portfolio.

<TABLE>
<CAPTION>
                                                    Allowance Allocation
                                                      at December 31,

          (Dollars in thousands)               1999             1998              1997              1996           1995
   --------------------------------------------------------------------------------------------------------------------
   <S>                                    <C>              <C>              <C>               <C>            <C>
   Commercial, financial, and
   agricultural .....................     $   1,574        $   1,312        $    1,231        $      801     $      714
   Commercial real estate............         2,789            2,442             1,874             1,366          1,263
   Real estate-construction..........           215              268               244               338            276
   Real estate-residential...........         1,149              821               839             1,126          1,227
   Installment.......................           592              600               986               666            709
   Unallocated.......................         1,081            1,159               924               426            501
                                          -----------------------------------------------------------------------------
   Total.............................     $   7,400        $   6,602        $    6,098        $    4,723     $    4,690
                                          =============================================================================
</TABLE>


Noninterest Income
================================================================================

1999 vs. 1998

Noninterest  income  increased 15% from $9.3 million in 1998 to $10.7 million in
1999,  primarily  attributable to origination fees and discount points earned on
mortgage  loans  held for sale.  Service  charges  on  deposit-related  products
generated  $4.7 million for the year, an increase of more than $400,000 over the
previous year. Trust income increased nearly $100,000 to $999,000 in 1999 as the
trust assets under  management  increased during the year. Loan servicing income
increased  nearly $300,000 in 1999,  which was primarily  attributable to Curtis
Mortgage's  mortgage banking  activities.  (See the section  entitled  "Mortgage
Banking" herein for additional  information.) Other noninterest income increased
$625,000 due mainly to gains on the sale of other real estate.

1998 vs. 1997

Noninterest  income increased from $5.7 million in 1997 to $9.3 million in 1998,
primarily  attributable  to  mortgage  banking  activities.  Service  charges on
deposit-related  products  generated  $4.3 million for the year,  an increase of
$446,000 over the previous year. Trust income increased from $704,000 in 1997 to
$903,000 in 1998 as the trust assets under management increased during the year.
Loan  servicing  income   increased   $131,000  in  1998,  which  was  primarily
attributable  to the purchase of Curtis  Mortgage in January  1998.  Net gain on
sale of  residential  mortgage  loans  increased  from  $226,000 in 1997 to $3.3
million in 1998,  also as a result of mortgage  banking  activities.  Securities
gains were $124,000 in 1998 and $309,000 in 1997.

<TABLE>
<CAPTION>
                                                     Noninterest Income

------------------------------------------------------------------------------------------------------------------------
                                                           % change                            % change
        (Dollars in thousands)             1999           from 1998            1998            from 1997            1997
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                <C>              <C>               <C>                <C>
   Noninterest Income
   Deposit service charges and fees .  $  4,668             9.65%          $  4,257             11.70%          $  3,811
   Trust department income ..........       999            10.63                903             28.27                704
   Loan servicing income, net of
   amortization .....................       426           225.19                131                NM                 --
   Other ............................     1,230           103.31                605             (0.33)               607
                                       ---------------------------------------------------------------------------------
                                          7,323            24.20              5,896             15.11              5,122

   Realized gain on sale of loans ...     3,374             2.77              3,283          1,352.65                226
   Security gains/(losses) ..........        40           (67.74)               124            (59.87)               309
                                       ---------------------------------------------------------------------------------

   Total Noninterest Income .........  $ 10,737            15.41%          $  9,303            64.45%           $  5,657
                                       =================================================================================
</TABLE>

NM = Not Measurable


                                                      BankFirst Corporation | 17
<PAGE>

Noninterest Expense
================================================================================

1999 vs. 1998

Noninterest expense increased approximately $600,000, or 2%, to $28.8 million in
1999 from $28.2 million in 1998. The primary component of noninterest expense is
salaries and benefits,  which increased  approximately $700,000, or 5%, to $15.7
million  in 1999  from  $15.1  million  in  1998.  Occupancy  expense  decreased
approximately  $400,000 from the previous year,  which  included  start-up costs
associated  with the opening of three new branches.  Other  noninterest  expense
decreased  by  approximately  $900,000 in 1999 that was mainly  attributable  to
merger-related expenses incurred in 1998. The Company's efficiency ratio in 1999
was 64.1% compared to 68.8% in 1998.

1998 vs. 1997

Noninterest  expense  increased  $6.9 million,  or 32%, to $28.2 million in 1998
from $21.3  million in 1997.  The primary  component of  noninterest  expense is
salaries and benefits,  which increased $3.9 million, or 35.5%, to $15.0 million
in 1998 from $11.1  million in 1997.  The  increase in salaries  and benefits is
primarily attributable to the expenses of newly acquired Curtis Mortgage and the
overall growth of the Company.  Occupancy expense increased $775,000, or 45%, to
$2.5 million in 1998 from $1.7 million in 1997. Office expense rose 107% to $1.6
million in 1998 from $775,000 in 1997.

<TABLE>
<CAPTION>

                                                    Noninterest Expense
-------------------------------------------------------------------------------------------------------------------
                                                       % change                          % change
       (Dollars in thousands)            1999          from 1998           1998          from 1997          1997
-------------------------------------------------------------------------------------------------------------------
<S>                                     <C>               <C>            <C>               <C>             <C>
   Noninterest Expense
   Salaries and employee benefits       $15,731           4.50%          $15,054           35.50%          $11,110
   Occupancy expense ............         2,054         (17.54)            2,491           45.16             1,716
   Equipment expense ............         2,599          13.74             2,285           (9.93)            2,537
   Office expense ...............         1,844          14.82             1,606          107.23               775
   Data processing expense ......         1,722          26.25             1,364            8.86             1,253
   Advertising ..................           734          78.59               411          (26.34)              558
   Other ........................         4,137         (17.38)            5,007           48.40             3,374
                                        --------------------------------------------------------------------------
   Total Noninterest Expense ....       $28,821           2.14%          $28,218           32.34%          $21,323
                                        ==========================================================================
</TABLE>

Provision for Income Taxes
================================================================================

The total  provision  for income taxes was $4.5 million for 1999,  reflecting an
increase of $900,000  when  compared to $3.6  million for 1998.  The increase in
1999 was due to a higher level of pre-tax  income.  The  effective  tax rate was
33.6% in 1999 and 34.3% in 1998.


                                                      BankFirst Corporation | 18
<PAGE>

Investment Securities
================================================================================

BankFirst and The First  National Bank and Trust  Company,  subsidiaries  of the
Company, use their securities  portfolios primarily as a source of liquidity and
a base  from  which to  pledge  assets  for  repurchase  agreements  and  public
deposits.  Generation  of income from  securities  is not a primary focus of the
Banks.  Total securities were $133.6 million at year-end 1999, which is slightly
higher than the $127.9 million balance in 1998. The Banks' policy guidelines are
designed  to  minimize  credit,  market,  and  liquidity  risk,  and  securities
generally must be "investment  grade" or higher to be purchased.  All securities
are  classified  as  "available  for  sale" to  provide  flexibility  for  asset
liability  management.  Approximately  $95.5 million of year-end 1999 securities
were pledged for public  deposits and  repurchase  agreements.  The Banks do not
invest in off-balance sheet derivative financial  instruments,  such as interest
rate swaps.

                                    Securities
                                  at December 31,

       (Dollars in thousands)            1999            1998            1997
 ------------------------------------------------------------------------------
 Available For Sale
 U.S. Government & Agencies.......    $  76,914       $  71,504       $  77,969
 State and municipal..............       39,891          39,008          38,999
 Mortgage-backed and asset-backed        16,791          17,350          10,768
                                     ------------------------------------------
 Total Available For Sale ........    $ 133,596       $ 127,862       $ 127,736
                                     ==========================================

<TABLE>
<CAPTION>
                                                Securities Maturity Schedule
                                                    at December 31, 1999

(Dollars in thousands)           1 Year and Less     1 to 5 Years      5 to 10 Years      Over 10 Years         Total
----------------------------------------------------------------------------------------------------------------------------
                                 Balance    Rate    Balance   Rate    Balance    Rate    Balance    Rate     Balance   Rate
<S>                              <C>        <C>     <C>        <C>    <C>        <C>     <C>        <C>     <C>        <C>
Available For Sale
U.S. Government & Agencies...... $11,988    5.98%   $42,904    6.06%  $ 21,906   6.58%   $   116    5.55%   $ 76,914   6.20%
State and municipal.............   1,137    6.82      8,227    6.09     21,565   6.47      8,962    6.64      39,891   6.44
Mortgage-backed and asset-backed                                                                              16,791   6.07
                                 -------            -------           --------           -------             -------  -----

Total Available For Sale ....... $13,125            $51,131           $ 43,471           $ 9,078            $133,596   6.26%
                                 =======            =======           ========           =======            ========  =====
</TABLE>

Loans
================================================================================

Total loans,  exclusive of loans held for sale,  were $585.6 million at year-end
1999, and $508.6  million at year-end  1998.  Loan growth was $77 million during
1999 and $44 million  during  1998.  Loans in all  categories  continued to grow
during 1998 and 1999 primarily as a result of strong economic  conditions in the
Banks' primary markets, with commercial lending experiencing the largest growth.
A significant  percentage of commercial  loans is represented by the hospitality
industry, which comprises approximately $132 million, or 22.6%, of the Company's
total loan portfolio.

Management expects loan growth in 2000 to continue at a slower rate than in 1999
due to rising interest rates initiated by the Federal Reserve Board.  Commercial
lending will continue to be the primary focus,  although management will work to
generate additional consumer loans, as well as additional  residential  mortgage
loans through Curtis Mortgage.

Lending  activities are under the direct  supervision of the Boards of Directors
and senior  management of the Banks.  The Banks operate under loan policies that
provide, among other things, guidelines for underwriting,  credit criteria, loan
composition, concentrations and administration.


                                                      BankFirst Corporation | 19
<PAGE>

<TABLE>
<CAPTION>
                                                      Loans Outstanding
                                                       at December 31,
   --------------------------------------------------------------------------------------------------------------------
     (Dollars in thousands)          1999               1998               1997                1996              1995
   --------------------------------------------------------------------------------------------------------------------
   <S>                         <C>               <C>                 <C>                <C>                 <C>
   Commercial, financing and
   agricultural..............  $   101,310       $    87,793         $    95,143        $    69,614         $    53,430
   Commercial real estate....      250,403           211,114             164,102            155,389             116,372
   Real estate-construction .       27,585            36,779              24,977             26,379              22,021
   Real estate-residential ..      138,001           115,115             119,748            110,636             108,276
   Installment...............       68,968            57,497              59,947             50,277              50,569
   Other.....................          203             1,614               2,623              2,035               1,754
                               ----------------------------------------------------------------------------------------

     Total loans.............      586,470           509,912             466,540            414,330             352,422
   Unearned income...........         (854)           (1,360)             (1,968)            (1,537)             (1,770)
                               ----------------------------------------------------------------------------------------

         Total loans, net ...  $   585,616       $   508,552         $   464,572        $   412,793         $   350,652
                               ========================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                            Composition of Loan Portfolio by Type
                                                       at December 31,
                               ----------------------------------------------------------------------------------------
                                     1999                1998                1997              1996                1995
                               ----------------------------------------------------------------------------------------
   <S>                              <C>                 <C>                  <C>              <C>                 <C>
   Commercial, financial,
   and agricultural..........       17.27%               17.22%              20.39%           16.80%              15.16%
   Commercial real estate ...       42.70                41.40               35.17            37.50               33.02
   Real estate-construction .        4.70                 7.21                5.35             6.37                6.25
   Real estate-residential ..       23.53                22.58               25.67            26.70               30.72
   Installment...............       11.76                11.28               12.85            12.13               14.35
   Other.....................        0.04                 0.31                0.57             0.50                0.50
                               =========================================================================================
   Total.....................      100.00%              100.00%             100.00%          100.00%             100.00%
                               =========================================================================================
</TABLE>

Mortgage Banking
================================================================================

Mortgage  banking  revenues  account for a significant  portion of the Company's
operating  noninterest income and include origination fees, points, gain or loss
on sales of loans, loan servicing  income,  and recognition of the value of loan
servicing.   The   costs  of   servicing   rights   on   mortgage   loans   sold
"servicing-retained"  is recognized  as an asset,  with a  corresponding  amount
recorded as income; the asset is amortized over its expected life. Net gains and
losses on loans,  coupled with loan servicing  income and related  amortization,
were $3.8  million for 1999,  compared to $3.4  million for the same period last
year. The increase was attributed to slower refinancing of serviced loans, which
favorably impacted amortization expense.

