TRADITION OF EXCELLENCE



Dear Fellow Shareholder:



The Board of Directors, officers and employees of CCF Holding Company and its subsidiary Heritage Bank are very pleased to present to you
the operating results for 2003. The company and the bank continued to show significant progress in many areas. The assets of the company grew at a rate of 13% and the earnings of the company grew 20%. The financial markets rewarded this performance
with an increase in our stock value of more than 34%. None of this would have been possible without the hard work of our outstanding employees and the continuing loyalty of our customers.



The operating ratios continue to strengthen as you will see throughout the report. Our company is finally realizing economies of scale as
the assets have exceeded $300 million in the first quarter of 2004. Also contributing to the favorable trends in this report has been our ability to attract significant new banking talent and a successful reorganization of certain areas of senior
management where we reassigned job duties to better utilize managements individual strengths.



The local economy has remained solid in our three county market area. The real estate development and residential construction segment of the banks business has continued to perform well. Some of our commercial
loan customers have developed weaknesses that are evident in their year over year financial results. This has resulted in increased levels of problem loans within the banks portfolio, but our underlying collateral positions appear to be
adequate. As the economy improves these companies should see increased earnings and better overall financial performance. This gives us reason to be excited about the prospects for 2004 and beyond. We feel that the opportunities within our markets
are tremendous and we feel we have the right team of bankers to take advantage of those opportunities.



We opened a sixth banking center, our second in Henry County, in September of 2003 and our third Henry County location is under construction now with a mid-summer 2004 projected opening. We will never lose sight of
the fact that you have entrusted us with your investment, and our commitment to you each and everyday is that we will work diligently to continue the Tradition of Excellence, upon which we were founded.



Very truly yours,



|                    |  |                    
|------------------- |  | -------------------
|LOGO                |  | LOGO               
|Leonard A. Moreland |  | David B. Turner    
|President           |  | President & CEO    
|Heritage Bank       |  | CCF Holding Company



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CCF HOLDING COMPANY

ANNUAL REPORT



TABLE
OF CONTENTS



|                                                   |  |   
|-------------------------------------------------- |  | --
|Overview of the Company                            |  | 2 
|                                                   | 
|Selected Financial and Other Data                  |  | 6 
|                                                   | 
|Managements Discussion and Analysis               |  | 8 
|                                                   | 
|Report of Independent Certified Public Accountants |  | 18
|                                                   | 
|Consolidated Financial Statements                  |  | 19
|                                                   | 
|Notes to Consolidated Financial Statements         |  | 24



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CCF HOLDING COMPANY



Overview of the Company



Corporate Profile. CCF Holding Company (the Company) is a bank holding company incorporated under the laws of the State of Georgia. Heritage Bank (the
Bank) is a Georgia commercial bank that is a wholly owned subsidiary of the Company. CCF Capital Trust I (the Trust) is a Delaware Corporation that is a wholly owned subsidiary of the Company formed in February 2002. The
Trust serves as the holder of Trust Preferred Securities for the Company. Prior to September 1998, the Company was a savings and loan holding Company and the Bank was a federally chartered savings bank. The Company was organized in 1995 in
connection with the conversion of the Bank from a mutual to stock form of organization (the Conversion) in July 1995. The Bank, through its predecessors, commenced business in 1955.



The Bank operates six offices within its primary market area in Clayton, Fayette and Henry
Counties, Georgia. The market area is part of the Atlanta, Georgia metropolitan statistical area. The Banks main office is located in Jonesboro, Georgia. An additional branch in Clayton County is located in the city of Forest Park. There are
two branches in Fayetteville, Georgia with one located on Jeff Davis Drive and the second on Highway 85 South, on an out parcel of a shopping center. In Henry County there are two branch locations, Keys Ferry and Highway 20/81. Twenty-four hour
ATMs are located at each branch and in addition there is a stand alone ATM location in a shopping center in Clayton County. Each county has at least one location open until 6:00pm on Friday and Saturday morning for the convenience of our
customers. Internet banking and bill payment services are available through the Banks website, www.Heritage24.com.



The Bank is subject to examination and comprehensive regulation by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corporation
(FDIC) and its deposits are federally insured by the Savings Association Insurance Fund (SAIF) of the FDIC. The Bank is a member of, and owns capital stock in, the Federal Home Loan Bank (FHLB) of Atlanta, which
is one of the 12 regional banks in the FHLB System. The Company also is subject to state of Georgia and federal regulation.



The Bank attracts deposits from the general public and uses such deposits primarily to invest in and originate commercial, residential and consumer loans and, to a lesser
extent, to invest in investment securities. The principal sources of funds for the Banks lending activities are deposits, FHLB borrowings, borrowings from correspondent banks and the amortization, repayment, and maturity of loans and
investment securities. Principal sources of income are interest on loans and investment securities and fees paid to the Bank for its services. The Banks principal expenses are interest paid on deposits and, to a lesser degree, personnel
related expenses.



Lending Activities.As of December 31, 2003, the Bank
had approximately $232 million in loans outstanding, which represented 78% of its total assets of $296 million. The Banks principal lending activities have been the origination of adjustable and fixed rate loans to individual consumers and
small business customers. At December 31, 2003, the loan portfolio consisted of $188 million, or 81%, variable rate loans with the remaining $43 million, or 19%, adjustable rate loans. Commercial and residential real estate is the primary form of
collateral for the loan portfolio with approximately $216 million, or 93%, of loans outstanding secured in this manner. Consumer loans, secured by collateral other than residential real estate account for $16 million, or 7% of loans outstanding.



Construction Lending. The Bank made construction loans of $79 million
during 2003. These loans are primarily to local builders and almost all are located in the Banks market area and nearby counties. These loans are made to the builders on both a speculative (unsold) and pre-sale basis. Loan to value ratios of
80% or less are required for pre-sales and ratios of 75% or less are required for speculative loans. These loans have maximum maturities of 12 months or less with one 12 month renewal allowed. Proceeds of construction loans are disbursed in
increments as construction on the property progresses and only after a Bank representative makes a physical inspection of the property. At December 31, 2003, the Bank had outstanding $63 million in real estate construction loans.



2



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Commercial Loans.These loans, which include commercial real estate, continue to grow as a percentage of
outstanding loans in the Banks portfolio. At December 31, 2003, the Bank had commercial loans of $144 million, which amounted to 62% of total loans outstanding. At December 31, 2002, commercial loans totaled $107 million or 55% of loans
outstanding. These loans are primarily permanent loans secured by small office buildings, apartment buildings, churches, shopping centers and convenience stores. Commercial real estate loans are usually made at up to 75% of appraised property value
with adjustable rates and terms of up to 20 years.



Consumer Loans.Loans to consumers consist primarily of secured and unsecured personal loans, automobile loans, watercraft loans and recreational vehicle loans. Seventy-nine percent of these loans are variable rate.



Lending Underwriting Risks. Construction financing is generally considered to involve
a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the propertys value at completion of construction
or development and the estimated cost (including interest) of construction and time to completion. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction cost proves to be
inaccurate, it may be necessary for the Bank to advance funds beyond the amount originally committed to permit completion of the construction. If the estimate of value proves to be inaccurate, the Bank may be confronted, at or prior to the maturity
of the loan, with collateral having a value, which is insufficient to assure full repayment. As a result, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the project. If
the Bank is forced to foreclose on a property prior to or at completion due to a default, there can be no assurance that the Bank will be able to recover all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure
and holding costs. The Bank has sought to lessen this risk by limiting construction lending to qualified borrowers in the Banks market area, by limiting the number of construction loans outstanding at any time and by requiring a Bank
representative to inspect properties under construction prior to disbursement of funds.



Loans secured by commercial real estate generally involve a greater degree of risk than one- to four-family mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the
concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the
repayment of loans secured by commercial real estate is typically dependent upon the successful operation or management of the related project or company. If the cash flow from the project or company is reduced, the borrowers ability to repay
the loan may be impaired. The Bank seeks to reduce these risks in a variety of ways, including limiting the size of such loans, analyzing the financial condition of the borrower, accurately assessing the quality of the collateral and assessing the
quality of the management of the property securing the loan. The Bank also obtains personal guarantees and appraisals on each property.



Consumer loans entail greater credit risk than do residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that
depreciate rapidly. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection
efforts against the borrower. In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the collateral and the lack of demand for used collateral.



Loan Approval Process.The Banks loan officers have been granted various levels
of lending authority by the Board of Directors. Loans exceeding an officers individual authority must be submitted to the Officer Loan Committee (OLC). This committee, comprised of the President and three executive vice presidents
of the Bank, has a lending limit of $1,000,000 for secured and unsecured loans. Loans greater than this must be approved by the Senior Loan Committee, which is the Board of Directors of the Bank. The Banks legal lending limit is $4,000,000.



