SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

 ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
                                 (FEE REQUIRED)

        FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

        FOR THE TRANSITION PERIOD FROM __________ TO __________

                          COMMISSION FILE NO. 33-97422

                          COUNTY FINANCIAL CORPORATION
                 (Name of Small Business Issuer in its Charter)

                FLORIDA                       59-2320497 
       (State or jurisdiction of              (IRS Employer Identification No.)
       incorporation or organization)

                               801 N.E. 167 STREET
                        NORTH MIAMI BEACH, FLORIDA 33162
                    (Address of Principal Executive Offices)

                    ISSUER'S TELEPHONE NUMBER: (305) 651-7110

       SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: NONE

       SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT: NONE

    Check whether the issuer: (1) has filed all reports required to be filed by
    Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
    such shorter period that the registrant was required to file such reports),
    and (2) has been subject to such filing requirements for past 90 days.
                                     
                                  Yes [X] No [ ]

    Check if there is no disclosure of delinquent filers in response to Item 405
    of Regulation S-B contained in this form, and no disclosure will be
    contained, to the best of registrant's knowledge, in the definitive proxy or
    information statement incorporated by reference in Part III of this Form
    10-KSB or any amendment to this Form 10-KSB.

       State issuer's revenues for its most recent fiscal year: $20,915.00

    As of March 31, 1997, the registrant had 1,264,328 outstanding shares of
    common stock $.01 par value, 685,910 of which were held by non-affiliates of
    the issuer. The aggregate market value of the common stock of the registrant
    held by non-affiliates was $11,461,556.00. (This amount was based on the
    book value per share of $16.71 per share, as of December 31, 1996. This
    amount may not accurately reflect the value of the common stock due to the
    absence of an established trading market for the common stock).

    Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

    Total Pages:_____                        Exhibit Index:Page_____

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                                     PART I

                                ITEM 1. BUSINESS

         County Financial Corporation (the "Company") is a Florida corporation
formed in August 1983 for the purpose of becoming a bank holding company and
acquiring all of the outstanding common stock of County National Bank of South
Florida ("CNB"). CNB is the only active subsidiary of the Company.

         CNB is a commercial bank which opened for business in 1962. It offers a
diversified range of commercial banking services for customers located
principally in Dade, Broward, and Palm Beach Counties, Florida. CNB classifies
itself as a community banking institution. CNB specifically targets the deposit
and credit needs of small businesses. Its services include the usual depository
products, safe deposit facilities, commercial and personal banking services, and
the making of commercial, interim construction, consumer, residential real
estate, and industrial loans. CNB's principal sources of income are interest on
loans, investments and service fees. Its principal expenses are interest paid on
deposits and general operating expenses.

         In January 1996, the Company acquired Carney Bank ("Carney") pursuant
to a merger in which Carney was merged with and into CNB. As a result of the
merger, CNB acquired branches in Boynton Beach, Florida, Delray Beach, Florida,
and Sunrise, Florida. See "Item 1 - Business-Acquisition of Carney."

EMPLOYEES

         As of March 14, 1997, CNB had approximately 152 full time equivalent
employees, including 61 officers and 11 part-time employees.

COMPETITION

         CNB's principal market areas are Dade, Broward, and Palm Beach
Counties, Florida. The competition among depository institutions in this area is
strong. CNB competes for deposits and loans with both commercial banks and
savings and loans associations and a variety of other financial intermediaries
such as credit unions, mutual funds and brokerage firms.

REGULATION AND SUPERVISION OF THE COMPANY

         The Company is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). As a result, the Company is
subject to supervision, examination and regulation by the Board of Governors of
the Federal Reserve System (the "Federal Reserve"). The BHCA and the regulations
of the Federal Reserve impose a variety of restrictions on the activities of
bank holding companies such as the Company. The following summarizes certain
aspects of those laws and regulations that affect the Company.

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ACQUISITIONS OF FINANCIAL INSTITUTIONS

         The Company is generally required to obtain prior approval of the
Federal Reserve before it may acquire more than 5% of the outstanding shares of
any class of voting securities or substantially all of the assets of any bank or
bank holding company. However, such prior approval is generally not required in
the case of a merger subject to approval by a federal banking agency (such as
the OCC) under the Bank Merger Act. The Company must provide the Federal Reserve
with at least 30 days prior notice of such merger.

         Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking and Branching Act"), a bank holding company
is now permitted to acquire banks in states other than its home state.

NON-BANKING ACTIVITIES

         The Company is prohibited by the BHCA, except in certain statutorily
prescribed instances, from acquiring direct or indirect ownership and control of
more than 5% of the outstanding voting shares of any company that is not a bank
or a bank holding company and from engaging directly or indirectly in activities
other than those of banking, managing and controlling banks or furnishing
services to its subsidiaries. However, the Company may, subject to the prior
approval of the Federal Reserve, engage in, or acquire shares of companies
engaged in, certain activities that are deemed by the Federal Reserve to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. In making any such determination, the Federal Reserve is
required to consider whether the performance of such activities by the Company
or an affiliate can reasonably be expected to produce benefits to the public,
such as greater convenience, increased competition or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreases in competition, conflicts of interest or unsound banking practices.
The Federal Reserve may also require the Company to terminate an activity or
terminate control of, liquidate or divest certain subsidiaries or affiliates
when the Federal Reserve believes that the activity or the control of the
subsidiary or affiliate constitutes a significant risk to the financial safety,
soundness or stability of any of its banking subsidiaries. At the present time,
the Company does not engage in any material non-banking activities and has only
one subsidiary other than CNB, which currently does not engage in any
activities.

CAPITAL STRUCTURE

         The Federal Reserve has the authority to regulate provisions of certain
bank holding company debt including authority to impose interest ceilings and
reserve requirements on such debts. Under certain circumstances, the Company
must obtain approval from the Federal Reserve prior to purchasing or redeeming
any of its equity securities. Further, the Company is required by the Federal
Reserve to maintain certain minimum levels of capital.

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REGULATION AND SUPERVISION OF CNB

         National banks and many of their affiliates are extensively regulated
under federal law. The following is a brief summary of certain statutes, rules,
and regulations affecting CNB. This summary is qualified in its entirety by
reference to the particular statutory and regulatory provisions referred to
below and is not intended to be an exhaustive description of the statutes or
regulations applicable to the business of CNB. Supervision, regulation, and
examination of banks by regulatory agencies are intended primarily for the
protection of depositors, rather than shareholders.

         CNB is chartered under the national banking laws and its deposits are
insured by the Federal Deposit Insurance Corporation (the "FDIC") to the extent
provided by law. CNB is subject to comprehensive regulation, examination and
supervision of the Office of the Comptroller of the Currency (the "OCC") and, to
a limited extent, the supervision of the FDIC and to other laws and regulations
applicable to banks. Such regulations include limitations on loans to a single
borrower and to its directors, officers and employees; restrictions on the
opening and closing of branch offices; the maintenance of required capital and
liquidity ratios; the granting of credit under equal and fair conditions; and
the disclosure of the costs and terms of such credit. CNB is examined
periodically by the OCC, to which it submits periodic reports regarding its
financial condition and other matters. Both the OCC and the FDIC have a broad
range of powers to enforce regulations under their respective jurisdiction, and
to take discretionary actions determined to be for the protection and safety and
soundness of banks, including the institution of cease and desist orders and the
removal of directors and officers. These regulatory agencies also have the
authority to approve or disapprove mergers, consolidations, and similar
corporate actions.

         There are various statutory limitations on the ability of CNB to pay
dividends. The OCC also has the general authority to limit the dividend payment
by national banks if such payment may be deemed to constitute an unsafe and
unsound practice.

         Under federal law, federally insured banks are subject, with certain
exceptions, to certain restrictions on any extension of credit to their
affiliates, on investments in the stock or other securities of affiliates, and
on the taking of such stock or securities as collateral from any borrower. In
addition, national banks are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit or the providing of any
property or service.

         The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") contains major regulatory reforms, stronger capital standards and
stronger civil and criminal enforcement provisions. FIRREA also provides that a
depository institution insured by the FDIC can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with (i) the default of a commonly controlled FDIC insured depository
institution, or (ii) any assistance provided by the FDIC to a commonly
controlled FDIC insured institution in danger of default.

         The FDIC Improvement Act of 1991 ("FDICIA") makes a number of reforms
addressing the safety and soundness of deposit insurance funds, supervision,
accounting, and prompt regulatory action, and also implements other regulatory
improvement. With certain 

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exceptions, annual full-scope, on-site examinations are required of all insured
depository institutions. The cost for conducting an examination of an
institution may be assessed to that institution, with special consideration
given to affiliates and any penalties imposed for failure to provide information
requested. FDICIA also required the FDIC to establish a risk-based assessment
system for depository institutions. Insured state banks also are precluded from
engaging as principal in any type of activity that is impermissible for a
national bank, including activities relating to insurance and equity
investments. FDICIA also recodified current law restricting extensions of credit
to insiders under the Federal Reserve Act.

         FDICIA also requires the FDIC to implement a risk-based federal deposit
insurance premium system. The FDIC imposes deposit insurance premiums from a
range of $0.04 to $.31 per $100 of deposits, the exact rate for each insured
institution being dependent upon that institution's capital ratios and the
agency's subjective assessment of risks. The highest-rated institutions pay the
statutory annual minimum of $2,000.

         Also important in terms of its effect on banks has been the
deregulation of interest rates paid by banks on deposits and the types of
deposit accounts that may be offered by banks. Most regulatory limits on
permissible deposit interest rates and minimum deposit amounts expired several
years ago. The effect of the deregulation of deposit interest rates generally
has been to increase the costs of funds to banks and to make their cost of funds
more sensitive to fluctuations in money market rates. As a result of the
pressure on banks' interest margins due to deregulation, there has been a trend
toward expansion of services offered by banks and an increase in the emphasis
placed on fee or non-interest income.

CAPITAL REQUIREMENTS

         The Federal Reserve, the OCC and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to United States
banking organizations. In addition, those regulatory agencies may from time to
time require that a banking organization maintain capital above the minimum
levels, whether because of its financial condition or actual or anticipated
growth.

         The Federal Reserve risk-based guidelines define a two-tier capital
framework. Tier 1 capital consists of common and qualifying preferred
shareholders' equity, less certain intangibles and other adjustments. Tier 2
capital consists of subordinated and other qualifying debt, and the allowance
for credit losses up to 1.25 percent of risk-weighted assets. The sum of Tier 1
and Tier 2 capital less investments in unconsolidated subsidiaries represents
qualifying total capital, at least 50 percent of which must consist of Tier 1
capital. Risk-based capital ratios are calculated by dividing Tier 1 and total
capital by risk-weighted assets. Assets and off-balance sheet exposures are
assigned to one of four categories of risk-weights, based primarily on relative
credit risk. The minimum Tier 1 capital ratio is 4 percent and the minimum total
capital ratio is 8 percent. The Company's Tier 1 and total risk-based capital
ratios under these guidelines at December 31, 1996 were 12.7 percent and 14.0
percent, respectively.

         The leverage ratio is determined by dividing Tier 1 capital by average
total assets. Although the stated minimum ratio is 3 percent, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3 percent. The Company's leverage

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ratio at December 31, 1996 was 9.2 percent. The Company's management believes
that the Company meets all of its required capital requirements.

         FDICIA contains "prompt corrective action" provisions pursuant to which
banks are to be classified into one of five categories based upon capital
adequacy, ranging from "well capitalized" to "critically undercapitalized" and
which require (subject to certain exceptions) the appropriate federal banking
agency to take prompt corrective action with respect to an institution which
becomes "significantly undercapitalized" or "critically undercapitalized."

         The FDIC has issued regulations to implement the "prompt corrective
action" provisions of FDICIA. In general, the regulations define the five
capital categories as follows: (i) an institution is "well capitalized" if it
has a total risk-based capital ratio of 10% or greater, has a Tier 1 risk-based
capital ratio of 6% or greater, has a leverage ratio of 5% or greater and is not
subject to any written capital order or directive to meet and maintain a
specific capital level for any capital measures; (ii) an institution is
"adequately capitalized" if it has a total risk-based capital ratio of 8% or
greater, has a Tier 1 risk-based capital ratio of 4% or greater, and has a
leverage ratio of 4% or greater; (iii) an institution is "undercapitalized" if
it has a total risk-based capital ratio of less than 8%, has a Tier 1 risk-based
capital ratio that is less that 4% or has a leverage ratio that is less than 4%;
(iv) an institution is "significantly undercapitalized" if it has a total
risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio
that is less than 4% or a leverage ratio that is less than 3%; and (v) an
institution is "critically undercapitalized" if its "tangible equity" is equal
to or less than 2% of its total assets. The FDIC also has authority to downgrade
an institution from "well capitalized" to "adequately capitalized" or to subject
an "adequately capitalized" or "undercapitalized" institution to the supervisory
actions applicable to the next lower category, for supervisory concerns.

         Additionally, FDICIA requires, among other things, that (i) only a
"well capitalized" depository institution may accept brokers deposits without
prior regulatory approval and (ii) the appropriate federal banking agency
annually examine all insured depository institutions, with some exceptions for
small, "well capitalized" institutions and state-chartered institutions examined
by state regulators. FDICIA also contains a number of consumer banking
provisions, including disclosure requirements and substantive contractual
limitations with respect to deposit accounts.

ENFORCEMENT POWERS

         Congress has provided the federal bank regulatory agencies with an
array of powers to enforce laws, rules, regulations and orders. Among other
things, the agencies may require that institutions cease and desist from certain
activities, may preclude persons from participating in the affairs of insured
depository institutions, may suspend or terminate deposit insurance, and may
impose civil money penalties against institution-affiliated parties for certain
violations.

BANK BRANCHING

         Banks in Florida are permitted to branch state-wide. Such branch
banking as to national banks, however, is subject to prior approval by the OCC.
Any approval by the OCC

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would take into consideration several factors, including the bank's level of
capital, the prospects and economics of the proposed branch office, the past
performance of the bank in meeting the credit needs of its local communities,
and other conditions deemed relevant by the OCC for purposes of determining
whether approval should be granted to open a branch office.

EFFECT OF GOVERNMENTAL POLICIES

         The earnings and business of CNB are affected by the policies of
various regulatory authorities of the United States, especially the Federal
Reserve. The Federal Reserve, among other things, regulates the supply of credit
and deals with general economic conditions within the United States. The
instruments of monetary policy employed by the Federal Reserve for those
purposes influence in various ways the overall level of investments, loans,
other extensions of credit, and deposits, and the interest rates paid on
liabilities and received on assets.

INTERSTATE BANKING AND BRANCHING

         Legislation recently enacted by Congress authorizes interstate banking
and interstate branching without geographic restrictions. Among other things,
this legislation will increase competition by allowing financial institutions,
regardless of location, to acquire and operate banks in any state (including
Florida). Generally, the legislation allows interstate banking beginning
September 29, 1995, and interstate branching beginning June 1, 1997.

         The Florida legislature also recently enacted a law that allows
out-of-state bank holding companies (located in states that allow Florida bank
holding companies to acquire banks and bank holding companies in that state) to
acquire Florida banks and Florida bank holding companies. The law, which was
effective May 1, 1995, expressly provides for out-of-state entry by acquisition
only (and not by interstate branching) and requires the acquired Florida bank to
have been in existence for at least two years.

ACQUISITION OF CARNEY BANK

         On January 12, 1996, the Company and CNB completed the acquisition of
Carney. The acquisition was accomplished through the merger of Carney with and
into CNB, with CNB as the surviving corporation in the merger. The acquisition
was consummated pursuant to the terms of a certain agreement and plan of
reorganization dated as of May 10, 1995, as amended, between the Company, CNB
and Carney (the "Merger Agreement"). Under the terms of the Merger Agreement,
all the outstanding shares of the common stock of Carney were cancelled and, in
exchange therefor, the holder of each share of Common Stock of Carney became
entitled to receive .22029 shares of the common stock of the Company, or an
aggregate of 282,860 shares (except for those persons properly exercising their
right to dissent under 12 U.S.C. ss. 215(a)). Additionally all outstanding
options and warrants to acquire shares of the Common Stock of Carney were
cancelled and, in exchange therefor, the holder of each option or warrant became
entitled to receive .04886 shares of the common stock of the Company, for an
aggregate of 5,240 shares. As a result of the merger, the Company issued a total
of 284,564 shares of its common stock and paid or set aside $60,926 for the
payment of fractional shares and payments to dissenting shareholders.

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         Information with respect to the merger is included in the Registration
Statement on Form S-4 (File No. 33-97422) filed by the Company with the
Securities and Exchange Commission in connection with the merger (the
"Registration Statement"). The Registration Statement was declared effective by
the Commission on November 29, 1995. 

SETTLEMENT OF PREMIUM LITIGATION

         On October 9, 1996, CNB settled certain litigation involving the
Premium Group. Under the terms of the proposed settlement, CNB agreed to pay the
amount of $3,000,000 in exchange for a release of all outstanding claims. This
amount, which was accrued on the Company's balance sheet as of December 31,
1996, was paid in January 1997. For further information regarding this matter
see "Item 3 - Legal Proceedings" and "Item 6 - Managements" Discussion and
Analysis of Results of Operations and Financial Condition."

ITEM 2. PROPERTIES

         The executive offices of the Company are located at 801 N.E. 167th
Street, North Miami Beach, Florida, which is also the main branch of CNB. This
facility, which is owned by CNB, consists of a three story office building of
approximately 45,000 square feet and 140 parking spaces. The Company and CNB
utilize approximately 30,850 square feet of this facility. The remaining space
is leased to nine tenants. The building is subject to a mortgage with a balance
of approximately $850,000 as of December 31, 1996.