The interest rate environment  heavily  influences  secondary market residential
loan originations and consumer refinance activity. Loan origination and purchase
loan volumes decreased from 1998; however,  the resulting gains realized on loan
sales were higher in 1999.  Market  interest rates for year 2000 are expected to
be higher  than 1999  levels,  which may cause gain on sale of loans to be lower
than 1998. Given this expected rise in interest rates,  management believes that
the secondary market sales volume, comprised mainly of fixed rate products, will
continue to decline from current levels.


                                                      BankFirst Corporation | 20
<PAGE>

Deposits and Borrowings
================================================================================

Deposits have been the Company's  primary source of funding for loans,  although
the  Company  also  utilizes  borrowed  funds,   including  customer  repurchase
agreements.  The Company  believes it has the ability to raise deposits  quickly
within its market  areas by  slightly  raising  interest  rates.  The  Company's
deposit  strategy,  however,  has been to  remain  competitive  in its  markets,
without paying the highest yield, because of the availability and attractiveness
of other sources of funding.  Customer  repurchase  agreements  and Federal Home
Loan Bank of  Cincinnati  ("FHLB")  advances,  while more  costly  than  deposit
funding,  are  typically  the lowest  costing  borrowed  funds  available in the
marketplace, and are utilized by management to raise identified amounts of funds
with more precision than deposit  solicitations.  Although management expects to
continue using repurchase  agreements,  short-term borrowings and FHLB advances,
deposits will continue to be the Company's primary funding source.

Total  deposits grew at a rate of 2% during 1999 and 12% during 1998,  resulting
from an increase in  deposit-taking  branch  locations and  effective  marketing
strategies. Despite the increase in deposit growth, loan growth, including loans
held for sale, outpaced the growth of deposit sources,  resulting in an increase
in the loan to deposit ratio to 89.1% at year-end  1999,  from 86.4% at year-end
1998.  To supply the needed  liquidity,  the Company  increased  its  repurchase
agreements  from $22.2 million in 1998 to $32.1 million in 1999.  These accounts
are considered volatile under regulatory requirements,  although the Company has
found them to be a steady  source of funding.  The Company has utilized the FHLB
as a borrowing  source.  FHLB borrowings were $11.9 million at year-end 1998 and
$29.2  million  at  year-end  1999.  The FHLB will  continue  to be a source for
funding  loan growth in the future,  as the Company  intends to draw  additional
borrowings to fund loan growth.

<TABLE>
<CAPTION>
                                      Deposit Information
                                        at December 31,

  --------------------------------------------------------------------------------------------
    (Dollars in thousands)         1999                      1998                      1997
  --------------------------------------------------------------------------------------------
  <S>                          <C>                       <C>                       <C>
  Noninterest-bearing........  $   105,079               $   117,823               $    92,749
  Interest-bearing demand....      181,918                   159,890                   150,761
  Saving deposits............       31,007                    33,862                    37,270
  Time.......................      312,375                   306,391                   268,989
                               ---------------------------------------------------------------
  Total Deposits.............  $   630,379               $   617,966               $   549,769
                               ===============================================================
</TABLE>

<TABLE>
<CAPTION>
                              Maturity Ranges of Time Deposits
                      With Balances of $100,000 or More at December 31,
  -------------------------------------------------------------------------------------------
    (Dollars in thousands)         1999                     1998                      1997
  -------------------------------------------------------------------------------------------
  <S>                          <C>                      <C>                        <C>
  3 months or less...........  $   24,905               $   23,642                 $   25,686
  3 through 6 months.........      27,611                   22,623                     14,324
  6 through 12 months........      25,815                   24,231                     21,167
  Over 12 months.............      17,572                   10,906                     17,083
                               --------------------------------------------------------------
                               $   95,903               $   81,402                 $   78,260
                               ==============================================================
</TABLE>

In  general,  large  certificate  of  deposit  customers  tend  to be  extremely
sensitive to interest rate levels,  making these deposits less reliable  sources
of funding for liquidity  planning  purposes than core  deposits.  However,  the
Company  does not believe  that its  deposits of this type are  materially  more
sensitive  to interest  rate  changes  than its other  certificates  of deposits
because such certificates are principally held by long-term customers located in
the Banks' market areas. Certificates of deposit of this type rose $14.5 million
from year-end 1998 to December 31, 1999, representing a $3.1 million increase.


                                                      BankFirst Corporation | 21
<PAGE>

Interest Rate Sensitivity
================================================================================

A key element in the  financial  performance  of financial  institutions  is the
level and type of  interest  rate risk  assumed.  The  single  most  significant
measure of interest rate risk is the  relationship  of the repricing  periods of
earning assets and interest-bearing  liabilities. The more closely the repricing
periods are correlated,  the less interest rate risk assumed by the Company.  In
general,  community bank customer preferences tend to push the average repricing
period  for  costing  liabilities  to a  shorter  time  frame  than the  average
repricing  period of earning  assets,  resulting  in a net  liability  sensitive
position in time frames less than one year.

<TABLE>
<CAPTION>

                                            Liquidity and Interest Rate Sensitivity
                                                     at December 31, 1999

----------------------------------------------------------------------------------------------------------------------
          (Dollars in thousands)               1-90 Days      91-365 Days      1-5 Years    Over 5 Years      Total
----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>             <C>             <C>
Interest-Earning Assets
  Loans, net (1)...........................  $   203,781     $   115,461     $   236,936     $   41,643    $   597,821
  Securities available for sale
    Taxable................................        1,776          19,868          48,641         25,881         96,166
    Tax-exempt.............................        1,445           2,915          25,854          7,216         37,430
                                             -------------------------------------------------------------------------
       Total securities....................        3,221          22,783          74,495         33,097        133,596

  Federal funds sold and other.............        1,621             749              --          3,496          5,866

                                             -------------------------------------------------------------------------
Total Interest-Earning Assets..............  $   208,623     $   138,993     $   311,431     $   78,236    $   737,283
                                             =========================================================================

Interest-Bearing Liabilities

  Interest-bearing demand deposits.........  $   181,918     $        --     $        --     $       --    $   181,918
  Savings deposits.........................       31,007              --              --             --         31,007
  Time Deposits............................       86,319         156,633          69,423             --        312,375
  Repurchase agreements and other borrowed
    Funds..................................       59,603              --              --             --         59,603
  Long-term borrowings.....................       27,000              --              --          2,159         29,159
                                             -------------------------------------------------------------------------
Total Interest-Bearing Liabilities.........  $   385,847     $   156,633     $    69,423     $    2,159    $   614,062
                                             =========================================================================

Rate sensitive gap.........................     (177,224)        (17,640)        242,008         76,077        123,221
Rate sensitive cumulative gap..............     (177,224)       (194,864)         47,144        123,221
Cumulative gap as a percentage of earning
assets.....................................       (24.04)%        (26.43)%          6.39%         16.71%
</TABLE>

(1) Includes mortgage loans held for sale.

The Company has a  cumulative  negative  GAP  (defined as the dollar  difference
between  rate-sensitive assets and rate-sensitive  liabilities with respect to a
given time frame) of approximately 24.0% and 26.4% at the end of 90 days and one
year,  respectively  as of December 31, 1999.  This  compares  with a cumulative
negative  GAP of  11.6%  and  18.6% at the end of 90 days  and one  year,  as of
year-end  1998.   Management  believes  that  this  level  of  negative  GAP  is
appropriate  since many of the liabilities  that are  contractually  immediately
repricable  can be effectively  repriced more slowly than the assets,  which are
contractually  immediately repricable in a rising rate environment.  Conversely,
those liabilities can often be repriced downward more rapidly than contractually
required assets  repricing in a downward rate  environment.  The degree to which
management  can  control  the rate of change in deposit  liabilities,  which are
contractually immediately repricable, is affected to a large extent by the speed
and amount of interest  rate  movements.  Management's  estimates  regarding the
actual  repricing  of  contractually   immediately   repricable  liabilities  is
incorporated into the Company's earnings simulation model.


                                                      BankFirst Corporation | 22
<PAGE>

The Company uses an earnings simulation model to analyze the net interest income
sensitivity.  Potential  changes in market  interest rates and their  subsequent
effect on interest  income is then  evaluated.  The model projects the effect of
instantaneous  movements in interest  rates of 100 and 200 basis points  ("bp").
Assumptions based on the historical  behavior of the Company's deposit rates and
balances in relation to interest rates are also incorporated in the model. These
assumptions  are  inherently  uncertain  and,  as a  result,  the  model  cannot
precisely  measure  net  interest  income or  precisely  predict  the  impact of
fluctuations  in market  interest rates on net interest  income.  Actual results
will differ  from the model's  simulated  results due to timing,  magnitude  and
frequency of interest rate changes,  as well as changes in market conditions and
the application of various management strategies.

<TABLE>
<CAPTION>

                                                     Market Risk Analysis
                                                     at December 31, 1999
                                      Decrease in Rates                                    Increase in Rates
                                      -----------------                                    -----------------
  (Dollars in thousands)      200 Basis Points  100 Basis Points   Level Rates     100 Basis Points  200 Basis Points
---------------------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>               <C>               <C>               <C>
Projected Interest Income
Loans.......................    $   52,061       $   53,410        $   55,484        $   57,559        $   58,906
Investments.................         8,925            9,058             9,229             9,400             9,532
Federal funds sold..........            --               --                --                --                --

Total interest income.......    $   60,986       $   62,468        $   64,713        $   66,959        $   68,438

Projected Interest Expense
Deposits....................    $   20,951       $   21,924        $   23,413        $   24,846        $   25,738
FHLB term advances..........         1,444            1,555             1,727             1,900             2,010
Fed funds purchased
& other borrowings..........         3,144            3,354             3,687             4,021             4,210

Total interest expense .....    $   25,539       $   26,833        $   28,827        $   30,767        $   31,958

Net interest income.........    $   35,447       $   35,635        $   35,886        $   36,192        $   36,480
Change from level rates ....          (439)            (251)                                306               594
% change from level rates ..         (1.22)%          (0.70)%                              0.85%             1.66%
</TABLE>

<TABLE>
<CAPTION>
                                                Summarized Market Risk Analysis
                                                     at December 31, 1998
                                      Decrease in Rates                                        Increase in Rates
                                      -----------------                                        -----------------
 (Dollars in thousands)    200 Basis Points   100 Basis Points   Level Rates      100 Basis Points   200 Basis Points
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>              <C>                <C>                <C>
Projected total interest
income......................   $49,667            $51,888          $54,085            $56,333            $58,546
Projected total interest
expense.....................    20,824             22,594           23,524             25,032             26,394
Net interest income.........    28,843             29,294           30,561             31,301             32,152
Change from level rates ....    (1,738)            (1,287)                                720              1,571
% change from level rates ..     (5.68)%            (4.21)%                              2.35%              5.14%
</TABLE>

In the event of an  immediate  100 bp upward  shift in the  yield  curve,  it is
estimated  that net interest  income would  increase by $306,000  compared to an
increase  of  $594,000  in the event of a similar  200 bp rate  movement.  These
changes  represent 0.85% and 1.66% of net interest  income,  respectively.  This
compares to December 31, 1998, when an immediate 100 bp upward shift resulted in
net  interest  income  increasing  $720,000 and an increase of $1.6 million when
there  was an upward  movement  of 200 bp.  Downward  rate  movements  result in
estimated  decreases in net interest  income of reasonably  similar  amounts and
percentages.


                                                      BankFirst Corporation | 23
<PAGE>

Even though the Company's  cumulative GAP at one year is negative,  the earnings
simulation  model indicates that an increase in interest rates of 100 bp and 200
bp would result in increased net interest income. This occurs because management
believes that if overall market  interest rates  increase  modestly,  the market
would not require an  immediate,  corresponding  repricing  of non-term  deposit
liabilities.

Although the 1999 model shown above  reflects a slight  increase in net interest
income if  interest  rates  rise,  future  fluctuations  in  noninterest-bearing
deposits,  reductions in loan  origination  fees,  higher  borrowing  costs, and
increasingly  competitive loan pricing pressures may have a significant negative
impact on future  earnings.  The Company's net interest margin has declined from
5.07% at December  31,  1997 to 4.95% at December  31, 1998 to 4.81% at December
31, 1999,  mainly due to the  above-reflected  situations.  Refer to the section
entitled "Asset/Liability Management" herein for additional information.

Equity and Capital Resources
================================================================================

The Company was "well capitalized" for regulatory purposes during 1999 and 1998.
Please refer to Note 11,  "Capital  Requirements  and  Restrictions  on Retained
Earnings",  in the Financial  Statements included herein. The Company has issued
stock upon the  exercise of stock  options,  conversion  of  preferred  stock to
common stock,  and in connection with a five for four common stock split in 1997
and five for one split in 1998.  In  September  1998 the  Company  received  net
proceeds  from its initial  public  offering.  The  increase in capital from the
offering will be utilized to support  long-term  future growth.  The Company has
not paid cash  dividends  on its Common Stock since  becoming a publicly  traded
Company in September 1998. The Company's  current  strategy is to support equity
growth by retaining net profits rather than  distributing its net profits in the
form of cash dividends.