3



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Deposit Products and Services. The Bank offers a full range of deposit services to individual consumers and
commercial customers. Products include transaction accounts such as checking accounts, NOW accounts, money market accounts and repurchase accounts as well as savings and certificates of deposit accounts. The interest rates paid and the service
charges applied to these accounts are competitive with other products offered in the market area.



Market Area.The following statistical data is based on information found on the chamber websites of Clayton, Fayette and Henry Counties as well as data from the FedStats website.



The Banks primary market area includes all of Clayton, Fayette and Henry County,
Georgia. The majority of the banks deposits come from the market area, although it attracts some deposit and loan business from neighboring counties and metro Atlanta. The major industries for the tri-county area include airline,
manufacturing, construction and retail services. The banks main office is located in Jonesboro, Georgia approximately 20 miles south of Atlanta. Hartsfield-Jackson Atlanta International Airport, one of the worlds busiest, Clayton State
College and University, which serves more than 5,000 students, and The Georgia State Archives, are also located in Clayton County.



Henry County is ranked 4th among the nations counties for a rate of population growth in the 1990s of 103%. With over 38,000 employees the airport is the largest
center of employment in the state. Clayton, Fayette and Henry County make up 663 square miles in land area, with a total population in Georgia in 2002 of 489,043.



The Bank opened two branches in the Fayette and Henry County markets over the past two years. One branch is located on Highway 85 just south
of Fayetteville and the other is located in a developing area in McDonough on Highway 20/81 west. The Bank is presently upgrading its main office in Jonesboro as well as building another branch in Henry County in the growing professional area of
Eagles Landing. The Bank also has plans to remodel its Forest Park location in Clayton County in the second quarter of 2004.



The Company was named for the third consecutive year to the Atlanta Journal-Constitutions Top 100 Best Businesses in Georgia for 2002, ranking 42nd. We have also just been named to the Fortune Magazine FSB Fortune Small Business 100 Americas
Fastest-Growing Small Companies. This was the first time we received this recognition, and were 92ndon their list.



Competition. The Bank operates in a competitive environment, competing
for deposits and/or loans with commercial banks, thrifts and other financial entities. Principal competitors include other small community commercial banks (such as Southern Community Bank, First State Bank, The Bank of Georgia, First Henry Bank and
McIntosh State Bank) and larger institutions with branches in the Banks market area such as SunTrust, Wachovia, RBC Centura, Bank of America, Southtrust and Peachtree National (a division of Synovus). Numerous de novo banks along with mergers
and consolidations involving banks in the Banks market area have occurred, requiring the Bank to compete with banks with greater resources. However, Heritage Bank is the oldest independent bank in Clayton County. The de novo banks are limited
in their funding strategies because they typically do not have access to wholesale funding. This has the effect of running up deposit rates as the new banks compete for funds in the market area.



The Bank is poised to take advantage of every opportunity available to it. The Bank has
restructured its daily functions and responsibilities to maximize our product sales opportunities with specific focus in the areas of business development, commercial lending and credit administration. We feel emphasizing these areas will continue
to improve our responsiveness to our existing customers and to develop new relationships. It starts with employees who really care about customers. Its not just an advertising claim but also the way we do business at Heritage Bank. Its
about taking time to determine accounts and services that best serve our customers needs. And, as always looking for options to serve those needs even better.



4



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The Bank is a major participant of Partners In Education in our tri-county area. We support over 60 schools annually and
contribute more than $50,000 a year in the effort. The Banks mission statement is Committed to the Future of the Communities We Serve Through a Tradition of Excellence. We stand by this mission statement by having our officers and
employees support and participate in many events. The Banks employees, officers and directors represent the Bank on many boards and local civic and charitable organizations.



Stock Market Information

Since its
issuance in July 1995, the Companys Common Stock (Common Stock) has been traded on The Nasdaq SmallCap Market under the trading symbol of CCFH. The following table reflects high and low prices paid in actual
transactions, as reported by The Nasdaq SmallCap Market, as well as dividend information. The quotations reflect inter-dealer closing prices, and may not include retail mark-up, mark-down, or commission.



|                       |  |      |       |     |     |   |       |                    |  |      |                |  |      |    
|---------------------- |  | ---- | ----- | --- | --- | - | ----- | ------------------ |  | ---- | -------------- |  | ---- | ---
|Period                 |  | High |       |     | Low |   |       | Dividends Declared |  |      | Dividends Paid | 
|2002        1stQuarter |  | $    | 9.78  | (1) |     | $ | 8.67  | (1)                |  | 0.00 |                |  | 0.00 |    
|2002        2ndQuarter |  |      | 10.17 | (1) |     |   | 9.24  | (1)                |  | 0.00 |                |  | 0.00 |    
|2002        3rdQuarter |  |      | 9.57  | (1) |     |   | 8.60  | (1)                |  | 0.00 |                |  | 0.00 |    
|2002        4thQuarter |  |      | 17.10 | (1) |     |   | 8.36  | (1)                |  | 0.05 | (2)            |  | 0.00 | (2)
|                       |  |      |       |    
|2003        1stQuarter |  |      | 18.80 |     |     |   | 16.26 |                    |  | 0.06 |                |  | 0.05 |    
|2003        2ndQuarter |  |      | 26.90 |     |     |   | 18.55 |                    |  | 0.06 |                |  | 0.06 |    
|2003        3rdQuarter |  |      | 26.89 |     |     |   | 21.69 |                    |  | 0.06 |                |  | 0.06 |    
|2003        4thQuarter |  |      | 23.85 |     |     |   | 21.37 |                    |  | 0.06 | (3)            |  | 0.06 |    

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|(1) | Values adjusted to reflect the three for two stock split paid in the form of a dividend to shareholders of record on December 4, 2002.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(2) | The Company declared the dividend on December 19, 2002, and paid the dividend on January 19, 2003.
|--- | --------------------------------------------------------------------------------------------------

|(3) | The Company declared the dividend on December 17, 2003, and paid the dividend on January 21, 2004.
|--- | --------------------------------------------------------------------------------------------------



The number of shareholders of record as of December 31, 2003, was approximately 400, inclusive of the number of persons or entities who held
stock in nominee or street name. At December 31, 2003, there were 1,468,627 shares of Common Stock issued and outstanding. The Companys ability to pay dividends to shareholders is primarily dependent upon the dividends it receives
from the Bank, and to a lesser extent, the amount of cash on hand. The Bank may not declare or pay a cash dividend on any of its stock if the effect thereof would cause the Banks regulatory capital to be reduced below (1) the amount required
for the liquidation account established in connection with the Conversion (up to $6.6 million), or (2) the regulatory capital requirements. The Company declared a dividend of $.06 per share on December 17, 2003, payable to shareholders of record
January 5, 2004, and paid the dividend to shareholders on January 21, 2004.



On
November 21, 2002, the Company announced a three for two stock split payable in the form of a stock dividend on December 19, 2002, to shareholders of record on December 4, 2002 (the Stock Split).



5



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SELECTED FINANCIAL AND OTHER DATA



The selected financial and other data set forth below should be read in
conjunction with the consolidated financial statements, including the notes thereto, and Managements Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this report. The following selected
financial data concerning the Company for and as of the end of each of the years in the five year period ended December 31, 2003, are derived from the audited consolidated financial statements of the Company. The selected financial and operating
data is qualified in its entirety by the more detailed information and consolidated financial statements, including the notes thereto, included elsewhere in this report. The audited consolidated financial statements of the Company as of December 31,
2003 and 2002 and for each of the years in the two year period ended December 31, 2003, and the report of Porter Keadle Moore, LLP, the Companys independent public accountants, thereon, are included elsewhere in this report. All share
information and per share amounts have been adjusted to reflect the Stock Split.



