##### Table of Contents

Exhibit 99(a)

HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002



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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL
REPORT DECEMBER 31, 2002

TABLE OF CONTENTS

|                             | Page                                           
|---------------------------- | -----------------------------------------------
|                             |                                                
|INDEPENDENT AUDITORS REPORT | 3                                              
|                             |                                                
|FINANCIAL STATEMENTS         |                                                
|                             |                                                
|                             | Consolidated balance sheets                    
|                             | Consolidated statements of income              
|                             | Consolidated statements of comprehensive income
|                             | Consolidated statements of stockholders equity
|                             | Consolidated statements of cash flows          
|                             | Notes to consolidated financial statements     





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INDEPENDENT AUDITORS REPORT

To the Board of Directors Henry County Bancshares, Inc. Stockbridge,
Georgia

We have audited the accompanying consolidated balance sheets of Henry County Bancshares, Inc. and subsidiariesas of
December 31, 2002 and 2001, and the related consolidated statements of income, comprehensive income, stockholders equity and cash flows for each of the three years in the period ended December 31, 2002.  These financial statements are the
responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Henry County Bancshares, Inc. and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.

|                  | /s/ MAULDIN & JENKINS, LLC
|----------------- | --------------------------
|                  |                           
|                  |                           
|Atlanta, Georgia  |                           
|February 20, 2003 |                           





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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2002 AND 2001

|                                                                                 |                                                                                  | 2002 |             | 2001        |  
|-------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ---- | ----------- | ----------- | -
|                                                                                 |                                                                                  |      |             |             |  
|Assets                                                                           |                                                                                  |      |             |             |  
|Cash and due from banks                                                          |                                                                                  | $    | 35,459,970  |             | $
|Interest-bearing deposits in banks                                               |                                                                                  |      | 1,148,764   |             |  
|Federal funds sold                                                               |                                                                                  |      | 22,300,000  |             |  
|Securities available-for-sale                                                    |                                                                                  |      | 62,088,707  |             |  
|Securities held-to-maturity, at cost (fair value 2002 $938,323; 2001 $3,573,614) |                                                                                  |      | 899,208     |             |  
|Restricted equity securities, at cost                                            |                                                                                  |      | 1,483,473   |             |  
|Loans held for sale                                                              |                                                                                  |      | 5,796,885   |             |  
|Loans                                                                            |                                                                                  |      | 350,276,958 |             |  
|Less allowance for loan losses                                                   |                                                                                  |      | 3,827,270   |             |  
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 | Loans, net                                                                       |      |             | 346,449,688 |  
|Premises and equipment                                                           |                                                                                  |      | 8,571,401   |             |  
|Other assets                                                                     |                                                                                  |      | 4,954,606   |             |  
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 | Total assets                                                                     |      | $           | 489,152,702 |  
|                                                                                 |                                                                                  |      |             |             |  
|Liabilities and Stockholders Equity                                             |                                                                                  |      |             |             |  
|Deposits                                                                         |                                                                                  |      |             |             |  
|                                                                                 | Noninterest-bearing                                                              |      | $           | 81,412,273  |  
|                                                                                 | Interest-bearing                                                                 |      |             | 338,737,025 |  
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 | Total deposits                                                                   |      |             | 420,149,298 |  
|                                                                                 | Other borrowings                                                                 |      |             | 20,287,289  |  
|                                                                                 | Other liabilities                                                                |      |             | 2,048,139   |  
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 | Total liabilities                                                                |      |             | 442,484,726 |  
|                                                                                 |                                                                                  |      |             |             |  
|Commitments and contingencies                                                    |                                                                                  |      |             |             |  
|Stockholders equity                                                             |                                                                                  |      |             |             |  
|                                                                                 | Common stock, par value $2.50; 10,000,000 shares authorized; 7,237,065.60 issued |      |             | 18,092,664  |  
|                                                                                 | Capital surplus                                                                  |      |             | 739,560     |  
|                                                                                 | Retained earnings                                                                |      |             | 28,647,251  |  
|                                                                                 | Accumulated other comprehensive income                                           |      |             | 581,917     |  
|                                                                                 | Treasury stock                                                                   |      |             | (1,393,416  | )
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 | Total stockholders equity                                                       |      |             | 46,667,976  |  
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 | Total liabilities and stockholders equity                                       |      | $           | 489,152,702 |  
|                                                                                 |                                                                                  |      |             |             |  
|                                                                                 |                                                                                  |      |             |             |  

See Notes to Consolidated Financial Statements.

2



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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