Items that represent common stock equivalents include 181,050 outstanding shares
of the Company's 5% preferred  stock,  $5.00 par value per share (the "Preferred
Stock"),  and 987,810 common stock options  outstanding  at year-end 1999.  Each
share of the Preferred Stock is convertible  into 3.0875 shares of Common Stock,
adjustable  for stock splits and future  recapitalizations.  There are 1,000,000
authorized shares of Preferred Stock; however, management currently has no plans
to issue  additional  shares.  There are 1,936,660  additional  shares of Common
Stock  available for grant under the Company's  Incentive Stock Option Plan. The
Company plans to continue granting stock options to selected officers, directors
and other key employees.

Liquidity
================================================================================

Liquidity management is both a daily and long-term responsibility of management.
The Company  adjusts its  investments  in liquid assets and long- and short-term
borrowings,  based upon  management's  consideration  of expected  loan  demand,
expected  deposit flows and securities sold under repurchase  agreements  (which
are  generally  deposit  equivalents  arising from a corporate  cash  management
program  offered  by the  Company).  Management  looks  to  deposits  and  other
borrowings  as its  primary  sources of  liquidity.  The Banks'  Asset/Liability
Committees  evaluate  funding sources on a quarterly  basis, set funding policy,
and evaluate  repricing  and maturity of the Banks'  assets and  liabilities  in
order to diminish the potential  adverse  impact that changes in interest  rates
could have on the Banks' net interest income.

The Company  believes it has the ability to raise  deposits  quickly  within its
market area by slightly  raising  interest rates, but has typically been able to
achieve  deposit  growth  without paying above market  interest  rates.  Deposit
growth has  funded  most of the  significant  asset  growth in the past  several
years,  but has decreased  modestly as a percent of total  funding.  The Company
actively solicits customer cash management relationships, which often includes a
securities  repurchase  agreement  feature.  Under these agreements,  commercial
customers are able to generate earnings on otherwise idle funds on deposits with
the Banks. These accounts are considered volatile under regulatory requirements,
although  the  Company  has found  them to be a steady  source of  funding.  The
Company has been able to increase customer  relationships  because of its strong
business-lending   program.  While  more  costly  than  deposit  funding,  these
deposit-related  accounts are typically the lowest cost borrowed funds available
to the Company.


                                                      BankFirst Corporation | 24
<PAGE>

The  Company  maintains   significant  lines  of  credit  with  other  financial
institutions.  At December 31, 1999, total borrowing  capacity under those lines
amounted to  approximately  $55.5 million under  agreements with five commercial
banks and an  additional  $7.6 million with the FHLB and $51.7  million with the
Federal Reserve Bank.

While  management is currently  extending the average maturity of its securities
for interest rate risk purposes,  substantial liquidity is available from normal
maturities  of  securities.  The Company also had $133.6  million in  securities
classified as "available  for sale" at year-end  1999.  The ability to sell such
securities  is  another  potential  source  of  liquidity,  although  management
generally  does not use this  source of funding  frequently.  To the extent such
securities  are pledged to  outstanding  borrowings,  they are not available for
liquidity  purposes.  Proceeds from the  maturities of loans are another  steady
source  of  funding,  although  on a net  basis  the  demands  for new loans and
renewals have exceeded funds provided by maturing loans.

<TABLE>
<CAPTION>

                                 Loan Liquidity
                              at December 31, 1999

        (Dollars in thousands)                                    Loan Maturities
--------------------------------------------------------------------------------------------------------------------
                                        1 year and less         1-5 years           Over 5 years             Total
                                        ---------------         ---------           ------------             -----
<S>                                     <C>                  <C>                   <C>                  <C>
Commercial, financial, and
agricultural ......................     $    49,669          $     44,958          $       6,683        $    101,310
Commercial real estate.............           5,846               179,313                 64,546             249,705
Real estate - construction and
residential (1)....................          39,858                64,870                 73,063             177,791
Installment & Other................          18,382                43,646                  6,987              69,015
                                        -----------          ------------          -------------        ------------
Total loans........................     $   113,755          $    332,787          $     151,279        $    597,821
                                        ===========          ============          =============        ============

Loans maturing after 1 year with:
  Fixed interest rates.............     $   324,006
  Floating interest rates..........         160,060
                                        ===========
                                        $   484,066
                                        ===========
</TABLE>

(1) Includes  $12,205 of mortgage loans held for sale,  which are generally sold
    within 60 days.

The liquidity  discussion above has described the Company's liquidity needs on a
consolidated  basis. In general,  the deposit and borrowing  capacity  described
above is at the  bank  level.  If  necessary,  additional  funding  sources  are
available  at the holding  company  level.  Substantial  liquidity  can be moved
between the Banks and the holding company, although there are certain regulatory
restrictions on such flows,  particularly from the Banks to the holding company.
Please refer to Note 11,  "Capital  Requirements  and  Restrictions  on Retained
Earnings",  to the Financial  Statements.  The holding company  currently has no
borrowings,  and management's  previous history has been to not pay dividends on
common stock, but rather to retain net profits to support the Company's  growth.
As a result, the holding company's  independent liquidity needs result primarily
from  holding  company only  expenses,  which are quite small in relation to its
sources of liquidity.


                                                      BankFirst Corporation | 25
<PAGE>

Year 2000
================================================================================

The Company undertook a project (the "Year 2000 Project") to identify and assess
the readiness of its computer systems,  programs and other  infrastructure  that
could be affected by the Year 2000 issue and to remedy the problems  identified.
The Year 2000 Project also included an assessment of Year 2000  readiness of key
third  parties on whom the  Company's  operations  depended.  The  Company  also
developed contingency plans to permit it to continue operations, consistent with
the  highest  quality  standards,  in the event  Year 2000  problems  arose.  If
problems are  encountered in the future related to in-house  systems or to those
of key third  parties,  it is possible  that costs could be incurred  that might
adversely affect the Company's financial condition.

During 1999, the Company incurred costs of approximately  $250,000  attributable
to Year  2000  remediation.  Although  management  does not  expect to incur any
additional  related  expenses  in  2000,  unforeseen  circumstances  may  arise;
therefore,  monitoring will continue at least through the first quarter of 2000.
Corrective  action  will  be  taken  if  management  encounters  any  previously
unidentified Year 2000 problems internally or in interfacing with third parties,
and our contingency plans remain available.  Management has determined that if a
business interruption as a result of the Year 2000 issue occurred,  that such an
interruption could be material to the Company's overall financial performance.

Effects of Inflation
================================================================================

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance  with generally  accepted  accounting  principles,  which require the
measurement of financial  position and operating  results in terms of historical
dollars without considering the change in the relative purchasing power of money
over  time due to  inflation.  The  impact  of  inflation  is  reflected  in the
increased  cost  of the  Company's  operations.  Nearly  all of the  assets  and
liabilities of the Company are financial, unlike most industrial companies. As a
result,  the Company's  performance is directly  impacted by changes in interest
rates,  which  are  indirectly  influenced  by  inflationary  expectations.  The
Company's  ability to match the interest  sensitivity of its financial assets to
the interest  sensitivity of its financial  liabilities  in its  asset/liability
management  may tend to minimize  the effect of change in interest  rates on the
Company's performance.  Changes in interest rates do not necessarily move to the
same extent as changes in the prices of goods and services.

New Reporting Requirements
================================================================================

SFAS No. 133,  "Accounting  for  Derivative  Financial  Instruments  and Hedging
Activities".  SFAS No.  133  requires  companies  to record  derivatives  on the
balance sheet as assets or  liabilities  at fair value.  Depending on the use of
the derivatives and whether they qualify for hedge  accounting,  gains or losses
from  changes in the value of such  derivatives  would  either be  recorded as a
component of net income or as a change in stockholders'  equity. Until recently,
BankFirst was required to adopt the new standard as of January 1, 2000. However,
in July 1999, the Financial Accounting Standards Board issued SFAS 137 extending
the  implementation  date of SFAS 133 until January 1, 2001.  Management has not
yet determined the impact of this standard.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
================================================================================

The  information  for this  item is  hereby  incorporated  by  reference  to the
Liquidity  and  Interest  Rate  Sensitivity  section  of  Item  7.  Management's
Discussion and Analysis of Financial Condition and Results of Operations.


                                                      BankFirst Corporation | 26
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
BankFirst Corporation
Knoxville, Tennessee

We have  audited  the  accompanying  consolidated  balance  sheets of  BankFirst
Corporation  as of  December  31, 1999 and 1998,  and the  related  consolidated
statements of income,  changes in stockholders'  equity, and cash flows for each
of the three years in the period  ending  December  31,  1999.  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 did not audit the 1997  financial  statements of First  Franklin
Bancshares,  Inc. which  statements  reflect net income  constituting 39% of the
related  1997  total.  The  First  Franklin  Bancshares,   Inc.  1997  financial
statements were audited by other  auditors,  whose report dated January 22, 1998
thereon has been furnished to us and our opinion expressed herein, insofar as it
relates to the  amounts  included  for First  Franklin  Bancshares,  Inc. in the
consolidated  financial  statements,  is based solely on the report of the other
auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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  balance sheet  presentation.  We
believe our audits provide a reasonable basis for our opinion.

In our  opinion,  based on our  audits  and the  report of other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material  respects,  the  financial  position  of  BankFirst  Corporation  as of
December  31, 1999 and 1998,  and its results of  operations  and cash flows for
each of the three years in the period  ending  December  31, 1999 in  conformity
with generally accepted accounting principles.

                                                   Crowe, Chizek and Company LLP

Louisville, Kentucky
January 21, 2000


                                                      BankFirst Corporation | 27
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

                                                                                1999            1998
                                                                                ----            ----
<S>                                                                        <C>              <C>
ASSETS
     Cash and due from banks                                               $     36,039     $     36,136
     Federal funds sold                                                               0            8,850
                                                                           ------------     ------------
         Total cash and cash equivalents                                         36,039           44,986
     Securities available for sale                                              133,596          127,862
     Mortgage loans held for sale                                                12,205           25,642
     Loans, net of allowance for credit losses of $7,400 and $6,602             578,216          501,950
     Premises and equipment, net                                                 26,814           24,927
     Mortgage servicing rights                                                    8,896            7,484
     Federal Home Loan Bank Stock, at cost                                        3,420            3,189
     Intangible assets                                                            1,845            2,002
     Accrued interest receivable and other assets                                11,868           10,259
                                                                           ------------     ------------

         Total assets                                                      $    812,899     $    748,301
                                                                           ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Noninterest-bearing deposits                                          $    105,079     $    117,823
     Interest-bearing deposits                                                  525,300          500,143
                                                                           ------------     ------------
         Total deposits                                                         630,379          617,966

     Securities sold under agreements to repurchase                              32,103           22,208
     Federal funds purchased and other borrowings                                27,500            4,166
     Advances from the Federal Home Loan Bank                                    29,159           11,884
     Accrued interest payable and other liabilities                               7,232            9,236
                                                                           ------------     ------------
         Total liabilities                                                      726,373          665,460

Stockholders' equity
     Common stock:  $2.50 par value, 15,000,000 shares
       authorized, 11,275,600 and 11,375,600 shares outstanding                  28,189           28,439
     Noncumulative convertible preferred stock:  $5 par value,
       1,000,000 shares authorized, 181,050 shares outstanding                      905              905
     Additional paid-in capital                                                  33,448           34,093
     Retained earnings                                                           25,914           17,160
     Accumulated other comprehensive income (loss)                               (1,930)           2,244
                                                                           ------------     ------------
         Total stockholders' equity                                              86,526           82,841
                                                                           ------------     ------------

         Total liabilities and stockholders' equity                        $    812,899     $    748,301
                                                                           ============     ============
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.