|                      |  |                         |         |      |   |         |  |      |         |      |   |         |  |   |        
|--------------------- |  | ----------------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                      |  | Year Ended December 31,
|                      |  | 2003                    |         | 2002 |   | 2001    |  | 2000 |         | 1999
|                      |  | (Dollars in Thousands) 
|Financial Condition   |  |                         |         |      |   |         |  |      |         |      |   |         |  |   |        
|Total Amount of:      |  |                         |         |      |   |         |  |      |         |      |   |         |  |   |        
|Assets                |  | $                       | 295,660 |      | $ | 261,993 |  | $    | 247,800 |      | $ | 228,381 |  | $ | 196,782
|Loans receivable, net |  |                         | 228,334 |      |   | 190,969 |  |      | 185,656 |      |   | 171,817 |  |   | 146,553
|Investment securities |  |                         | 36,524  |      |   | 33,570  |  |      | 37,358  |      |   | 36,368  |  |   | 28,503 
|Deposits              |  |                         | 249,637 |      |   | 231,787 |  |      | 217,254 |      |   | 208,415 |  |   | 165,526
|FHLB advances         |  |                         | 15,000  |      |   | 5,000   |  |      | 8,000   |      |   |        |  |   | 13,100 
|Liabilities           |  |                         | 275,994 |      |   | 244,252 |  |      | 231,987 |      |   | 214,750 |  |   | 184,800
|Shareholders equity  |  |                         | 19,666  |      |   | 17,740  |  |      | 15,813  |      |   | 13,630  |  |   | 11,982 
|Other Data:           |  |                         |         |      |   |         |  |      |         |      |   |         |  |   |        
|Net income            |  | $                       | 2,363   |      | $ | 1,963   |  | $    | 1,429   |      | $ | 1,280   |  | $ | 1,003  
|Average assets        |  |                         | 279,867 |      |   | 254,321 |  |      | 242,490 |      |   | 214,866 |  |   | 185,376
|Average equity        |  |                         | 18,765  |      |   | 16,797  |  |      | 14,742  |      |   | 12,644  |  |   | 12,186 
|Full service offices  |  |                         | 6       |      |   | 5       |  |      | 5       |      |   | 5       |  |   | 5      



|                                                    |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       
|--------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                    |  | Year Ended December 31,
|                                                    |  | 2003                    |        | 2002 |   | 2001   |  | 2000 |        | 1999
|                                                    |  | (Dollars in Thousands) 
|Summary of Operations                               |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       
|Total interest income                               |  | $                       | 16,044 |      | $ | 16,256 |  | $    | 18,832 |      | $ | 18,458 |  | $ | 14,671
|Total interest expense                              |  |                         | 4,967  |      |   | 6,205  |  |      | 9,748  |      |   | 9,935  |  |   | 7,501 
|                                                    |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       
|Net interest income                                 |  |                         | 11,077 |      |   | 10,051 |  |      | 9,084  |      |   | 8,523  |  |   | 7,170 
|Provision for loan losses                           |  |                         | 540    |      |   | 1,054  |  |      | 662    |      |   | 570    |  |   | 341   
|                                                    |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       
|Net interest income after provision for loan losses |  |                         | 10,537 |      |   | 8,997  |  |      | 8,422  |      |   | 7,953  |  |   | 6,829 
|Other income                                        |  |                         | 1,801  |      |   | 1,566  |  |      | 1,549  |      |   | 892    |  |   | 843   
|Other expenses                                      |  |                         | 8,837  |      |   | 7,689  |  |      | 7,879  |      |   | 6,894  |  |   | 6,143 
|                                                    |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       
|Earnings before income taxes                        |  |                         | 3,501  |      |   | 2,874  |  |      | 2,092  |      |   | 1,951  |  |   | 1,529 
|Income tax expense                                  |  |                         | 1,138  |      |   | 911    |  |      | 663    |      |   | 671    |  |   | 526   
|                                                    |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       
|Net earnings                                        |  | $                       | 2,363  |      | $ | 1,963  |  | $    | 1,429  |      | $ | 1,280  |  | $ | 1,003 
|                                                    |  |                         |        |      |   |        |  |      |        |      |   |        |  |   |       



6



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Key Operating Ratios



|                                                                            |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|--------------------------------------------------------------------------- |  | --------------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                                                                            |  | Year Ended December 31,                       |       
|                                                                            |  | 2003                                          |        |   | 2002 |   |        | 2001 |  |   | 2000   |   |  | 1999 |       
|                                                                            |  | (Dollars in Thousands, except per share data) |       
|Performance Ratios:                                                         |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Return on average assets (net earnings divided by average total assets)     |  |                                               | 0.84   | % |      |   | 0.77   | %    |  |   | 0.59   | % |  |      | 0.60   | % |  |   | 0.54   | %
|Return on average equity (net earnings divided by average equity)           |  |                                               | 12.59  | % |      |   | 11.69  | %    |  |   | 9.70   | % |  |      | 10.13  | % |  |   | 8.23   | %
|Average interest earning assets to average interest bearing liabilities     |  |                                               | 112.29 | % |      |   | 109.90 | %    |  |   | 108.41 | % |  |      | 106.00 | % |  |   | 108.08 | %
|Net interest rate spread                                                    |  |                                               | 4.01   | % |      |   | 3.99   | %    |  |   | 3.65   | % |  |      | 3.99   | % |  |   | 3.79   | %
|Net yield on average interest-earnings assets                               |  |                                               | 4.24   | % |      |   | 4.25   | %    |  |   | 4.01   | % |  |      | 4.29   | % |  |   | 4.14   | %
|Net interest income after provision for loan losses to total other expenses |  |                                               | 119.24 | % |      |   | 117.06 | %    |  |   | 106.89 | % |  |      | 123.63 | % |  |   | 111.17 | %
|Basic earnings per share                                                    |  | $                                             | 1.61   |   |      | $ | 1.34   |      |  | $ | 0.96   |   |  | $    | 0.90   |   |  | $ | 0.72   |  
|Diluted earnings per share                                                  |  | $                                             | 1.47   |   |      | $ | 1.26   |      |  | $ | 0.94   |   |  | $    | 0.89   |   |  | $ | 0.69   |  
|Dividend payout (1)                                                         |  |                                               | 15.65  | % |      |   | 3.97   | %    |  |   | 0.00   | % |  |      | 23.07  | % |  |   | 30.77  | %
|Capital Ratios                                                              |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Book value per share                                                        |  | $                                             | 13.39  |   |      | $ | 12.09  |      |  | $ | 10.77  |   |  | $    | 9.26   |   |  | $ | 8.14   |  
|Average equity to average assets                                            |  |                                               | 6.70   | % |      |   | 6.60   | %    |  |   | 6.08   | % |  |      | 5.88   | % |  |   | 6.57   | %
|Equity-to-assets (End of Period)                                            |  |                                               | 6.65   | % |      |   | 6.77   | %    |  |   | 6.38   | % |  |      | 5.97   | % |  |   | 6.09   | %
|Asset Quality Ratios                                                        |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Non-performing loans as a percentage of total loans, net                    |  |                                               | 0.68   | % |      |   | 0.39   | %    |  |   | 0.03   | % |  |      | 0.05   | % |  |   | 0.19   | %
|Non-performing loans as a percentage of total assets                        |  |                                               | 0.52   | % |      |   | 0.29   | %    |  |   | 0.02   | % |  |      | 0.04   | % |  |   | 0.15   | %
|Allowance for loan losses to non-performing loans                           |  |                                               | 174    | % |      |   | 382    | %    |  |   | 3770   | % |  |      | 1837   | % |  |   | 422    | %

---

|(1) | Dividends declared per share divided by net earnings per diluted share.
|--- | -----------------------------------------------------------------------



7



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS



Forward-Looking Statements



The Company may from time to time make written or oral forward-looking statements, including statements contained in the Companys filings with the
Securities and Exchange Commission, in its reports to shareholders and in other communications by the Company, which are made in good faith by the Company pursuant to the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995.



These forward-looking statements involve risks and uncertainties,
such as statements of the Companys plans, objectives, expectations, beliefs, feelings, anticipations, estimates, and intentions, that are subject to change based on various important factors (some of which are beyond the Companys
control). The following factors, among others, could cause the Companys financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in forward-looking statements: the strength of the
United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of
Governors of the Federal Reserve System, inflation, interest rate and market and monetary fluctuations; the adequacy of the Companys loan loss reserve; the timely development of and acceptance of new products and services of the Company and
the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors products and services; the willingness of potential customers to substitute competitors products and
services for the Companys products and services; the success of the Company in gaining regulatory approval of its products and services, when required; the impact of changes in financial services laws and regulations (including laws
concerning taxes, banking, securities and insurance); technological changes; changes in consumers spending and saving habits; terrorism; war and the success of the Company at managing the risks involved in the foregoing.



The Company cautions that these important factors are not exclusive. The Company does not
undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.



Critical Accounting Policies



In preparing its financial statements, the Company has adopted various accounting policies that comply with accounting principles generally accepted in the United States
of America. Certain accounting policies involve significant judgments and assumptions on the part of management that can have a material impact on the carrying value of assets and liabilities. Management considers such accounting policies to be
critical accounting policies. The Company believes the allowance for loan losses is a critical accounting policy that requires the most significant use of estimates and assumptions in the preparation of its consolidated financial statements.



The allowance for loan losses is based on managements judgment of an
amount that is adequate to absorb inherent losses in the existing loan portfolio. The allowance for loan losses is established through a provision for losses based on managements evaluation of several factors. The evaluation, which includes a
review of all loans on which full collection may not be reasonably assumed, considers among other matters, economic conditions, the fair market value or the estimated net realizable value of the underlying collateral, the financial condition of the
borrower(s), managements estimate of probable credit losses, historical loan loss experience, and other factors that warrant recognition in providing for an adequate loan loss allowance.