         CNB currently operates 13 branches at the following locations in
Florida: Bay Point, Miami; California Club Mall, Miami; Coral Way, Miami;
Hialeah; Miami Lakes; Aventura, Aventura; Main, North Miami Beach; Fort
Lauderdale; Coral Springs; Sunrise; Delray Beach; Boynton Beach; and Boca Raton.
These branches range in size from 1,400 square feet (at California Club Mall) to
5,934 square feet (at Miami Lakes). The leases on such properties, with the
exception of the Boynton Beach branch, which is owned by CNB, and the Sunrise
branch, the building and improvements on which are owned by CNB, expire between
November 1998 and July 2007 and generally give CNB the right to renew for an
option period. CNB also operates a stand-alone ATM machine at Aventura, Florida.

         The Boynton Beach branch, which was acquired from Carney in the Merger,
was originally acquired by Carney on November 1, 1985. The property consists of
an approximately 14,457 square foot building and approximately 1.06 acres of
land. The facility has 2 inside teller stations and 1 drive-through teller
station operated from the main building. CNB occupies approximately 7,972 square
feet and leases approximately 5,708 square feet to others.

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ITEM 3. LEGAL PROCEEDINGS

PREMIUM GROUP LITIGATION

         As previously reported, CNB has been a party to several legal
proceedings arising out of the failure of the food " deverting" business owned
and operated by Premium Sales Corporation, Plaza Trading Corporation and certain
of their affiliates and associates (the "Premium Group"). In June 1993, the
Premium Group was forced into bankruptcy and a receiver was appointed for the
principal members of the Premium Group. It appears that the Premium Group
financed a major portion of their operations by attracting funds from private
investors. Many of the investors in the Premium Group have alleged that the
Premium Group was involved in a "Ponzi" scheme in which the Premium Group paid
high rates of return to early investors from funds raised from later investors.

WALCO INVESTMENTS ET AL. V. KENNETH THENEN, ET AL.

         In June 1994, certain investors in the Premium Group filed a class
action complaint in the United States District Court for the Southern District
of Florida seeking in excess of $250 million in damages for losses sustained by
them by investing in the Premium Group.

         The plaintiffs alleged that CNB, primarily through the actions of one
of its officers, Larry Robinette, facilitated the scheme and is liable for the
plaintiff's losses due to violations of federal and state RICO statutes and
common law fraud. The plaintiffs sought to recover their alleged damages of more
than $250 million as well as treble damages and punitive damages. CNB and Larry
Robinette filed answers to the complaint denying all allegations.

         On October 9, 1996, the Class Plaintiffs, CNB, and Harley Tropin as
Trustee and Receiver for certain Premium Group companies agreed to settle all
claims against CNB and Larry Robinnette for $3,000,000. This amount was paid by
CNB in January 1997.

IN RE: PREMIUM SALES CORPORATION ET AL., DEBTOR; HARLEY S. TROPIN, TRUSTEE V.
COUNTY NATIONAL BANK OF SOUTH FLORIDA AND LARRY ROBINETTE.

         In July 1995, Harley S. Tropin, as the Chapter 11 trustee for the
estates of Premium Sales Corporation, Plaza Trading Corporation and the
designated corporate representative of Windsor Wholesale Corporation (the
"Premium Debtors"), commenced an adversary proceeding against CNB and Larry
Robinette in the United States Bankruptcy Court for the Southern District of
Florida.

         In his complaint, the trustee alleged that various transactions between
CNB and the Premium Debtors represented avoidable transfers under federal
bankruptcy and federal and state fraudulent conveyance laws. He requested a
judgment against CNB for all amounts involved in these transactions. The trustee
further alleged that CNB extended unsecured credit to the Premium Debtors by
providing access to uncollected funds and by permitting certain overdrafts. He
also alleged that CNB should be required to return the profits which it received
from servicing of the Premium Group accounts under a theory of unjust
enrichment. CNB filed an answer denying all of the trustee's allegations.

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         In October 1996, CNB and Harley S. Tropin, as trustee, agreed to settle
this case as part of the settlement for the WALCO case described above.

HARLEY S. TROPIN, AS RECEIVER, V. KENNETH THENEN, ET AL.

         On December 23, 1993, Harley S. Tropin, as receiver for certain members
of the Premium Group, filed a complaint in the United States District Court for
the Southern District of Florida against various parties seeking to recover
unspecified damages suffered by the Premium Group from the defendant's
participation and assistance in the allegedly fraudulent scheme conducted by the
Premium Group. In October 1995, the receiver amended its complaint to add CNB as
an additional defendant in the litigation. In its complaint, the receiver
alleged that CNB aided, abetted and participated in the fraudulent scheme and,
therefore, was liable to the receiver for the damages suffered by these
corporations as a result of the "Ponzi" scheme.

         In October 1996, CNB and Harley S. Tropin, as receiver, agreed to
settle this case as part of the settlement for the WALCO case described above.

GRAND JURY INVESTIGATION

         CNB is aware that the U.S. Attorney convened a grand jury to
investigate possible criminal violations with respect to the Premium Group
matter. This has been under investigation for several years. To date, several
directors and officers of CNB have appeared as witnesses before the grand jury.
In August, 1996, a federal grand jury indicted several of the principals of
Premium for fraud. One officer of CNB, Larry Robinette, has also been indicted
for complicity in the fraud. Mr. Robinette has vigorously denied the charges and
is entitled to the constitutional presumption of innocence. No other officer or
director of CNB nor was CNB itself named either as a target of the investigation
or charged with any wrongdoing.

RELATED MATTERS

         CNB expended approximately $1,400,000 through December 31, 1996 in
legal fees and other expenses in connection with the legal proceedings related
to the failure of the Premium Group. The Premium Group matter has been highly
publicized in South Florida and widely reported by the local media. This
resulted in adverse publicity for CNB and may have caused a loss of business for
CNB in the form of deposit withdrawals and other customer relationships.

POTENTIAL LITIGATION INVOLVING FLORIDA HOME FINDERS, INC.

         In June 1995, CNB made a loan in the amount of $2,000,000 to the
principals of Florida Home Finders, Inc. ("FHF"). The loan was utilized to pay
part of the purchase price of FHF owed by the principals to the former owners of
FHF. The loan was secured by a pledge of a $2,000,000 certificate of deposit
established by FHF at the time of the loan. FHF is a property management
company. As part of its business, it apparently received security deposits from
tenants at properties managed by FHF. It has been alleged that FHF utilized
these tenant security deposits to establish the certificate of deposit at CNB.

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         In September, 1995, the Florida Department of Business Regulation (the
"DBR") filed an action in the Circuit Court for St. Lucie County against FHF and
its principals based on the alleged misuse of the tenant security deposits and
other items. As part of this proceeding, the DBR sought a temporary injunction
preventing CNB from offsetting the $2,000,000 certificate of deposit against the
amount of the loan. In seeking the injunction, the DBR alleged that the
certificate of deposit represented tenants' security deposits and that such
funds should have been held in segregated accounts by FHF. The court granted the
temporary injunction without notice to CNB. CNB subsequently intervened in the
proceeding and requested the court to dissolve the injunction because: (i) CNB
had a valid and perfected security interest in the certificate of deposit, (ii)
FHF had the right under Florida law to utilize the security deposits to
establish the certificate of deposit because it had posted a $250,000 bond with
the State of Florida; and (iii) certain other reasons. The court subsequently
held that the injunction would dissolve within 10 days unless the DBR either
posted a bond in the amount of $25,000,000 with the court, or filed a motion
with the appellate court with respect to its obligation to post the bond. The
DBR failed to take either action within the required time period.

         In October, 1995, CNB took the position that the injunction against CNB
was dissolved because the DBR had failed to take either of the required actions
within the required time period. Accordingly, CNB applied the certificate of
deposit against the outstanding balance of the loan. The receiver for FHF
subsequently notified CNB that the set off of the certificate of deposit was
improper, and demanded that the certificate of deposit be reestablished.

         In August 1996, the receiver for FHF filed an amended complaint against
a variety of plaintiffs with respect to the activities of FHF, including CNB. In
the amended complaint, the receiver sought, among other things, the return of
the $2,000,000 certificate of deposit set off by CNB based upon theories of
fraudulent transfer, negligence and unjust enrichment. In January 1997, the
receiver of FHF voluntarily dismissed (without prejudice) its complaint against
all of the defendants in order, according to the receiver, to conserve the
assets of the estate of FHF. In the event that the receiver renews its legal
proceedings, CFC intends to vigorously defend its position.

CERTAIN ENVIRONMENTAL MATTERS

         At the time of the Merger, Carney was involved in an environmental
matter with respect to hazardous substances on certain real property acquired by
Carney through a foreclosure sale. As a result of the Merger, CNB is now subject
to such proceedings as successor in interest to Carney. This matter is described
below.

         In 1993, Carney took title to the premises of a former dry cleaner
located in Coral Springs, Florida pursuant to a foreclosure sale. Carney then
arranged to sell the property to a third party. The purchaser required that an
environmental study be performed after the closing and that Carney indemnify the
purchaser against any expenses that might result from the presence of hazardous
substances on the property. After the sale, Carney engaged an independent
consultant to perform an environmental study of the property. This study
indicated that hazardous substances were located at the property. Based on this
study, Carney's environmental consultant prepared a remedial action plan (the
"RAP") and submitted 

                                      -11-
<PAGE>

it to the Broward County Department of Natural Resource Protection ("Broward
County"). The RAP sets forth a plan to clean up the hazardous substances over a
period of two years. Carney's consultant has estimated that the cost of the plan
will be approximately $178,000. There can be no assurance that the actual cost
of clean up will not exceed the estimate made by Carney's consultant.The RAP has
received final approval from Broward County.

         In 1994, the State of Florida established a Dry Cleaning Solvent
Superfund program (the "Program") under which the State of Florida will pay for
the clean-up of certain contaminated dry cleaning sites. The State of Florida
has not yet issued regulations and an application form under the Program. When
the application form becomes available, the Company will apply for inclusion in
the Program. Based on the eligibility criteria set forth in the legislation, the
property would appear to qualify for inclusion in the Program. The Program
preempts local government and private enforcement actions with respect to
contaminated sites eligible for inclusion in the Program.

         During 1995, Broward County requested Carney to proceed with the RAP at
Carney's expense. Carney resisted this request because it would jeopardize its
right to receive benefits of the Program. In October, 1995, Carney met with
officials of Broward County to discuss this matter. Based on these discussions,
Carney concluded that it was unlikely that Broward County would institute an
enforcement action with respect to the property.

         If Broward County institutes enforcement action against the Company
with respect to the property, the Company intends to vigorously defend such
actions based on applicable provisions of Florida law. Although there can be no
assurance that those defenses would be successful or that the Company would not
be required to pay for the clean up of the Property, the Company believes that
any enforcement action against the Company will not have a material adverse
effect on the business or financial position of the Company.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         None.

                                     PART II

ITEM 5. MARKET COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is no established public trading market for the shares of the
Common Stock. To the knowledge of the Company's management, in 1995 and 1996,
there were no sales of Common Stock and the most recent transaction was the sale
of 526 shares in February, 1997, at a price of $16.53 per share. As of March 31,
1997, the Company had 1,264,328 outstanding shares of Common Stock.

         As of March 31, 1997, the outstanding shares of Common Stock were held
of record by approximately 377 persons.

                                      -12-
<PAGE>

         The Company has not paid any dividends during its last two fiscal years
and does not currently anticipate that it will pay any dividends in the near
future. The payment of dividends by the Company are subject to the restrictions
set forth in the Florida Business Corporation Act. The Florida Business
Corporation Act provides that a corporation may pay dividends only if it is
solvent and would not be rendered insolvent by a dividend payment. Dividend
payments are dependent upon earnings, financial conditions and other factors,
and there can be no assurance that the Company will be in a position to pay
dividends in the future. The source of funds for dividends will be derived
solely from dividends declared by CNB to the Company. The declaration of
dividends by CNB is subject to various restrictions contained in the National
Bank Act.

                                      -13-
<PAGE>

ITEM  6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION FOR THE FISCAL YEARS ENDED DECEMBER 31, 1996 AND
         1995

RESTATEMENT OF FINANCIAL STATEMENTS

         The Company acquired Carney in January 1996 in a transaction which was
accounted for as a "pooling of interest." As a result, the Company's financial
statements for prior periods have been restated to include the financial
position and results of operation of Carney. This section reflects this
restatement.

RESULTS OF OPERATIONS

         CFC's consolidated net income for 1996 was $924,000, or 50% less than
the $1,845,000 earned in 1995. Net income per common share was $.73 in 1996 and
$1.46 in 1995. In 1996, CFC settled the Premium litigation for $3,000,000.
Without this settlement, net income would have been $3,924,000, and net income
per share would have been $3.10.

         CFC's performance in 1996 resulted in a return on average stockholders'
equity ("ROE") of 4.3%, compared to 9.5% in 1995. The return on average assets
("ROE") was 0.40% in 1996, compared to 0.81% in 1995. In the absence of the
Premium settlement, ROE would have been 18.2% and ROA 1.70%.

         CFC's average assets, which declined from $243 million in 1994 to $227
million in 1995, and grew in 1996 to $231 million. Average liabilities followed
this same pattern, with average liability declining from $226 in 1994 to $208
million, and then increasing to $209 million in 1996. The decrease from 1994 to
1995 was caused by customers moving funds out of deposit accounts at CNB to
other higher yield investment opportunities, such as mutual funds. The growth in
1996 was due to CFC's increase in its loan portfolio.

         The following ratios reflect CFC's operating results for 1996 and 1995.

                                          DECEMBER 31
                                     -------------------
                                     1996          1995
                                     -----         -----
Return on Assets                     0.40%         0.81%
Return on Equity                     4.28%         9.47%
Equity to Assets                     9.34%         8.56%

NET INTEREST INCOME

         Net interest income is defined as the total of interest income on
earning assets less interest expense on deposits and other interest-bearing
liabilities. Earning assets, which consist of loans, investment securities,
federal funds sold and securities purchased under agreements to resell, are
financed by a large base of interest-bearing funds in the form of money market,
NOW, savings and time deposits. Earning assets are also funded by the net amount
of non-interest related funds, which consist of non-interest bearing demand
deposits, the allowance for loan losses and stockholders' equity, reduced by
non-interest earning assets

                                      -14-
<PAGE>

such as cash and due from banks.

         The following table sets forth CFC's average balance sheets and related
interest, yield and rate information for the last two fiscal years.

                                      -15-

<PAGE>
<TABLE>
<CAPTION>



                                                                  AVERAGE BALANCE SHEETS

                                                    RESTATED
                                                    --------
                                                       1995                                            1996
                                       ------------------------------------             ------------------------------------
                                       AVERAGE                       YIELD/             AVERAGE                       YIELD/
                                       BALANCE        INTEREST        RATE              BALANCE      INTEREST          RATE

                                                                  (AMOUNTS IN THOUSANDS)

ASSETS
----------------------
<S>                                     <C>            <C>            <C>               <C>           <C>               <C>
EARNING ASSETS:
Loans, net of unearned
   income                              $133,726        $13,822        10.34%            $140,854      $14,004          9.94%
Investment Securities                    64,431          3,565         5.53%              59,649        3,580          6.00%
Federal funds sold                        9,402            552         5.87%              10,366          548          5.29%
                                       --------         ------                          --------      -------

   Total earning assets                $207,559         17,939         8.64%             210,869       18,132          8.60%
                                       --------         ------                          --------      -------
NON-INTEREST EARNING
 ASSETS:
Cash and due from banks                  11,978                                           12,589
Premises and equipment, net               4,289                                            4,224
Other Real Estate Owned, net              3,891                                            3,295
Other assets                              2,672                                            2,646
Allowance for loan losses                (2,874)                                          (2,591)
                                       --------                                         --------
 Total non-interest
 earning assets                          19,956                                           20,163
                                       --------                                         --------
  TOTAL ASSETS                         $227,515                                         $231,032
                                       ========                                         ========

LIABILITIES AND
 STOCKHOLDERS EQUITY
INTEREST BEARING LIABILITIES:
Savings accounts                       $ 25,666            754         2.94%             $23,697          679          2.87%
Money market/NOW accounts                73,266          1,949         2.66%              73,617        1,689          2.29%
Time deposits                            51,301          2,738         5.34%              51,026        2,725          5.34%
Repurchase agreements                       951             45         4.73%                 785           63          8.03%
Other borrowings                          1,000             99         9.90%                 889           89         10.01%
                                       --------         ------                          --------

Total interest bearing liabilities     $152,184          5,585         3.67%             150,014        5,245          3.50%
                                       --------         ------                          --------        -----
NON-INTEREST BEARING LIABILITIES:
Demand deposits                         $53,993                                           57,207
Other liabilities                         1,855                                            2,229
                                       --------                                         --------
  Total non-interest bearing
     liabilities                         55,848                                           59,436
                                       --------                                         --------
  Total liabilities                    $208,032                                          209,450

STOCKHOLDERS' EQUITY                     19,483                                           21,582
                                       --------                                         --------

TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                 $227,515                                         $231,032
                                       ========                                         ========
Net Interest Income/Spread                            $ 12,354         4.97%                          $12,887          5.10%
                                                      ========                                         ======
Net Interest Yield                                                     5.95%                                           6.11%
</TABLE>

                                      -16-
<PAGE>

        Notes:
                      -    The  amounts  set  forth  as  average  balances  
                           are  based  on  daily averages for each fiscal year.
                      -    Loan fees, which are
                           included in interest income and in
                           the calculation of average yields,
                           were $318,000 and $299,000 in 1995
                           and 1996, respectively.
                      -    Tax exempt income is not calculated on a tax 
                           equivalent basis.
                      -    Non-accruing loans are included in average loans.