                                                      BankFirst Corporation | 28
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 1999, 1998 and 1997
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

                                                                       1999             1998            1997
                                                                       ----             ----            ----
<S>                                                                <C>             <C>             <C>
Interest income
    Interest and fees on loans                                     $   50,514      $   47,846      $   42,880
    Taxable securities                                                  5,878           5,539           6,874
    Nontaxable securities                                               1,651           1,839           1,173
    Other                                                                 565             691             360
                                                                   ----------      ----------      ----------
                                                                       58,608          55,915          51,287

Interest expense
    Deposits                                                           21,933          22,734          21,104
    Federal funds purchased and repurchase agreements                   1,848           1,550             744
    Federal Home Loan Bank advances and other debt                      1,355             643             804
                                                                   ----------      ----------      ----------
                                                                       25,136          24,927          22,652

Net interest income                                                    33,472          30,988          28,635

Provision for credit losses                                             1,996           1,706           2,935
                                                                   ----------      ----------      ----------

Net interest income after provision
  for credit losses                                                    31,476          29,282          25,700

Noninterest income
    Service charges and fees                                            4,668           4,257           3,811
    Net securities gains                                                   40             124             309
    Net gain on loan sales                                              3,374           3,283             226
    Loan servicing income, net of amortization                            426             131               -
    Trust department income                                               999             903             704
    Other                                                               1,230             605             607
                                                                   ----------      ----------      ----------
                                                                       10,737           9,303           5,657
Noninterest expense
    Salaries and employee benefits                                     15,731          15,054          11,110
    Occupancy expense                                                   2,054           2,491           1,716
    Equipment expense                                                   2,599           2,285           2,537
    Office expense                                                      1,844           1,606             775
    Data processing fees                                                1,722           1,364           1,253
    Advertising                                                           734             411             558
    Other                                                               4,137           5,007           3,374
                                                                   ----------      ----------      ----------
                                                                       28,821          28,218          21,323

Income before income taxes                                             13,392          10,367          10,034

Provision for income taxes                                              4,506           3,558           3,406
                                                                   ----------      ----------      ----------

Net income                                                         $    8,886      $    6,809      $    6,628
                                                                   ==========      ==========      ==========

Earnings per share:
    Basic                                                          $      .77      $      .64      $      .66
    Diluted                                                        $      .73      $      .59      $      .61
</TABLE>


--------------------------------------------------------------------------------
                             See accompanying notes.


                                                      BankFirst Corporation | 29
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years ended December 31, 1999, 1998 and 1997
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

                                                                                              Accumulated
                                                                                                 Other       Total
                                                                     Additional                  Compre-     Stock-
                                            Common      Preferred     Paid-in     Retained      hensive     holders'
                                             Stock        Stock       Capital     Earnings   Income (loss)   Equity
                                             -----        -----       -------     --------   -------------   ------
<S>                                      <C>          <C>          <C>           <C>          <C>          <C>
Balance, January 1, 1997                 $    4,303   $    1,128   $   23,456    $  25,992    $      336   $   55,215

Sales of common stock,  1,177 shares              4           --           39           --            --           43
Stock options exercised, 23,659 shares           59           --          465           --            --          524
Conversion of 7,051 shares preferred
  stock into 3,482 shares common stock            9          (35)          26           --            --           --
Cash dividends on preferred stock                --           --           --         (161)           --         (161)
Cash dividends on common stock                   --           --           --       (1,214)           --       (1,214)
Common stock split, 253,727 shares              634           --           --         (634)           --           --
Cash paid for fractional shares in
  stock split                                    --           --           --           (3)           --           (3)
Repurchased common stock, 6,173
  shares                                        (16)          --         (209)          --            --         (225)
Comprehensive income (loss):
    Net income                                   --           --           --        6,628            --        6,628
    Change in unrealized gains
      (losses), net of reclassification          --           --           --           --           625          625
                                                                                                           ----------
     Total comprehensive income (loss)                                                                          7,253
                                         ----------   ----------   ----------    ---------    ----------   ----------

Balance, December 31, 1997                    4,993        1,093       23,777       30,608           961       61,432

Sale of common stock, 428 shares                  1           --           15           --            --           16
Stock options exercised, 1,107 shares             2           --           28           --            --           30
Conversion of 37,548 shares of preferred
  stock into 108,974 shares of common
  stock                                         272         (188)         (84)          --            --           --
Cash dividend on preferred stock                 --           --           --         (146)           --         (146)
Cash dividend on common stock                    --           --           --         (115)           --         (115)
Proceeds from issuance of 1,270,000 shares
  of common stock, net of related costs       3,175           --       10,357           --            --       13,532
Common stock split, 7,998,436 shares         19,996           --           --      (19,996)           --           --
Comprehensive income (loss):
     Net income                                  --           --           --        6,809            --        6,809
     Change in unrealized gains (losses),
       net of reclassification                   --           --           --           --         1,283        1,283
                                                                                                           ----------
     Total comprehensive income (loss)                                                                          8,092
                                         ----------   ----------   ----------    ---------    ----------   ----------

Balance, December 31, 1998               $   28,439   $      905   $   34,093    $  17,160    $    2,244   $   82,841
                                         ==========   ==========   ==========    =========    ==========   ==========
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.


                                                      BankFirst Corporation | 30
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years ended December 31, 1999, 1998 and 1997
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

                                                                                             Accumulated
                                                                                                Other         Total
                                                                    Additional                 Compre-       Stock-
                                            Common      Preferred     Paid-in     Retained     hensive      holders'
                                             Stock        Stock       Capital     Earnings  Income (loss)    Equity
                                             -----        -----       -------     --------  -------------    ------
<S>                                      <C>          <C>          <C>           <C>          <C>          <C>
Balance, January 1, 1999                 $   28,439   $      905   $   34,093    $  17,160    $    2,244   $   82,841

Cash dividends on preferred stock                --           --           --         (132)           --         (132)
Repurchased common stock,                      (250)          --         (645)          --            --         (895)
  100,000 shares
Comprehensive income (loss):
    Net income                                   --           --           --        8,886            --        8,886
    Change in unrealized gains
      (losses), net of reclassification          --           --           --           --        (4,174)      (4,174)
                                                                                                           ----------
     Total comprehensive income (loss)                                                                          4,712
                                         ----------   ----------   ----------    ---------    ----------   ----------

Balance, December 31, 1999               $   28,189   $      905   $   33,448    $  25,914    $   (1,930)  $   86,526
                                         ==========   ==========   ==========    =========    ==========   ==========
</TABLE>


--------------------------------------------------------------------------------
                             See accompanying notes.


                                                      BankFirst Corporation | 31
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1999, 1998 and 1997
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

                                                                              1999           1998           1997
                                                                              ----           ----           ----
<S>                                                                       <C>            <C>             <C>
Cash flows from operating activities
    Net income                                                            $    8,886     $    6,809      $    6,628
    Adjustments to reconcile net income to net cash from
      operating activities
       Provision for credit losses                                             1,996          1,706           2,935
       Depreciation                                                            2,278          1,936           1,754
       Amortization of mortgage servicing rights                               1,690          1,787               -
       Security amortization and accretion, net                                  104            (35)           (120)
       Net (gains) losses on securities sales                                    (40)          (124)           (309)
       Net gain on sale of mortgage loans                                     (3,374)        (3,283)           (226)
       Proceeds from sales of mortgage loans                                 166,189        209,390          15,491
       Purchases of mortgage loans held for sale                             (21,529)       (39,283)
       Originations of mortgage loans held for sale                         (131,223)      (185,804)        (15,562)
       Increase in mortgage servicing rights                                  (1,412)          (484)             --
       Net (gains) losses on sales of assets                                      --             --              77
       Changes in assets and liabilities:
          Accrued interest receivable and other assets                        (1,828)        (2,260)           (571)
          Accrued interest payable and other liabilities                      (2,004)        (2,358)          4,340
                                                                          ----------     ----------      ----------
             Net cash from operating activities                               19,733        (12,003)         14,437

Cash flows from investing activities

    Purchase of securities                                                   (51,134)       (57,152)        (59,276)
    Proceeds from maturities of securities                                    25,438         41,906          32,224
    Proceeds from sales of securities                                         15,788         14,335          35,530
    Net increase in loans                                                    (76,266)       (43,583)        (53,437)
    Purchase of FHLB stock                                                      (231)          (219)           (494)
    Premises and equipment expenditures, net                                  (4,165)        (5,731)         (6,255)
    Net cash paid for mortgage company                                            --         (7,449)             --
                                                                          ----------     ----------      ----------
                Net cash from investing activities                           (90,570)       (57,893)        (51,708)

Cash flows from financing activities
    Net change in deposits                                                    12,413         68,197          33,430
    Net change in repurchase agreements
      and other borrowings                                                    33,229          8,113          11,068
    Advances from the Federal Home Loan Bank                                  27,275         10,000           2,000
    Repayments of advances from Federal Home Loan Bank                       (10,000)       (10,237)         (2,033)
    Repayments of notes payable                                                   --         (5,798)             --
    Dividends paid                                                              (132)          (261)         (1,375)
    Sales of stock and stock options exercised                                    --             46             564
    Proceeds from public offering of common stock                                 --         13,532              --
    Repurchase of common stock                                                  (895)            --            (225)
                                                                          ----------     ----------      ----------
                Net cash from financing activities                            61,890         83,592          43,429
                                                                          ----------     ----------      ----------

Net change in cash and cash equivalents                                       (8,947)        13,696           6,158

Cash and cash equivalents, beginning of year                                  44,986         31,290          25,132
                                                                          ----------     ----------      ----------

Cash and cash equivalents, end of year                                    $   36,039     $   44,986      $   31,290
                                                                          ==========     ==========      ==========

Supplemental disclosures - cash and noncash
    Interest paid                                                         $   25,221     $   25,334      $   22,619
    Income taxes paid                                                          3,960          3,100           3,186
    Loans converted to other real estate                                       2,886          1,096           1,082
</TABLE>

--------------------------------------------------------------------------------

                             See accompanying notes.


                                                      BankFirst Corporation | 32
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:  The consolidated  financial statements include the
accounts of BankFirst Corporation and its wholly-owned subsidiaries,  BankFirst,
First National Bank and Trust Company (together  referred to as the "Banks") and
BankFirst  Trust  Company,  and  BankFirst's  wholly-owned  subsidiary,   Curtis
Mortgage  Company,  Inc.,  collectively  referred  to  as  the  "Company".   All
significant  inter-company  balances and  transactions  have been  eliminated in
consolidation.

Nature of  Operations:  The  Company  provides  financial  services  through its
offices in Eastern and Southeastern Tennessee.  Its primary deposit products are
checking,  savings,  and term  certificate  accounts,  and its  primary  lending
products  are  residential   mortgage,   commercial,   and  installment   loans.
Substantially  all loans are secured by specific  items of collateral  including
business assets, consumer assets and real estate.  Commercial loans are expected
to be repaid from cash flow from operations of businesses. Real estate loans are
secured  by  both  residential  and  commercial  real  estate.  Other  financial
instruments that  potentially  represent  concentrations  of credit risk include
deposit accounts in other financial institutions.

Use of Estimates:  To prepare financial  statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available  information.  These estimates and  assumptions  affect the amounts
reported in the financial  statements and the disclosures  provided,  and future
results could differ.  Mortgage  servicing rights,  allowance for credit losses,
and fair values of financial instruments are particularly subject to change.

Cash  Flows:  Cash and cash  equivalents  includes  cash,  deposits  with  other
financial institutions under 90 days, and federal funds sold. Net cash flows are
reported for loan, deposit and other borrowing transactions.

Securities:  Securities  are  classified  as held to  maturity  and  carried  at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with  unrealized   holding  gains  and  losses  reported  in  accumulated  other
comprehensive  income. All securities are currently  classified as available for
sale.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

Loans: Loans are reported at the principal balance outstanding,  net of unearned
interest,  deferred  loan fees and costs,  and an allowance  for credit  losses.
Loans held for sale are reported at the lower of cost or market, on an aggregate
basis.  The aggregate  cost of mortgage loans held for sale at year-end 1999 and
1998 is less than their aggregate net realizable value.

Interest income is reported on the interest method and includes  amortization of
net deferred loan fees and costs over the loan term. Interest income on mortgage
and commercial  loans is discontinued at the time the loan is 90 days delinquent
unless the loan is well  secured and in process of  collection.  Other  consumer
loans are  typically  charged off no later than 180 days past due. In all cases,
loans are placed on  nonaccrual  or charged off at an earlier date if collection
of principal  and interest is doubtful.  Interest  accrued but not  collected is
reversed against interest  income.  Interest  received is recognized on the cash
basis or cost recovery  method,  until  qualifying for return to accrual status.
Accrual is resumed when all  contractually  due payments are brought current and
future payments are reasonably assured.

Allowance  for Credit  Losses:  The  allowance  for credit losses is a valuation
allowance  for probable  credit  losses,  increased by the  provision for credit
losses and decreased by charge-offs  less recoveries.  Management  estimates the
allowance balance required using past credit loss experience, known and inherent
risks in the nature  and volume of the  portfolio,  information  about  specific
borrower situations and estimated collateral values,  economic  conditions,  and
other factors.  Allocations of the allowance may be made for specific loans, but
the entire  allowance is available for any loan that, in management's  judgment,
should be charged off.


                                                      BankFirst Corporation | 33
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

A loan is impaired when full payment  under the loan terms is not expected.  The
Company has defined its population of impaired  loans for individual  evaluation
of  impairment  to be those  commercial  real estate and  commercial  loans over
$250,000.  Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage,  consumer, and credit card loans, and on an
individual loan basis for other loans.  If a loan is impaired,  a portion of the
allowance is allocated so that the loan is reported,  net, at the present  value
of  estimated  future cash flows using the loan's  existing  rate or at the fair
value of collateral if repayment is expected solely from the collateral.