Recent Developments



On March 17, 2004, the Company declared a $0.06 dividend to shareholders of record on April 2, 2004, with a payment date of April 19, 2004.



8



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In late January 2004, the Bank purchased the note of another lender totaling $1.4 million secured by a first lien on
commercial property that also secured a note already held by the Bank. The note already held by the bank in the amount of $1.3 million was reported as a nonperforming asset in the press release dated January 12, 2004. Based on current appraisals and
interest shown in this property the Bank does not expect substantial loss. Both notes are currently nonperforming on the Banks books. In addition to the above mentioned relationship, the Bank has another lending relationship totaling $1.3
million that has been in a workout status for several months that was moved to nonperforming late during the first quarter of 2004. This relationship is secured by real estate and based on appraisals the bank expects little, if any loss.



Late in the first quarter of 2004, the Company requested and was granted permission by the
Federal Reserve Bank for Tier I capital treatment of a $4.5 million dollar trust preferred issue that it is currently pursuing. The Company is in the very early stages and therefore the certainty of the success of this transaction is in question at
this time.



On December 17, 2003, the Company declared a $0.06 dividend to
shareholders of record on January 5, 2004, with a payment date of January 21, 2004.



Business Strategy



The Banks business strategy is to be
a flexible, efficient, and financially stable community financial services institution providing a range of real estate lending services, commercial lending, and consumer financial products primarily to the Clayton, Fayette, and Henry County,
Georgia areas. Management of the Bank has identified and sought to pursue four primary strategic objectives: (1) to maintain an adequate amount of regulatory capital; (2) to reduce interest rate risk; (3) to maintain good asset quality through
continued emphasis on well underwritten consumer, commercial, and residential lending; and (4) to broaden the Banks product and customer base to become a more diversified financial institution.



Regulatory Capital. In February 2002, CCF through a private placement of Trust
Preferred Securities issued by its subsidiary CCF Capital Trust I, a Delaware business trust, raised gross proceeds of $4 million, or net proceeds of $3.75 million. The securities issued are considered Tier I capital for regulatory capital purposes
and are reported as a long term debt obligation of the Company reflecting the issuance of subordinated debentures by the Company to CCF Capital Trust I in a like principal amount. The proceeds from the sale of the Capital Securities were used to
retire $2.5 million of short-term debt, which had been used by the Company to augment the capital of the Bank, and to infuse $900,000 of additional capital into the Bank. Throughout 2002 and 2003, the Company made quarterly interest payments under
the terms of the Trust Preferred Securities.



The Company and the Bank continue
to manage their respective capital positions in order to support healthy growth. The Company ended the year 2003 with a total capital to risk weighted assets ratio of 10.78%. The Bank ended the year 2003 with a total capital to risk weighted assets
ratio of 10.47%. Capital levels at December 31, 2003 are considered well capitalized by regulatory standards.



Reduction of Interest Rate Risk. The Bank manages its interest rate risk through the origination of adjustable-rate loans when market conditions permit. The emphasis in the loan portfolio production continues
to be to increase the volume of loans that reprice at least annually, in order to better match the repricing of the Banks liabilities.





Asset Quality. The Bank continues to maintain its asset quality through detailed
underwriting and thorough analysis of loan requests. The Bank analyzes each loan request from both a credit and a collateral approach. The credit analysis is performed first and if the request meets the credit guidelines of the Bank, the loan is
then underwritten to the Banks collateral guidelines. The degree of credit analysis performed is based both on the size of the request and the risk exposure. The loan portfolio is constantly reviewed and evaluated to measure the quality of the
portfolio and to try and anticipate future problems. If a loan reaches 90 consecutive days without



9



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payment in full of all scheduled payments, the Bank places the loan in a non-accrual or non-performing status. At
December 31, 2003, the Banks ratio of non-performing loans to total loans was 0.68% and to total assets 0.52%. This compares to 0.39% and 0.29%, respectively, at December 31, 2002. The increase in 2003 is due primarily to one large commercial
real estate loan that has been adversely rated due to cash flow deficiencies of the borrower.



Product and Customer Base. The Bank increased the size of its loan portfolio by approximately $38 million, from $194 million at December 31, 2002 to $232 million at December 31, 2003. The increase over December
31, 2002 year end totals is attributed to a growth in commercial real estate lending of $35 million, or 39%, construction lending of $10 million, or 18%, and commercial loans of $2 million, or 11%, partially offset by a reduction in consumer lending
primarily indirect lending activities of $6 million, or 28%, and residential mortgage loans outstanding of $3 million, or 29%. The Bank continued to sell new residential mortgage originations to Fannie Mae during 2003. The Banks deposits
increased by $18 million, or 8%, from $232 million at December 31, 2002 to $250 million at December 31, 2003. This growth in deposits was used to fund the loan growth. In addition, the Bank had FHLB borrowings outstanding as of December 31, 2003 of
$15 million as compared to FHLB borrowings at December 21, 2002 of $5 million. The Bank used the additional $10 million in borrowings to fund loan growth. It is expected that 2004 loan growth will continue to be steady in the Banks primary
market areas as long as long-term borrowing rates remain steady and economic conditions do not worsen. The Bank will seek to continue to expand its customer base through advertising, direct mail and one-on-one personal visits with prospective
customers.



Management of the Bank believes that there are opportunities for
growth within the Banks primary and adjacent market areas. The Bank intends to manage the growth of deposits and loans in a manner that will ensure its ability to comply with current and future capital requirements as well as manage interest
rate risk. As discussed below, with this growth comes risk, and the Banks ability to manage this risk will directly impact its financial condition and operating results in future periods.



Asset and Liability Management



Interest Rate Sensitivity. The ability to maximize net interest income is largely
dependent on achieving a positive interest rate spread that can be sustained during fluctuations in prevailing interest rates. Interest rate spread is defined as the difference between interest earned on assets such as loans and investments, and
interest paid on liabilities, such as deposit accounts and notes payable. The Bank is subject to interest rate risk resulting from the difference in the maturity of interest-bearing liabilities (including deposits) and interest-earning assets
(including loans) and the volatility of interest rates. Because time deposit accounts, given their longer terms to maturity, react more slowly to market interest rate movements than do many types of loans in the Banks portfolio, decreases in
interest rates may have an adverse effect on the Banks earnings. The Bank reduces this exposure by diversifying its deposit portfolio to include more deposits at primarily variable rates such as NOW and Money Market accounts.



The Banks net interest rate spread was 4.01% for the year ended December 31, 2003, and
3.99% for the year ended December 31, 2002. The results of the Companys cumulative interest sensitivity gap analysis indicate that a fluctuation in interest rates would not have a material adverse impact on the Banks net interest rate
spread and earnings, as the ratio of interest sensitive assets to interest sensitive liabilities in the one year time frame approximates one. The Bank is liability sensitive over the short term, which would cause earnings to be depressed in a rising
rate environment. However, over a 12-month period net interest income should be not be materially affected. In 2003, the Federal Reserve interest rate reductions resulted in a prime rate of 4.00%. These reductions had a favorable effect on the
Banks net interest income as the asset sensitivity outpaced liability repricing. Once rates stabilize, it is expected that approximately six months must pass before all rate reductions can be fully adjusted through both the asset and liability
pricing.



The Bank attempts to manage the interest rates it pays on deposits
while maintaining a stable deposit base and providing quality services to its customers. The Bank has continued to rely primarily on deposits to fund its loan



10



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growth with FHLB borrowings as additional funding sources. To the extent the Bank is unable to invest these funds in loans originated in the Banks
market area, it will continue to purchase municipal securities and other high quality investment securities. The decline in interest rates has also meant that yields on investment securities dropped to levels not experienced in the last forty years.



In an effort to manage interest rate risk and provide the Bank with some
protection from the negative effect of changes in interest rates, the Bank instituted certain asset and liability management measures, including the following: 1) reduced the maturities or terms of its loans and other assets to reprice
interest-earning assets by emphasizing the origination of adjustable rate loans and the purchase of relatively short-term interest-earning investments and mortgage-backed securities; 2) lengthened the maturities of interest-bearing liabilities by
encouraging depositors to invest in longer term deposit products offered by the Bank; 3) increased the amount of less rate-sensitive deposits by actively seeking demand deposit accounts; and 4) encouraged long-term depositors to maintain their
accounts with the Bank through expanded customer products and services.