|                          |                                                      | 2002 |           | 2001       |   | 2000      |           
|------------------------- | ---------------------------------------------------- | ---- | --------- | ---------- | - | --------- | ----------
|                          |                                                      |      |           |            |   |           |           
|Interest income           |                                                      |      |           |            |   |           |           
|                          | Loans, including fees                                |      | $         | 23,037,336 |   | $         | 24,698,187
|                          | Taxable securities                                   |      |           | 3,188,287  |   |           | 6,339,896 
|                          | Nontaxable securities                                |      |           | 700,148    |   |           | 901,210   
|                          | Deposits in banks                                    |      |           | 108,714    |   |           | 3,332     
|                          | Federal funds sold                                   |      |           | 264,191    |   |           | 1,281,392 
|                          |                                                      |      |           |            |   |           |           
|                          | Total interest income                                |      |           | 27,298,676 |   |           | 33,224,017
|                          |                                                      |      |           |            |   |           |           
|Interest expense          |                                                      |      |           |            |   |           |           
|                          | Deposits                                             |      |           | 10,053,245 |   |           | 15,401,525
|                          | Other borrowings                                     |      |           | 924,061    |   |           | 1,105,027 
|                          |                                                      |      |           |            |   |           |           
|                          | Total interest expense                               |      |           | 10,977,306 |   |           | 16,506,552
|                          |                                                      |      |           |            |   |           |           
|                          | Net interest income                                  |      |           | 16,321,370 |   |           | 16,717,465
|Provision for loan losses |                                                      |      | 540,500   |            |   | 550,000   |           
|                          |                                                      |      |           |            |   |           |           
|                          | Net interest income after provision for loan losses  |      |           | 15,780,870 |   |           | 16,167,465
|                          |                                                      |      |           |            |   |           |           
|Other income              |                                                      |      |           |            |   |           |           
|                          | Service charges on deposit accounts                  |      |           | 2,144,544  |   |           | 2,244,705 
|                          | Other service charges and fees                       |      |           | 788,951    |   |           | 670,621   
|                          | Gain (loss) on sale of securities available-for-sale |      |           | 80,040     |   |           | (100,445  
|                          | Mortgage banking income                              |      |           | 1,532,635  |   |           | 1,828,653 
|                          |                                                      |      |           |            |   |           |           
|                          | Total other income                                   |      |           | 4,546,170  |   |           | 4,643,534 
|                          |                                                      |      |           |            |   |           |           
|Other expenses            |                                                      |      |           |            |   |           |           
|                          | Salaries and employee benefits                       |      |           | 5,679,887  |   |           | 5,580,792 
|                          | Equipment and occupancy expenses                     |      |           | 1,369,008  |   |           | 1,307,616 
|                          | Other operating expenses                             |      |           | 2,085,590  |   |           | 1,893,229 
|                          |                                                      |      |           |            |   |           |           
|                          | Total other expenses                                 |      |           | 9,134,485  |   |           | 8,781,637 
|                          |                                                      |      |           |            |   |           |           
|                          | Income before income taxes                           |      |           | 11,192,555 |   |           | 12,029,362
|Income tax expense        |                                                      |      | 3,858,717 |            |   | 4,056,272 |           
|                          |                                                      |      |           |            |   |           |           
|                          | Net income                                           |      | $         | 7,333,838  |   | $         | 7,973,090 
|                          |                                                      |      |           |            |   |           |           
|Earnings per share        |                                                      | $    | 1.02      |            | $ | 1.11      |           
|                          |                                                      |      |           |            |   |           |           
|                          |                                                      |      |           |            |   |           |           

See Notes to Consolidated Financial Statements.

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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

|                            |                                                                                                                                         | 2002 |           | 2001    |   | 2000      |        
|--------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ---- | --------- | ------- | - | --------- | -------
|                            |                                                                                                                                         |      |           |         |   |           |        
|Net income                  |                                                                                                                                         | $    | 7,333,838 |         | $ | 7,973,090 |        
|                            |                                                                                                                                         |      |           |         |   |           |        
|Other comprehensive income: |                                                                                                                                         |      |           |         |   |           |        
|                            | Unrealized gains on securities available-for-sale:                                                                                      |      |           |         |   |           |        
|                            | Net unrealized holding gains arising during period, net of tax of $248,308, $280,627 and $542,549,
respectively                         |      |           | 482,010 |   |           | 544,046
|                            | Reclassification adjustment for (gains) losses realized in net income, net of tax (benefits) of $27,214, $(34,151) and $-,
respectively |      |           | (52,826 | ) |           | 66,294 
|                            |                                                                                                                                         |      |           |         |   |           |        
|Other comprehensive income  |                                                                                                                                         |      | 429,184   |         |   | 610,340   |        
|                            |                                                                                                                                         |      |           |         |   |           |        
|Comprehensive income        |                                                                                                                                         | $    | 7,763,022 |         | $ | 8,583,430 |        
|                            |                                                                                                                                         |      |           |         |   |           |        
|                            |                                                                                                                                         |      |           |         |   |           |        

See Notes to Consolidated Financial Statements.

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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

|                           |                                         | Common Stock |           | Capital Surplus |   | Retained Earnings |          
|-------------------------- | --------------------------------------- | ------------ | --------- | --------------- | - | ----------------- | ---------
|                           |                                         |              |           |                 |  
|                           |                                         | Shares       |           | Par Value       |   |                   |          
|                           |                                         |              |           |                 |   |                   |          
|Balance, December 31, 1999 |                                         |              | 3,640,314 |                 | $ | 9,100,784         |          
|                           | Net income                              |              |           |                |   |                   |         
|                           | Cash dividends declared, $.35 per share |              |           |                |   |                   |         
|                           | Purchase of treasury stock              |              |           |                |   |                   |         
|                           | Other comprehensive income              |              |           |                |   |                   |         
|                           |                                         |              |           |                 |   |                   |          
|Balance, December 31, 2000 |                                         |              | 3,640,314 |                 |   | 9,100,784         |          
|                           | Net income                              |              |           |                |   |                   |         
|                           | Two-for-one common stock split          |              |           | 3,596,752       |   |                   | 8,991,880
|                           | Cash dividends declared, $.38 per share |              |           |                |   |                   |         
|                           | Purchase of treasury stock              |              |           |                |   |                   |         
|                           | Other comprehensive income              |              |           |                |   |                   |         
|                           |                                         |              |           |                 |   |                   |          
|Balance, December 31, 2001 |                                         |              | 7,237,066 |                 |   | 18,092,664        |          
|                           | Net income                              |              |           |                |   |                   |         
|                           | Cash dividends declared, $.35 per share |              |           |                |   |                   |         
|                           | Purchase of treasury stock              |              |           |                |   |                   |         
|                           | Other comprehensive income              |              |           |                |   |                   |         
|                           |                                         |              |           |                 |   |                   |          
|Balance, December 31, 2002 |                                         |              | 7,237,066 |                 | $ | 18,092,664        |          
|                           |                                         |              |           |                 |   |                   |          

See Notes to Consolidated Financial Statements.