                 Net interest income is primarily affected by changes in the
        amounts and types of earning assets, interest-bearing funds and net
        non-interest related funds, as well as their relative sensitivity to
        interest rate movements. The following chart reflects these factors:

<TABLE>
<CAPTION>

                         CHANGES IN NET INTEREST INCOME

                                                    RESTATED                                             RESTATED
                                                1994 VERSUS 1995                                    1995 VERSUS 1996
                                       -------------------------------------             -----------------------------------------
                                                   CHANGE DUE TO:                                      CHANGE DUE TO:
                                         VOLUME        RATE          TOTAL                 VOLUME          RATE          TOTAL
                                       -------------------------------------             -----------------------------------------
                                                                       (AMOUNTS IN THOUSANDS)

<S>                                    <C>             <C>             <C>                 <C>           <C>             <C>
Increase (Decrease) in
 Interest Income:
 Loans                                 $   303        $ 1,082       $ 1,385                $   717        $  (535)       $   182 
 Investment Securities                    (505)           584            79                   (288)           303             15 
 Federal funds sold                        (90)           144            54                     50            (54)            (4)
                                       -------        -------       -------                -------        -------        ------- 
     Total interest income                (292)         1,810         1,518                    479           (286)           193 
                                       -------        -------       -------                -------        -------        ------- 
Increase (Decrease) in                                                                                                           
  Interest Expense:                                                                                                              
  Savings accounts                        (171)           129           (42)                   (57)           (18)           (75)
  Money market/NOW accounts               (253)           343            90                     11           (271)          (260)
  Time deposits                            393            286           679                    (13)          --              (13)
  Repurchase agreements                     16              7            23                    (13)            31             18 
  Other borrowings                         (10)             0           (10)                   (10)          --              (10)
                                       -------        -------       -------                -------        -------        ------- 
     Total Interest Expense                (25)           765           740                    (82)          (258)          (340)
                                       -------        -------       -------                -------        -------        ------- 
Increase (Decrease) in Net                                                                                                       
  Interest Income                      $  (267)       $ 1,045       $   778                $   561        $   (28)       $   533 
                                       =======        =======       =======                =======        =======        ======= 
</TABLE>                                                             

        Notes:   -    To  calculate  volume  change,  multiply the change in 
                      volume from current year to prior year times the
                      prior year's rate.
                 -    To calculate rate change, multiply the change
                      in rate from current year to prior year times the
                      prior year's dollar volume.
                 -    Changes  which are not due only to volume  changes or 
                      rate changes are included in the
                      changes due to volume column.

                 Net interest income for 1996 was $12,887,000 up 4.3% from
        $12,354,000 in 1995. The growth in net interest income in 1996 was
        attributable to an increase of $3,310,000 in average earning assets as
        well as a small improvement in CFC's net interest margin, which

                                      -17-

<PAGE>

        grew from 5.0% in 1995 to 5.1% in 1996. Average loans (which are CNB's
        highest yielding earning assets) grew 5.3%, while investment securities
        dropped 7.4%.

        NON-INTEREST INCOME

                 Non-interest income in 1996 totaled $2,783,000, compared with
        $2,925,000 in 1995. Customer service charges totaled $2,425,000 in 1996,
        down 4.2% from $ 2,526,000 in 1995 due to declining deposit balances.

        INVESTMENT SECURITIES GAINS AND LOSSES

                 At December 31, 1996, CFC held investment securities with a
        market value of $56,460,000, which was $91,000 lower than the amortized
        cost of the portfolio. This difference consisted of $198,000 of gross
        unrealized gains and $289,000 of gross unrealized losses. There were net
        losses of $11,000 from sales of securities available for sale in 1996.
        date.

        PROVISION FOR LOAN LOSSES

                 The provision for loan losses totaled $24,000 in 1996 and
        $259,000 in 1995. See "Allowance and Provision for Loan Losses."

        NON-INTEREST EXPENSES

                 Non-interest expenses for 1996 totaled $14,722,000, which was
        up 20.7% from $12,195,000 in 1995. The increase in 1996 was primarily
        due to the establishment of a $3,000,000 provision related to the
        settlement of the Premium litigation. See AItem 3- Legal Proceedings.@
        Non-interest expenses are discussed below in more detail.

                 PERSONNEL. Personnel expense (which includes salaries and
        benefits) represented 37.6% of total non-interest expenses in 1996.
        Personnel expenses decrease 2.7% to $5,541,000 in 1996 from $5,693,000
        in 1995. Staff on a full-time equivalent basis averaged 158 in 1996
        compared to 138 in 1995.

                 OCCUPANCY EXPENSE. Net occupancy expense in 1996 totaled
        $1,604,000, down 5.0% from $1,689,000 in 1995. The principal reason for
        the decrease was due to a reduction in maintenance and utilities
        expenses.

                 PREMISES AND EQUIPMENT EXPENSE. Premises and equipment expense,
        which includes depreciation and rental, totaled $596,000 in 1996, down
        33.7% from $899,000 in 1995. The decrease was due to a reduction in 
        depreciation expense on equipment fully depreciated in 1995.

                 OTHER NON-INTEREST EXPENSES. Other non-interest expenses for
        1996 totaled $3,981,000, up 1.7% from $3,914,000 in 1995. Other
        non-interest expenses in 1996 were impacted by relatively high legal and
        professional services fees. Legal fees for the Premium Group matter were
        $671,000 in 1996, compared to $340,000 in 1995. In 1996, losses on the

                                      -18-
<PAGE>

        sale of OREO were $13,000, compared to $148,000 in 1995, while the
        write-down of OREO was $50,000 in 1996 compared to $100,000 in 1995.

        PROVISION FOR INCOME TAXES

                 The income tax provision totaled $-0- in 1996 compared with
        $980,000 in 1995. The absence of a provision in 1996 was primarily due
        to utilization of Carney's $2,997,000 of net operating losses. See Note 
        11 to the Consolidated Financial Statements for CFC for more information
        regarding the income tax provision.

        CAPITAL EXPENDITURES

                 CFC's capital expenditures are reviewed by its Board of
        Directors. CFC makes capital expenditures in order to improve its
        ability to provide quality services to its customers. Capital
        expenditures for 1996 equaled $406,000 compared to $661,000 in 1995, and
        were principally related to equipment purchased for various branch sites
        and changes in equipment due to technological advances.

        ASSET QUALITY AND CREDIT RISK

                 INVESTMENT SECURITIES. CFC maintains a high quality investment
        portfolio including U.S. Treasury securities, securities of other U.S.
        government entities, state and municipal securities, and other
        securities such as Federal Reserve Bank stock. Securities issued by the
        U.S. Treasury, other U.S. government entities and states constitute
        approximately 99% of CFC's investment portfolio. CFC believes that the
        securities have very little risk of default. At December 31, 1996, all
        of the securities held in CFC's investment portfolio were classified
        available for sale and were rated "A" or better (with a majority rated
        triple "A"). A rating of "A" or better means that the bonds are of
        "upper medium grade, with strong ability to repay, possibly with some
        susceptibility to adverse economic conditions or changing
        circumstances." Ratings are assigned by independent rating agencies and
        are subject to the accuracy of reported information concerning the
        issuers and the subjective judgment and analysis of the rating agencies.
        Approximately 42.0% of these securities mature in one year or less and
        96.4% in five years or less. As such, the risk of significant
        fluctuations in value due to changes in the general level of interest
        rates is limited.

                 The following table sets forth information regarding the
        composition of the investment portfolio for the last two years (amounts
        in thousands).

                                      -19-
<PAGE>
<TABLE>
<CAPTION>

                          INVESTMENT PORTFOLIO

                                                      RESTATED                 DECEMBER 31,
                                                     ----------          ------------------------
                                                       1995               1995             1996
                                                      -------            -------          -------
                                                 (HELD TO MATURITY)         (AVAILABLE FOR SALE)

<S>                                                    <C>               <C>              <C>    
        U.S. Treasury Securities                                         $41,554          $32,602

        Securities of other U.S. Government
          agencies and corporations                    $  938             14,711           23,238

        Obligations of states and political
          subdivisions                                     95              2,197               9

        Other securities                                  602                257              525
                                                      -------            -------          -------

             Total investments                        $ 1,635            $58,719          $56,460
                                                      =======            =======          =======
</TABLE>

                 During 1996, CFC's investment portfolio dropped by 6.3% due to
        a decline in CFC's deposits. In recent years, CFC has adjusted the mix
        of its investment securities from U.S. Treasury securities to securities
        of U.S. Government agencies and municipals to obtain higher yields. U.S.
        Treasury securities represented 57.7% in 1996, and 70.8% in 1995, while
        securities of U.S. Government agencies and municipals represented 41.2%
        in 1996, and 25.9% in 1995.

                 LOANS. CFC maintains a high quality portfolio of real estate,
        commercial and consumer loans. All loans are reviewed and approved by
        CFC's loan committee, which ensures that loans comply with applicable
        credit standards. In most cases, CFC requires collateral from the
        borrower. The type and amount of collateral varies but may include
        residential or commercial real estate, deposits held by financial
        institutions, U.S. Treasury securities, other marketable securities and
        personal property. Collateral values are monitored to ensure that they
        are maintained at proper levels.

                 As of December 31, 1996, approximately 75% of CFC's loans were
        real estate loans secured by real estate in South Florida. This level of
        concentration could present a potential credit risk to CFC because the
        ultimate collectible of these loans is susceptible to adverse changes in
        real estate market conditions in this market. CFC has addressed this
        risk by limiting most loans to a maximum of 70% of the appraised value
        of the underlying real estate and maximum amortization schedules of
        twenty (20) years.

                 The following table divides CFC's loan portfolio into four
        categories. Most of the loans are short-term and may be renewed or
        rolled over at maturity. At that time, CFC undertakes a complete review
        of the borrower's credit worthiness and the value of any collateral. If
        these items are satisfactory, CFC will generally renew the loan at
        prevailing interest rates.

                                      -20-
<PAGE>

                                 TYPES OF LOANS

                                                             DECEMBER 31,
                                                      -------------------------
                                                      RESTATED
                                                        1995             1996
                                                      --------         --------
                                                        (AMOUNTS IN THOUSANDS)

        Commercial, financial and agricultural        $ 35,804         $ 35,203

        Real estate - construction                       8,508            9,868

        Real estate - mortgage                          92,522           99,415

        Installment loans                                2,344            1,572

        Overdrafts                                         107              213
                                                      --------         --------

             Total loans                              $139,285         $146,271
                                                      ========         ========


              The following table sets forth information regarding the
         maturities of CFC's commercial and real estate construction loans. For
         purposes of the table, loans are treated as maturing on the final
         maturity date provided for in the loan agreement, regardless of whether
         payments are amortized over a period of time. Thus, for example, all
         amounts payable under a three year loan which is amortized on a monthly
         basis will be shown in the table as being payable in the Over One to
         Five Years column even though some payments will be made in the first
         year. Demand loans are shown as being payable in one year or less. The
         entire amount of a balloon loan is treated as maturing in the year that
         the balloon payment is due.

                                      -21-
<PAGE>
<TABLE>
<CAPTION>

                          MATURITIES OF SELECTED LOANS

                                                                               DECEMBER 31, 1996
                                                                 ------------------------------------------------
                                                                 ONE YEAR     OVER ONE TO   OVER FIVE
                                                                 OR LESS      FIVE YEARS      YEARS        TOTAL
                                                                 -------      ----------    ---------     -------
                                                                             (AMOUNTS IN THOUSANDS)

<S>                                                              <C>           <C>          <C>           <C>
COMMERCIAL, FINANCIAL AND AGRICULTURAL:

Fixed                                                            $ 2,876       $ 2,796      $     9       $ 5,681

Variable                                                          16,464        11,804        1,254        29,522

REAL ESTATE - CONSTRUCTION:

Fixed                                                                 --       $ 1,805         --         $ 1,805

Variable                                                         $ 4,251         3,812         --           8,063
</TABLE>


                 Commercial, financial and agricultural loans are segmented by
        fixed and variable interest rates. At December 31, 1996, the amount of
        such loans with a maturity of more than one year which had fixed
        interest terms was $2,805,000 and the amount which had variable interest
        terms was $13,058,000.

                 COMMERCIAL, FINANCIAL AND AGRICULTURAL LOANS. CFC makes
        commercial, financial and agricultural loans to businesses located in
        South Florida. The credit risk associated with business lending is
        influenced by general economic conditions, the deterioration in a
        borrower's capital position resulting in increasing debt to equity
        ratios, deterioration in a borrower's cash position resulting in a
        liquidity problem, and decreasing revenues due to inefficient operations
        of the borrower. These loans are generally secured by corporate assets,
        marketable securities or other liquid financial instruments. These loans
        totaled approximately $35,203,000 at December 31, 1996, and $35,792,000
        at December 31, 1995. Legally binding commitments to extend credit and
        letters of credit for these borrowers totaled $16,588,000 on December
        31, 1996.

                 REAL ESTATE CONSTRUCTION LOANS. CFC makes real estate
        construction loans from time to time for real estate projects located in
        South Florida. CFC generally requires security in the form of a mortgage
        on the underlying real property and the improvements constructed thereon
        and personal guarantees. It attempts to limit its credit exposure to 70%
        of the appraised value of the underlying real property. On December 31,
        1996, construction loans totaled $9,868,000 to thirty borrowers,
        including experienced residential builders, and other financially strong
        borrowers. Risks associated with construction loans include variations

                                      -22-
<PAGE>

        from vacancy projections, delays in construction, environmental factors,
        reliability of subcontractors and timing and reliability of inspections,
        and costs overruns.

                 REAL ESTATE MORTGAGE LOANS. CFC makes both commercial and
         residential real estate loans. These loans totaled $99,415,000 at
         December 31, 1996. Risks associated with real estate mortgage loans
         include reliability of appraisals, deterioration of market values,
         environmental contamination, and accelerated depreciation of property
         due to deferred maintenance.

                 CFC makes real estate loans secured by commercial real estate,
        including loans to acquire or refinance office buildings, warehouses and
        apartments. At December 31, 1996, these loans totaled $81 million, or
        55.0 % of total loans. Most of these loans have a maturity of five years
        or less. Almost all of these loans are secured by real property located
        in South Florida. These loans generally require a loan-to-collateral
        value of not more than 70%. At December 31, 1996, CFC had $4.0 million
        in legally binding commitments to extend credit or standby letters of
        credit involving commercial real estate borrowers, compared to $1.6
        million at December 31, 1995.

                 Residential real estate loans totaled $19 million, or 12.8% of
        total loans at December 31, 1996, compared with $23 million, or 16.2% at
        December 31, 1995. Residential real estate loans are predominately
        adjustable rate home mortgages which generally require a
        loan-to-collateral value of not more than 70% and equity credit lines
        which generally limit the loan-to-collateral value to not more than 70%
        to 75%. Most loans have a maximum term of five to seven years. CFC does
        not ordinarily charge any points on its real estate loans. Almost all of
        the residential real estate loans are secured by homes in South Florida.
        Legally binding commitments to extend credit secured by residential
         mortgages totaled $2,064,000 as of December 31, 1996 compared to
         $964,000 as of December 31, 1995.

                 INSTALLMENT LOANS. CFC offers consumer loans and personal and
        secured loans. The security for these loans ordinarily consists of
        automobiles, consumer goods, marketable securities, certificates of
        deposit and similar items. These loans totaled approximately $1.6
        million, or 1.1% of total loans, on December 31, 1996, compared with
        $2.3 million, or 1.7% of total loans, on December 31, 1995. Risks
        associated with installment loans include loss of employment of
        borrowers, declines in the financial condition of borrowers resulting in
        delinquencies, and rapid depreciation of loan collateral.

        NON-PERFORMING ASSETS AND PAST DUE LOANS

                 Non-performing assets consist of non-accrual loans and
        residential and commercial properties acquired in partial or total
        satisfaction of problem loans which are known as "other real estate
        owned" or "OREO." Past due loans are loans that are delinquent 30 days
        or more which are still accruing interest.

                 Maintaining a low level of non-performing assets is important
        to the ongoing success of any financial institution. CFC' credit review
        and approval process is critical to CFC's ability to minimize
        non-performing assets on a long term basis. In addition to the negative
        impact on interest income, non-performing assets also increase operating
        costs due to the expense 

                                      -23-
<PAGE>

        of collection efforts. It is CFC's policy to place all loans which are
        past due 90 days or more on non-accrual status, subject to exceptions
        made on a case by case basis.

                 The following table presents CFC's non-performing assets and
        past due loans for 1995 and 1996.

                 NON-PERFORMING ASSETS AND 90 DAY PAST DUE LOANS

                                                        DECEMBER 31,
                                                  -----------------------
                                                  Restated
                                                    1995           1996
                                                  --------        ------
                                                  (AMOUNTS IN THOUSANDS)

        Non-Accrual Loans                         $2,441          $2,670

        OREO, net                                  3,329           3,338
                                                  ------          ------

        Total Non Performing Assets               $5,770          $6,008
                                                  ======          ======
        Accruing Loans Past Due
          90 Days                                 $  104          $    0
                                                  ======          ======


                 Of the total assets of $245,946 at December 31, 1996,
        $6,008,000 or 2.4%, was non-performing, or an increase of $238,000 from
        year end 1995. Non-performing loans at December 31, 1996 consisted of
        commercial and residential real estate loans. Non-accrual loans
        increased by $229,000 and are comprised of five mortgage loans in
        foreclosure and one past due commercial loan.