11



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Average Balance Sheets. The following table sets forth certain information relating to the Companys average
balance sheets and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the
periods presented.



|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|------------------------------------------------------------------- |  | ----------------------- | ------- | - | -------- | - | ------ |  | ---- | ----------------- |  | - | -------- | - | ----- | - | ------ |  | ---- | -
|                                                                    |  | Year Ended December 31, |        
|                                                                    |  | 2003                    |         |   | 2002     |  
|                                                                    |  | Average Balance(1)      |         |   | Interest |   | Yield  |  |      | AverageBalance(1) |  |   | Interest |   | Yield |  
|                                                                    |  | (Dollars in Thousands)  |        
|Assets                                                              |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Interest-earning assets:                                            |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Loans (including loan fees)(2)                                      |  | $                       | 207,594 |   |          | $ | 14,668 |  | 7.07 | %                 |  | $ | 193,157  |   |       | $ | 14,745 |  | 7.63 | %
|Taxable investment securities                                       |  |                         | 32,383  |   |          |   | 1,001  |  | 3.09 | %                 |  |   | 24,374   |   |       |   | 1,046  |  | 4.29 | %
|Nontaxable investment securities                                    |  |                         | 3,435   |   |          |   | 173    |  | 5.04 | %                 |  |   | 3,682    |   |       |   | 186    |  | 5.05 | %
|FHLB Stock                                                          |  |                         | 750     |   |          |   | 29     |  | 3.87 | %                 |  |   | 847      |   |       |   | 45     |  | 5.31 | %
|Federal Funds Sold                                                  |  |                         | 9,771   |   |          |   | 112    |  | 1.15 | %                 |  |   | 11,375   |   |       |   | 175    |  | 1.54 | %
|Interest-earning deposits in other financial institutions           |  |                         | 7,098   |   |          |   | 61     |  | 0.86 | %                 |  |   | 3,073    |   |       |   | 59     |  | 1.92 | %
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Total interest-earning assets                                       |  |                         | 261,031 |   |          |   | 16,044 |  | 6.15 | %                 |  |   | 236,508  |   |       |   | 16,256 |  | 6.87 | %
|Other noninterestearning assets                                    |  |                         | 18,836  |   |          |   |        |  |      |                   |  |   | 17,813   |   |       |   |        |  |      |  
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Total assets                                                        |  | $                       | 279,867 |   |          |   |        |  |      |                   |  | $ | 254,321  |   |       |   |        |  |      |  
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|                                                                    |  |                         |         |   |          |  
|Liabilities and shareholders equity:                               |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Interest-bearing liabilities:                                       |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Demand deposits                                                     |  |                         | 89,246  |   |          |   | 943    |  | 1.06 | %                 |  | $ | 77,084   |   |       |   | 1,130  |  | 1.47 | %
|Regular savings                                                     |  |                         | 7,291   |   |          |   | 55     |  | 0.75 | %                 |  |   | 6,849    |   |       |   | 66     |  | 0.96 | %
|Time deposits                                                       |  |                         | 117,931 |   |          |   | 3,481  |  | 2.95 | %                 |  |   | 118,156  |   |       |   | 4,616  |  | 3.91 | %
|FHLB advances                                                       |  |                         | 11,216  |   |          |   | 259    |  | 2.31 | %                 |  |   | 6,615    |   |       |   | 156    |  | 2.36 | %
|Line of Credit                                                      |  |                         |        |   |          |   |       |  |     |                   |  |   | 212      |   |       |   | 10     |  | 4.72 | %
|Note Payable                                                        |  |                         | 4,000   |   |          |   | 201    |  | 5.03 | %                 |  |   | 3,660    |   |       |   | 195    |  | 5.33 | %
|Securities sold under agreements to repurchase                      |  |                         | 2,786   |   |          |   | 28     |  | 1.01 | %                 |  |   | 2,635    |   |       |   | 32     |  | 1.21 | %
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Total interest-bearing liabilities                                  |  |                         | 232,470 |   |          |   | 4,967  |  | 2.14 | %                 |  |   | 215,211  |   |       |   | 6,205  |  | 2.88 | %
|Non-interest bearing deposits                                       |  |                         | 26,503  |   |          |   |        |  |      |                   |  |   | 20,344   |   |       |   |        |  |      |  
|Other noninterest-bearing liabilities                               |  |                         | 2,129   |   |          |   |        |  |      |                   |  |   | 1,969    |   |       |   |        |  |      |  
|Shareholders equity                                                |  |                         | 18,765  |   |          |   |        |  |      |                   |  |   | 16,797   |   |       |   |        |  |      |  
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Total liabilities and shareholders equity                          |  | $                       | 279,867 |   |          |   |        |  |      |                   |  | $ | 254,321  |   |       |   |        |  |      |  
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Excess of interest-earning assets over interest-bearing liabilities |  | $                       | 28,561  |   |          |   |        |  |      |                   |  | $ | 21,297   |   |       |   |        |  |      |  
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Ratio of interest-earning assets to interest bearing liabilities    |  |                         | 112.29  | % |          |   |        |  |      |                   |  |   | 109.90   | % |       |   |        |  |      |  
|Net interest income                                                 |  |                         |         |   |          | $ | 11,077 |  |      |                   |  |   |          |   |       | $ | 10,051 |  |      |  
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Net interest spread(3)                                              |  |                         |         |   |          |   |        |  | 4.01 | %                 |  |   |          |   |       |   |        |  | 3.99 | %
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  
|Net yield on average interest-earning assets(4)                     |  |                         |         |   |          |   |        |  | 4.24 | %                 |  |   |          |   |       |   |        |  | 4.25 | %
|                                                                    |  |                         |         |   |          |   |        |  |      |                   |  |   |          |   |       |   |        |  |      |  

---

|(1) | Average balances are derived from average daily balances.
|--- | ---------------------------------------------------------

|(2) | Average balances include nonaccrual loans.
|--- | ------------------------------------------

|(3) | Net interest spread represents the difference between the average yield on interest-earnings assets and the average cost of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net yield on average interest earning assets represents net interest income as a percentage of average interest earning assets.
|--- | -------------------------------------------------------------------------------------------------------------------------------



12



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Rate/Volume Analysis. The following table describes the extent to which changes in interest rates and changes in
volume of interest-earning assets and interest-bearing liabilities have affected the Companys interest income and expense during the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is
provided as to changes in volume (change in volume multiplied by old rate) and changes in rates (change in rate multiplied by old volume). The net change attributable to changes in both volume and rate has been allocated proportionately to the
change due to volume and the change due to rate.



|                                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | --------------------------------------------- | ----- | - | --------------------------------------------- | - | ------ | ----- |  | - | ------ | - |  | ---------- | ----- | - | ----- | - | ------ | - |  | - | ------ | -
|                                                          |  | Year Ended December 31, 2003 compared to 2002 |       |   | Year Ended December 31, 2002 compared to 2001 |  
|                                                          |  | Changes due to                                |      
|                                                          |  | Volume                                        |       |   | Rate/Yield                                    |   |        | Total |  |   | Volume |   |  | Rate/Yield |       |   | Total |  
|                                                          |  | (Dollars in Thousands)                        |      
|Interest income:                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|Loans                                                     |  | $                                             | 1,053 |   |                                               |   | (1,130 | )     |  |   | (77    | ) |  | $          | 1,029 |   |       | $ | (2,787 | ) |  | $ | (1,758 | )
|Taxable investment securities                             |  |                                               | 292   |   |                                               |   | (337   | )     |  |   | (45    | ) |  |            | (190  | ) |       |   | (380   | ) |  |   | (570   | )
|Nontaxable investment securities                          |  |                                               | (12   | ) |                                               |   | (1     | )     |  |   | (13    | ) |  |            | 15    |   |       |   | 1      |   |  |   | 16     |  
|FHLB stock                                                |  |                                               | (5    | ) |                                               |   | (11    | )     |  |   | (16    | ) |  |            | (1    | ) |       |   | (13    | ) |  |   | (14    | )
|Federal Funds Sold                                        |  |                                               | (23   | ) |                                               |   | (40    | )     |  |   | (63    | ) |  |            | 61    |   |       |   | (176   | ) |  |   | (115   | )
|Interest-earning deposits in other financial institutions |  |                                               | 47    |   |                                               |   | (45    | )     |  |   | 2      |   |  |            | (32   | ) |       |   | (103   | ) |  |   | (135   | )
|                                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|Total interest income                                     |  | $                                             | 1,352 |   |                                               |   | (1,564 | )     |  |   | (212   | ) |  | $          | 882   |   |       | $ | (3,458 | ) |  | $ | (2,576 | )
|                                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|Interest expense:                                         |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|Demand deposits                                           |  | $                                             | 161   |   |                                               | $ | (348   | )     |  | $ | (187   | ) |  | $          | 127   |   |       | $ | (904   | ) |  | $ | (777   | )
|Regular savings                                           |  |                                               | 4     |   |                                               |   | (15    | )     |  |   | (11    | ) |  |            | 8     |   |       |   | (29    | ) |  |   | (21    | )
|Time deposits                                             |  |                                               | (9    | ) |                                               |   | (1,126 | )     |  |   | (1,135 | ) |  |            | (376  | ) |       |   | (2,490 | ) |  |   | (2,866 | )
|FHLB advances                                             |  |                                               | 106   |   |                                               |   | (3     | )     |  |   | 103    |   |  |            | 138   |   |       |   |       |   |  |   | 138    |  
|Line of credit                                            |  |                                               | (10   | ) |                                               |   |       |       |  |   | (10    | ) |  |            | (125  | ) |       |   | (50    | ) |  |   | (175   | )
|Notes payable                                             |  |                                               | 18    |   |                                               |   | (12    | )     |  |   | 6      |   |  |            | 195   |   |       |   |       |   |  |   | 195    |  
|Securities sold under agreements to Repurchase            |  |                                               | 2     |   |                                               |   | (6     | )     |  |   | (4     | ) |  |            | (1    | ) |       |   | (36    | ) |  |   | (37    | )
|                                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|Total interest expense                                    |  |                                               | 272   |   |                                               |   | (1,510 | )     |  |   | (1,238 | ) |  |            | (34   | ) |       |   | (3,509 | ) |  |   | (3,543 | )
|                                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  
|Net interest income                                       |  | $                                             | 1,080 |   |                                               |   | (54    | )     |  | $ | 1,026  |   |  | $          | 916   |   |       | $ | 51     |   |  | $ | 967    |  
|                                                          |  |                                               |       |   |                                               |   |        |       |  |   |        |   |  |            |       |   |       |   |        |   |  |   |        |  