Foreclosed  Assets:  Assets acquired  through or instead of loan foreclosure are
initially recorded at lower of cost or market when acquired,  establishing a new
cost basis. If fair value declines,  a valuation  allowance is recorded  through
expense. Costs after acquisition are expensed.

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation is computed over the asset useful lives
on an accelerated basis,  except for buildings for which the straight line basis
is used.

Mortgage Banking Activities:  Mortgage loans originated and intended for sale in
the secondary market are carried at the lower of aggregate cost or market value.
The Company  controls its interest rate risk with respect to mortgage loans held
for sale and loan  commitments  expected to close by entering into agreements to
sell loans. The aggregate market value of mortgage loans held for sale considers
the sales prices of such agreements. The Company also provides currently for any
losses on uncovered commitments to lend or sell.

Servicing  rights  are  recognized  as assets for  purchased  rights and for the
allocated cost of retained servicing rights on loans sold.  Servicing rights are
expensed  in  proportion  to and over the  period  of  estimated  net  servicing
revenues.  Impairment is evaluated based on the fair value of the rights,  using
groupings of the underlying loans as to interest rates and then, secondarily, as
to geographic  and prepayment  characteristics.  Any impairment of a grouping is
reported as a valuation allowance.

Loan  servicing  income is recorded as  principal  payments  are  collected  and
includes  servicing  fees from  investors  and certain  charges  collected  from
borrowers,  such as late payment  fees.  Costs of loan  servicing are charged to
expense as incurred.

Intangibles: Purchased intangibles, primarily goodwill, are recorded at cost and
amortized over the estimated life.  Goodwill  amortization is straight-line over
15 years.

Long-term Assets:  These assets are reviewed for impairment when events indicate
their  carrying  amount may not be  recoverable  from future  undiscounted  cash
flows. If impaired, the assets are recorded at discounted amounts.

Repurchase  Agreements:   Substantially  all  repurchase  agreement  liabilities
represent amounts advanced by various customers. Securities are pledged to cover
these liabilities, which are not covered by federal deposit insurance.

Benefit Plans:  Pension expense is the net of service and interest cost,  return
on plan assets, and amortization of gains and losses not immediately recognized.
During  1999,  the  Company  amended  the Plan such that no  additional  service
benefits  will  accrue  after   December  31,  1999.  See  Note  8  for  further
information.  The 401(k) plan expense is the amount  contributed  to the plan as
determined by Board  decision.  The Company merged the two separate 401(k) plans
together on December 31, 1999. Deferred  compensation plan expense allocates the
benefits over years of service.

Stock  Compensation:  Pro forma disclosures of net income and earnings per share
are shown  using the fair value  method of SFAS No. 123 to measure  expense  for
options  granted  after 1994,  using an option  pricing  model to estimate  fair
value.


                                                      BankFirst Corporation | 34
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes: Income tax expense is the total of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences  between  carrying  amounts and tax bases of assets and liabilities,
computed  using enacted tax rates.  A valuation  allowance,  if needed,  reduces
deferred tax assets to the amount expected to be realized.

Financial Instruments: Financial instruments include credit instruments, such as
commitments to make loans and standby letters of credit, issued to meet customer
financing  needs.  The face amount for these items  represents  the  exposure to
loss, before considering customer collateral or ability to repay. Such financial
instruments are recorded when they are funded.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares  outstanding  during the period.
Diluted  earnings per common share  includes the dilutive  effect of  additional
potential  common shares  issuable  under stock  options,  and preferred  stock.
Earnings and dividends per share are restated for all stock splits and dividends
through the date of issue of the financial statements.

Comprehensive Income (loss):  Comprehensive income (loss) consists of net income
and  other  comprehensive  income  (loss).  Other  comprehensive  income  (loss)
includes unrealized gains and losses on securities  available for sale which are
also recognized as separate components of equity. Comprehensive income (loss) is
presented in the consolidated statements of changes in stockholders' equity.

New  Accounting  Pronouncements:  Beginning  January 1, 2001,  a new  accounting
standard  will  require all  derivatives  to be  recorded at fair value.  Unless
designated  as hedges,  changes in these fair  values  will be  recorded  in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting  gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not  otherwise  recorded.  Application  of this
statement is not  expected to have a material  effect but the effect will depend
on derivative holdings when this standard applies.

Loss  Contingencies:  Loss  contingencies,  including  claims and legal  actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood  of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there are any such matters that will have
a material effect on the financial statements.

Preferred  Stock:  The preferred  stock earns  dividends at a rate of 5%, and is
noncumulative,  nonvoting,  and each share is convertible  into 3.0875 shares of
common  stock at the option of the holder.  The  conversion  ratio of  preferred
stock into  common  stock is adjusted  for common  stock  dividends  and splits.
Preferred stock has equal liquidation rights to common stock.

Segments:  The Company's  primary segment is banking,  which accounts for 89% of
gross revenues at year-end  1999.  Other  operating  segments  include  mortgage
banking and trust services.

Fair Value of Financial  Instruments:  Fair values of financial  instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value  estimates  involve  uncertainties  and
matters  of  significant   judgment  regarding  interest  rates,   credit  risk,
prepayments,  and other factors,  especially in the absence of broad markets for
particular  items.   Changes  in  assumptions  or  in  market  conditions  could
significantly affect the estimates.

Reclassifications:  Certain items in prior year financial  statements  have been
reclassified to conform to the 1999 presentation.


                                                      BankFirst Corporation | 35
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 2 - BUSINESS COMBINATIONS

On July 2, 1998,  BankFirst  Corporation  acquired all of the outstanding common
stock of First  Franklin  Bancshares,  Inc.  ("First  Franklin")  in a  business
combination  accounted  for as a  pooling  of  interest.  Stockholders  of First
Franklin  exchanged  164,125 shares of stock for 723,673 shares of the Company's
Common  Stock.  In the  business  combination,  First  Franklin  was merged into
BankFirst Corporation,  and its wholly-owned subsidiary, The First National Bank
and  Trust  Company,  remains  a  subsidiary  of  BankFirst  Corporation.  These
consolidated  financial statements give retroactive effect to the merger, and as
a result,  the financial  statements are presented as if the combined  companies
had been consolidated for all periods presented.

Separate interest income and net income of the merged entities are as follows:

                                                     1998            1997
                                                     ----            ----
Interest income
     BankFirst Corporation                        $   41,526     $   37,625
     First Franklin                                   14,389         13,662
                                                  ----------     ----------

                                                  $   55,915     $   51,287
                                                  ==========     ==========
Net income
     BankFirst Corporation                        $    4,480     $    4,066
     First Franklin                                    2,329          2,562
                                                  ----------     ----------

                                                  $    6,809     $    6,628
                                                  ==========     ==========

On January 16, 1998, the Bank acquired Curtis Mortgage Company, Inc., a mortgage
loan  origination  and  servicing  company,  for  $7.5  million  in  a  business
combination  accounted  for as a purchase.  The results of  operations of Curtis
Mortgage  Company,  Inc. is included in the accompanying  financial  statements
since the date of  acquisition.  The excess of the purchase  price over the fair
value of net assets  acquired  resulted in $1.9  million of  goodwill,  which is
being amortized on a straight-line basis over 15 years.

Assets and liabilities acquired were:
     Cash                                                        $     51
     Loans held for sale                                            6,267
     Mortgage servicing rights                                      7,000
     Furniture and equipment                                          165
     Accrued interest receivable and other assets                     375
     Notes payable                                                 (5,798)
     Accrued and other liabilities                                 (2,460)


                                                      BankFirst Corporation | 36
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 3 - SECURITIES AVAILABLE FOR SALE

Securities are summarized as follows:

<TABLE>
<CAPTION>
                                                                         Gross       Gross
                                                         Amortized    Unrealized   Unrealized       Fair
1999                                                       Cost          Gains       Losses         Value
----                                                       ----          -----       ------         -----
<S>                                                    <C>            <C>          <C>            <C>
U.S. Treasury securities                               $   17,210     $       5    $      (60)    $   17,155
Obligations of U.S. government agencies                    61,585             8        (1,834)        59,759
Obligations of states and political subdivisions           40,570           117          (796)        39,891
Mortgage-backed securities                                 17,344             2          (555)        16,791
                                                       ----------     ---------    ----------     ----------

                                                       $  136,709     $     132    $   (3,245)    $  133,596
                                                       ==========     =========    ==========     ==========
</TABLE>


<TABLE>
<CAPTION>
1998
----
<S>                                                    <C>            <C>          <C>            <C>
U.S. Treasury securities                               $   25,258     $      601   $       --     $   25,859
Obligations of U.S. government agencies                    44,197          1,448           --         45,645
Obligations of states and political subdivisions           37,455          1,553           --         39,008
Mortgage-backed securities                                 17,335             61          (46)        17,350
                                                       ----------     ----------    ---------     ----------

                                                       $  124,245     $    3,663    $     (46)    $  127,862
                                                      ===========     ==========    =========     ==========
</TABLE>

Contractual   maturities  of  securities  at  year-end  1999  are  shown  below.
Securities  not  due  at  a  single  maturity  date,  primarily  mortgage-backed
securities, are shown separately.

                                                 Amortized           Fair
                                                    Cost             Value
                                                ------------     ------------
Due in one year or less                         $     13,148     $     13,125
Due after one year through five years                 52,309           51,131
Due after five years through ten years                44,530           43,471
Due after ten years                                    9,378            9,078
Mortgage-backed securities                            17,344           16,791
                                                ------------     ------------

     Total maturities                           $    136,709     $    133,596
                                                ============     ============

                                            1999           1998            1997
                                            ----           ----            ----
Sales of securities available for
 sale were as follows:
         Proceeds                       $   15,788     $   14,335     $   35,530
         Realized gains                         71            125            343
         Realized losses                        31              1             34

Securities  with a carrying  value of $95,490 and  $74,691 at year-end  1999 and
1998, were pledged for public  deposits and securities sold under  agreements to
repurchase.


                                                      BankFirst Corporation | 37
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 4 - LOANS

At year-end 1999 and 1998, loans consisted of the following:

                                                       1999            1998
                                                   ------------    ------------
Commercial, industrial and agricultural            $    101,310    $     87,793
Commercial real estate                                  250,403         211,114
Real estate construction                                 27,585          36,779
Residential real estate                                 138,001         115,115
Loans to individuals                                     68,968          57,497
Lease financing and other                                   203           1,614
                                                   ------------    ------------

Total loans                                             586,470         509,912

Less:   Unearned interest income and fees                  (854)         (1,360)
        Allowance for credit losses                      (7,400)         (6,602)
                                                   ------------    ------------

                                                   $    578,216    $    501,950
                                                   ============    ============

Activity in the allowance for credit losses is as follows:

                                           1999           1998          1997
                                        ----------     ----------    ----------
Beginning balance                       $    6,602     $    6,098    $    4,723
Provision                                    1,996          1,706         2,935
Loans charged off                           (1,464)        (1,524)       (1,833)
Recoveries of loans charged off                266            322           273
                                        ----------     ----------    ----------

Balance, end of year                    $    7,400     $    6,602    $    6,098
                                        ==========     ==========    ==========

Impaired loans were as follows:

                                                 1999          1998        1997
                                                 ----          ----        ----
Loans with allowance allocated                 $ 3,559       $   --     $    552
Amount of allowance for credit losses
  allocated                                        878           --           61
Loans with no allowance allocated                   --           --          615
Average balance during the year                  1,338          855        1,312
Interest income recognized during impairment        --           --           30
Cash-basis interest income recognized               --           --           30

Nonperforming loans were as follows:

                                                 1999         1998         1997
                                                 ----         ----         ----
Loans past due 90 days still on accrual        $  2,261     $  1,971    $  1,705
Nonaccrual loans                                  3,981          537       1,141


                                                      BankFirst Corporation | 38
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 4 - LOANS (Continued)

Nonperforming  loans  includes  all (or almost all)  impaired  loans and smaller
balance homogeneous loans, such as residential mortgage and consumer loans, that
are collectively evaluated for impairment.

The aggregate amount of loans to executive officers and directors of the Company
and their  related  interests was  approximately  $12,537 and $7,731 at year-end
1999 and 1998. During 1999 and 1998, new loans aggregating  approximately $5,551
and  $7,156  and  amounts  collected  of  approximately  $745  and  $7,827  were
transacted with such parties.

Loans serviced for others,  which are not reported as assets, total $603,870 and
$516,835 at year-end 1999 and 1998.