                 Other real estate owned at December 31, 1996 consisted of
        $1,147,000 of residential real estate and $2,191,000 of commercial real
        estate. OREO at December 31, 1995 consisted of $1,367,000 of residential
        real estate and $1,962,000 of commercial real estate. CFC believes that
        the carrying value of its OREO portfolio is realizable.

                                      -24-
<PAGE>

        ALLOWANCE AND PROVISION FOR LOAN LOSSES

                 CFC evaluates the adequacy of its allowance for loan losses as
        part of its ongoing credit review and approval process. The review
        process is intended to identify, as early as possible, customers who may
        be facing financial difficulties. Once identified, the extent of the
        client's financial difficulty is carefully monitored by CFC's loan
        review officer, who recommends to the loan committee of the Board of
        Directors the portion of any credit that needs a specific reserve
        allocation or should be charged off. Other factors considered by the
        loan committee in evaluating the adequacy of the allowance include
        overall loan volume, historical net loan loss experience, the level and
        composition of non-accrual and past due loans, local economic
        conditions, and value of any collateral. From time to time, specific
        amounts of the reserve are designated for certain loans in connection
        with the loan committee's review of the officer's analysis of the
        adequacy of the allowance for loan losses.

                 While the largest portion of this allowance is typically
        intended to cover specific loan losses, it is considered a general
        reserve which is available for all credit-related purposes. The
        allowance is not a precise amount, but is derived based upon the above
        factors and represents management's best estimate of the amount
        necessary to adequately cover probable losses from current credit
        exposures. The provision for loan losses is a charge against current
        earnings and is determined by management as the amount needed to
        maintain an adequate allowance.

                 Management relied on its assessment of the overall quality of
        the loan portfolio, as well as its assessment of the financial condition
        of specific clients facing financial difficulties, in permitting the
        allowance for loan losses to decline to $2,524,000 at December 31, 1996,
        from $3,040,000 at December 31, 1995. The major part of this decline was
        the result of $761,000 in charged offs (which primarily relate to former
        Carney loans)

                 On January 1, 1995, C.F.C. adopted Financial Accounting
        Standards Board Statements of Financial Accounting Standards ("SFAS")
        No. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN, and SFAS No.
        118, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN - RECOGNITION AND
        DISCLOSURES, an amendment of SFAS No. 114. These standards address the
        accounting for impairment of certain loans when it is probable that all
        amounts due pursuant to the contractual terms of the loan will not be
        collected. Adoption of these standards entailed the identification of
        commercial, industrial, real estate commercial and real estate
        construction loans which are considered impaired under the provisions of
        SFAS No. 114.

                 Under the provisions of these standards, individually idntified
        impaired loans are measured based on the present value of payment
        expected to be received, using the historical effective loan rate as
        the discount rate. Alternatively, measurement may also be based on
        observable market prices or for loans that are solely dependent on the
        collateral for repayment, measurement may be based on the fair value of
        the collateral. Loans that are to be foreclosed are measured based on
        the fair value of the collateral. If the recorded investment in the
        impaired loan exceeds the measure of fair value, a valuation allowance
        is required as a component of the allowance for loan losses. Changes to
        the valuation allowance are recorded as a component of the provision for
        loan losses.

                 At December 31, 1996 and 1995, the recorded investment in loans
        that are considered impaired under SFAS No. 114 was approximately
        $2,449,000 and $1,780,000, respectively. These impaired loans required
        a SFAS No. 114 allowance for loan losses of approximately $364,000 and
        $368,000, respectively. The average recorded invesment in impaired loans
        during the years December 31, 1996 and 1995 was approximately $1,908,000
        and $909,000, respectively. For the years ended December 31, 1996 and
        1995, the Bank recognized interest income on these impaired loans of
        approximately $166,000 and $153,000, respectively.


                                      -25-
<PAGE>



                 The following table summarizes the allowance for loan losses
        for 1995 and 1996:

        ALLOWANCE FOR LOAN LOSSES

                                                               DECEMBER 31,
                                                          ---------------------
                                                          Restated
                                                            1995         1996
                                                          --------      -----

                                                         (AMOUNTS IN THOUSANDS)

Balance at beginning of period                            $ 2,791       $ 3,040

Charge-offs:

  Commercial, financial and agricultural                       11           547

  Real estate - nonfarm, nonresidential                       132             0

  Real estate - residential                                    40           211

  Installment loans                                             7             3
                                                          -------       -------

       Total charge-offs                                      190           761
                                                          -------       -------

Recoveries:

  Commercial, financial and agricultural                      161           124

  Real estate - construction                                    3            18

  Real estate - nonfarm, nonresidential                        11            16

  Real estate - residential                                     2            62

  Installment loans                                             3             1
                                                          -------       -------

      Total recoveries                                        180           221
                                                          -------       -------

         Net charge-offs                                        9           540

Provision charged to operations                               259            24
                                                          -------       -------

Balance at end of period                                  $ 3,040       $ 2,524
                                                          =======       =======

Ratio of net charge-offs during                               .01%         0.38%
  period to average loans outstanding                     =======       =======
  during period


                 In 1996, net charge offs were $540,000 representing .38% of the
        average loan portfolio. In 1995, net charge-offs were $9,000,
        representing .01% of the average loan portfolio.

                                      -26-
<PAGE>

                 CFC's allowance for loan losses decreased to $2,524,000 in 1996
        which was approximately 1.7% of total loans ($146.3 million).

                 During 1996, CFC experienced a higher level of charge-offs than
        in prior years due to the Carney Bank merger. The net amounts
        charged-off were $758,000 in commercial and real estate loans and $3,000
        in installment loans. In addition, CFC had net recoveries of $124,000 in
        commercial loans, and $96,000 in real estate loans.

                 The following table further summarizes the allocation of the
        allowance for loan losses by type of loan.

                                      -27-
<PAGE>
<TABLE>
<CAPTION>


                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES


                                              (RESTATED)    
                                           DECEMBER 31, 1995           DECEMBER 31, 1996
                                         --------------------        --------------------
                                                                              
                                                    PERCENT                      PERCENT
                                                    OF LOANS                     OF LOANS
                                                    IN EACH                      IN EACH
                                                    CATEGORY                     CATEGORY
                                                    TO TOTAL                     TO TOTAL
                                         AMOUNT      LOANS           AMOUNT      LOANS
                                         ------     --------         ------      --------

                                                       (AMOUNTS IN THOUSANDS)

<S>                                     <C>         <C>              <C>          <C>
Commercial, financial and
 agricultural                           $  262       25.8%          $  175        24.2%

Real Estate - Construction                  29        6.1%             183         6.7%

Real Estate - Mortgage                     729       66.4%             522        68.0%

Installment loans and overdrafts             1        1.7%               0         1.1%

Unallocated general reserves             2,019         N/A           1,644          N/A
                                        ------      ------          ------        -----
Total allowance for
  loan losses                           $3,040        100%          $2,524         100%
                                        ======      ======          ======        =====
</TABLE>


        FINANCIAL CONDITION

                 CFC's goal is to maintain a high quality and liquid balance
        sheet. CFC seeks to achieve this objective through increases in
        collateralized loans, a strong portfolio of real estate loans and a
        stable portfolio of investment securities of high quality.

                 INVESTMENT SECURITIES. In 1996, investment securities averaged
        $60.0 million or 28.3% of total earning assets. CFC's management
        strategy for its investment account is to maintain a very high quality
        portfolio with generally short-term maturities. To maximize after tax
        income, investments in municipal securities are utilized but with
        somewhat longer maturities. The investment portfolio, all of which has
        been classified as available for sale in 1996, decreased 6.5% from $60.4
        million in 1995 to $56.5 million at December 31, 1996. The decrease,
        resulting primarily from maturities which were not reinvested, was due
        to cash requirements arising from a decrease in deposits. The following
        table sets forth information regarding the investment portfolio at
        December 31, 1996, all of which are available for sale.

                                      -28-

<PAGE>
<TABLE>
<CAPTION>


                                              REMAINING MATURITY AND AVERAGE YIELD OF INVESTMENT SECURITIES
                                                                 (DECEMBER 31, 1996)

                                                               ($ AMOUNTS IN THOUSANDS)

                      ONE YEAR OR LESS        ONE TO FIVE YEARS    FIVE TO TEN YEARS      OVER TEN YEARS
                     -------------------     ------------------    -----------------      --------------
                       BOOK        YIELD       BOOK      YIELD     BOOK        YIELD      BOOK     YIELD     TOTAL      YIELD
                     -------       -----     -------     ------    -----       -----      ----     -----     -----      -----

<S>                  <C>           <C>       <C>         <C>       <C>         <C>        <C>      <C>       <C>        <C>
U.S. Treasury
 Securities          $12,555       6.41%     $20,048     5.94%                                               $32,603    6.12%

Securities of
 other U.S. 
 Governmental
 agencies and
 corporations         11,080       6.46%      10,653     6.07%       1,504      6.97%                         23,237    6.31%

Obligations of
 states and
 political
 subdivisions             95       8.12%                                                                          95    8.12%

Other securities                                                                           $525     5.19%        525    5.19%
                     -------       -----     -------     -----     -------      -----      ----     -----    --------   -----

 Total               $23,730       6.44%     $30,701     5.99%     $ 1,504      6.97%      $525     5.19%    $56,460    6.19%
                     =======       =====     =======     =====     =======      =====      ====     =====    =======    =====
</TABLE>


                 Note: Yield on tax exempt bonds have not been computed on a
        equivalent basis.

                 LOANS. Loans averaged $140.9 million in 1996 and increased 5.3%
        from the prior year. The increase in the loan portfolio reflects an
        expanded customer base, favorable economic conditions and increased
        business development. See "Asset Quality and Credit Risk -- Loans,"
        above.

                 INTEREST-BEARING LIABILITIES. Total interest-bearing
        liabilities averaged $150.0 million in 1996, down from $152.2 million in
        1995. The decline in average savings of $2.0 million or 7.7% was due to
        lower interest rates which resulted in customers shifting their funds
        into higher yielding investments, and increased competition from mutual
        funds and credit unions.

                 The following table sets forth information regarding CFC's
        average deposits for the last two years.


                                      -29-
<PAGE>


                                                AVERAGE DEPOSITS

                                    1995 (RESTATED)              1996
                                   -----------------      ------------------
                                   AVERAGE                AVERAGE
                                   BALANCE      RATE      BALANCE       RATE
                                   -------      ----      -------       ----

                                               (AMOUNTS IN THOUSANDS)

        Demand deposits-
         non-interest bearing     $ 53,993               $ 57,207

        Savings accounts            25,666      2.94%      23,697      2.87%

        Money market and
         NOW accounts               73,266      2.66%      73,617      2.29%

        Time deposits               51,301      5.34%      51,026      5.34%
                                  --------               -------- 

        Total deposits            $204,226      2.66%    $205,547      2.48%
                                  ========               ========


                 The following table summarizes the maturity of time deposits
over $100,000:

               SUMMARY OF TIME DEPOSITS OVER $100,000 BY MATURITY

                                                        DECEMBER 31, 1996

                                                     (AMOUNTS IN THOUSANDS)

                         Three months or less               $3,698

                         Three to Six months                 2,456

                         Six to Twelve months                4,668

                         Over Twelve months                  3,615
                                                             -----

                                Total                      $14,437
                                                           =======

                                      -30-
<PAGE>

        LIQUIDITY AND RATE SENSITIVITY

                 The principal functions of asset and liability management are
        to provide for adequate liquidity, to manage interest rate exposure by
        maintaining a prudent relationship between rate sensitive assets and
        liabilities and to manage the size and composition of the balance sheet
        so as to maximize net interest income.

                 Liquidity is the ability to provide funds at minimal cost to
        meet fluctuating deposit withdrawals or loan demand. These demands are
        met by maturing assets and the capacity to raise funds from internal and
        external sources. CFC primarily utilizes cash, federal funds sold and
        securities purchased under repurchase agreements to meet its liquidity
        needs. Although not utilized in managing daily liquidity needs, the sale
        of investment securities provides a secondary source of liquidity.

                 Fluctuating interest rates, increased competition and changes
        in the regulatory environment continue to significantly affect the
        importance of interest-rate sensitivity management. Rate sensitivity
        arises when interest rates on assets change in a different period of
        time or a different proportion than that of interest rates on
        liabilities. The primary objective of interest-rate sensitivity
        management is to prudently structure the balance sheet so that movements
        of interest rates on assets and liabilities are highly correlated and
        produce a reasonable net interest margin even in periods of volatile
        interest rates.

                 Regular monitoring of assets and liabilities that are rate
        sensitive within 30 days, 90 days, 180 days and one year is an integral
        part of CFC's rate-sensitivity management process. It is CFC's policy to
        maintain a reasonable balance of rate-sensitive assets and liabilities
        on a cumulative one year basis, thus minimizing net interest income
        exposure to changes in interest rates. CFC's sensitivity position at
        December 31, 1996 was such that net interest income would decline
        modestly if there were an increase in short-term interest rates.

                 CFC monitors the interest rate risk sensitivity with
        traditional gap measurements. The gap table has certain limitations in
        its ability to accurately portray interest sensitivity; however, it does
        provide a static reading of CFC's interest rate risk exposure.

                 CFC's gap table at December 31, 1996 is shown on the following
        table. This table shows the repricing structure of CFC's balance sheet
        with each maturity interval referring to the earliest repricing
        opportunity (i.e., the earlier of scheduled contractual maturities or
        next reset date) for each asset and liability. As of that date, CFC
        remained asset sensitive (interest sensitive assets subject to repricing
        exceeded interest sensitive liabilities subject to repricing) on a
        365-day basis to the extent of $25.6 million. This positive gap at
        December 31, 1996 was 10.3 percent of total assets compared with 7.5
        percent at December 31, 1995. The primary cause for this increase in the
        gap was the amount of federal funds sold at December 31, 1996, which
        were up $7.5 million from 1995. CFC's targeted gap position is in the
        range of negative 5 percent to positive 15 percent. CFC measures its gap
        position as a percentage of its total assets.

                 While the absolute level of gap is a measurement of interest
        rate risk, the quality of the assets and liabilities in the balance
        sheet must be analyzed in order to understand the 

                                      -31-
<PAGE>

        degree of interest rate risk taken by CFC. CFC does not invest in any
        derivative products in order to manage or hedge its interest rate risk.
<TABLE>
<CAPTION>

                           INTEREST SENSITIVITY TABLE
                             AS OF DECEMBER 31, 1996
                             (AMOUNTS IN THOUSANDS)

                                                                                                        OVER ONE
                                                                                          TOTAL         YEAR AND
                                 0-30           30-90          90-180       180-365      INTEREST     NON-INTEREST
                                 DAYS            DAY            DAYS          DAYS       SENSITIVE     SENSITIVE       TOTAL
                               --------      --------       ---------      --------      ---------    ------------  --------

Interest Earning Assets:
<S>                            <C>           <C>            <C>            <C>           <C>           <C>          <C>
 Loans                         $ 92,837      $  1,646       $  3,944       $  5,635      $104,062      $ 42,209     $146,271
 Investment Securities            6,285         2,035          4,167          9,250        21,737        34,723       56,460
 Federal funds sold              19,585             0              0              0        19,585             0       19,585
                               --------      --------       --------       --------      --------      --------     --------
                               $118,707      $  3,681       $  8,111       $ 14,885      $145,384      $ 76,932     $222,316
                               ========      ========       ========       ========      ========      ========     ========
 Interest Bearing
 Liabilities:
 Deposits and Repos            $ 87,139      $  8,055       $ 10,406       $ 14,484      $120,084      $ 33,026     $153,110
 Borrowings                          25             0             25             50           100           750          850
                               --------      --------       --------       --------      --------      --------     --------
                               $ 87,164      $  8,055       $ 10,431       $ 14,534      $120,184      $ 33,776     $153,960
                               ========      ========       ========       ========      ========      ========     ========
 Gap                             31,543        (4,374)        (2,320)           351        25,200
 Cumulative Gap                  31,543        27,169         24,849         25,200        25,200
 Gap as % of Total Assets        12.83%        11.05%         10.10%         10.25%        10.25%

</TABLE>


        CAPITAL

                 One of management's primary objectives is to maintain a strong
        capital position to merit the confidence of customers, bank regulators
        and stockholders. A strong capital position helps CFC withstand
        unforeseen adverse developments and take advantage of attractive lending
        and investment opportunities when they raise. During 1996, stockholders'
        equity increased by $ 652,000, or 3.2% over 1995.

                 The Federal Reserve's final rules pertaining to risk-based
        capital became effective as of December 31, 1992. Under these rules, at
        December 31, 1996, CFC's tier one capital was 12.73% and the total
        capital was 13.98% of risk-based assets. These risk-based capital ratios
        are well in excess of the minimum requirements of 4% for tier one and 8%
        for total risk-based capital ratios.

                 CFC's leverage ratio (tier one capital to total average
        adjusted quarterly assets) of 9.2% on December 31, 1996, is also well
        in excess of the minimum 4% requirement. During 1996, equity capital
        increased 3.2% and assets increased by 5.1%.

                                      -32-

<PAGE>
<TABLE>
<CAPTION>


                 The following table sets forth CFC's required and actual
        capital amounts and ratios for 1996 and 1995.