Comparison of Financial Condition
at December 31, 2003 and December 31, 2002



Total assets increased $34
million, or 13%, to $296 million in fiscal 2003 compared to $262 million in fiscal 2002, with growth primarily in lending activities, funded by increased deposits and FHLB borrowings. Shareholders equity increased by approximately $1.9
million, or 11%, to $20 million at December 31, 2003, from $18 million at December 31, 2002. The increase was attributable to net income of approximately $2.4 million partially offset by a decrease of net unrealized holding gains on investment and
mortgage-backed securities available-for-sale of approximately $125,000 and payment of cash dividends to shareholders of approximately $323,000. The Company carries at fair value its securities available for sale, with unrealized gains and losses,
net of income tax effects, recorded as a separate component of shareholders equity in accordance with Statement of Financial Accounting Standards (SFAS) No. 115. Because the Companys portfolio of securities is classified as
available-for-sale, volatility in the fair value of such securities could continue during periods of changing market interest rates.



Comparison of Operating Results For The Fiscal Years Ended December 31, 2003 and December 31, 2002



Net Income The Companys net income increased by $401,000, or 20%, to $2.36 million in 2003 from $1.96 million in 2002. The
increase was primarily due to the $1.0 million or 10% increase in net interest income from



13



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$10.1 million in 2002 to $11.1 million in 2003. The increase in net income was partially offset by an increase in other expenses of $1.1 million or 15 %, to
$8.8 million in 2003 from $7.7 million in 2002. The increase in net interest income is primarily due to the increase in earning assets relative to interest bearing liabilities during 2003. Typically interest-bearing deposit accounts require longer
adjustment periods when rate reductions are required. The effects of the Federal Reserve Bank rate reductions in 2002 were not fully realized until mid-year 2003.



Net Interest Income Net interest income (before provision for loan losses) increased $1.0 million, or 10%, to $11.1 million in 2003
from $10.1 million in 2002. This increase was primarily due to a decrease in interest expense on deposits of $1.2 million.



Provision For Loan Losses The Bank decreased the provision for loan losses from $1.1 million at December 31, 2002 to $540,000 at December 31, 2003. The decrease
was due to managements assessment of the risk inherent in the portfolio and the assessment of the risk relative to the changes in the size of the portfolio as well as external forces such as economic conditions. The Banks allowance for
loan losses decreased from $2.9 million at December 31, 2002, to $2.7 million at December 31, 2003. The reserve as a percentage of total outstanding loans was at 1.16% at year-end 2003, as compared to 1.47% at year-end 2002. The decrease in the loan
loss reserve was primarily due to the charge off of two commercial loans in the third quarter of 2003 that had been restructured and carried as non-performing since September 2002. These credits had been provided for in the allowance for loan losses
as of December 31, 2002. One of these loans continues to pay as agreed under the restructure, but will now be handled as a recovery. The second loan was charged-off as a part of a negotiated settlement. The $38 million increase in loans during the
twelve-month period of 2003 coupled with the reduction in non-performing loans contributed significantly to the decline of the reserve as a percentage of outstanding loans. The Bank periodically evaluates the adequacy of the allowance for loan
losses based on a review of all significant loans, with particular emphasis on impaired, non-performing, past due and other loans that management believes require special attention. The Bank also utilized an independent loan review process in
assessing the overall adequacy of the allowance for loan losses. Management believes that the allowance for loan losses is adequate. Management will continue to monitor and adjust the allowance as necessary in future periods based on growth in the
loan portfolio, loss experience, condition of borrowers, and continued monitoring of local economic conditions, as well as, any other external factors. If the size of the loan portfolio continues to increase and the relative proportion in the
portfolio of commercial and construction loans increases, it is expected that the provision for loan losses will increase in order to maintain the allowance for loan losses at an adequate level.



The following table sets forth the allocation of the allowance for loan losses by loan
category and the percent of loans in each loan category to total loans for the periods indicated.



|                                          |  |                        |       |                                               |                      |   |                    |   |                                               |  |        |  
|----------------------------------------- |  | ---------------------- | ----- | --------------------------------------------- | -------------------- | - | ------------------ | - | --------------------------------------------- |  | ------ | -
|                                          |  | At December 31, 2003   |       |                                               | At December 31, 2002 |  
|                                          |  | AllocatedAllowance     |       | Percent ofLoans in eachCategory toTotal Loans |                      |   | AllocatedAllowance |   | Percent ofLoans in eachCategory toTotal Loans | 
|                                          |  | (Dollars in Thousands) |      
|Balance at end of period applicable to:   |  |                        |       |                                               |                      |   |                    |   |                                               |  |        |  
|Permanent residential mortgage            |  | $                      | 95    |                                               | 3.53                 | % |                    | $ | 48                                            |  | 1.68   | %
|Construction, acquisition and development |  |                        | 734   |                                               | 27.26                | % |                    |   | 922                                           |  | 32.31  | %
|Commercial and commercial real estate     |  |                        | 1,679 |                                               | 62.34                | % |                    |   | 1,604                                         |  | 56.20  | %
|Consumer and other                        |  |                        | 185   |                                               | 6.87                 | % |                    |   | 280                                           |  | 9.81   | %
|                                          |  |                        |       |                                               |                      |   |                    |   |                                               |  |        |  
|Total                                     |  | $                      | 2,693 |                                               | 100.00               | % |                    | $ | 2,854                                         |  | 100.00 | %
|                                          |  |                        |       |                                               |                      |   |                    |   |                                               |  |        |  



Other Income. Other income
increased by $236,000, or 15%, to $1.8 million in 2003 from $1.6 million in 2002. The major component of the increase was net gains on sales of SBA loans of $104,000. In 2003, increases in service charges on deposit accounts amounted to $53,000, or
6%, over 2002, from $910,000 in 2002 to $963,000 in 2003. Other operating income increased $83,000 from $563,000 in 2002, to $646,000 in 2003. This was due



14



---

primarily to an increase in income from Bank owned life insurance of $66,000, or 3%, from $213,000 in 2002 to $279,000 in 2003.



Other Expenses. Other expenses increased from $7.7 million in 2002 to $8.8 million in
2003, representing an increase of $1.1 million or 15%. Included in this increase is an increase of $868,000, or 20%, in salaries and benefits. Of this increase, approximately $200,000 is due to the staffing of a new branch and the hiring of two loan
production officers. In addition, general salary increases for the year account for approximately $100,000, or 3%, over prior year salaries. Accruals for benefits related to the Bank owned life insurance plan increased approximately $100,000 and the
accrual for the incentive bonus plan increased by approximately $100,000. Occupancy expenses and other expenses increased $280,000, or 8%, from $3.3 million in 2002 to $3.6 million in 2003.



Income Tax Expense. Income tax expense as a percent of income before taxes was 31.7%
in 2002 and 32.5% in 2003. The increase in the effective interest rate reflects the higher level of interest income from loans as opposed to investments, which have certain tax preferences.