Activity for capitalized mortgage servicing rights was as follows:

                                                      1999         1998
                                                   ---------    ----------
Servicing rights:
     Beginning of year                             $   7,484    $       --
     Acquired in purchase transaction                     --         7,000
     Additions                                         3,102         2,271
     Amortized to expense                             (1,690)       (1,787)
                                                   ---------    ----------

     End of year                                   $   8,896    $    7,484
                                                   =========    ==========

NOTE 5 - PREMISES AND EQUIPMENT

A summary of premises and equipment as of year-end 1999 and 1998 is as follows:

                                                      1999         1998
                                                   ----------   ----------
Land                                               $    7,050   $    6,798
Premises                                               17,911       15,087
Furniture, fixtures and equipment                      13,810       11,721
Construction in progress                                1,327        2,645
                                                   ----------   ----------
    Total cost                                         40,098       36,251

Accumulated depreciation                              (13,284)     (11,324)
                                                   ----------   ----------

                                                   $   26,814   $   24,927
                                                   ==========   ==========

NOTE 6 - DEPOSITS

Time deposits of $100 thousand or more were $95,903 and $81,402 at year-end 1999
and 1998.

At year-end 1999, maturities of total time deposits were as follows:

  One year or less                                              $    241,998
  Over one year through three years                                   63,055
  Over three years                                                     8,130

The  aggregate  amount of deposits to executive  officers  and  directors of the
Company  and their  related  interests  was  approximately  $2,435 and $3,114 at
year-end 1999 and 1998.


                                                      BankFirst Corporation | 39
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 7 - BORROWINGS

Federal funds  purchased,  securities  sold under  agreements to repurchase  and
treasury tax and loan deposits are financing  arrangements.  Securities involved
with the agreements  are recorded as assets and are held by a safekeeping  agent
and the  obligations to repurchase the securities are reflected as  liabilities.
Securities  sold under  agreements  to  repurchase  consist of short term excess
funds  and  overnight  liabilities  to  deposit  customers  arising  from a cash
management program. While effectively deposit equivalents, such arrangements are
in the form of repurchase agreements. Other borrowed funds were comprised of fed
funds purchased as well as treasury tax and loan deposits.

Information  concerning  securities  sold  under  agreements  to  repurchase  at
year-end 1999 and 1998 is as follows:

                                                      1999          1998
                                                   ----------    ----------
Average month-end balance during the year          $   25,514    $   22,834
Average interest rate during the year                    4.32%         4.48%
Maximum month-end balance during the year          $   33,288    $   27,407

The aggregate  amount of  securities  sold under  agreements to repurchase  from
executive officers and directors of the Company and their related interests were
$-0- and $1,786 at year-end 1999 and 1998.

Federal Home Loan Bank  ("FHLB")  advances  consist of the following at year-end
1999 and 1998:

                                                         1999          1998
                                                        -------       -------
   Fixed rate advances, from 5.7% to 7.2%,
   maturities from March 2008 to January 2013           $ 2,159       $ 1,884

   Variable rate advances, from 5.9% to 6.6%,
   maturities from March 2001 to May 2001                27,000            --

   Variable rate "overnight" note advances                   --        10,000
                                                        -------       -------

                                                        $29,159       $11,884
                                                        =======       =======

Each advance is payable at its maturity  date,  with a prepayment  penalty.  The
advances are  collateralized  by FHLB stock and a blanket  pledge of  qualifying
mortgage loans totaling $43,739 and $17,826 at year-end 1999 and 1998.

Approximately  $27,000  in FHLB  advances  will  mature in 2001.  $2,159 in FHLB
advances will mature beyond year 2004.

At year-end 1999, the Company had  approximately  $55,500 of federal funds lines
of credit  available  from  correspondent  institutions,  $7,645 unused lines of
credit with the Federal Home Loan Bank,  $2,000 unused unsecured lines of credit
with the Federal Reserve Bank of Atlanta,  and $49,731 in unused  collateralized
lines of credit with the Federal Reserve Bank of Atlanta.


                                                      BankFirst Corporation | 40
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 8 - RETIREMENT PLANS

On December 31, 1999 The First  National  Bank and Trust  Company  401(k) Profit
Sharing Plan was merged into BankFirst's 401(k) Profit Sharing Plan covering all
employees of the Company and its  subsidiaries.  Prior to that,  the Company had
two separate  plans.  The  BankFirst  profit  sharing plan covered  employees of
BankFirst  and Curtis  Mortgage  Company,  Inc.  This plan allows  employees  to
contribute up to 15% of their compensation,  which is matched at a discretionary
rate established by the Corporate Board of Directors annually. Prior to the plan
merger,  The First  National Bank and Trust Company  401(k) profit  sharing plan
covered  employees  of The First  National  Bank and Trust  Company  and allowed
employees to contribute up to 10% of their compensation,  which is matched equal
to 50% of the first 6% of the compensation  contributed.  Expense for both Plans
was $290, $275, and $218 for 1999, 1998, and 1997.

The First National Bank and Trust Company  maintains a  noncontributory  defined
benefit plan covering  substantially all full-time  employees.  During 1999, the
Company  amended the plan such that no additional  service  benefits will accrue
after December 31, 1999. Upon curtailment, the unrecognized net loss was reduced
by $423. There was no gain or loss recorded as a result of the curtailment.

Information about the plan was as follows:

                                                            1999          1998
                                                          -------       -------
     Change in benefit obligation:
         Beginning benefit obligation                     $(5,678)      $(5,239)
         Service cost                                        (239)         (196)
         Interest cost                                       (406)         (361)
         Actuarial gain                                        56           (33)
         Curtailment                                          423            --
         Benefits paid                                        116           151
                                                          -------       -------
         Ending benefit obligation                         (5,728)       (5,678)

     Change in plan assets, at fair value:
         Beginning plan assets                              5,546         4,927
         Actual return                                        423           528
         Employer contribution                                109           242
         Benefits paid                                       (116)         (151)
                                                          -------       -------
         Ending plan assets                                 5,962         5,546
                                                          -------       -------

     Funded status                                            234          (132)
     Unrecognized net actuarial loss                          300           748
                                                          -------       -------

     Prepaid benefit cost                                 $   534       $   616
                                                          =======       =======

Plan assets held include common stocks,  corporate bonds, government securities,
and other investments.


                                                      BankFirst Corporation | 41
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 8 - RETIREMENT PLANS (Continued)

The  components of pension  expense and related  actuarial  assumptions  were as
follows:

<TABLE>
<CAPTION>
                                                            1999         1998        1997
                                                            ----         ----        ----
<S>                                                       <C>          <C>         <C>
Service cost                                              $    239     $    196    $   173
Interest cost                                                  406          361        318
Expected return on plan assets                                (446)        (420)      (358)
Recognized net actuarial (gain) loss                            (8)         (13)       (22)
                                                          --------     --------    -------
    Net                                                   $    191     $    124    $   111
                                                          ========     ========    =======

Discount rate on benefit obligation                            7.0%         7.0%       7.5%
Long-term expected rate of return on assets                    8.5          8.5        8.5
Rate of compensation increase                                  5.5          5.5        6.5
</TABLE>

The First  National  Bank and Trust Company  contributed  $109,  $242,  and $238
during 1999, 1998, and 1997.

NOTE 9 - INCOME TAXES

Income tax expense is summarized as follows:

                            1999            1998             1997
                            ----            ----             ----
   Current                $   4,546       $   3,699        $   3,612
   Deferred                     (40)           (141)            (206)
                          ---------       ---------        ---------

                          $   4,506       $   3,558        $   3,406
                          =========       =========        =========

   Federal                $   3,713       $   2,914        $   2,817
   State                        793             644              589
                          ---------       ---------        ---------

                          $   4,506       $   3,558        $   3,406
                          =========       =========        =========

Deferred  income taxes  reflect the effect of  "temporary  differences"  between
values recorded for assets and liabilities for financial  reporting purposes and
values  utilized for measurement in accordance with tax laws. The tax effects of
the primary temporary  differences giving rise to the Company's net deferred tax
assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                          1999                              1998
                                                --------------------------        --------------------------
                                                Assets         Liabilities        Assets         Liabilities
                                                ------         -----------        ------         -----------
<S>                                            <C>              <C>             <C>              <C>
Allowance for credit losses                    $   1,996        $      --       $   1,461         $     --
Mortgage Servicing Rights                             --           (3,377)             --           (2,841)
Depreciation                                          --             (636)             --             (763)
FHLB dividends                                        --             (372)             --             (284)
Defined benefit plan                                  --             (205)             --             (233)
Unrealized (gain) loss on securities               1,182               --              --           (1,374)
Other                                                217              (35)            408             (120)
                                               ---------        ---------       ---------         --------

     Total deferred income taxes               $   3,395        $  (4,625)      $   1,869         $ (5,615)
                                               =========        =========       =========         ========
</TABLE>


                                                      BankFirst Corporation | 42
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 9 - INCOME TAXES (Continued)

A reconciliation  of expected income tax expense at the statutory federal income
tax rate of 34% with the actual effective income tax rates, is as follows:

                                                    1999       1998       1997
                                                    ----       ----       ----
Statutory federal tax rate                          34.0%      34.0%      34.0%
State income tax, net of federal benefit             4.0        4.0        4.0
Tax exempt income                                   (3.6)      (5.1)      (3.7)
Other                                               (0.8)       1.4       (0.4)
                                                    ----       ----       ----

                                                    33.6%      34.3%      33.9%
                                                    ====       ====       ====

NOTE 10 - COMMITMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

Some financial instruments,  such as loan commitments,  credit lines, letters of
credit, and overdraft  protection,  are issued to meet customer financing needs.
These are  agreements to provide  credit or to support the credit of others,  as
long as  conditions  established  in the  contract  are met,  and  usually  have
expiration dates.  Commitments may expire without being used.  Off-balance-sheet
risk to credit loss exists up to the face amount of these instruments,  although
material losses are not  anticipated.  The same credit policies are used to make
such  commitments  as are used for  loans,  including  obtaining  collateral  at
exercise of the commitment.

Financial instruments with off-balance-sheet risk were as follows at year-end:

                                                             1999        1998
                                                             ----        ----
Commitments to make loans (at market rates)               $ 24,588    $ 39,005
Unused lines of credit and letters of credit                75,381      72,417

The majority of  commitments  to make loans have a variable  interest  rate. The
fixed rate loan  commitments  have interest rates ranging from 7.0% to 13.0% and
maturities ranging from 1 year to 13 years.

NOTE 11 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

Banks and bank holding companies are subject to regulatory capital  requirements
administered  by federal  banking  agencies.  Capital  adequacy  guidelines and,
additionally  for  banks,   prompt   corrective   action   regulations   involve
quantitative  measures of assets,  liabilities,  and  certain  off-balance-sheet
items  calculated  under regulatory  accounting  practices.  Capital amounts and
classifications are also subject to qualitative judgments by regulators. Failure
to meet capital requirements can initiate regulatory action.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and capital restoration plans are required.


                                                      BankFirst Corporation | 43
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 11 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (Continued)

At year-end,  the capital  requirements  were met, as the Company and banks were
considered well capitalized under regulations. Actual capital levels and minimum
required levels (in millions) were:

<TABLE>
<CAPTION>

                                                                                                  Minimum Amounts to
                                                                                                  be Well Capitalized
                                                                          Minimum Required           Under Prompt
                                                                            for Capital           Corrective Action
                                                     Actual              Adequacy Purposes            Provisions
                                                     ------              -----------------            ----------
                                                Actual      Ratio       Actual        Ratio       Actual       Ratio
                                                ------      -----       ------        -----       ------       -----
<S>                                            <C>           <C>       <C>             <C>        <C>           <C>
1999
----
Total Capital (to Risk Weighted Assets)
     Consolidated                               $93.1       14.8%       $50.5          8.0%       $63.1        10.0%
     BankFirst                                   52.3       10.4         40.1          8.0         50.1        10.0
     First National Bank and Trust Co.           26.6       20.8         10.2          8.0         12.8        10.0
Tier 1 Capital (to Risk Weighted Assets)
     Consolidated                               $85.7       13.6%       $25.2          4.0%       $37.9         6.0%
     BankFirst                                   46.6        9.3         20.1          4.0         30.1         6.0
     First National Bank and Trust Co.           25.0       19.6          5.1          4.0          7.7         6.0
Tier 1 Capital  (to Average Assets)
     Consolidated                               $85.7       10.8%       $31.9          4.0%       $39.9         5.0%
     BankFirst                                   46.6        7.7         24.1          4.0         30.1         5.0
     First National Bank and Trust Co.           25.0       12.8          7.8          4.0          9.8         5.0

1998
-----
Total Capital (to Risk Weighted Assets)
     Consolidated                               $83.4       18.9%       $44.9          8.0%       $56.1        10.0%
     BankFirst                                   45.4       10.2         35.4          8.0         44.3        10.0
     First National Bank and Trust Co.           24.1       20.1          9.6          8.0         12.0        10.0
Tier 1 Capital (to Risk Weighted Assets)
     Consolidated                               $77.8       17.6%       $22.5          4.0%       $33.8         6.0%
     BankFirst                                   40.3        9.1         17.7          4.0         26.6         6.0
     First National Bank and Trust Co.           22.6       18.9          4.8          4.0          7.2         6.0
Tier 1 Capital  (to Average Assets)
     Consolidated                               $77.8       10.7%       $29.1          4.0%       $36.3         5.0%
     BankFirst                                   40.3        7.5         21.4          4.0         26.7         5.0
     First National Bank and Trust Co.           22.6       11.8          7.7          4.0          9.6         5.0
</TABLE>


The Company's  primary source of funds to pay dividends to  stockholders  is the
dividends  it  receives  from the  Banks.  The  Banks  are  subject  to  certain
regulations on the amount of dividends it may declare  without prior  regulatory
approval.  Under these regulations,  the amount of dividends that may be paid in
any year is limited to that year's net profits,  as defined,  combined  with the
retained net profits of the preceding two years, less dividends  declared during
those periods.  At year-end 1999, $21,884 of retained earnings was available for
dividends in future periods.