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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

|                                                   |                                                                                   |   | 2002       |             |   | 2001       |             |   | 2000        |            
|-------------------------------------------------- | --------------------------------------------------------------------------------- | - | ---------- | ----------- | - | ---------- | ----------- | - | ----------- | -----------
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|OPERATING ACTIVITIES                               |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Net income                                                                        |   | $          | 7,333,838   |   | $          | 7,973,090   |   | $           | 7,187,905  
|                                                   | Adjustments to reconcile net income to net cash provided by operating activities: |   |            |             |   |            |             |   |             |            
|                                                   | Depreciation                                                                      |   |            | 549,521     |   |            | 535,646     |   |             | 553,069    
|                                                   | Provision for loan losses                                                         |   |            | 540,500     |   |            | 550,000     |   |             | 490,000    
|                                                   | Deferred income taxes                                                             |   |            | (203,422    | ) |            | (265,707    | ) |             | (193,459   
|                                                   | (Gain) loss on sale of securities available-for-sale                              |   |            | (80,040     | ) |            | 100,445     |   |             |           
|                                                   | Gain on sale of premises and equipment                                            |   |            | (72,385     | ) |            |            |   |             |           
|                                                   | Net increase in loans held for sale                                               |   |            | (4,221,729  | ) |            | (414,294    | ) |             | (770,205   
|                                                   | (Increase) decrease in interest receivable                                        |   |            | 331,590     |   |            | 1,059,098   |   |             | (1,038,084 
|                                                   | Increase (decrease) in interest payable                                           |   |            | (301,254    | ) |            | (185,818    | ) |             | 238,213    
|                                                   | Net other operating activities                                                    |   |            | 877,134     |   |            | (367,420    | ) |             | 488,177    
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Net cash provided by operating activities                                         |   |            | 4,753,753   |   |            | 8,985,040   |   |             | 6,955,616  
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|INVESTING ACTIVITIES                               |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Purchases of securities available-for-sale                                        |   |            | (35,536,158 | ) |            | (68,469,392 | ) |             | (18,407,273
|                                                   | Proceeds from sales of securities available-for-sale                              |   |            | 16,641,725  |   |            | 8,552,785   |   |             |           
|                                                   | Proceeds from maturities of securities available-for-sale                         |   |            | 57,811,193  |   |            | 82,514,277  |   |             | 18,347,999 
|                                                   | Proceeds from maturities of securities held-to-maturity                           |   |            | 2,623,031   |   |            | 5,748,288   |   |             | 6,547,523  
|                                                   | Purchases of restricted equity securities                                         |   |            | (169,000    | ) |            |            |   |             |           
|                                                   | Net (increase) decrease in federal funds sold                                     |   |            | 21,500,000  |   |            | (21,350,000 | ) |             | 9,180,000  
|                                                   | Net (increase) decrease in interest-bearing deposits in banks                     |   |            | 3,783,680   |   |            | (4,788,110  | ) |             | 11,695     
|                                                   | Net increase in loans                                                             |   |            | (45,679,237 | ) |            | (33,980,728 | ) |             | (50,189,150
|                                                   | Proceeds from sale of premises and equipment                                      |   |            | 355,744     |   |            |            |   |             |           
|                                                   | Purchase of premises and equipment                                                |   |            | (1,962,362  | ) |            | (954,880    | ) |             | (970,642   
|                                                   | Net other investing activities                                                    |   |            | (129,000    | ) |            | (600,000    | ) |             |           
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Net cash provided by (used in) investing activities                               |   |            | 19,239,616  |   |            | (33,327,760 | ) |             | (35,479,848
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|FINANCING ACTIVITIES                               |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Net increase (decrease) in deposits                                               |   |            | (16,514,654 | ) |            | 49,531,028  |   |             | 20,582,757 
|                                                   | Net proceeds from (repayments of) other borrowings                                |   |            | 4,595,659   |   |            | (4,510,770  | ) |             | (1,956,426 
|                                                   | Dividends paid                                                                    |   |            | (2,506,347  | ) |            | (2,729,924  | ) |             | (2,519,748 
|                                                   | Purchase of treasury stock                                                        |   |            | (312,442    | ) |            | (177,354    | ) |             | (655,810   
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Net cash provided by (used in) financing activities                               |   |            | (14,737,784 | ) |            | 42,112,980  |   |             | 15,450,773 
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|Net increase (decrease) in cash and due from banks |                                                                                   |   | 9,255,585  |             |   | 17,770,260 |             |   | (13,073,459 | )          
|Cash and due from banks at beginning of year       |                                                                                   |   | 26,204,385 |             |   | 8,434,125  |             |   | 21,507,584  |            
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|Cash and due from banks at end of year             |                                                                                   | $ | 35,459,970 |             | $ | 26,204,385 |             | $ | 8,434,125   |            
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            
|SUPPLEMENTAL DISCLOSURES                           |                                                                                   |   |            |             |   |            |             |   |             |            
|                                                   | Cash paid for:                                                                    |   |            |             |   |            |             |   |             |            
|                                                   | Interest                                                                          |   | $          | 11,278,560  |   | $          | 16,692,370  |   | $           | 16,922,898 
|                                                   | Income taxes                                                                      |   | $          | 3,933,164   |   | $          | 4,378,028   |   | $           | 3,612,837  
|                                                   |                                                                                   |   |            |             |   |            |             |   |             |            

See Notes to Consolidated Financial Statements.

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HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    
|------- | ----------------------------------------------
|        |                                               
|        | Nature of Business                            
|        |                                               
|        |                                               
|        |                                               
|        | Basis of Presentation and Accounting Estimates
|        |                                               
|        |                                               
|        |                                               
|        |                                               
|        |                                               
|        | Cash, Due From Banks and Cash Flows           
|        |                                               
|        |                                               
|        |                                               
|        |                                               
|        |                                               
|        | Securities                                    
|        |                                               
|        |                                               
|        |                                               
|        |                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|------- | ------------------------------------------------------
|        |                                                       
|        | Loans Held for Sale                                   
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        | Loans                                                 
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       
|        |                                                       

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|------- | ------------------------------------------------------
|        |                                                       
|        | Premises and Equipment                                
|        |                                                       
|        |                                                       
|        |                                                       
|        | Other Real Estate Owned                               
|        |                                                       
|        |                                                       
|        |                                                       
|        | Income Taxes                                          
|        |                                                       
|        |                                                       
|        |                                                       
|        | Earnings Per Share                                    
|        |                                                       
|        |                                                       
|        |                                                       
|        | Comprehensive Income                                  
|        |                                                       
|        |                                                       