Liquidity. The Bank is required to maintain minimum levels of liquid assets as defined
by the State of Georgia and FDIC regulations. The Banks short-term liquidity at December 31, 2003, was 13.5%, which was below the Banks goal of 15.0%. The Bank continues to search for deposits and other means of meeting its loan demand.
The Bank adjusts its liquidity level as appropriate to meet its asset/liability objectives. The primary sources of funds are deposits, including deposits gathered using the Internet (from institutional investors such as banks and credit unions),
amortization and prepayments of loans and mortgage-backed securities, maturity of investments, and funds provided from operations. As an alternative to supplement liquidity needs, the Bank has the ability to borrow from the FHLB and other
correspondent banks. These commitments totaled $44 million at December 31, 2003 with $15 million in outstanding balances. Scheduled loan amortization and maturing investment securities are a relatively predictable source of funds, however, deposit
flow and loan prepayments are greatly influenced by, among other things, market interest rates, economic conditions, and competition. The Banks liquidity, represented by cash, cash equivalents, and securities available for sale, is a product
of its operating, investing, and financing activities.



Subsidiary
Activity. Late in the first quarter of 2004, the Company requested and was granted permission by the Federal Reserve Bank for Tier I capital treatment of a $4.5 million dollar trust preferred issue that it is currently pursuing. The Company is
in the very early stages and therefore the certainty of the success of this transaction is in question at this time.



The following table details the Companys contractual obligations as of December 31, 2003:



|                              |  |                   |       |        |   |        |   |        |        |       |       
|----------------------------- |  | ----------------- | ----- | ------ | - | ------ | - | ------ | ------ | ----- | ------
|                              |  | Maturity by Years |       |       
|                              |  | 1 or less         |       | 1 to 3 |   | 3 to 5 |   | Over 5 |        | Total
|                              |  | (in thousands)    |       |       
|FHLB Advances                 |  | $                 | 5,000 |        |  |        |  |        | 10,000 |       | 15,000
|Notes payable                 |  |                   |      |        |  |        |  |        | 4,000  |       | 4,000 
|Total contractual obligations |  | $                 | 5,000 |        |  |        |  |        | 14,000 |       | 19,000



Impact of Inflation and Changing
Prices. The financial statements and related data have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms
of historical dollars, without consideration for changes in the relative purchasing power of money over time caused by inflation.



Unlike industrial companies, nearly all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more
significant impact on a financial institutions performance than general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude



15



---

as the price of goods and services, since such goods and services are affected by inflation. In the current interest rate environment, liquidity and the
maturity structure of the Banks assets and liabilities are critical to the maintenance of acceptable performance levels.



Off Balance Sheet Items



The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial
instruments include standby letters of credit and commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated financial statements. The
contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. See footnote number 11 in the audited financial statements for further details.



Other Important Events



The Bank completed construction of its second branch location in Henry County, Georgia in
July 2003. This location, Heritage Plaza, is a leased out parcel of a strip center located in an area of residential housing and retail shopping. The Bank initially purchased this property as a future potential branch location and subsequently sold
this property on Georgia Highway 20/81 in McDonough to a group of investors in December 2002.



In April 2003, the Company purchased property located on U.S. Highway 19 & 41 in Lovejoy for a future branch location.



The Bank also is negotiating a lease agreement in the Pinnacle office complex for a branch location on Eagles Landing Parkway in Stockbridge. This branch is expected to
open in late Summer 2004.



In February 2002, the Bank sold the property it
owned on Georgia Highway 155 in Stockbridge, originally acquired for a future branch location. The Bank had concerns that zoning and infrastructure issues would unduly delay our intended use of the property.



16



---

CCF HOLDING COMPANY



AND SUBSIDIARIES



Consolidated Financial Statements



December 31, 2003 and 2002



(with Independent Accountants Report thereon)



17



---

LOGO



REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS



The Board of Directors

CCF Holding Company



We have audited the accompanying consolidated balance sheets of CCF Holding Company and subsidiaries as of December 31, 2003 and 2002 and the related consolidated
statements of earnings, comprehensive income, changes in shareholders 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
CCF Holding Company and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.



LOGO

Atlanta, Georgia

February 13, 2004



Certified Public Accountants

---

Suite 1800  235 Peachtree Street NE  Atlanta, Georgia 30303  Phone 404-588-4200  Fax 404-588-4222  www.pkm.com



18



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Consolidated Balance Sheets



December 31, 2003 and 2002



|                                                                                                                                                     |  |      |             |      |            
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | -----------
|                                                                                                                                                     |  | 2003 |             | 2002
|Assets                                                                                                                                               |  |      |             |      |            
|                                                                                                                                                     |  |      |             |      |            
|Cash and due from banks, including reserve requirements of $1,046,000 and $500,000                                                                   |  | $    | 10,294,292  |      | 7,181,709  
|Interest-bearing demand deposits in other financial institutions                                                                                     |  |      | 1,349,804   |      | 7,396,251  
|Federal funds sold                                                                                                                                   |  |      | 2,361,632   |      | 8,120,227  
|                                                                                                                                                     |  |      |             |      |            
|Cash and cash equivalents                                                                                                                            |  |      | 14,005,728  |      | 22,698,187 
|Interest-bearing time deposits in other financial institutions                                                                                       |  |      | 1,386,075   |      |           
|Investment securities available-for-sale                                                                                                             |  |      | 36,524,205  |      | 33,569,843 
|Federal Home Loan Bank stock, at cost                                                                                                                |  |      | 750,000     |      | 750,000    
|Loans, net                                                                                                                                           |  |      | 228,334,366 |      | 190,968,808
|Premises and equipment, net                                                                                                                          |  |      | 7,185,756   |      | 6,858,478  
|Accrued interest receivable                                                                                                                          |  |      | 1,123,890   |      | 1,127,988  
|Cash surrender value of life insurance                                                                                                               |  |      | 4,620,438   |      | 4,341,591  
|Other assets                                                                                                                                         |  |      | 1,729,205   |      | 1,677,695  
|                                                                                                                                                     |  |      |             |      |            
|                                                                                                                                                     |  | $    | 295,659,663 |      | 261,992,590
|                                                                                                                                                     |  |      |             |      |            
|Liabilities and Shareholders Equity                                                                                                                 |  |      |             |      |            
|Deposits:                                                                                                                                            |  |      |             |      |            
|Noninterest-bearing demand deposits                                                                                                                  |  | $    | 27,855,720  |      | 23,609,262 
|Interest-bearing demand deposits                                                                                                                     |  |      | 90,383,872  |      | 83,893,015 
|Savings accounts                                                                                                                                     |  |      | 7,689,032   |      | 6,937,688  
|Time deposits less than $100,000                                                                                                                     |  |      | 89,623,330  |      | 88,921,841 
|Time deposits greater than $100,000                                                                                                                  |  |      | 34,084,868  |      | 28,425,650 
|                                                                                                                                                     |  |      |             |      |            
|Total deposits                                                                                                                                       |  |      | 249,636,822 |      | 231,787,456
|Securities sold under agreements to repurchase                                                                                                       |  |      | 3,220,798   |      | 2,084,604  
|Federal Home Loan Bank advances                                                                                                                      |  |      | 15,000,000  |      | 5,000,000  
|Junior subordinated debentures                                                                                                                       |  |      | 4,000,000   |      | 4,000,000  
|Other liabilities                                                                                                                                    |  |      | 4,136,044   |      | 1,380,300  
|                                                                                                                                                     |  |      |             |      |            
|Total liabilities                                                                                                                                    |  |      | 275,993,664 |      | 244,252,360
|                                                                                                                                                     |  |      |             |      |            
|Commitments                                                                                                                                          |  |      |             |      |            
|Shareholders equity:                                                                                                                                |  |      |             |      |            
|Preferred stock, no par value; 1,000,000 shares authorized; none issued and outstanding                                                              |  |      |            |      |           
|Common stock, $.10 par value, 4,000,000 shares authorized; 1,468,627 issued and outstanding in 2003; 1,466,767 shares issued and outstanding
in 2002 |  |      | 146,862     |      | 146,677    
|Additional paid-in capital                                                                                                                           |  |      | 9,030,932   |      | 9,005,946  
|Retained earnings                                                                                                                                    |  |      | 10,286,108  |      | 8,260,523  
|Accumulated other comprehensive income                                                                                                               |  |      | 202,097     |      | 327,084    
|                                                                                                                                                     |  |      |             |      |            
|Total shareholders equity                                                                                                                           |  |      | 19,665,999  |      | 17,740,230 
|                                                                                                                                                     |  |      |             |      |            
|                                                                                                                                                     |  | $    | 295,659,663 |      | 261,992,590
|                                                                                                                                                     |  |      |             |      |            



See accompanying notes
to consolidated financial statements.