The Banks were required to have approximately $12,080 and $9,659 of cash on hand
to meet regulatory reserve requirements at year-end 1999 and 1998.


                                                      BankFirst Corporation | 44
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 12 - STOCK OPTIONS

The Company maintains a stock option plan,  whereby a maximum of 3,125,000 stock
options may be issued to selected directors,  officers, and other key employees.
The  exercise  price of each  option is the fair market  value of the  Company's
common stock on the date of grant. The maximum term of the options is ten years.
Certain  options may be exercised  immediately  upon grant,  and certain options
vest at an annual rate of 20%. At year-end 1999, 1,936,660 shares are authorized
for future grant.

A summary of the  Company's  option  activity  and related  information  for the
year-ended 1999, 1998, and 1997 is presented below:

<TABLE>
<CAPTION>

                                                   1999                      1998                      1997
                                                   ----                      ----                      ----

                                                        Weighted                  Weighted                 Weighted
                                                         Average                   Average                  Average
                                                        Exercise                  Exercise                 Exercise
                                           Options        Price      Options        Price      Options       Price
                                           -------        -----      -------        -----      -------       -----

<S>                                         <C>        <C>            <C>         <C>            <C>        <C>
Outstanding at beginning of year            977,185    $   6.19       862,000     $  6.19        887,645    $  5.21
Granted                                      25,000        9.00       142,000        8.80        164,380       7.68
Exercised                                        --          --        (4,535)       6.59       (140,765)      3.72
Forfeited                                   (14,375)       7.78       (22,280)       8.21        (49,260)      7.12
                                          ---------    --------     ---------     -------      ---------    -------

Outstanding at end of year                  987,810        6.24       977,185        6.19        862,000       6.19
                                          =========                 =========                  =========

Options exercisable at year-end             661,019        5.44       548,706        5.01        461,030       4.55
                                          =========    ========     =========     =======      =========

Weighted-average fair value of
  options granted during the year         $    3.78                 $    2.97                  $    3.09
                                          =========                 =========                  =========
</TABLE>


Options outstanding at year-end 1999 were as follows:

<TABLE>
<CAPTION>
                                                  Outstanding                           Exercisable
                                                  -----------                           -----------
                                                           Weighted Average                         Weighted
Range of                                                      Remaining                             Average
Exercise                                                     Contractual                            Exercise
Prices                                        Number            Life                 Number          Price
------                                        ------            ----                 ------          -----
<S>                                            <C>              <C>                  <C>            <C>
$3.50-$5.00                                    329,055          5.00                 329,055        $   3.72
$6.00-$7.00                                    372,690          7.71                 244,638            6.84
$7.50-$9.00                                    286,065          7.97                  87,326            7.99
                                               -------          ----                 -------        --------

Outstanding at year end                        987,810          6.88                 661,019        $   5.44
                                               =======          ====                 =======        ========
</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions used for grants in 1999, 1998, and 1997:  risk-free interest rate of
4.95%,  5.76%, and 6.75%,  expected lives of eight,  seven, and seven years, and
estimated  volatility of 24%, 10%, and 10%. No assumption was made for estimated
volatility for 1997 since it was not feasible to determine this assumption for a
non-public entity whose stock was not actively traded. With estimated volatility
excluded, the option pricing model produces the option's minimum value for 1997.
There is no dividend  yield  assumption  since the Company has not  historically
paid dividends or indicated that dividends would be paid in the future.

No expense for stock  options is recorded,  as the grant price equals the market
price of the stock at grant date. The following  disclosures  show the effect on
income and earnings per share had the options' fair value been recorded using an
option pricing model.  If additional  options are granted,  the pro forma effect
will increase in the future.


                                                      BankFirst Corporation | 45
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 12 - STOCK OPTIONS (Continued)

<TABLE>
<CAPTION>

                                                1999                     1998                      1997
                                                ----                     ----                      ----
                                           As                      As                        As
                                       Reported   Pro forma     Reported     Pro forma    Reported     Pro forma
                                       --------   ---------     --------     ---------    --------     ---------
   <S>                                <C>          <C>          <C>          <C>          <C>          <C>
   Net income                         $  8,886     $  8,555     $  6,809     $  6,484     $  6,628     $  6,400

   Basic earnings per share           $    .77     $    .74     $    .64     $    .61     $    .66     $    .63
   Diluted earnings per share              .73          .69          .59          .55          .61          .58
</TABLE>

NOTE 13 - EARNINGS PER SHARE

A  reconciliation  of the numerators and denominators of the earnings per common
share and earnings per common share assuming dilution computations are presented
below.

<TABLE>
<CAPTION>

                                                                       1999           1998             1997
                                                                       ----           ----             ----
<S>                                                               <C>             <C>             <C>
Basic Earnings Per Share
------------------------
    Net income                                                    $      8,886    $      6,809    $      6,628
    Less:  Dividends declared on preferred stock                          (132)           (146)           (161)
                                                                  ------------    ------------    ------------

       Net income available to common
         stockholders                                             $      8,754    $      6,663    $      6,467
                                                                  ============    ============    ============

    Weighted average common shares outstanding                      11,352,739      10,446,779       9,876,735
                                                                  ============    ============    ============

Basic Earnings Per share                                          $        .77    $        .64    $        .66
                                                                  ============    ============    ============


Diluted Earnings Per Share
--------------------------

    Net income available to common stockholders                   $      8,754    $      6,663    $      6,467

    Add back dividends upon assumed conversion
      of preferred stock                                                   132             146             161
                                                                  ------------    ------------    ------------

       Net income available to common
         stockholders assuming conversion                         $      8,886    $      6,809    $      6,628
                                                                  ============    ============    ============

    Weighted average common shares outstanding                      11,352,739      10,446,779       9,876,735

    Add:  Dilutive effects of assumed conversions
      and exercises:
       Convertible preferred stock                                     558,992         635,516         685,830
       Stock options                                                   319,388         383,819         313,025
                                                                  ------------    ------------    ------------

    Weighted average common and dilutive
      potential common shares outstanding                           12,231,119      11,466,114      10,875,590
                                                                  ------------    ------------      ----------

    Diluted Earnings Per Share                                    $        .73    $        .59    $        .61
                                                                  ============    ============    ============
</TABLE>


                                                      BankFirst Corporation | 46
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The  carrying  value  and  estimated  fair  value  of  the  Company's  financial
instruments are as follows at year-end 1999 and 1998.

<TABLE>
<CAPTION>

                                                                    1999                            1998
                                                                    ----                            ----
                                                         Carrying           Fair          Carrying           Fair
                                                           Value           Value            Value           Value
                                                           -----           -----            -----           -----
<S>                                                    <C>              <C>             <C>              <C>
Financial assets:
   Cash and cash equivalents                           $   36,039       $   36,039      $   44,986       $   44,986
   Securities available for sale                          133,596          133,596         127,862          127,862
   Mortgage loans held for sale                            12,205           12,247          25,642           26,037
   Loans, net                                             585,616          575,735         501,950          503,397
   Federal Home Loan Bank stock                             3,420            3,420           3,189            3,189
   Accrued interest receivable                              5,643            5,643           4,653            4,653

Financial liabilities:
   Demand, savings, and money
     market accounts                                   $  318,004       $  318,025      $  311,575       $  311,575
   Certificate of deposits                                312,375          312,002         306,391          307,060
   Advances from Federal Home Loan Bank                    29,159           29,168          11,884           11,993
   Repurchase agreement and other borrowings               59,603           59,603          26,374           26,479
   Accrued interest payable                                 3,029            3,029           3,113            3,113
</TABLE>

The following  methods and assumptions were used to estimate the fair values for
financial instruments.  The carrying amount is considered to estimate fair value
for cash and short-term instruments,  demand deposits,  liabilities for borrowed
money,  variable rate loans or deposits that reprice  frequently and fully,  and
accrued  interest  receivable  and payable.  Securities  available for sale fair
values are based on quoted market prices or, if no quotes are available,  on the
rate and term of the security  and on  information  about the issuer.  For fixed
rate loans or deposits and for variable rate loans or deposits  with  infrequent
repricing or repricing  limits,  the fair value is estimated by discounted  cash
flow analysis using current market rates for the estimated life and credit risk.
Fair values for impaired loans are estimated using discounted cash flow analyses
or underlying collateral values, where applicable.  Fair value of mortgage loans
held for sale is based on current market price for such loans.  Liabilities  for
borrowed  money  are  estimated  using  rates of debt  with  similar  terms  and
remaining  maturities.  The fair value of  off-balance  sheet  items is based on
current  fees or costs that would be  charged  to enter into or  terminate  such
arrangements.  The  fair  value  of  commitments  to sell  loans is based on the
difference  between  the  interest  rates  committed  to sell at and the  quoted
secondary market price for similar loans, which is not material.


                                                      BankFirst Corporation | 47
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 15 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                              BALANCE SHEETS
                                   Years ended December 31, 1999 and 1998

                                                                                1999              1998
                                                                                ----              ----
<S>                                                                            <C>              <C>
Assets
     Cash and cash equivalents                                                 $  13,039        $  13,719
     Investment in subsidiary banks                                               73,555           68,904
     Other                                                                           504              359
                                                                               ---------        ---------

         Total assets                                                          $  87,098        $  82,982
                                                                               =========        =========

Total liabilities                                                              $     572        $     141

Stockholders' equity                                                              86,526           82,841
                                                                               ---------        ---------

         Total liabilities and stockholders' equity                            $  87,098        $  82,982
                                                                               =========        =========
</TABLE>

<TABLE>
<CAPTION>
                                             STATEMENTS OF INCOME
                                Years ended December 31, 1999, 1998, and 1997

                                                                   1999             1998            1997
                                                                   ----             ----            ----
<S>                                                               <C>            <C>              <C>
Dividends from subsidiaries                                       $    157       $     215        $   1,593
Other income                                                           564             201              220
Interest expense                                                        --              --               --
Other expense                                                          687             909              213
                                                                  --------       ---------        ---------
Income (loss) before income taxes                                       34            (493)           1,600
Income tax (benefit) expense                                           (23)            (59)               2
Equity in undistributed net income of subsidiaries                   8,829           7,243            5,030
                                                                  --------       ---------        ---------

Net income                                                        $  8,886       $   6,809        $   6,628
                                                                  ========       =========        =========
</TABLE>


                                                      BankFirst Corporation | 48
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 15 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>
                                            STATEMENTS OF CASH FLOWS
                                Years ended December 31, 1999, 1998, and 1997

                                                                           1999             1998            1997
                                                                           ----             ----            ----
<S>                                                                     <C>             <C>              <C>
Operating activities
     Net income                                                           $  8,886        $  6,809         $  6,628
     Adjustments to reconcile net income to net
       cash provided by operating activities:
         Undistributed net income of subsidiaries                           (8,829)         (7,243)          (5,030)
         Change in assets                                                     (141)            157            1,040
         Change in liabilities                                                 431            (291)             293
                                                                          --------        --------         --------
              Net cash provided by (used in) operating activities              347            (568)           2,931

Financing activities
     Dividends paid                                                           (132)           (261)          (1,375)
     Effect of internal reorganization                                          --          (1,049)              --
     Sales of common stock and stock options exercised                          --              46              567
     Proceeds from public offering of common stock                              --          13,532               --
     Repurchase of common stock                                               (895)             --             (225)
                                                                          --------        --------         --------
               Net cash provided by (used in) financing activities          (1,027)         12,268           (1,033)
                                                                          --------        --------         --------

Net change in cash and cash equivalents                                       (680)         11,700            1,898

Cash and cash equivalents, beginning of year                                13,719           2,019              121
                                                                          --------        --------         --------

Cash and cash equivalents, end of year                                    $ 13,039        $ 13,719         $  2,019
                                                                          ========        ========         ========
</TABLE>

NOTE 16 - OTHER COMPREHENSIVE INCOME

Other comprehensive income (loss) components were as follows.