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 2. | SECURITIES                                                                
|------- | --------------------------------------------------------------------------
|        |                                                                           
|        | The amortized cost and fair value of securities are summarized as follows:

|                              |                                        | Amortized Cost |             | Gross Unrealized Gains |   | Gross Unrealized Losses |         | Fair Value |         
|----------------------------- | -------------------------------------- | -------------- | ----------- | ---------------------- | - | ----------------------- | ------- | ---------- | --------
|                              |                                        |                |             |                        |   |                         |         |            |         
|Securities Available-for-Sale |                                        |                |             |                        |   |                         |         |            |         
|                              | December 31, 2002:                     |                |             |                        |   |                         |         |            |         
|                              | U. S. Government and agency securities |                | $           | 22,852,511             |   | $                       | 258,745 |            | $       
|                              | State and municipal securities         |                |             | 12,979,605             |   |                         | 246,544 |            |         
|                              | Mortgage-backed securities             |                |             | 25,374,899             |   |                         | 456,369 |            |         
|                              |                                        |                |             |                        |   |                         |         |            |         
|                              |                                        | $              | 61,207,015  |                        | $ | 961,658                 |         | $          | (79,966 
|                              |                                        |                |             |                        |   |                         |         |            |         
|                              | December 31, 2001:                     |                |             |                        |   |                         |         |            |         
|                              | U. S. Government and agency securities |                | $           | 34,512,512             |   | $                       | 470,699 |            | $       
|                              | State and municipal securities         |                |             | 19,565,377             |   |                         | 140,554 |            |         
|                              | Mortgage-backed securities             |                |             | 45,865,846             |   |                         | 92,892  |            |         
|                              | Equity securities                      |                |             | 100,000                |   |                         | 200     |            |         
|                              |                                        |                |             |                        |   |                         |         |            |         
|                              |                                        | $              | 100,043,735 |                        | $ | 704,345                 |         | $          | (472,931
|                              |                                        |                |             |                        |   |                         |         |            |         
|Securities Held-to-Maturity   |                                        |                |             |                        |   |                         |         |            |         
|                              | December 31, 2002:                     |                |             |                        |   |                         |         |            |         
|                              | State and municipal securities         |                | $           | 640,000                |   | $                       | 27,951  |            | $       
|                              | Mortgage-backed securities             |                |             | 259,208                |   |                         | 11,164  |            |         
|                              |                                        |                |             |                        |   |                         |         |            |         
|                              |                                        | $              | 899,208     |                        | $ | 39,115                  |         | $          |        
|                              |                                        |                |             |                        |   |                         |         |            |         
|                              | December 31, 2001:                     |                |             |                        |   |                         |         |            |         
|                              | State and municipal securities         |                | $           | 2,880,105              |   | $                       | 38,658  |            | $       
|                              | Mortgage-backed securities             |                |             | 642,134                |   |                         | 12,717  |            |         
|                              |                                        |                |             |                        |   |                         |         |            |         
|                              |                                        | $              | 3,522,239   |                        | $ | 51,375                  |         | $          |        
|                              |                                        |                |             |                        |   |                         |         |            |         

Restricted equity securities are summarized as follows:

|                             |  | December 31, |          
|---------------------------- |  | ------------ | ---------
|                             |  |              |          
|                             |  | 2002         |          
|                             |  |              |          
|Federal Home Loan Bank stock |  | $            | 1,250,000
|Correspondent bank stock     |  |              | 233,473  
|                             |  |              |          
|                             |  | $            | 1,483,473
|                             |  |              |          

10



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 2. | SECURITIES (Continued)                                                                                                                                                                                  
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                         
|        | Securities with a carrying value of $51,344,000 and $92,880,000 at December 31, 2002 and 2001, respectively, were pledged to secure public deposits and for other
purposes required or permitted by law.
|        |                                                                                                                                                                                                         
|        | Gains and losses on sales of securities available-for-sale consist of the following:                                                                                                                    

|                            |  | Years Ended December 31, |       
|--------------------------- |  | ------------------------ | ------
|                            |  |                          |       
|                            |  | 2002                     |       
|                            |  |                          |       
|Gross gains                 |  | $                        | 86,038
|Gross losses                |  |                          | (5,998
|                            |  |                          |       
|Net realized gains (losses) |  | $                        | 80,040
|                            |  |                          |       

| | The amortized cost and fair value of debt securities as of December 31, 2002 by contractual maturity are shown below.  Maturities may differ from contractual maturities in
mortgage-backed securities because the mortgages underlying the securities may be called or repaid without penalty.  Therefore, these securities are not included in the maturity categories in the following summary.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           |  | Securities  Available-for-Sale |            | Securities Held-to-Maturity |  
|-------------------------- |  | ------------------------------ | ---------- | --------------------------- | -
|                           |  |                                |            |                             |  
|                           |  | Amortized Cost                 |            | Fair Value                  |  
|                           |  |                                |            |                             |  
|Due in one year or less    |  | $                              | 6,126,508  |                             | $
|Due from one to five years |  |                                | 21,033,567 |                             |  
|Due from five to ten years |  |                                | 6,902,526  |                             |  
|Due after ten years        |  |                                | 1,769,515  |                             |  
|Mortgage-backed securities |  |                                | 25,374,899 |                             |  
|                           |  |                                |            |                             |  
|                           |  | $                              | 61,207,015 |                             | $
|                           |  |                                |            |                             |  

|NOTE 3. | LOANS                                             
|------- | --------------------------------------------------
|        |                                                   
|        | The composition of loans is summarized as follows:

|                                        |  | December 31, |            
|--------------------------------------- |  | ------------ | -----------
|                                        |  |              |            
|                                        |  | 2002         |            
|                                        |  |              |            
|Commercial, financial, and agricultural |  | $            | 58,994,000 
|Real estate  construction              |  |              | 102,602,000
|Real estate  mortgage                  |  |              | 165,546,000
|Consumer installment and other          |  |              | 23,134,958 
|                                        |  |              |            
|                                        |  |              | 350,276,958
|Allowance for loan losses               |  |              | (3,827,270 
|                                        |  |              |            
|Loans, net                              |  | $            | 346,449,688
|                                        |  |              |            