                                                        COUNTY FINANCIAL CORPORATION

                                     DECEMBER 31, 1996                            DECEMBER 31, 1995  (RESTATED)
                             ---------------------------------------     --------------------------------------------
                                   REQUIRED             ACTUAL                 REQUIRED                 ACTUAL
                             -----------------    ------------------     -------------------      -------------------
                             AMOUNT      RATIO    AMOUNT       RATIO     AMOUNT        RATIO      AMOUNT        RATIO
                             ------      -----    ------       -----     ------        -----      ------        -----
<S>                         <C>           <C>      <C>          <C>       <C>            <C>       <C>           <C>
   Tier 1 Capital
   (to Risk Weighted
   Assets)                  $ 6,660,000   4.0%     $21,196,000  12.7%     $ 6,251,000    4.0%      $20,265,000   13.0%

   Total 1 Capital
   (to Risk Weighted
   Assets)                  $13,320,000   8.0%     $23,283,000  14.0%     $12,502,000    8.0%      $22,232,000   14.2%

   Tier 1 Capital
   (to Average
   Assets)                  $ 9,241,000   4.0%     $21,196,000   9.2%     $ 9,025,000    4.0%      $20,265,000    9.0%
</TABLE>

            In October 1996, CFC agreed to settle all of the outstanding
   litigation arising from the failure of the Premium Sales Corporation and
   certain of its affiliates (the "Premium Group"). Under the terms of the
   proposed settlement, CNB paid $3,000,000 to the plaintiffs in January 1997.
   This litigation is described in greater detail in Part I - Item 3 - "Legal
   Proceedings."

            CFC has expensed the entire amount of the settlement for accounting
   purposes during the fiscal year ended December 31, 1996. As a result, most of
   CFC=s net income for 1996 was entirely offset by the amount of the
   settlement. The settlement is also expected to reduce interest income in 1997
   due to the decrease in earning assets of CFC. However, this drop is expected
   to be substantially offset by reduced legal and professional fees resulting
   from the settlement of the case.

            For income tax purposes, CFC expects to expense the settlement at
   the time of payment (i.e., in January 1997). Assuming that CFC continues its
   current level of operating profitability, the $3 million settlement will, for
   tax purposes, offset a substantial portion of CFC=s anticipated taxable
   income for 1997.

            CFC funded the settlement from its existing cash reserves, which
   have been maintained at relatively high levels. As a result, the settlement
   did not have a significant impact on CFC=s liquidity level.

                                      -33-
<PAGE>


   ITEM 7.  FINANCIAL STATEMENTS
        
         The consolidated financial statements of the Company, are filed under 
   this item, beginning on page F-1 of this report.

   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

         None.

                                    PART III

   ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The following table sets forth certain information with respect to the
    current directors and executive officers of the Company. A summary of the
    background of each director and executive officer is set forth in the
    paragraphs following the table.

                                      -34-
<PAGE>



   NAME AND POSITIONS                    AGE AT            YEAR FIRST BECAME
   WITH THE COMPANY AND CNB        DECEMBER 31, 1996    DIRECTOR OF THE COMPANY
   ------------------------        -----------------    -----------------------


   George M. Apelian,                       65                    1984
   Director, President and Chief
   Executive Officer

   Dr. Julian J. Blitz,                     74                    1984
   Director

   Joseph E. Carney, Jr.                    64                    1984
   Director

   Peter H.  Carney                         34                    1996
   Director

   Dr. Thomas F. Carney,                    70                    1984
   Chairman of the Board of
   Directors

   Harold Diamond,                          71                    1984
   Director

   Morton M. Fisher,                        81                    1984
   Director

   C. Bernard Jacobs,                       78                    1996
   Director

   Richard Arn Kuci, Jr.,                   40                       -
   Executive Vice President
   of CNB

   Thomas J. Langan,                        76                    1996
   Director 

   Milton Mamber,                           71                    1984
   Director

   Eileen A. Salsano,                       65                       -
   Executive Vice President

   Dr. Morton Terry,                        75                    1984
   Director

                                      -35
<PAGE>


        GEORGE M. APELIAN has served as President and director of the Company
    since 1984, and as President, Chief Executive Officer and director of CNB
    since 1984.

        DR. JULIAN J. BLITZ has served as a director of the Company since 1984
    and CNB since 1980. Dr. Blitz has been employed as a physician since 1946
    and currently maintains an office in Hollywood, Florida.

        JOSEPH E. CARNEY, JR. has served as a director of the Company since 1984
    and as a director of CNB since 1978. Mr. Carney is Vice President of PM
    Management Group, Inc., a management company for racetracks, President of
    Sports Programs, Inc. (a printer of sports programs), Vice-President and
    General Manager of Yankee Greyhound Racing, Inc. (the owner and operator of
    a greyhound racecourse), and President of Rockingham Venture, Inc. (the
    owner and operator of a horse racetrack). Mr. Carney's brother, Dr. Thomas
    F. Carney, serves as a director of the Company and CNB.

        PETER H. CARNEY has served as a Director of the Company since April,
    1996. Mr. Carney is an attorney and is with The Carney Legal Group. Peter
    Carney is the son of Dr. Thomas F. Carney, another director of the Company.

        DR. THOMAS F. CARNEY has served as Chairman of the Board of the Company
    since 1984 and as Chairman of the Board of CNB since 1962. Dr. Carney also
    served as a director of Carney. His brother, Joseph E. Carney, Jr., and his
    son, Peter Carney, also serve as directors of the Company and CNB.

        HAROLD DIAMOND has served as a director of the Company since 1984 and as
    a director of CNB since 1962. Mr. Diamond is a private investor.
    Additionally, he has been the comptroller of the North Miami Beach
    Kampgrounds of America since January 1, 1995. In December 1992, Mr. Diamond
    was an officer, director and major shareholder of Azure Lakes, Inc., the
    general partner of Azure Lakes, Ltd. This partnership owned and operated an
    apartment complex. In December 1992, the partnership defaulted on its
    mortgage and filed for bankruptcy. The bankruptcy petition was subsequently
    dismissed with prejudice in connection with a settlement between the
    partnership and its lender. Under the settlement, the partnership conveyed
    the apartment complex to the lender.

        MORTON M. FISHER has served as a director of the Company since 1984 and
    as a director of CNB since 1962. Fisher is a self employed investor.

        C. BERNARD JACOBS served as Chairman of the Board of Directors of Carney
    from 1985 until the Merger. He became a director of the Company following
    the consummation of the Merger. Mr. Jacobs was Chairman of the Board of
    Directors of National City Bancorporation of Minneapolis, Minnesota from
    1968 to 1985 and was President of its subsidiary, National City Bank,
    Minneapolis, Minnesota, from 1965 to 1968.

        RICHARD ARN KUCI, JR. has served as Executive Vice President and Senior
    Loan Officer of CNB since 1994. From 1984 to 1993, he served as a Senior
    Vice President of CNB.

        THOMAS J. LANGAN, JR. served as a Director of Carney from 1991 until the
    Merger. He became a director of the Company following the consummation of
    the Merger. Mr. Langan is a retired investor.

                                      -36-
<PAGE>

        MILTON MAMBER has served as a director of the Company since 1984 and as
    the Vice Chairman of the Board of Directors of CNB since 1962. Mr. Mamber is
    an attorney and president of the law firm of Mamber, Savage & Singer, P.A.,
    which serves as general counsel to the Company and CNB.

        DR. MORTON TERRY has served as a director of the Company since 1984 and
    as a director of CNB since 1963. From 1980 to 1993, Dr. Terry was President
    of Southeastern University, North Miami Beach, Florida. In 1994, Dr. Terry
    became Chancellor-Health Professions Division of Nova Southeastern
    University.

        EILEEN A. SALSANO has been the Executive Vice-President of the Company
    since 1984 and as the Executive Vice President/Cashier of CNB since 1983. In
    1994, she was also named Chief Operating Officer of CNB.

                                      -37-
<PAGE>

        COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

        The officer, directors, and certain beneficial owners of the Company's
    outstanding securities are not subject to the reporting obligations set
    forth in Section 16(a) of the Securities Exchange Act of 1934.

    ITEM 10. EXECUTIVE COMPENSATION

        The following table sets forth the compensation which the Company and
    its subsidiaries paid to its executive officers for services rendered in the
    fiscal years ended December 31, 1994, 1995 and 1996.

   SUMMARY COMPENSATION TABLE
   --------------------------

                                           ANNUAL COMPENSATION
                                           -------------------

   NAME AND                                                         ALL OTHER
   PRINCIPAL POSITION           YEAR       SALARY        BONUS     COMPENSATION
   ------------------           ----      -------       -------    ------------

   George M. Apelian,
   President and Chief          1994      $140,000      $12,000     (1)(2)(3)
   Executive Officer            1995      $146,538      $15,000
                                1996      $167,187      $18,000
   Eileen A. Salsano,
   Executive Vice-President     1994      $ 86,885      $ 8,000     (4)(5)(6)
                                1995      $ 92,923      $10,000
                                1996      $101,346      $12,000

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

   (1)      CNB pays the premiums on a $400,000 term life insurance policy on
            the life on Mr. Apelian. The policy is payable to Mr. Apelian's
            designee. During 1996, the premium on this policy was $3,124.

   (2)      CNB has entered into an income continuance agreement with Mr.
            Apelian under which CNB has agreed to pay Mr. Apelian's designee the
            amount of $100,000 if Mr. Apelian should die while employed by CNB.

   (3)      CNB has entered into a keyman agreement with Mr. Apelian. Under this
            agreement, CNB has agreed to purchase a life insurance policy on the
            life of Mr. Apelian with a death benefit of $100,000. The policy is
            owned by CNB and will be payable to CNB in the event that Mr.
            Apelian dies while employed by CNB. CNB intends to use the proceeds
            of this policy to make the payment described in Note (2). Upon any
            termination of Mr. Apelian's employment with CNB, Mr. Apelian has
            the right to purchase CNB's rights in the policy for $1.00. The
            policy had a cash value of $40,659 and $49,582 on December 31, 1995
            and December 31, 1996, respectively. During 1995 and 1996, CNB paid
            premiums of $4,000 on this policy.

   (4)      CNB pays the premiums on a $300,000 term life insurance policy on
            the life of Ms. Salsano. The policy is payable to Ms. Salsano's
            designee. During 1996, the premium on this policy was $1,716.

   (5)      CNB has entered into an income continuance agreement with Ms.
            Salsano under which CNB has agreed to pay Ms. Salsano's designee the
            amount of $100,000 if Ms. Salsano should die while employed by CNB.

                                      -38-
<PAGE>

   (6)      CNB has entered into a keyman agreement dated January 20, 1988 with
            Ms. Salsano. Under this agreement, CNB has agreed to purchase a life
            insurance policy on the life of Ms. Salsano with a death benefit of
            $100,000. The policy is owned by CNB and will be payable to CNB in
            the event that Ms. Salsano dies while employed by CNB. CNB will
            utilize the proceeds to make the payment described in Note (5). Upon
            any termination of Ms. Salsano's employment with CNB, Ms. Salsano
            has the right to purchase CNB's rights in the policy for $1.00. The
            policy had a cash value of $5,445 and $11,521 on December 31, 1995
            and December 31, 1996, respectively. During 1995 and 1996, CNB paid
            premiums of $3,000 on this policy.

   FISCAL YEAR END OPTIONS

            The following table sets forth information regarding stock options
   for shares of Common Stock held by certain executive officers as of December
   31, 1996 and 1995:

                                NUMBER OF SHARES              VALUE OF
                             UNDERLYING UNEXERCISED      UNEXERCISED IN THE
          NAME                      OPTIONS                MONEY OPTIONS
   -----------------         ----------------------      ------------------

   George M. Apelian                  6,400 (1)                 (2)
   Eileen A. Salsano                  2,114 (1)                 (2)


   (1)      All options are currently exercisable.

   (2)      On December 31, 1995, all options were exercisable at the price of
            $15.37, representing the book value per share of the Common Stock as
            of the end of the Company's fiscal year immediately preceding the
            date of exercise. On January 18, 1995, the Board of Directors
            granted an extension of three (3) additional years to exercise the
            options at a fixed price of $12.00 per share which became effective
            January 1, 1996.

   EMPLOYMENT AGREEMENT WITH MR. APELIAN

            In 1988, George Apelian and CNB entered into an agreement that
   obligates CNB to employ Mr. Apelian for three years after any change in
   control of CNB at an annual salary at least equal to the salary that Mr.
   Apelian is receiving at the time of the change in control. In the event Mr.
   Apelian's employment is not continued after the change in control, Mr.
   Apelian is entitled to receive a severance payment equal to three years
   salary.

   COMPENSATION OF DIRECTORS

            The directors of the Company receive $7,200 per year for serving as
   directors of the Company and CNB, $15,600 per year for serving on the
   loan/executive committee of CNB, and $1,800 per year for serving on the audit
   committee of the Company and CNB. The chairman of the audit committee
   receives an additional $4,200 per year. Total directors fees paid in 1996
   were approximately $165,000. CNB also pays Mr. Fisher $300 per month for
   certain advertising services.

                                      -39-
<PAGE>

   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   BENEFICIAL OWNERSHIP OF MANAGEMENT

            The following table sets forth, as of March 15, 1997, the number of
   shares of Common Stock owned beneficially by each director and executive
   officer of the Company, and all directors and executive officers of the
   Company as a group.
<TABLE>
<CAPTION>

                                                                        NUMBER OF SHARES      PERCENT OF
       NAME                        POSITIONS WITH THE COMPANY          BENEFICIALLY OWNED        CLASS
       ----                        --------------------------          ------------------     ----------

<S>                                <C>                                 <C>                    <C>
George M. Apelian                  Director and President                   7,755(1)              .6%
Dr. Julian J. Blitz                       Director                         83,057(2)             6.6%
Joseph E. Carney, Jr.                     Director                         33,013(3)             2.6%
Peter Carney                              Director                         20,316(4)             1.6%
Dr. Thomas F. Carney                Chairman of the Board                 303,774(5)              24%
Harold Diamond                            Director                          2,992(6)              .2%
Morton M. Fisher                          Director                         21,429(7)             1.7%
Richard Arn Kuci, Jr.             Executive Vice President                  4,426(8)              .4%
C. Bernard Jacobs                         Director                         26,026                  2%
Thomas J. Langan                          Director                            354                  -
Milton Mamber                             Director                         26,278(9)             2.1%
Dr. Morton Terry                          Director                         99,151(10)            7.8%
Eileen A. Salsano                 Executive Vice President                  3,414(11)             .3%

All Executive Officers and                                                926,478(12)             72%
Directors as a Group
(12 persons)

<FN>
-------------
   (1)  This amount consists of 1,355 shares which Mr. Apelian owns jointly
        with his wife and 6,400 shares which Mr. Apelian may purchase under
        stock options which are currently exercisable.

   (2)  This amount consists of 48,274 shares which Dr. Blitz owns jointly
        with his wife and 34,783 shares owned solely by his wife.

   (3)  This amount consists of 27,506 shares owned directly by Mr. Carney,
        and 5,507 owned by a corporation in which Mr. Carney is a
        shareholder and 


                                      -40-
<PAGE>


        director. It does not include shares owned by Mr. Carney's other family
        members.

   (4)  This amount consists of 19,362 shares owned directly by Mr. Carney,
        and 954 owned as trustee for a family trust.

   (5)  This amount consists of 298,267 shares owned directly by Dr. Carney,
        and 5,507 owned by a corporation in which Mr. Carney is a
        shareholder and director. It does not include shares owned by other
        members of his family.

   (6)  This amount consists of 629 shares owned jointly with Mr. Diamond's
        wife, and 2,363 shares owned by a partnership of which Mr. Diamond
        is a general partner.

   (7)  This amount consists of 21,429 shares owned jointly with Mr.
        Fisher's wife.

   (8)  This amount consists of 2,800 shares which may be purchased by Mr.
        Kuci pursuant to stock options which are currently exercisable, 600
        shares owned by him directly and 1,026 shares that Mr. Kuci owns
        jointly with his wife.

   (9)  This amount consists of 26,278 shares owned jointly with Mr.
        Mamber's wife.

   (10) This amount consists of 97,720 shares owned jointly with Dr. Terry's
        wife and 1,431 shares owned by Dr. Terry's professional association
        pension trust.

   (11) This amount consists of 2,114 shares which Ms. Salsano may purchase
        pursuant to stock options which are currently exercisable, and 1,300
        shares which Ms. Salsano owns jointly with her husband.

   (12) This amount includes 11,314 shares which may be purchased by
        executive officers of the Company pursuant to options which are
        currently exercisable.

</FN>
</TABLE>

                                      -41-
<PAGE>

        PRINCIPAL SHAREHOLDERS OF THE COMPANY

                 The following table sets forth, as of March 15, 1997, the
        persons known by the Company to be beneficial owners of more than five
        (5%) percent of the outstanding shares of Common Stock.


      NAME AND ADDRESS OF                  NUMBER OF SHARES
       BENEFICIAL OWNER                   BENEFICIALLY OWNED   PERCENT OF CLASS
      -------------------                 ------------------   ----------------

      Dr. Julian J. Blitz                      83,057(1)              6%
      19707 Turnberry Way, Apt.  12J
      North Miami Beach, FL 33180

      Dr. Thomas F. Carney                    303,774(2)             24%
      801 N.E. 167th Street
      North Miami Beach, FL 33162

      Roz Kovens                               76,234(3)              6%
      9999 Collins Avenue, PH 1K
      Bal Harbour, FL
      33154

      Dr. Morton Terry                         99,151(4)              7%
      20185 E. Country Club Drive,
      Apt.  2104
      Aventura, FL 33180

---------------
   (1)   This amount consists of 48,274 owned jointly with Dr. Blitz' wife and
         34,783 shares owned solely by his wife. It does not include 1,419
         shares owned by Dr. Blitz' other family members.