<TABLE>
<CAPTION>

                                                                       1999             1998            1997
                                                                       ----             ----            ----
<S>                                                                     <C>             <C>              <C>
Unrealized holding gains and losses on
  securities available for sale, net of tax                        $   (4,148)     $    1,365       $      829
Less reclassification adjustments for gains and
  losses later recognized in income, net of tax at 34%                    (26)            (82)            (204)
                                                                   ----------      ----------       ----------

Other comprehensive income (loss)                                  $   (4,174)     $    1,283       $      625
                                                                   ==========      ==========       ==========
</TABLE>


                                                      BankFirst Corporation | 49
<PAGE>


                              BANKFIRST CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)

--------------------------------------------------------------------------------

NOTE 17.  SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Presented below is a summary of the consolidated quarterly financial data:

<TABLE>
<CAPTION>

                                                         For the three months ended
                                      3/31/99           6/30/99            9/30/99          12/31/99
                                ------------------------------------------------------------------------
<S>                                   <C>               <C>                <C>               <C>
Summary of operations
Interest income - tax                 $14,108           $14,748            $15,342           $15,215
equivalent
Net interest income                     8,153             8,540              8,973             8,611
Tax equivalent adjustment (1)            (201)             (187)              (214)             (203)
                                         ----              ----               ----              ----
Net interest income                     7,952             8,353              8,759             8,408
Provision for credit losses               419               461                522               594
Income before income taxes              3,116             3,354              3,463             3,459
Net income                              2,069             2,202              2,294             2,321

Basic earnings per share                  .18               .19                .20               .20
Diluted earnings per share                .17               .17                .19               .19

Average common shares              11,375,600        11,375,600         11,359,843        11,300,658
outstanding
</TABLE>

<TABLE>
<CAPTION>

                                                         For the three months ended
                                     3/31/98           6/30/98           9/30/98          12/31/98
                                  ------------------------------------------------------------------
<S>                                 <C>              <C>               <C>               <C>
Summary of operations
Interest income - tax               $  13,786        $   14,339        $    14,331       $    14,289
equivalent
Net interest income                     7,784             7,885              7,978             8,171
Tax equivalent adjustment (1)            (236)             (236)              (217)             (141)
                                    ---------        ----------        -----------       -----------
Net interest income                     7,548             7,649              7,761             8,030
Provision for credit losses              (524)             (540)              (320)             (322)
Income before income taxes              2,584             2,343              2,675             2,765
Net income                              1,704             1,477              1,677             1,952

Basic earnings per share                 0.17              0.14               0.16               .17
Diluted earnings per share               0.16              0.13               0.15               .16
Dividends per common share (2)             --              0.01                 --                --

Average common shares               9,988,427         9,998,012         10,410,370        11,375,600
outstanding
----------------------------------------------------------------------------------------------------
</TABLE>

(1)  Tax equivalent basis was calculated using 38% for 1999 and 1998.

(2)  Dividends  declared on common  shares  divided by net income  available  to
     common shareholders.

Note:  Certain  amounts  above  that  have  been  presented  in prior  financial
information  have  been  reclassified,  causing  minor  differences  from  prior
presentations.


                                                      BankFirst Corporation | 50
<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE
--------------------------------------------------------------------------------

During the fiscal  year ended  December  31,  1999 and  through the date of this
Report, there has been no change in the Company's independent  accountants,  nor
have there been any disagreements with such accountants or reportable events.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
================================================================================

The  information  required by this item with respect to directors of the Company
is set forth in the section  entitled  "Election of  Directors" in the Company's
definitive proxy statement for its 2000 Annual Meeting of Shareholders (the 2000
Proxy  Statement).  The  information  required  by this  item  with  respect  to
executive officers of the Company is set forth at Item 4(A) of this Report under
the  caption  "Executive  Officers  of the  Company".  Information  relating  to
compliance  with the reporting  requirements  of Section 16(a) of the Securities
Exchange  Act of 1934,  as amended,  by the  Company's  executive  officers  and
directors,  persons who own more than ten percent of the Company's  Common Stock
and their affiliates who are required to comply with such reporting requirements
is set forth in the section  entitled  "Reports of Beneficial  Ownership" of the
Company's 2000 Proxy Statement. All such information is hereby incorporated into
this Report by reference.

ITEM 11. EXECUTIVE COMPENSATION
================================================================================

The information required by this item is incorporated herein by reference to the
section entitled "Executive Compensation" in the 2000 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
================================================================================

The information required by this item is incorporated herein by reference to the
section entitled "Security Ownership of Management" in the 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
================================================================================

The information required by this item is incorporated herein by reference to the
section  entitled  "Interest of Management in Certain  Transactions" in the 2000
Proxy Statement.


                                                      BankFirst Corporation | 51
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
================================================================================

(a)  The following documents are filed as a part of this Report:

     1.  Financial   Statements:   The  Consolidated   Financial  Statements  of
         BankFirst Corporation and Reports of Independent  Accountants have been
         included as Part II, ITEM 8 of this filing and are hereby  incorporated
         by reference. These financial statements consist of the following:

                                                                            PAGE
                                                                            ----
Report of Independent Accountants ........................................    27

Consolidated Balance Sheets as of December 31, 1999 and 1998 .............    28

Consolidated Statements of Income for the years ended
   December 31, 1999, 1998, and 1997 .....................................    29

Consolidated Statements of Changes in Stockholders' Equity
   for the years ended December 31, 1999, 1998, and 1997 .................    30

Consolidated Statements of Cash Flows for the years ended
   December 31, 1999, 1998, and 1997 .....................................    32

Notes to Consolidated Financial Statements ...............................    33

     2.  Financial  Statement  Schedules and Exhibits not listed above have been
         omitted  because they are not  applicable or are not  required,  or the
         information  required  to be  set  forth  therein  is  included  in the
         Consolidated  Financial  Statements or Notes thereto,  included in Part
         II, ITEM 8, and are hereby incorporated by reference.

(b)  The  Company  has filed no Reports  on Form 8-K during the last  quarter of
     1999.

(c)  Exhibits:  The list of exhibits in the INDEX TO EXHIBITS  appearing on page
     54 of this Report is incorporated herein by reference.


                                                      BankFirst Corporation | 52
<PAGE>

SIGNATURES
================================================================================

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

                                               BANKFIRST CORPORATION
                                               (Registrant)

                                               BY: /s/ FRED R. LAWSON
                                                   --------------------------
                                                      Fred R. Lawson
                                                      President and
                                                      Chief Executive Officer

Pursuant to the  requirements  of the  Securities  Exchange of 1934, as amended,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

Date             Signature                       Capacity
----             ---------                       --------

<S>              <C>                             <C>
March 17, 2000   /s/ James L. Clayton            Chairman of The
                 --------------------------------Board of Directors
                     James L. Clayton

March 17, 2000   /s/ Fred R. Lawson              Director and
                 --------------------------------President & CEO
                     Fred R. Lawson              (Principal Executive Officer)

March 17, 2000   /s/ C. David Allen              Chief Financial Officer and
                 --------------------------------Secretary
                     C. David Allen              (Principal Financial Officer)

March 17, 2000   /s/ Scot M. Braun               Corporate Controller
                 --------------------------------(Principal Accounting Officer)
                     Scot M. Braun

March 17, 2000   /s/ C. Scott Mayfield, Jr.      Director
                 --------------------------------
                     C. Scott Mayfield, Jr.

March 17, 2000   /s/ C. Warren Neel              Director
                 --------------------------------
                     C. Warren Neel

March 17, 2000   /s/ Charles Earl Ogle, Jr.      Director
                 --------------------------------
                     Charles Earl Ogle, Jr.

March 17, 2000   /s/ W. David Sullins, Jr.       Director
                 --------------------------------
                     W. David Sullins, Jr.

March 17, 2000   /s/ L. A. Walker, Jr.           Director &
                 --------------------------------Executive Vice President
                     L. A. Walker, Jr.

March 17, 2000   /s/ Geoffrey A. Wolpert         Director
                 --------------------------------
                     Geoffrey A. Wolpert
</TABLE>


                                                      BankFirst Corporation | 53
<PAGE>

INDEX TO EXHIBITS
================================================================================

Exhibit
   No.            Description
-------           -----------

2.1               Agreement and Plan of Merger between Smoky  Mountain  Bancorp,
                  Inc. and First Franklin Bancshares, Inc. dated March 19, 1998.
                  (Filed  as  Exhibit  2  to  the  Company's  S-4   Registration
                  Statement dated May 7, 1998,  Commission  File No.  333-52051,
                  and incorporated herein by reference.)

2.2               Agreement  to  Purchase  Stock  between  BankFirst  and Curtis
                  Mortgage  Company,  Inc.;  William  H.  Curtis  and  Gordon C.
                  Curtis,  dated January 13, 1998. (Filed as Exhibit 10.5 to the
                  Company's  S-4  Registration  Statement  dated  May  7,  1998,
                  Commission  File No.  333-52051,  and  incorporated  herein by
                  reference.)

2.3               Agreement and Plan of Merger of BankFirst  and First  National
                  Bank of Gatlinburg,  dated January 16, 1997. (Filed as Exhibit
                  10.6 to the Company's S-4 Registration  Statement dated May 7,
                  1998,  Commission File No. 333-52051,  and incorporated herein
                  by reference.)

2.4               Acquisition Agreement between Smoky Mountain Bancorp, Inc. and
                  BankFirst,  dated August 15,  1996.  (Filed as Exhibit 10.7 to
                  the Company's S-4  Registration  Statement  dated May 7, 1998,
                  Commission  File No.  333-52051,  and  incorporated  herein by
                  reference.)

3.1               Amended and  Restated  Charter of  BankFirst  Corporation,  as
                  amended.   (Filed  as  Exhibit  3.1  to  the   Company's   S-4
                  Registration  Statement dated May 7, 1998, Commission File No.
                  333-52051, and incorporated herein by reference.)

3.2               Bylaws of BankFirst Corporation.  (Filed as Exhibit 3.2 to the
                  Company's  S-4  Registration  Statement  dated  May  7,  1998,
                  Commission  File No.  333-52051,  and  incorporated  herein by
                  reference.)

4                 Form of Common Stock  Certificate  of  BankFirst  Corporation.
                  (Filed  as  Exhibit  4  to  the  Company's  S-4   Registration
                  Statement dated May 7, 1998,  Commission  File No.  333-52051,
                  and incorporated herein by reference.)

10.1              BankFirst  Corporation  Incentive Stock Option Plan. (Filed as
                  Exhibit 10.1 to the Company's S-4 Registration Statement dated
                  May 7, 1998,  Commission File No. 333-52051,  and incorporated
                  herein by reference.)

10.2              Smoky Mountain Bancorp, Inc. Employee Stock Ownership Plan, as
                  amended April 1, 1989. (Filed as Exhibit 10.2 to the Company's
                  S-4 Registration  Statement dated May 7, 1998, Commission File
                  No. 333-52051, and incorporated herein by reference.)

10.3              Stock Option Plan of BankFirst dated March 14, 1995. (Filed as
                  Exhibit 10.3 to the Company's S-4 Registration Statement dated
                  May 7, 1998,  Commission File No. 333-52051,  and incorporated
                  herein by reference.)

10.4              BankFirst  Incentive Stock Option Plan dated October 11, 1995.
                  (Filed  as  Exhibit  10.4 to the  Company's  S-4  Registration
                  Statement dated May 7, 1998,  Commission  File No.  333-52051,
                  and incorporated herein by reference.)

10.5              First National Bank and Trust Company Pension Plan.  (Filed as
                  Exhibit  10.12 to the  Company's  S-1  Registration  Statement
                  dated  June  18,  1998,  Commission  File No.  333-57147,  and
                  incorporated herein by reference.)


                                                      BankFirst Corporation | 54

<PAGE>

10.6              BankFirst  401(k) Profit Sharing Plan.  (Filed as Exhibit 10.7
                  to the Company's  1998 Annual Report on Form 10-K,  Commission
                  File No. 1-14417, and incorporated herein by reference.)

10.7              First  National Bank & Trust Profit  Sharing  Plan.  (Filed as
                  Exhibit 10.8 to the Company's 1998 Annual Report on Form 10-K,
                  Commission  File  No.  1-14417,  and  incorporated  herein  by
                  reference.)

10.8*             Merger  Agreement of BankFirst  401(k) Profit Sharing Plan and
                  First  National Bank and Trust Company  401(k) Profit  Sharing
                  Plan.

11                Statement re: computation of per share earnings  (incorporated
                  by reference herein as ITEM 8, Financial Statements,  Note 13,
                  included in this Annual Report on Form 10-K).

21 *              List of Subsidiaries.

27 *              Financial Data Schedule.
================================================================================

* Filed herewith.

                                                      BankFirst Corporation | 55