11



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 3. | LOANS (Continued)                                       
|------- | --------------------------------------------------------
|        |                                                         
|        | Changes in the allowance for loan losses are as follows:

|                           |                                            | Years Ended December 31, |          
|-------------------------- | ------------------------------------------ | ------------------------ | ---------
|                           |                                            |                          |          
|                           |                                            | 2002                     |          
|                           |                                            |                          |          
|Balance, beginning of year |                                            | $                        | 3,376,986
|                           | Provision for loan losses                  |                          |          
|                           | Loans charged off                          |                          |          
|                           | Recoveries of loans previously charged off |                          |          
|                           |                                            |                          |          
|Balance, end of year       |                                            | $                        | 3,827,270
|                           |                                            |                          |          

| | The total recorded investment in impaired loans, consisting solely of loans on nonaccrual status, was $296,643 and $304,269 at December 31, 2002 and 2001,
respectively.  There were no impaired loans that had related allowances for loan losses determined in accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, at December 31, 2002 and 2001.  The average
recorded investment in impaired loans for 2002 and 2001 was $315,648 and $582,105, respectively.  Interest income recognized on impaired loans for cash payments received was not material for the years ended 2002, 2001 and 2000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Loans past due ninety days or more and still accruing interest amounted to $1,048,000 and $1,197,000 at December 31, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | In the ordinary course of business, the Company has granted loans to certain related parties, including directors, executive officers, and their affiliates.  The
interest rates on these loans were substantially the same as rates prevailing at the time of the transaction and repayment terms are customary for the type of loan.  Changes in related party loans for the year ended December 31, 2002 are as
follows:                                                                                                                                                                                                     

|Balance, beginning of year |                                         | $ | 970,509   |         
|-------------------------- | --------------------------------------- | - | --------- | --------
|                           | Advances                                |   |           | 803,387 
|                           | Repayments                              |   |           | (430,996
|                           | Transactions due to change in directors |   |           | (69,768 
|                           |                                         |   |           |         
|Balance, end of year       |                                         | $ | 1,273,132 |         
|                           |                                         |   |           |         

|NOTE 4. | PREMISES AND EQUIPMENT                           
|------- | -------------------------------------------------
|        |                                                  
|        | Premises and equipment are summarized as follows:

|                                                             |  | December 31, |           
|------------------------------------------------------------ |  | ------------ | ----------
|                                                             |  |              |           
|                                                             |  | 2002         |           
|                                                             |  |              |           
|Land                                                         |  | $            | 1,569,547 
|Buildings                                                    |  |              | 7,520,097 
|Equipment                                                    |  |              | 3,055,073 
|Construction in progress, estimated cost to complete $75,000 |  |              | 1,080,141 
|                                                             |  |              |           
|                                                             |  |              | 13,224,858
|Accumulated depreciation                                     |  |              | (4,653,457
|                                                             |  |              |           
|                                                             |  | $            | 8,571,401 
|                                                             |  |              |           

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 5. | DEPOSITS                                                                                                                                                                                                                               
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                        
|        | The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2002 and 2001 was $60,365,000 and $55,750,575, respectively.  The
scheduled maturities of time deposits at December 31, 2002 are as follows:

|2003 |  | $ | 146,631,545 | 
|---- |  | - | ----------- | 
|2004 |  |   | 20,707,450  | 
|2005 |  |   | 16,633,191  | 
|2006 |  |   | 7,369,895   | 
|2007 |  |   | 9,464,565   | 
|     |  |   |             | 
|     |  | $ | 200,806,646 | 
|     |  |   |             | 

|        | The Company had deposits from one public depositor totaling $33,938,600 and $61,214,453 at December 31, 2002 and 2001, respectively.
|------- | ------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                     
|NOTE 6. | OTHER BORROWINGS                                                                                                                    
|        |                                                                                                                                     
|        | Other borrowings consist of the following:                                                                                          

|                                                                                                                   |  | December 31, |           
|------------------------------------------------------------------------------------------------------------------ |  | ------------ | ----------
|                                                                                                                   |  |              |           
|                                                                                                                   |  | 2002         |           
|                                                                                                                   |  |              |           
|Advance from Federal Home Loan Bank with interest at 5.24%, due March 30, 2009.                                    |  | $            | 5,000,000 
|Advance from Federal Home Loan Bank with interest at 5.51%, due March 26, 2008.                                    |  |              | 5,000,000 
|Advance from correspondent bank with interest at prime less .25%, unsecured, due December 30, 2003.                |  |              | 2,000,000 
|Treasury, tax, and loan note option account, with interest at 25% less than the federal funds rate, due on demand. |  |              | 3,287,289 
|Securities sold under agreements to repurchase.                                                                    |  |              | 5,000,000 
|                                                                                                                   |  |              |           
|                                                                                                                   |  | $            | 20,287,289
|                                                                                                                   |  |              |           

| | The advances from the Federal Home Loan Bank are secured by certain qualifying loans of approximately $44,328,000 and Federal Home Loan Bank stock of
$1,250,000.                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Securities sold under agreements to repurchase, which are secured borrowings, generally mature within thirty days from the transaction date.  Securities sold
under repurchase agreements are reflected at the amount of cash received in connection with the transactions.  The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company
monitors the fair value of the underlying securities on a daily basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 7. | MORTGAGE BANKING INCOME                           
|------- | --------------------------------------------------
|        |                                                   
|        | Mortgage banking income consists of the following:

|                                   |  | Years Ended December 31, |          
|---------------------------------- |  | ------------------------ | ---------
|                                   |  |                          |          
|                                   |  | 2002                     |          
|                                   |  |                          |          
|Fees from sale of servicing rights |  | $                        | 761,746  
|Other fees from borrowers          |  |                          | 770,889  
|                                   |  |                          |          
|                                   |  | $                        | 1,532,635
|                                   |  |                          |          