   (2)   This amount consists of 298,267 shares owned directly by Dr. Carney,
         and 5,507 owned by a corporation in which Dr. Carney is a shareholder
         and director. It does not include shares owned by other members of his
         family.

   (3)   This amount consists of 20,062 shares owned directly by Ms. Kovens, and
         56,172 shares owned by the Estate of Cal Kovens, which is controlled by
         Roz Kovens as personal representative.

   (4)   This amount consists of 97,720 shares owned jointly with Dr. Terry's
         wife, and 1,431 shares owned by Dr. Terry's professional association
         pension trust.

                                      -42-
<PAGE>


        ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        LENDING TRANSACTIONS

                 The Company, through its subsidiary CNB, has outstanding loans
        to certain of its directors and executive officers, members of their
        immediate families and companies and organizations in which a director
        or executive officer is a principal officer, partner or shareholder.
        These loans were made in the ordinary course of business, remain on
        substantially the same terms, including interest rates and collateral,
        as those prevailing at the time for comparable transactions with
        unrelated persons, and did not involve (in the opinion of management)
        more than the normal risk of collectibility or other unfavorable
        features.

        LEGAL SERVICES

                 Milton Mamber, a director of the Company and CNB, is a
        shareholder in the law firm of Mamber, Savage and Singer, P.A. This firm
        serves as general counsel to the Company and CNB. The Company and CNB
        paid this firm $379,000 in legal fees in 1996, and $371,000 in 1995.

        ACQUISITION OF CARNEY BANK

                 On January 12, 1996, the Company and CNB completed the
        acquisition of Carney Bank. See "ItemCBusinessCAcquisition of Carney."

                 Dr. Thomas F. Carney is the Chairman of the Board and largest
        shareholder of the Company. He was also a director and the largest
        shareholder of Carney. In particular, prior to the consummation of the
        Merger, he beneficially owned 21.4% of the outstanding common stock of
        the Company and 31.8% of the outstanding common stock of Carney.
        Additionally, his family (which includes his brothers, sons and a
        grandchild) owned an additional 10% of the outstanding shares of the
        Company and 7.5% of the outstanding common stock of Carney. He was also
        the Chairman of the Board of a corporation which owned an additional 2%
        of the outstanding common stock of the Company. Dr. Carney did not
        participate in any meetings of the directors of the Company which
        involved the consideration of the Merger, nor did he vote as a director
        of the Company on the approval of the Merger Agreement.

        EMPLOYMENT AGREEMENT WITH JAMES HEARON

                 In connection with the Merger, the Company and CNB agreed to
        employ James Hearon, the former president of Carney, following the
        consummation of the Merger. Under the employment agreement, Mr. Hearon
        will be employed for a period of 30 months to perform the following
        duties: (a) to develop and expand for CNB certain Carney loan programs;
        (b) to develop and expand CNB's deposits from real property management
        accounts; and (c) to make business development calls to corporate,
        commercial and certain other customers located in Palm Beach County.
        During the term of his employment, Mr. Hearon will receive an annual
        salary of $100,000 per year and reimbursement of expenses. In addition,
        he will receive the same benefits, perquisites and benefit programs that
        are available to the other officers of CNB, including a life insurance
        policy of at least $200,000, medical insurance, disability and accident
        insurance and participation in CNB's 401(k) plan.

                                      -43-
<PAGE>

                 CNB may terminate Mr. Hearon's employment at any time,
        notwithstanding the initial 30-month period of the agreement. However,
        if Mr. Hearon's employment is terminated within the first 18 months of
        the agreement for any reason other than his death, disability or cause,
        CNB is obligated to continue to provide Mr. Hearon his salary and
        benefits for the balance of such 18 month period.

                 As part of the employment agreement, Mr. Hearon has agreed that
        he will not own, control, manage, be employed by, consult or otherwise
        participate in a business involved in banking or of any other activity
        which is competitive with the services provided by CNB in Dade, Palm
        Beach, Broward and Monroe Counties during the term of his employment and
        for the period any payments are made to him under the agreement.

        ITEM 13. EXHIBITS AND REPORTS ON FORM 10-KSB

                 (a) The exhibits set forth in the following Index of Exhibits
        are files as a part of this report.

 
                                                                      SEQUENTIAL
EXHIBIT NO.   DESCRIPTION                                              PAGE NO.
-----------   -----------                                             ----------

   3.1        Bylaws of County Financial Corporation                      *


   3.2        Article of Incorporation of County Financial Corporation    *

  10.1        Income Continuance Agreement dated January 20, 1988, 
              between George M. Apelian and CFC                           *

  10.2        Keyman Agreement dated January 20, 1988, between 
              George M. Apelian and CFC                                   *

  10.3        Renewal Note dated March 29, 1990 for $1,500,000 in 
              favor of Life Insurance Company of Georgia                  *

  10.4        Florida Mortgage and Security Agreement dated the 28th 
              day of December, 1989 between CNB and Southeast 
              Mortgage Company.                                           *

  10.6        Employment Agreement between County Financial
              Corporation and James Hearon dated January 11, 1996         *

  21.1        Subsidiaries of Registrant                                  *

  27          Financial Data Schedule                                     *


                 *Each of the exhibits to this report on Form 10-KSB are
        incorporated by reference from the Company's Registration Statement of
        Form S-4 (File No. 33-97422) filed by the Company with the Securities
        and Exchange Commission in connection with the acquisition of Carney
        Bank. The Registration Statement was declared effective by the
        Commission on November 29, 1995.

                                      -44-
<PAGE>


                 (b) The Company did not file any reports on Form 8-K during the
        last quarter of the 1996 fiscal year.

                                   SIGNATURES

        In accordance with Section 13 or 15(d) of the Exchange Act, the
        registrant caused this report to be signed on its behalf by the
        undersigned, thereunto duly authorized in the City of North Miami Beach,
                               Florida, on April 15, 1997.

                          COUNTY FINANCIAL CORPORATION


                              By: /s/ GEORGE M. APELIAN
                                 -------------------------
                              George M. Apelian, President

        In accordance with the Exchange Act, this report has been signed below
        by the following persons on behalf of the registrant and in the
        capacities and on April 15, 1997.

                                SIGNATURES TITLE
                                ----------------
 /s/ GEORGE M. APELIAN
--------------------        President, Chief Executive Officer and Director
George M. Apelian           (Principal Executive Officer)

/s/ EILEEN A. SALSANO
--------------------        Executive Vice President and Chief Operating Officer
Eileen A. Salsano           (Principal Financial Officer and Principal 
                            Accounting Officer)

/s/ DR. JULIAN J. BLITZ
--------------------        Director
Dr. Julian J. Blitz


--------------------        Director
Joseph E. Carney

/s/ DR. JOSEPH E. CARNEY
--------------------        Director
Dr. Thomas F. Carney


--------------------        Director
Harold Diamond


--------------------        Director
Morton M. Fisher


--------------------        Director
C. Bernard Jacobs


--------------------        Director
Thomas Langan

/s/ MILTON MAMBER
--------------------        Director
Milton Mamber

/s/ DR. MORTON TERRY
--------------------        Director
Dr. Morton Terry

/s/ PETER CAREY
-------------------         Director
Peter Carey         
                                      -45-

<PAGE>

                       [DELOITTE & TOUCHE LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
  County Financial Corporation:

We have audited the accompanying consolidated balance sheets of County Financial
Corporation and subsidiaries ("the Company"), as of December 31, 1996 and 1995,
and the related consolidated statements of income, stockholders' equity and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
1996 and 1995, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP
    ---------------------
    Deloitte & Touche LLP

February 21, 1997

                                      -46-

<PAGE>

COUNTY FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995 (IN THOUSANDS)
--------------------------------------------------------------------------------

                                                        1996          1995
                                                      --------      --------
ASSETS

EARNING ASSETS:
  Loans                                               $146,271      $139,285
  Less: Unearned income                                     (1)           (8)
        Allowance for loan losses                       (2,524)       (3,040)
                                                      --------      --------
        Total loans, net                               143,746       136,237

  Securities available for sale                         56,460        58,719
  Securities held to maturity                                          1,635
  Federal funds sold                                    19,585        12,136
                                                      --------      --------
        Total earning assets                           219,791       208,727

CASH AND DUE FROM BANKS                                 15,617        14,732

PREMISES AND EQUIPMENT, Net                              4,186         4,369

OTHER REAL ESTATE OWNED, Net                             3,338         3,329

INTEREST RECEIVABLE                                      1,450         1,865

OTHER ASSETS                                             1,564         1,000
                                                      --------      --------
TOTAL                                                 $245,946      $234,022
                                                      ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

INTEREST-BEARING LIABILITIES:
  Interest-bearing deposits:
    Savings accounts                                  $ 24,360      $ 23,479
    Interest checking, interest checking plus
      and moneyfund accounts                            71,288        74,247
    Certificates of deposit, $100,000 and over          14,437        12,928
    Other certificates of deposit                       38,275        40,904
                                                      --------      --------
        Total interest-bearing deposits                148,360       151,558

  Securities sold under repurchase agreements            4,750         1,777
  Other borrowings                                         850           950
                                                      --------      --------
        Total interest-bearing liabilities             153,960       154,285

  Demand deposits                                       64,950        57,687
                                                      --------      --------
        Total                                          218,910       211,972

  Interest payable                                         775           730
  Other liabilities                                      5,122           833
                                                      --------      --------
        Total liabilities                              224,807       213,535
                                                      --------      --------
COMMITMENTS AND CONTINGENCIES (Notes 7,9)

STOCKHOLDERS' EQUITY:
  Common stock, $0.01 par value; 1,500,000
    shares authorized; 1,264,328 issued and
    outstanding                                             13            13
  Capital surplus                                       13,562        13,555
  Retained earnings                                      7,621         6,697
  Net unrealized (loss) gain on securities
    available for sale, net of taxes                       (57)          222
                                                      --------      --------
    Total stockholders' equity                          21,139        20,487
                                                      --------      --------

TOTAL                                                 $245,946      $234,022
                                                      ========      ========

See accompanying notes to consolidated financial statements.

                                      -47-

<PAGE>

COUNTY FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996 AND 1995 (IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------

                                                       1996            1995
                                                    ----------      ----------
INTEREST INCOME:
  Interest and fees on loans                        $   14,004      $   13,822
  Interest on investment securities:
    Taxable                                              3,565           3,472
    Non-taxable                                             15              93
  Interest on federal funds sold                           548             552
                                                    ----------      ----------

        Total interest income                           18,132          17,939
                                                    ----------      ----------
INTEREST EXPENSE:
  Savings                                                  679             754
  Interest checking, interest checking
    plus and moneyfund accounts                          1,690           1,949
  Certificates of deposit, $100,000 and over               725             639
  Other certificates of deposit                          2,000           2,099
  Interest on other borrowings                             151             144
                                                    ----------      ----------

        Total interest expense                           5,245           5,585
                                                    ----------      ----------

NET INTEREST INCOME                                     12,887          12,354

PROVISION FOR LOAN LOSSES                                   24             259
                                                    ----------      ----------
        Net interest income after provision
          for loan losses                               12,863          12,095
                                                    ----------      ----------
NON-INTEREST OPERATING INCOME:
  Service charges on deposit accounts                    2,425           2,526
  Net loss on sale of investment securities                (11)            (12)
  Other                                                    369             411
                                                    ----------      ----------

        Total non-interest operating income              2,783           2,925
                                                    ----------      ----------
NON-INTEREST OPERATING EXPENSE:
  Personnel expense                                      5,541           5,693
  Occupancy expense, net                                 1,604           1,689
  Premises and equipment expense                           596             899
  Other                                                  3,981           3,914
  Provision for litigation settlement                    3,000
                                                    ----------      ----------

        Total non-interest operating expense            14,722          12,195
                                                    ----------      ----------

INCOME BEFORE INCOME TAXES                                 924           2,825

PROVISION FOR INCOME TAXES                                                 980
                                                    ----------      ----------

NET INCOME                                          $     924       $    1,845
                                                    ==========      ==========

NET INCOME PER COMMON AND COMMON
  EQUIVALENT SHARE                                  $     0.73      $     1.46
                                                    ==========      ==========

AVERAGE SHARES OUTSTANDING                           1,268,316       1,263,617
                                                    ==========      ==========

See accompanying notes to consolidated financial statements.

                                      -48-
<PAGE>

COUNTY FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995 (IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            NET
                                                                         UNREALIZED
                                                                         GAIN(LOSS)
                                                                        ON SECURITIES
                                                                        AVAILABLE FOR
                                          COMMON   CAPITAL    RETAINED    SALE, NET
                                           STOCK   SURPLUS    EARNINGS     OF TAXES      TOTAL
                                          -------  -------    --------  -------------   --------
<S>                                        <C>     <C>        <C>         <C>           <C>   
BALANCE, DECEMBER 31, 1994 (as reported)  $  10    $ 4,679     $10,362                   $15,051

  Merger with Carney Bank                     3      8,876      (5,510)                    3,369
                                          ------   -------     -------                   -------

BALANCE, DECEMBER 31, 1994 (as restated)     13     13,555       4,852                    18,420

  Net change in unrealized gain on
    securities available for sale                                           $ 222            222
  Net income                                                     1,845                     1,845
                                          ------   -------     -------      -----        -------
BALANCE, DECEMBER 31,1995                    13     13,555       6,697        222         20,487

  Net change in unrealized gain on
    securities available for sale                                            (279)          (279)
  Employee stock options exercised                       7                                     7
  Net income                                                       924                       924
                                          ------   -------     -------      -----        -------

BALANCE, DECEMBER 31, 1996                $  13    $13,562     $ 7,621      $ (57)       $21,139
                                          ======   =======     =======      =====       ========

</TABLE>

See accompanying notes to consolidated financial statements.

                                      -49-

<PAGE>

COUNTY FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995  (IN THOUSANDS)
--------------------------------------------------------------------------------

                                                            1996          1995
                                                          --------      -------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                               $    924      $ 1,845
 Adjustments to reconcile net income to net
  cash provided by operating activities:
  Provision for loan losses                                     24          259
  Provision for litigation settlement                        3,000
  Depreciation and amortization                                687          800
  Deferred income tax benefit                                 (486)         (27)
  Net loss on sale of assets                                    11           36
  Net loss on sale of investment securities                     11           12
  Provision for other real estate owned losses                  50          102
  Decrease (increase) in interest receivable                   415           (1)
  Decrease (increase) in other assets                           59           (8)
  Increase in interest payable                                  45          213
  Increase (decrease) in other liabilities                   1,289         (229)
                                                          --------     --------
     Net cash provided by operating activities               6,029        3,002
                                                          --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sales and maturities of
  securities held to maturity                                            18,306
 Proceeds from sales and maturities of
  securities available for sale                             31,117       12,016
 Purchase of securities held to maturity                                 (7,990)
 Purchase of securities available for sale                 (27,692)     (12,837)
 Increase in loans, net                                     (7,659)      (4,526)
 Proceeds from sale of other real estate owned                  56        1,457
 Purchases of premises and equipment, net                     (406)        (661)
                                                          --------     --------
     Net cash (used in) provided
      by investing activities                               (4,584)       5,765
                                                          --------     --------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Increase (decrease) in savings                                881       (5,144)
 Decrease in interest checking,
  interest checking plus and moneyfund                      (2,959)      (3,329)
 (Decrease) increase in certificates of deposit             (1,120)       9,101
 Increase in securities sold
   under repurchase agreements                               2,973        1,407
 Repayment of long-term borrowings                            (100)        (129)
 Increase (decrease) in demand deposits                      7,263       (1,122)
 Proceeds from employee stock options exercised                  7
 Payments to dissenting shareholders from merger               (56)
                                                          --------     --------
     Net cash provided by financing activities               6,889          784
                                                          --------     --------
NET INCREASE IN CASH AND CASH EQUIVALENTS                    8,334        9,551

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR              26,868       17,317
                                                          --------     --------
CASH AND CASH EQUIVALENTS AT END OF YEAR                  $ 35,202     $ 26,868
                                                          ========     ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
 Cash paid during the year for:                           $  4,865     $  5,398
                                                          ========     ========
  Interest                                                             $  1,187
                                                                       ========
  Income taxes

SUPPLEMENTAL SCHEDULE ON NON-CASH INVESTING ACTIVITIES:
 Other real estate owned received through foreclosure     $    233     $  1,113
                                                          ========     ========


See accompanying notes to consolidated financial statements.

                                      -50-

<PAGE>

COUNTY FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
--------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   County Financial Corporation ("C.F.C."), a one Bank holding company, its
   wholly-owned banking subsidiary, County National Bank of South Florida (the
   "Bank") and its inactive wholly-owned non-banking subsidiary, Carnco
   Corporation ("Carnco") are primarily engaged in the traditional banking
   practices of gathering deposits and investing in loans and investment
   securities. The Bank offers these services through its main office and eleven
   branches located in Dade, Broward and Palm Beach counties, Florida.
   Substantially all of the Bank's activities are conducted with customers in
   South Florida.