|NOTE 8. | EMPLOYEE BENEFIT PLANS                                                                                                                                                                                                                                        
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                               
|        | The Company has a noncontributory profit-sharing plan and a 401(k) retirement plan covering substantially all employees.  Contributions to the plans charged to
expense during 2002, 2001 and 2000 amounted to $320,657, $320,809, and $285,446, respectively.
|        |                                                                                                                                                                                                                                                               
|        | The Company also has deferred compensation agreements with certain key officers.  Amounts charged to expense under these agreements totaled $51,734, $59,290,
and $69,447 for the years ended December 31, 2002, 2001 and 2000, respectively.                 
|        |                                                                                                                                                                                                                                                               
|NOTE 9. | INCOME TAXES                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                               
|        | Income tax expense consists of the following:                                                                                                                                                                                                                 

|         |                    | Years Ended December 31, |          
|-------- | ------------------ | ------------------------ | ---------
|         |                    |                          |          
|         |                    | 2002                     |          
|         |                    |                          |          
|Current  |                    | $                        | 4,062,139
|Deferred |                    |                          | (203,422 
|         |                    |                          |          
|         | Income tax expense |                          | $        
|         |                    |                          |          
|         |                    |                          |          

| | The Companys income tax expense differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes.  A reconciliation
of the differences is as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |                     | Years Ended December 31, |          
|------------------------------ | ------------------- | ------------------------ | ---------
|                               |                     |                          |          
|                               |                     | 2002                     |          
|                               |                     |                          |          
|Income taxes at statutory rate |                     | $                        | 3,917,396
|                               | Tax-exempt interest |                          |          
|                               | State income taxes  |                          |          
|                               | Surtax exemption    |                          |          
|                               | Other items, net    |                          |          
|                               |                     |                          |          
|Income tax expense             |                     | $                        | 3,858,717
|                               |                     |                          |          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 9. | INCOME TAXES (Continued)                               
|------- | -------------------------------------------------------
|        |                                                        
|        | The components of deferred income taxes are as follows:

|                          |                               | December 31, |          
|------------------------- | ----------------------------- | ------------ | ---------
|                          |                               |              |          
|                          |                               | 2002         |          
|                          |                               |              |          
|Deferred tax assets:      |                               |              |          
|                          | Loan loss reserves            |              | $        
|                          | Deferred compensation         |              |          
|                          |                               |              |          
|                          |                               |              | 1,540,164
|                          |                               |              |          
|Deferred tax liabilities: |                               |              |          
|                          | Depreciation                  |              |          
|                          | Securities available-for-sale |              |          
|                          |                               |              |          
|                          |                               |              | 323,360  
|                          |                               |              |          
|Net deferred tax assets   |                               | $            | 1,216,804
|                          |                               |              |          

|NOTE 10. | COMMITMENTS AND CONTINGENCIES
|-------- | -----------------------------
|         |                              
|         | Loan Commitments             
|         |                              
|         |                              
|         |                              
|         |                              

|                             |  | December 31, |           
|---------------------------- |  | ------------ | ----------
|                             |  |              |           
|                             |  | 2002         |           
|                             |  |              |           
|Commitments to extend credit |  | $            | 69,417,280
|Standby letters of credit    |  |              | 3,562,246 
|                             |  |              |           
|                             |  | $            | 72,979,526
|                             |  |              |           

| |               | Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Since many of the
commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.                                                                                                                                 
| | ------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |               |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |               | Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.  Those letters of credit are
primarily issued to support public and private borrowing arrangements.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.  Collateral is required in instances
which the Company deems necessary.
| |               |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Contingencies
| |               |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |               | In the normal course of business, the Company is involved in various legal proceedings.  In the opinion of management, any liability resulting from such proceedings would
not have a material effect on the Companys financial statements.                                                                                                                                                                                                         

15



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|NOTE 11. | CONCENTRATIONS OF CREDIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Company originates primarily commercial, residential, and consumer loans to customers in Henry County and surrounding counties.  The ability of the majority
of the Companys customers to honor their contractual loan obligations is dependent on the economy in these areas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Seventy-seven percent of the Companys loan portfolio is concentrated in loans secured by real estate, of which a substantial portion is secured by real estate
in the Companys primary market area.  In addition, a substantial portion of the other real estate owned is located in those same markets.  Accordingly, the ultimate collectibility of the loan portfolio and recovery of other real
estate owned are susceptible to changes in market conditions in the Companys primary market area.  The other significant concentrations of credit by type of loan are set forth in Note 3.                                                                                                                                                                                                                                                                                                                      
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Company, as a matter of policy, does not generally extend credit to any single borrower or group of related borrowers in excess of 25% of statutory capital, or
approximately $8,000,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|NOTE 12. | REGULATORY MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Bank is subject to certain restrictions on the amount of dividends that may be declared without prior regulatory approval.  At December 31, 2002,
approximately $3,661,000 of retained earnings were available for dividend declaration without regulatory approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements.  Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting
practices.  Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Prompt corrective action provisions are not applicable to bank holding
companies.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total and Tier I
capital to risk-weighted assets, as defined, and of Tier I capital to average assets, as defined.  Management believes, as of December 31, 2002 and 2001, the Company and the Bank met all capital adequacy requirements to which they are
subject.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | As of December 31, 2002, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action.  To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table.  There are no conditions or
events since that notification that management believes have changed the Banks category.                                                                                                                                                                                                                                                                                                                                                                                                           

16



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|NOTE 12. | REGULATORY MATTERS (Continued)                                                                
|-------- | ----------------------------------------------------------------------------------------------
|         |                                                                                               
|         | The Company and Banks actual capital amounts and ratios are presented in the following table.

|                         |                        | Actual                 |   | For Capital Adequacy Purposes |  | To Be Well Capitalized Under Prompt Corrective Action Provisions |      
|------------------------ | ---------------------- | ---------------------- | - | ----------------------------- |  | ---------------------------------------------------------------- | -----
|                         |                        |                        |   |                               |  |                                                                  |      
|                         |                        | Amount                 |   | Ratio                         |  | Amount                                                           |      
|                         |                        |                        |   |                               |  |                                                                  |      
|                         |                        | (Dollars in Thousands) |  
|As of December 31, 2002: |                        |                        |   |                               |  |                                                                  |      
|                         | Total Capital to Risk  |                        |   |                               |  |                                                                  |      
|                         | Weighted Assets:       |                        |   |                               |  |                                                                  |      
|                         | Consolidated           |                        | $ | 49,913                        |  |                                                                  | 13.23
|                         | Bank                   |                        | $ | 48,930                        |  |                                                                  | 13.01
|                         | Tier I Capital to Risk |                        |   |                               |  |                                                                  |      
|                         | Weighted Assets:       |                        |   |                               |  |                                                                  |      
|                         | Consolidated           |                        | $ | 46,086                        |  |                                                                  | 12.22
|                         | Bank                   |                        | $ | 45,103                        |  |                                                                  | 11.99
|                         | Tier I Capital to      |                        |   |                               |  |                                                                  |      
|                         | Average Assets:        |                        |   |                               |  |                                                                  |      
|                         | Consolidated           |                        | $ | 46,086                        |  |                                                                  | 9.79 
|                         | Bank                   |                        | $ | 45,103                        |  |                                                                  | 9.58 
|As of December 31, 2001: |                        |                        |   |                               |  |                                                                  |      
|                         | Total Capital to Risk  |                        |   |                               |  |                                                                  |      
|                         | Weighted Assets:       |                        |   |                               |  |                                                                  |      
|                         | Consolidated           |                        | $ | 44,948                        |  |                                                                  | 12.81
|                         | Bank                   |                        | $ | 44,050                        |  |                                                                  | 12.56
|                         | Tier I Capital to Risk |                        |   |                               |  |                                                                  |      
|                         | Weighted Assets:       |                        |   |                               |  |                                                                  |      
|                         | Consolidated           |                        | $ | 41,571                        |  |                                                                  | 11.85
|                         | Bank                   |                        | $ | 40,673                        |  |                                                                  | 11.60
|                         | Tier I Capital to      |                        |   |                               |  |                                                                  |      
|                         | Average Assets:        |                        |   |                               |  |                                                                  |      
|                         | Consolidated           |                        | $ | 41,571                        |  |                                                                  | 8.65 
|                         | Bank                   |                        | $ | 40,673                        |  |                                                                  | 8.47 
|                         |                        |                        |   |                               |  |                                                                  |      

|NOTE 13. | FAIR VALUE OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|         | The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation.  Fair value
is best determined based upon quoted market prices.  However, in many instances, there are no quoted market prices for the Companys various financial instruments.  In cases where quoted market prices are not available, fair values
are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  Accordingly, the fair value
estimates may not be realized in an immediate settlement of the instrument.  SFAS No. 107, Disclosures about Fair Values of Financial Instruments, excludes certain financial instruments and all nonfinancial instruments from its
disclosure requirements.  Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

17



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|NOTE 13. | FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
|-------- | -----------------------------------------------
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                
|         |                                                

|                       |                                                                                    | December 31, 2002 |   | December 31, 2001 | 
|---------------------- | ---------------------------------------------------------------------------------- | ----------------- | - | ----------------- | 
|                       |                                                                                    |                   |   |                   | 
|                       |                                                                                    | Carrying Amount   |   | Fair Value        | 
|                       |                                                                                    |                   |   |                   | 
|Financial assets:      |                                                                                    |                   |   |                   | 
|                       | Cash and due from banks, interest-bearing deposits in banks and federal funds sold |                   | $ | 58,908,734        | 
|                       | Securities available-for-sale                                                      |                   |   | 62,088,707        | 
|                       | Securities held-to-maturity                                                        |                   |   | 899,208           | 
|                       | Restricted equity securities                                                       |                   |   | 1,483,473         | 
|                       | Loans held for sale                                                                |                   |   | 5,796,885         | 
|                       | Loans                                                                              |                   |   | 346,449,688       | 
|                       | Accrued interest receivable                                                        |                   |   | 2,792,841         | 
|Financial liabilities: |                                                                                    |                   |   |                   | 
|                       | Deposits                                                                           |                   |   | 420,149,298       | 
|                       | Other borrowings                                                                   |                   |   | 20,287,289        | 
|                       | Accrued interest payable                                                           |                   |   | 1,291,223         | 
|                       |                                                                                    |                   |   |                   | 

18



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 14. | SUPPLEMENTAL SEGMENT INFORMATION                                                                                                                                                                                                                                                                          
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                           
|         | The Company has two reportable segments: commercial banking and mortgage loan origination.  The commercial banking segment provides traditional banking services
offered through the Bank.  The mortgage loan origination segment provides mortgage loan origination services offered through First Metro.
|         |                                                                                                                                                                                                                                                                                                           
|         | The accounting policies of the segments are the same as those described in the summary of significant accounting policies.  The Company evaluates performance
based on profit and loss from operations before income taxes not including nonrecurring gains and losses.                                   
|         |                                                                                                                                                                                                                                                                                                           
|         | The Company accounts for intersegment revenues and expenses as if the revenue/expense transactions were to third parties, that is, at current market
prices.                                                                                                                                              
|         |                                                                                                                                                                                                                                                                                                           
|         | The Companys reportable segments are strategic business units that offer different products and services.  They are managed separately because each
segment has different types and levels of credit and interest rate risk.                                                                             

|                                           |  | INDUSTRY SEGMENTS  |            
|------------------------------------------ |  | ------------------ | -----------
|                                           |  |                    |            
|For the Year Ended December 31, 2002       |  | Commercial Banking |            
|                                           |  |                    |            
|Interest income                            |  | $                  | 27,400,632 
|Interest expense                           |  |                    | 10,987,920 
|Net interest income (expense)              |  |                    | 16,412,712 
|Intersegment net interest income (expense) |  |                    | 91,342     
|Other revenue from external sources        |  |                    | 3,001,335  
|Intersegment other revenues                |  |                    | 58,600     
|Depreciation                               |  |                    | 538,433    
|Provision for loan losses                  |  |                    | 540,500    
|Segment profit                             |  |                    | 11,176,061 
|Segment assets                             |  |                    | 486,961,832
|Expenditures for premises and equipment    |  |                    | 1,962,362  
|                                           |  |                    |            
|                                           |  | INDUSTRY SEGMENTS  |            
|                                           |  |                    |            
|For the Year Ended December 31, 2001       |  | Commercial Banking |            
|                                           |  |                    |            
|Interest income                            |  | $                  | 33,413,872 
|Interest expense                           |  |                    | 16,515,616 
|Net interest income (expense)              |  |                    | 16,898,256 
|Intersegment net interest income (expense) |  |                    | 180,340    
|Other revenue from external sources        |  |                    | 2,814,881  
|Intersegment other revenues                |  |                    | 43,000     
|Depreciation                               |  |                    | 522,777    
|Provision for loan losses                  |  |                    | 550,000    
|Segment profit                             |  |                    | 11,792,651 
|Segment assets                             |  |                    | 495,983,128
|Expenditures for premises and equipment    |  |                    | 954,880    