   MERGER - On January 12, 1996, Carney Bank was merged with and into the Bank
   with the Bank being the surviving corporation. The merger was made pursuant
   to an Agreement and Plan of Reorganization and related Agreement to Merge
   (the "Merger Agreement"), dated May 10, 1995. Under the terms of the Merger
   Agreement, the Company issued approximately 285,000 shares of its common
   stock in exchange for all outstanding common stock, stock options, and
   warrants of Carney Bank. The merger was accounted for as a pooling of
   interests and, accordingly, the consolidated financial statements for periods
   prior to the merger have been restated to include the financial position and
   results of operations of Carney Bank.

   The following summarizes amounts previously reported by C.F.C. and Carney
   Bank prior to the merger:

                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                                    1995
                                                                ------------
Net interest income:
 C.F.C                                                            $  9,794
 Carney Bank                                                         2,560
                                                                  --------

 Combined                                                         $ 12,354
                                                                  ========
Net income:
 C.F.C                                                            $  1,620
 Carney Bank                                                           225
                                                                  --------

 Combined                                                         $  1,845
                                                                  ========
Net income per common and common equivalent share:
 C.F.C                                                            $   1.28
 Carney Bank                                                          0.18
                                                                  --------

 Combined                                                         $   1.46
                                                                  ========

   The accounting and reporting policies and practices of C.F.C., the Bank, and
   Carnco conform to the practices in the banking industry and generally
   accepted accounting principles. The following is a description of the more
   significant accounting policies.

                                      -51-
<PAGE>

   USE OF ESTIMATES - The preparation of financial statements in conformity with
   generally accepted accounting principles requires management to make
   estimates and assumptions that affect the reported amounts of assets and
   liabilities and disclosure of contingent assets and liabilities as the date
   of the financial statements and the reported amounts of revenues and expense
   during the reporting period. Actual results could differ from those
   estimates.

   CONSOLIDATION - The consolidated financial statements include the accounts of
   C.F.C., the Bank, and Carnco (inactive). All significant intercompany
   transactions and balances have been eliminated in consolidation.

   STATEMENT OF CASH FLOWS - For purposes of reporting cash flows, cash and cash
   equivalents includes cash on hand, amounts due from banks and federal funds
   sold. Generally, federal funds are sold for one-day periods.

   LOANS AND ALLOWANCE FOR LOAN LOSSES - Loans are stated at principal amounts
   outstanding. Interest on loans is accrued at the applicable interest rate on
   the principal amount outstanding.

   The allowance for loan losses is established by charges to income through the
   provision for loan losses. Loans or portions thereof which are considered by
   management to be uncollectible are charged to the allowance and recoveries of
   amounts previously charged off are credited to the allowance. The allowance
   represents the amount which, in management's judgment, is adequate to absorb
   charge-offs of existing loans which may become uncollectible. The adequacy of
   the allowance is determined by management's continuing evaluation of the loan
   portfolio in light of past loan loss experience, regulatory examinations,
   present economic conditions and other factors considered relevant by
   management. Anticipated changes in economic factors which may influence the
   level of the allowance are considered in the evaluation by management when
   the likelihood of the changes can be reasonably determined. While management
   uses the best information available to make such evaluations, future
   adjustments to the allowance may be necessary as a result of future economic
   and other conditions that may be beyond management's control.

   On January 1, 1995, C.F.C. adopted Financial Accounting Standards Board
   Statements of Financial Accounting Standards ("SFAS") No. 114, ACCOUNTING BY
   CREDITORS FOR IMPAIRMENT OF A LOAN, and SFAS No. 118, ACCOUNTING BY CREDITORS
   FOR IMPAIRMENT OF A LOAN - RECOGNITION AND DISCLOSURES, an amendment of SFAS
   No. 114. These standards address the accounting for impairment of certain
   loans when it is probable that all amounts due pursuant to the contractual
   terms of the loan will not be collected. Adoption of these standards entailed
   the identification of commercial, industrial, real estate commercial and real
   estate construction loans which are considered impaired under the provisions
   of SFAS No. 114.

   Under the provisions of these standards, individually identified impaired
   loans are measured based on the present value of payments expected to be
   received, using the historical effective loan rate as the discount rate.
   Alternatively, measurement may also be based on observable market prices or
   for loans that are solely dependent on the collateral for repayment,
   measurement may be based on the fair value of the collateral. Loans that are
   to be foreclosed are measured based on the fair value of the collateral. If
   the recorded investment in the impaired loan exceeds the measure of fair
   value, a valuation allowance is required as a component of the allowance for
   loan losses. Changes to the valuation allowance are recorded as a component
   of the provision for loan losses.

   Commercial loans that are past due 90 days or more as to principal or
   interest or where reasonable doubt exists as to timely collection, including
   loans that are individually identified as being impaired under SFAS No. 114,
   are generally classified as nonperforming loans unless based on the
   evaluation of management the loan is well secured and in the process of
   collection.

                                      -52-

<PAGE>

   Interest collections on nonperforming loans, including impaired loans, for
   which the ultimate collectibility of principal and interest is uncertain are
   applied as reductions in book value. Otherwise, such collections are credited
   to income when received.

   Installment loans that are past due 90 days or more are not generally
   classified as nonperforming assets. Generally, installment loans are
   liquidated or charged-off soon after becoming 90 days past due. Income is
   generally recognized on past due installment loans until the loan is
   charged-off.

   At December 31, 1996 and 1995, the recorded investment in loans that are
   considered impaired under SFAS No. 114 was approximately $2,449,000 and
   $1,780,000, respectively. These impaired loans required a SFAS No. 114
   allowance for loan losses of approximately $364,000 and $368,000,
   respectively. The average recorded investment in impaired loans during the
   years December 31, 1996 and 1995 was approximately $1,908,000 and $909,000,
   respectively. For the years ended December 31, 1996 and 1995, the Bank
   recognized interest income on these impaired loans of approximately $166,000
   and $153,000, respectively.

   LOAN FEES - Loan origination and commitment fees and costs are deferred and
   recognized as a yield adjustment.

   INVESTMENT SECURITIES - Investment securities are accounted for under
   Statement of Financial Accounting Standards ("SFAS") No. 115, ACCOUNTING FOR
   CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES.  Under SFAS No. 115,
   investment securities must be classified and accounted for under the
   following conditions:

       TRADING ACCOUNT SECURITIES - Trading account securities are held in
       anticipation of short-term sales or market movements. Trading account
       securities are stated at fair value. Gains or losses on the sale of
       trading account securities, as well as unrealized fair value adjustments,
       are included in operating income. At December 31, 1996 and 1995, the Bank
       held no trading account securities.

       SECURITIES AVAILABLE FOR SALE - Securities to be held for unspecified
       periods of time including securities that management intends to use as
       part of its asset/liability strategy, or that may be sold in response to
       changes in interest rates, changes in prepayment risk, or other similar
       factors are classified as available for sale and are carried at fair
       value. Unrealized gains or losses are reported as a net amount in a
       separate component of stockholders' equity until realized.

       SECURITIES HELD TO MATURITY - Securities that management has a positive
       intent and the ability to hold to maturity are carried at cost, adjusted
       for amortization of premiums and accretions of discounts over the life of
       the securities using a method which approximates the level yield method.
       At December 31, 1996, the Bank held no securities classified as
       securities held to maturity.

   OTHER REAL ESTATE OWNED - Real estate acquired through actual foreclosure is
   recorded at the fair value of the property. Subsequently, the property is
   carried at the lower of cost as determined above or fair value less disposal
   cost.

   Costs relating to the development and improvement of other real estate owned
   are capitalized, whereas those relating to holding the property are charged
   to expense in the period incurred.

   The amount the Bank will ultimately recover from other real estate owned
   could differ from the amounts used in arriving at the net carrying value of
   the property due to future market factors beyond the Bank's control.
   Allowance for losses on other real estate owned were approximately $283,000
   and $233,000 at December 31, 1996 and 1995.

                                      -53-

<PAGE>

   PREMISES AND EQUIPMENT - Bank premises and equipment are stated at cost, less
   accumulated depreciation and amortization. Depreciation is computed by the
   straight-line method over the estimated useful lives of the related assets.
   Leasehold improvements are amortized by the straight-line method over the
   remaining term of the applicable leases or their useful lives, whichever is
   shorter. Maintenance and repairs are charged to operating expenses as
   incurred; improvements and betterments are capitalized. When items are
   retired or otherwise disposed of, the related costs and accumulated
   depreciation are removed from the accounts and any resulting gains or losses
   are credited or charged to operating income.

   INCOME TAXES - In accordance with SFAS No. 109, ACCOUNTING FOR INCOME TAXES,
   the Bank provides for deferred taxes under the liability method. Under such
   method, deferred taxes are adjusted for tax rate changes as they occur.
   Deferred income tax assets and liabilities are computed annually for
   differences between the financial statements and tax bases of assets and
   liabilities that will result in taxable or deductible amounts in the future
   based on enacted tax laws and rates applicable to the periods in which the
   differences are expected to affect taxable income. Valuation allowances are
   established when necessary to reduce deferred tax assets to the amount
   expected to be realized. Provision for income taxes is the tax payable or
   refundable for the period plus or minus the change during the period in
   deferred tax assets and liabilities.

   STOCK-BASED COMPENSATION - SFAS No. 123, ACCOUNTING FOR STOCK-BASED
   COMPENSATION, encourages, but does not require, companies to record
   compensation cost for stock-based employee compensation plans at fair value.
   C.F.C. has chosen to continue to account for stock-based compensation to
   employees using the intrinsic value method as prescribed by Accounting
   Principles Board Opinion ("APB") No. 25, ACCOUNTING FOR STOCK ISSUED TO
   EMPLOYEES, and related interpretations. Accordingly, compensation cost for
   stock options issued to employees are measured as the excess, if any, of the
   fair value of C.F.C.'s stock at the date of grant over the amount an employee
   must pay for the stock.

   RECLASSIFICATIONS - Formats and certain amounts in the 1995 consolidated
   financial statements have been reclassified to conform to the 1996
   presentation.

   NEW ACCOUNTING PRONOUNCEMENT - In June 1996, the Financial Accounting
   Standards Board ("FASB") issued SFAS No. 125, ACCOUNTING FOR TRANSFERS AND
   SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. SFAS No.
   125 provides accounting and reporting standards for transfers and servicing
   of financial assets and extinguishments of liabilities. These standards are
   based on consistent application of a FINANCIAL-COMPONENTS APPROACH that
   focuses on control. Under that approach, after a transfer of financial
   assets, an entity recognizes the financial and servicing assets it controls
   and the liabilities it has incurred, derecognizes financial assets when
   control has been surrendered, and derecognizes liabilities when extinguished.
   SFAS No. 125 also provides consistent standards for distinguishing transfers
   of financial assets that are sales from transfers that are secured
   borrowings. SFAS No. 125 is effective for transfers and servicing of
   financial assets and extinguishments of liabilities occurring after December
   31, 1996, and is to be applied prospectively. C.F.C. is in the process of
   evaluating the impact of SFAS No. 125.

                                      -54-

<PAGE>

2. LOANS OUTSTANDING AND LOANS TO RELATED PARTIES

   The distribution of loans outstanding, by type, is as follows (in thousands):

                                                        1996        1995
                                                      --------   --------
   Real estate loans                                  $110,094   $ 97,455
   Commercial and industrial loans                      34,392     39,379
   Instalment loans                                      1,572      2,344
   Overdrafts                                              213        107
                                                      --------   --------

   Total                                              $146,271   $139,285
                                                      ========   ========

   Substantially all of the Bank's loan activity is with borrowers located
   within South Florida. A substantial portion of the Bank's real estate loan
   portfolio is secured by various types of commercial real estate and land. A
   concentration of the Bank's commercial and industrial loans are to companies
   and individuals in the service and trade-related industries, with
   approximately 6% of these being unsecured. The collectibility of these loans
   is dependent to a large degree on the economic conditions within South
   Florida and these industries.

   Loans on which the accrual of interest has been discontinued amounted to
   $2,670,000 and $1,492,000 at December 31, 1996 and 1995, respectively. The
   unrecorded related interest on loans classified as non-accrual for the years
   ended December 31, 1996 and 1995 was $285,000 and $36,000, respectively.
   There are no commitments to lend additional funds to these borrowers.

   Included in loans at December 31, 1996 and 1995 are approximately $551,000
   and $1,270,000, respectively, in loans to executive officers, directors,
   principal shareholders and their affiliates of C.F.C. and the Bank. In
   addition, legal fees totaling $379,000 and $371,000 for the years ended 1996
   and 1995, respectively, were paid to the Bank's law firm, in which the
   principal owner is a director and shareholder of C.F.C.

3. ALLOWANCE FOR LOAN LOSSES

   Transactions in the allowance for loan losses for the years ended December
   31, 1996 and 1995 are as follows (in thousands):

                                                          1996      1995
                                                         ------    ------
   Balance, beginning of period                          $3,040    $2,791
   Provision charged to operations                           24       259
   Loan recoveries                                          221       180
   Loan charge-offs                                        (761)     (190)
                                                         ------    ------

   Balance, end of period                                $2,524    $3,040
                                                         ======    ======

                                      -55-

<PAGE>

4. INVESTMENT SECURITIES

   The amortized cost and approximate fair values of investment securities at
   December 31, 1996 and 1995 are as follows (in thousands):

                                                 1996
                                ------------------------------------
                                AMORTIZED   GROSS  UNREALIZED   FAIR
                                  COST      GAINS    LOSSES    VALUE
                                ---------   -----  ---------- ------
   AVAILABLE FOR SALE:
     U.S. Treasury securities    $32,553   $125    $ 76      $32,602
     U.S. Government agencies     23,378     73     213       23,238
     Municipals                       95                          95
     Other                           525                         525
                                 -------   ----    ----      -------
         Total                   $56,551   $198    $289      $56,460
                                 =======   ====    ====      =======

                                                1995
                                ------------------------------------
                                AMORTIZED   GROSS  UNREALIZED   FAIR
                                  COST      GAINS    LOSSES    VALUE
                                ---------   -----  ---------- ------
   AVAILABLE FOR SALE:
     U.S. Treasury securities    $41,278    $346    $70      $41,554
     U.S. Government agencies     14,654      74     17       14,711
     Municipals                    2,186      20      9        2,197
     Other                           257                         257
                                 -------    ----    ---      -------
           Total                 $58,375    $440    $96      $58,719
                                 =======    ====    ===      =======

                                                1995
                                ------------------------------------
                                AMORTIZED  GROSS  UNREALIZED  FAIR
                                  COST     GAINS    LOSSES    VALUE
                                ---------  -----  ---------- ------
   HELD TO MATURITY:
     U.S. Government agencies    $  938      $14    $  4     $  948
     Municipals                      95        2                 97
     Other                          602              103        499
                                 ------      ---    ----     ------
           Total                 $1,635      $16    $107     $1,544
                                 ======      ===    ====     ======

   In December 1995, the Bank transferred approximately $51,702,000 of
   securities held to maturity with net unrealized holding gains of
   approximately $277,000 to securities available for sale. This transfer was a
   result of the Bank adopting the provisions of FASB's Special Report, A GUIDE
   TO IMPLEMENTATION OF STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN
   DEBT AND EQUITY SECURITIES - QUESTIONS AND ANSWERS, issued in November 1995.

   In addition, in January 1996, the Bank transferred approximately $1,635,000
   of securities held to maturity with net unrealized holding losses of
   approximately $91,000 to securities available for sale. The transfer was a
   result of the merger with Carney Bank as discussed in Note 1.

   U.S. Government agencies at December 31, 1996 and 1995 are GNMA (including
   FNMA and FHLMC in 1995) mortgage-backed securities and U.S. Government
   sponsored agency securities.

   At December 31, 1996 and 1995, investment securities with an approximate book
   value of $13,739,000 and $13,239,000, respectively, were pledged as
   collateral for repurchase agreements, letters of credit, public and
   bankruptcy deposits, federal funds purchased and U.S. Treasury tax and loan
   deposits as required by law.

                                      -56-

<PAGE>

   As of December 31, 1996, the amortized cost and fair value of investment
   securities, by contractual maturity, was as follows (in thousands):

                                            AMORTIZED     FAIR
                                               COST      VALUE
                                            ---------   -------
   Within one year                           $23,672    $23,730
   One to five years                          30,845     30,701
   Five to ten years                           1,509      1,504
   Over ten years                                525        525
                                             -------    -------

   Total                                     $56,551    $56,460
                                             =======    =======

   Proceeds from the sales of securities available for sale for the year ended
   December 31, 1996 were $14,346,000. Proceeds from the sales of securities
   held to maturity for the year ended December 31, 1995 were approximately
   $3,990,000. For the years ended December 31, 1996 and 1995, there were gross
   losses of $34,000 and $12,000, respectively, and for the year ended December
   31, 1996, there were gross gains of $23,000 from sales of these securities.
   There were no gross gains in 1995. All securities held to maturity sold were
   within three months of their respective maturity date.

5. CASH AND DUE FROM BANKS

   Included in cash and due from banks are required federal reserves of
   approximately $6,351,000 and $5,506,000 at December 31, 1996 and 1995,
   respectively. The required reserves are computed by applying prescribed
   ratios to the various classes of average deposit balances. These funds are
   held in the form of cash on hand and balances maintained directly with the
   Federal Reserve Bank.

6. PREMISES AND EQUIPMENT

   Bank premises and equipment are summarized as follows (in thousands):

                                                     1996        1995
                                                   -------     -------
   Land                                            $   925     $   925
   Bank building and improvement                     3,631       3,564
   Furniture and equipment                           5,893       5,632
   Leasehold improvements                            1,733       1,709
                                                   -------     -------

   Total                                            12,182      11,830

   Less accumulated depreciation and amortization   (7,996)     (7,461)
                                                   -------     -------

   Total                                           $ 4,186     $ 4,369
                                                   =======     =======

   As of December 31, 1996 and 1995, certain land, building and improvements
   with an approximate net book value of $1,258,000 and $1,325,000,
   respectively, have been pledged as collateral for certain mortgages (see Note
   8).

   Depreciation and amortization expense related to premises and equipment for
   the years ended December 31, 1996 and 1995 was $589,000 and $682,000,
   respectively.

                                      -57-

<PAGE>

7. LEASE AND SUBLEASE COMMITMENTS

   The Bank leases certain premises and equipment under various operating lease
   agreements. Certain lease agreements provide for renewals and purchase
   options and rental escalations based upon the consumer price index, at
   specific intervals. Substantially all leases provide that the Bank pay
   executory costs such as insurance, maintenance, and taxes applicable to the
   lease properties.

   As of December 31, 1996, future minimum lease payments for all non-cancelable
   operating leases with initial or remaining terms of more than one year are as
   follows (in thousands):

                                         DECEMBER 31,
                                             1996
                                         ------------
   1997                                     $1,190
   1998                                      1,232
   1999                                        915
   2000                                        745
   2001                                        580
   2002 and thereafter                       1,423
                                            ------

   Total                                    $6,085
                                            ======

   Lease expense amounted to $1,022,000 and $1,016,000 for the years ended
   December 31, 1996 and 1995, respectively.

   As of December 31, 1996, future minimum lease and sublease rental income for
   all non-cancelable leases and subleases with initial or remaining terms of
   more than one year are as follows (in thousands):

                                         DECEMBER 31,
                                            1996
                                         ------------
   1997                                     $175
   1998                                       82
   1999                                       51
   2000                                       10
                                            ----

   Total                                    $318
                                            ====

   Sublease and rental income for the years ended December 31, 1996 and 1995
   amounted to $178,000 and $173,000, respectively.

8. OTHER BORROWINGS

   In March 1990, the Bank obtained permanent financing of $1,500,000 in the
   form of a 15-year first mortgage loan with an unaffiliated financial
   institution, at an interest rate of ten percent (10%) payable monthly and
   with quarterly principal reductions of $25,000. The mortgage loan is
   collateralized by certain Bank premises and contains certain prepayment
   restrictions. The proceeds from this borrowing were used to pay off the
   C.F.C. long-term credit agreement dated April 1985 and amended in 1989.

   Interest expenses on long-term borrowings for the years ended December 31,
   1996 and 1995 amounted to $89,000 and $99,000, respectively.

   Securities sold under repurchase agreements generally mature within one day
   from the transaction date.

                                      -58-

<PAGE>

9.  COMMITMENTS AND CONTINGENCIES

   In the normal course of business, the Bank utilizes various financial
   instruments with off-balance sheet risk to meet the financing needs of its
   customers. These off-balance sheet activities include commitments to fund
   loans and to extend letters of credit. The credit and market risks associated
   with these instruments are generally managed in conjunction with the Bank's
   balance sheet activities and are subject to normal credit policies and
   monitoring procedures. The Bank's exposure to loss is represented by the
   contractual amount of the commitments. Commitments to fund loans and standby
   letters of credit amounted to approximately $32,123,000 and $28,207,000 as of
   December 31, 1996 and 1995. Management does not anticipate any significant
   losses as a result of these transactions.

   The Bank was a party to several legal proceedings arising out of the alleged
   failure due to fraud of the food "diverting" business owned and operated by
   former deposit customers of the Bank, Premium Sales Corporation, Plaza
   Trading Corporation, and certain of their affiliates and associates (the
   "Premium Group"). These proceedings had been brought by the Chapter 11
   trustee for certain members of the Premium Group and others as class actions
   on behalf of investors in the Premium Group. On October 9, 1996, the Bank
   reached a settlement in the case and agreed to pay $3,000,000 without any
   admission of fault. Such amount has been accrued as of December 31, 1996 and
   is included in other liabilities in the accompanying consolidated balance
   sheet.

10. STOCK OPTION PLAN

   C.F.C. maintains an Employee Stock Option Plan (the "Plan") whereby 25,000
   shares of C.F.C.'s common stock, which consists of authorized but previously
   unissued common stock, may be issued to certain key management employees
   pursuant to options granted under the Plan. The option price is the book
   value per share as of the end of C.F.C.'s fiscal year immediately preceding
   the date of exercise. Options are exercisable after one year and up to ten
   years after the date of grant. In July 1985, C.F.C. granted the first options
   of 18,200 shares which became exercisable during 1986. On January 18, 1995,
   the Board of Directors granted an extension of three (3) additional years to
   exercise the options at a fixed price of $12.00 per share which become
   effective January 1, 1996.

   During 1996, 5,400 stock options were granted, and 700 shares were exercised.
   During 1995, no stock options were granted and no shares were exercised. At
   December 31, 1996 and 1995, 21,064 and 16,364 options were outstanding and
   exercisable at an option price of $12.00 and $15.37, respectively.

   The Company applies APB No. 25 and related interpretations in accounting for
   its stock options plan to employees as described in Note 1. Accordingly, no
   compensation expense has been recognized in the year ended December 31, 1996,
   related to the granting of options during the current year. Compensation
   costs would have been increased by approximately $34,000 in 1996 had the fair
   value of stock options granted been recognized as compensation expense as
   prescribed by SFAS No. 123. The fair value of the stock option at the date of
   grant were estimated using the minimum value method prescribed by SFAS No.
   123.

                                      -59-

<PAGE>

11. INCOME TAXES

   The consolidated provision for income taxes is as follows (in thousands):

                                             1996       1995
                                            ------     ------
   Federal:
     Current                               $  456     $  903
     Deferred                                (456)       (25)
                                           ------     ------

   Total                                        -        878
                                           ------     ------
   State:
     Current                                   30        104
     Deferred                                 (30)        (2)
                                           ------     ------

   Total                                        -        102
                                           ------     ------

   Total                                   $    -     $  980
                                           ======     ======

   Deferred income taxes are provided for the temporary differences between
   financial reporting basis and tax basis of the Company's assets and
   liabilities under SFAS No. 109. Temporary differences are as follows (in
   thousands):

                                                 1996                 1995
                                             DEFERRED TAX         DEFERRED TAX
                                         ---------------------------------------
                                          ASSET    LIABILITY   ASSET   LIABILITY
                                         -------   ---------  -------  ---------
   Net operating loss                                         $ 1,027   $   (53)
   Securities available for sale         $    34    $    -                 (122)
   Depreciation                              123                  159
   Deferred loan fees                        323                  217
   Other real estate owned                   104                  251
   Provision for litigation settlement     1,186

   Other                                     290                  242
                                         -------    ------    -------   --------
           Total                           2,060         -      1,896      (175)
 
           Less valuation allowance       (1,078)        -     (1,381)        -
                                         -------    ------    -------   --------

           Total                             982    $    -        515   $  (175)
                                         -------    ======    -------   ========
   Net deferred tax asset                $   982              $   340
                                         =======              =======

   A reconciliation of the income tax provision to the amount obtained by
   applying the effective federal tax rates is as follows (in thousands):

                                                             1996      1995
                                                            -----      ----
   Income tax at statutory rate                             $ 314      $960
   Tax-exempt interest, net of related expenses                (5)      (31)
   State taxes net of benefit                                            67
   Change in valuation allowance                             (303)
   Other                                                       (6)      (16)
                                                            -----      ----

Total taxes                                                 $   -      $980
                                                            =====      ====

                                      -60-

<PAGE>

12. "401(K)" SAVINGS PLAN

   The Bank maintains a contributory "401(k)" savings plan for substantially all
   of its employees. Employees are eligible to begin participating in the plan
   after one year of active employment. Employees participating in the plan may
   contribute from one to fifteen percent of their gross wages effective January
   1, 1996. During 1995, employee contributions of up to five percent of their
   gross wages were matched by a contribution by the Bank of approximately fifty
   percent of the employees contribution. Starting July 1, 1996, the first one
   percent of the employee contribution has been matched by a Bank's
   contribution of one hundred percent of the employees contribution. The Bank
   will contribute fifty percent of employee contribution for contributions
   between two and six percent of the employee gross wages.

   The Bank's contribution to the "401(k)" savings plan for the years ended
   December 31, 1996 and 1995 were $101,000 and $78,000, respectively.

   Participants vest in the plan funds contributed by the Bank at a cumulative
   rate of 25% per year of active service after initial participation in the
   plan. Funds contributed by participants are 100% vested.

13. REGULATORY MATTERS

   C.F.C. 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 C.F.C.'s consolidated financial statements. Under capital
   adequacy guidelines, C.F.C. and the Bank must meet specific capital
   guidelines that involve quantitative measures of C.F.C.'s and the Bank's
   assets, liabilities, and certain off-balance sheet items as calculated under
   regulatory accounting practices. C.F.C.'s and the Bank's capital amounts and
   the Bank's classification under the regulatory framework for prompt
   corrective action are also subject to qualitative judgments by the regulators
   about components, risk weightings, and other factors.

   Quantitative measures established by regulation to ensure capital adequacy
   require C.F.C. and the Bank to maintain minimum amounts and ratios (set forth
   in the table below) of total and Tier I capital (as defined in the
   regulations) to risk-weighted assets (as defined), and of Tier I capital (as
   defined) to average assets (as defined). Management believes, as of December
   31, 1996, that C.F.C. and the Bank meets all capital adequacy requirements to
   which it is subject.

   As of December 31, 1996, the most recent notification from the Office of the
   Comptroller of the Currency categorized the Bank as well capitalized under
   the regulatory framework for prompt corrective action. To be categorized as
   well capitalized, the Bank must maintain minimum total risk-based, Tier I
   risk-based, and Tier I leverage ratios as set forth in the table. There are
   no conditions or events since that notification that management believes have
   changed the institution's category.

   C.F.C.'s consolidated and the Bank's actual capital amounts and ratios are
   also presented in the table (in thousands):

                                      -61-

<PAGE>

<TABLE>
<CAPTION>
                                                                                    TO BE CONSIDERED WELL
                                                                                      CAPITALIZED UNDER
                                                                    FOR CAPITAL       PROMPT CORRECTIVE
                                                 ACTUAL          ADEQUACY PURPOSE     ACTION PROVISIONS
                                            ----------------    -----------------   ---------------------
                                             AMOUNT    RATIO    AMOUNT      RATIO     AMOUNT       RATIO
                                            -------   ------    -------     -----   ----------   -------- 
<S>                                         <C>       <C>       <C>         <C>     <C>          <C>
AS OF DECEMBER 31, 1996:
C.F.C.

Total Capital (to Risk Weighted Assets)     $23,283    14.0%    $13,320     8.0%
                                            =======    ====     =======     ===

Tier I Capital (to Risk Weighted Assets)    $21,196    12.7%    $ 6,660     4.0%        Not Applicable
                                            =======    ====     =======     ===

Tier I Capital (to Average Assets)          $21,196     9.2%    $ 9,241     4.0%
                                            =======    ====     =======     ===
BANK

Total Capital (to Risk Weighted Assets)     $23,283    14.0%    $13,320     8.0%      $16,650     10.0%
                                            =======    ====     =======     ===       =======     ====

Tier I Capital (to Risk Weighted Assets)    $21,196    12.7%    $ 6,660     4.0%      $ 9,990      6.0%
                                            =======    ====     =======     ===       =======     ====

Tier I Capital (to Average Assets)          $21,196     9.2%    $ 9,241     4.0%      $11,551      5.0%
                                            =======    ====     =======     ===       =======     ====
AS OF DECEMBER 31, 1995:
C.F.C.

Total Capital (to Risk Weighted Assets)     $22,232    14.2%    $12,502     8.0%
                                            =======    ====     =======     ===

Tier I Capital (to Risk Weighted Assets)    $20,265    13.0%    $ 6,251     4.0%       Not Applicable
                                            =======    ====     =======     ===

Tier I Capital (to Average Assets)          $20,265     9.0%    $ 9,025     4.0%
                                            =======    ====     =======     ===
BANK

Total Capital (to Risk Weighted Assets)     $22,232    14.2%    $12,502     8.0%      $15,627     10.0%
                                            =======    ====     =======     ===       =======     ====

Tier I Capital (to Risk Weighted Assets)    $20,265    13.0%    $ 6,251     4.0%      $ 9,376      6.0%
                                            =======    ====     =======     ===       =======     ====

Tier I Capital (to Average Assets)          $20,265    69.0%    $ 9,025     4.0%      $11,282      5.0%
                                            =======    ====     =======     ===       =======     ====
</TABLE>

   The Bank is subject to certain restrictions on the amount of dividends that
   it may declare without prior regulatory approval. At December 31, 1996,
   approximately $4,495,000 of retained earnings were available for dividend
   declaration without prior regulatory approval. No dividends were declared
   and/or paid during the years ended December 31, 1996 and 1995.

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

   The estimated fair value amounts have been determined by the Bank using
   available market information and appropriate valuation methodologies.
   However, considerable judgment is necessarily required to interpret market
   data to develop the estimates of fair value. Accordingly, the estimates
   presented herein are not necessarily indicative of the amounts the Bank could
   realize in a current market exchange. The use of different market assumptions
   and/or estimation methodologies may have a material effect on the estimated
   fair value amounts.

                                      -62-

<PAGE>

                                            AT DECEMBER 31 (IN THOUSANDS)
                                       ----------------------------------------
                                              1996                  1995
                                       --------------------  -------------------
                                       CARRYING   ESTIMATED  CARRYING  ESTIMATED
                                        AMOUNT   FAIR VALUE   AMOUNT  FAIR VALUE
                                       --------  ----------  -------- ----------
Assets:
  Cash and cash equivalents             $ 35,202   $35,202   $ 26,868  $ 26,868
  Securities available for sale           56,460    56,460     58,719    58,719
  Securities held to maturity                                   1,635     1,544
  Loans, net                             143,746   135,813    136,237   132,261

Liabilities:
  Savings, demand deposits and
    other deposits                       160,598   160,598    155,413   155,413
  Time deposits                           52,712    52,028     53,832    53,103
  Securities sold under
    repurchase agreements                  4,750     4,750      1,777     1,777
  Other borrowings                           850       723        950       808

  Off-balance-sheet unrealized gains:
    Standby letters of credit                           20                   15
    Unused commitments                                  23                   20

   The fair value of investment securities is based on quoted market prices
   obtained from independent pricing services. The fair value of fixed-rate
   loans, time deposits, and other financial instruments is estimated based on
   the present value method using current entry-value rates applicable to each
   category of such financial instruments with maturities more than one year. No
   adjustment entry was made to the entry-value interest rates for changes in
   credit of performing commercial loans for which there are no known credit
   concerns. The fair value of nonperforming loans with a recorded book value of
   $6,000,000 was not estimated because it is not practicable to reasonably
   assess the credit adjustment that would be applied in the marketplace for
   such loans. Demand deposits are shown at their face value. The fair value of
   commitments is estimated using the fees currently charged to enter into
   similar agreements, taking into account the remaining terms of the
   agreements.

   The fair value estimates presented herein are based on pertinent information
   available to management. Although management is not aware of any factors that
   would significantly affect the estimated fair value amounts, such amounts
   have not been comprehensively revalued for purposes of these financial
   statements since that date and, therefore, current estimates of fair value
   may differ significantly from the amounts presented herein.

15. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

   The following condensed balance sheets as of December 31, 1996 and 1995, and
   condensed statements of income and cash flows for the years ended December
   31, 1996 and 1995, for County Financial Corporation should be read in
   conjunction with the consolidated financial statements and the notes herein:

                                      -63-

<PAGE>

                                                           DECEMBER 31,
                                                        ------------------
                                                          1996       1995
                                                        -------    -------
PARENT COMPANY ONLY
  BALANCE SHEETS
  (IN THOUSANDS):

ASSETS:
  Cash                                                  $    31    $    80
  Investments in subsidiaries                            21,108     20,407
                                                        -------    -------

  Total                                                 $21,139    $20,487
                                                        =======    =======
STOCKHOLDERS' EQUITY:
  Common stock                                          $    13    $    13
  Capital surplus                                        13,562     13,555
  Retained earnings                                       7,621      6,697
  Net unrealized gains on securities
    available for sale                                      (57)       222
                                                        -------    -------

  Total                                                 $21,139    $20,487
                                                        =======    =======

                                                              YEAR ENDED
                                                             DECEMBER 31,
                                                          -----------------
                                                           1996       1995
                                                          -----     -------
PARENT COMPANY ONLY
  STATEMENTS OF INCOME
  (IN THOUSANDS):

Equity in undistributed earnings of the
  Bank and net income                                     $ 924     $ 1,845

PARENT COMPANY ONLY
  STATEMENTS OF CASH FLOWS
  (IN THOUSANDS):

Operating activities:
  Net income                                              $ 924     $ 1,845

  Less equity in earnings of the bank                      (924)     (1,845)
                                                          -----     -------
       Net cash provided by operating activities              -           -
                                                          -----     -------
Financing activities:
  Proceeds from issuance of common stock                      7
  Payments to dissenting shareholders from merger           (56)
                                                          -----     -------

  Net cash used in financing activities                     (49)

  Net decrease in cash                                      (49)          -

  Cash at beginning of year                                  80          80
                                                          -----     -------

  Cash at end of year                                     $  31     $    80
                                                          =====     =======
                                 ************
                                      -64-

<PAGE>

                               INDEX TO EXHIBITS


EXHIBIT
NUMBER       DESCRIPTION
------       -----------
  27         Financial Data Schedule