19



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 14. | SUPPLEMENTAL SEGMENT INFORMATION (Continued)
|-------- | --------------------------------------------

|                                           |  | INDUSTRY SEGMENTS 
|------------------------------------------ |  | ------------------
|                                           |  |                   
|For the Year Ended December 31, 2000       |  | Commercial Banking
|                                           |  |                   
|Interest income                            |  | $                 
|Interest expense                           |  |                   
|Net interest income (expense)              |  |                   
|Intersegment net interest income (expense) |  |                   
|Other revenue from external sources        |  |                   
|Intersegment other revenues                |  |                   
|Depreciation                               |  |                   
|Provision for loan losses                  |  |                   
|Segment profit                             |  |                   
|Segment assets                             |  |                   
|Expenditures for premises and equipment    |  |                   

|NOTE 15. | STOCK DIVIDEND                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         | On January 11, 2001, the Company declared a two-for-one common stock split in the form of a dividend payable to stockholders of record on January 11, 2001.  An
amount equal to the par value of common shares declared was transferred from retained earnings to common stock.  Earnings per share and all per share amounts for the years ended December 31, 2001 and 2000 have been retroactively adjusted for
the increased number of shares of common stock.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|NOTE 16. | PARENT COMPANY FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         | The following information presents the condensed balance sheets, statements of income, and cash flows for Henry County Bancshares, Inc.                                                                                                                                                                                                                                                                                                                          

CONDENSED BALANCE SHEETS



|                     |                            | December 31, |           
|-------------------- | -------------------------- | ------------ | ----------
|                     |                            |              |           
|                     |                            | 2002         |           
|                     |                            |              |           
|Assets               |                            |              |           
|                     | Cash                       |              | $         
|                     | Investment in subsidiaries |              |           
|                     | Premises and equipment     |              |           
|                     | Other assets               |              |           
|                     |                            |              |           
|                     | Total assets               |              | $         
|                     |                            |              |           
|Stockholders equity |                            | $            | 46,667,976
|                     |                            |              |           
|                     |                            |              |           

20



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 16. | PARENT COMPANY FINANCIAL INFORMATION (Continued)
|-------- | ------------------------------------------------

CONDENSED STATEMENTS
OF INCOME

|                                               |                                                                                                | Years Ended December 31, |          
|---------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------ | ---------
|                                               |                                                                                                |                          |          
|                                               |                                                                                                | 2002                     |          
|                                               |                                                                                                |                          |          
|Income                                         |                                                                                                |                          |          
|                                               | Dividends from bank subsidiary                                                                 |                          | $        
|                                               | Rental income                                                                                  |                          |          
|                                               |                                                                                                |                          |          
|                                               |                                                                                                |                          | 2,905,989
|                                               |                                                                                                |                          |          
|Expense                                        |                                                                                                |                          |          
|                                               | Salaries and employee benefits                                                                 |                          |          
|                                               | Depreciation                                                                                   |                          |          
|                                               | Other expenses                                                                                 |                          |          
|                                               |                                                                                                |                          |          
|                                               | Total expenses                                                                                 |                          |          
|                                               |                                                                                                |                          |          
|                                               | Income before income tax expense (benefits) and equity in undistributed income of subsidiaries |                          |          
|Income tax expense (benefits)                  |                                                                                                |                          | (62,038  
|                                               |                                                                                                |                          |          
|                                               | Income before undistributed income of subsidiaries                                             |                          |          
|Equity in undistributed income of subsidiaries |                                                                                                |                          | 4,538,404
|                                               |                                                                                                |                          |          
|                                               | Net income                                                                                     |                          | $        
|                                               |                                                                                                |                          |          
|                                               |                                                                                                |                          |          

21



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|NOTE 16. | PARENT COMPANY FINANCIAL INFORMATION (Continued)
|-------- | ------------------------------------------------

CONDENSED STATEMENTS
OF CASH FLOWS

|                                |                                                                                   | Years Ended December 31, |        
|------------------------------- | --------------------------------------------------------------------------------- | ------------------------ | -------
|                                |                                                                                   |                          |        
|                                |                                                                                   | 2002                     |        
|                                |                                                                                   |                          |        
|OPERATING ACTIVITIES            |                                                                                   |                          |        
|                                | Net income                                                                        |                          | $      
|                                | Adjustments to reconcile net income to net cash provided by operating activities: |                          |        
|                                | Depreciation                                                                      |                          |        
|                                | Undistributed income of subsidiaries                                              |                          |        
|                                | Net other operating activities                                                    |                          |        
|                                |                                                                                   |                          |        
|                                | Net cash provided by operating activities                                         |                          |        
|                                |                                                                                   |                          |        
|FINANCING ACTIVITIES            |                                                                                   |                          |        
|                                | Dividends paid                                                                    |                          |        
|                                | Purchase of treasury stock                                                        |                          |        
|                                |                                                                                   |                          |        
|                                | Net cash used in financing activities                                             |                          |        
|                                |                                                                                   |                          |        
|Net increase (decrease) in cash |                                                                                   |                          | (33,434
|Cash at beginning of year       |                                                                                   |                          | 61,557 
|                                |                                                                                   |                          |        
|Cash at end of year             |                                                                                   | $                        | 28,123 
|                                |                                                                                   |                          |        
|                                |                                                                                   |                          |        

22