19



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Consolidated Statements of Earnings

For the Years Ended December 31, 2003 and 2002



|                                                                                 |  |      |            |      |           
|-------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | ----------
|                                                                                 |  | 2003 |            | 2002
|Interest and dividend income:                                                    |  |      |            |      |           
|Interest and fees on loans                                                       |  | $    | 14,668,312 |      | 14,744,978
|Interest bearing deposits in other financial institutions and federal funds sold |  |      | 173,453    |      | 233,561   
|Interest and dividends on taxable investment securities                          |  |      | 1,029,374  |      | 1,091,528 
|Interest on nontaxable investment securities                                     |  |      | 172,497    |      | 185,765   
|                                                                                 |  |      |            |      |           
|Total interest income                                                            |  |      | 16,043,636 |      | 16,255,832
|                                                                                 |  |      |            |      |           
|Interest expense:                                                                |  |      |            |      |           
|Deposit accounts                                                                 |  |      | 4,478,663  |      | 5,811,887 
|Other borrowings                                                                 |  |      | 487,953    |      | 392,838   
|                                                                                 |  |      |            |      |           
|Total interest expense                                                           |  |      | 4,966,616  |      | 6,204,725 
|                                                                                 |  |      |            |      |           
|Net interest income                                                              |  |      | 11,077,020 |      | 10,051,107
|Provision for loan losses                                                        |  |      | 540,000    |      | 1,053,750 
|                                                                                 |  |      |            |      |           
|Net interest income after provision for loan losses                              |  |      | 10,537,020 |      | 8,997,357 
|                                                                                 |  |      |            |      |           
|Other operating income:                                                          |  |      |            |      |           
|Service charges on deposit accounts                                              |  |      | 963,368    |      | 909,596   
|Net gain on sale of investment securities                                        |  |      | 61,985     |      | 33,947    
|Gain on sale of loans                                                            |  |      | 104,291    |      | 22,574    
|Increase in value of life insurance asset                                        |  |      | 278,847    |      | 213,319   
|Other                                                                            |  |      | 393,010    |      | 386,229   
|                                                                                 |  |      |            |      |           
|Total other operating income                                                     |  |      | 1,801,501  |      | 1,565,665 
|                                                                                 |  |      |            |      |           
|Other operating expenses:                                                        |  |      |            |      |           
|Salaries and employee benefits                                                   |  |      | 5,231,002  |      | 4,363,103 
|Occupancy                                                                        |  |      | 1,642,902  |      | 1,622,045 
|Other                                                                            |  |      | 1,963,188  |      | 1,704,114 
|                                                                                 |  |      |            |      |           
|Total other operating expenses                                                   |  |      | 8,837,092  |      | 7,689,262 
|                                                                                 |  |      |            |      |           
|Earnings before income taxes                                                     |  |      | 3,501,429  |      | 2,873,760 
|Income tax expense                                                               |  |      | 1,138,185  |      | 911,070   
|                                                                                 |  |      |            |      |           
|Net earnings                                                                     |  | $    | 2,363,244  |      | 1,962,690 
|                                                                                 |  |      |            |      |           
|Basic earnings per share                                                         |  | $    | 1.61       |      | 1.34      
|                                                                                 |  |      |            |      |           
|Diluted earnings per share                                                       |  | $    | 1.47       |      | 1.26      
|                                                                                 |  |      |            |      |           



See accompanying notes
to consolidated financial statements.



20



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2003 and 2002



|                                                                                           |  |      |           |   |      |           |  
|------------------------------------------------------------------------------------------ |  | ---- | --------- | - | ---- | --------- | -
|                                                                                           |  | 2003 |           |   | 2002 |          
|Net earnings                                                                               |  | $    | 2,363,244 |   |      | 1,962,690 |  
|                                                                                           |  |      |           |   |      |           |  
|Other comprehensive (loss) income:                                                         |  |      |           |   |      |           |  
|Unrealized holding (losses) gains on investment securities available-for-sale              |  |      | (130,303  | ) |      | 152,417   |  
|Associated income tax effect                                                               |  |      | 45,606    |   |      | (53,346   | )
|Reclassification adjustment for gains on sales of investment securities available-for-sale |  |      | (61,985   | ) |      | (33,947   | )
|Associated income tax effect                                                               |  |      | 21,695    |   |      | 11,881    |  
|                                                                                           |  |      |           |   |      |           |  
|Total other comprehensive (loss) income, net of tax                                        |  |      | (124,987  | ) |      | 77,005    |  
|                                                                                           |  |      |           |   |      |           |  
|Total comprehensive income                                                                 |  | $    | 2,238,257 |   |      | 2,039,695 |  
|                                                                                           |  |      |           |   |      |           |  







See accompanying notes to consolidated financial statements.





21



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CCF HOLDING COMPANY AND SUBSIDIARIES



Consolidated Statements of Changes in Shareholders Equity

For the Years Ended December 31, 2003 and 2002



|                                                                          |  |              |   |  |                    |         |   |          |           |   |                                 |            |   |        |          |   |       |            |  
|------------------------------------------------------------------------- |  | ------------ | - |  | ------------------ | ------- | - | -------- | --------- | - | ------------------------------- | ---------- | - | ------ | -------- | - | ----- | ---------- | -
|                                                                          |  | Common Stock |   |  | Additional Paid-in |         |   | Retained |           |   | Accumulated Other Comprehensive |            |   |        |         
|                                                                          |  | Shares       |   |  | Amount             |         |   | Capital  |           |   | Earnings                        |            |   | Income |          |   | Total |           
|Balance, December 31, 2001                                                |  | 1,468,808    |   |  | $                  | 146,881 |   |          | 9,045,065 |   |                                 | 6,371,172  |   |        | 250,079  |   |       | 15,813,197 |  
|Net earnings                                                              |  |             |   |  |                    |        |   |          |          |   |                                 | 1,962,690  |   |        |         |   |       | 1,962,690  |  
|Cash paid in lieu of fractional shares                                    |  | (58          | ) |  |                    | (6      | ) |          | (1,326    | ) |                                 |           |   |        |         |   |       | (1,332     | )
|Retirement of common stock                                                |  | (2,733       | ) |  |                    | (273    | ) |          | (42,717   | ) |                                 |           |   |        |         |   |       | (42,990    | )
|Exercise of stock options                                                 |  | 750          |   |  |                    | 75      |   |          | 4,924     |   |                                 |           |   |        |         |   |       | 4,999      |  
|Cash dividend declared ($.05 per share)                                   |  |             |   |  |                    |        |   |          |          |   |                                 | (73,339    | ) |        |         |   |       | (73,339    | )
|Unrealized gains on investment securities available-for-sale, net of tax  |  |             |   |  |                    |        |   |          |          |   |                                 |           |   |        | 77,005   |   |       | 77,005     |  
|                                                                          |  |              |   |  |                    |         |   |          |           |   |                                 |            |   |        |          |   |       |            |  
|Balance, December 31, 2002                                                |  | 1,466,767    |   |  |                    | 146,677 |   |          | 9,005,946 |   |                                 | 8,260,523  |   |        | 327,084  |   |       | 17,740,230 |  
|Net earnings                                                              |  |             |   |  |                    |        |   |          |          |   |                                 | 2,363,244  |   |        |         |   |       | 2,363,244  |  
|Retirement of common stock                                                |  | (715         | ) |  |                    | (72     | ) |          | (12,193   | ) |                                 |           |   |        |         |   |       | (12,265    | )
|Exercise of stock options                                                 |  | 2,575        |   |  |                    | 257     |   |          | 37,179    |   |                                 |           |   |        |         |   |       | 37,436     |  
|Cash dividends declared ($.23 per share)                                  |  |             |   |  |                    |        |   |          |          |   |                                 | (337,659   | ) |        |         |   |       | (337,659   | )
|Unrealized losses on investment securities available-for-sale, net of tax |  |             |   |  |                    |        |   |          |          |   |                                 |           |   |        | (124,987 | ) |       | (124,987   | )
|                                                                          |  |              |   |  |                    |         |   |          |           |   |                                 |            |   |        |          |   |       |            |  
|Balance, December 31, 2003                                                |  | 1,468,627    |   |  | $                  | 146,862 |   |          | 9,030,932 |   |                                 | 10,286,108 |   |        | 202,097  |   |       | 19,665,999 |  
|                                                                          |  |              |   |  |                    |         |   |          |           |   |                                 |            |   |        |          |   |       |            |  





See accompanying notes to consolidated financial statements.



22



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Consolidated Statements of Cash Flows

For the Years Ended December 31, 2003 and 2002



|                                                                                                    |  |      |             |   |      |             |  
|--------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | ----------- | -
|                                                                                                    |  | 2003 |             |   | 2002 |            
|Cash flows from operating activities:                                                               |  |      |             |   |      |             |  
|Net earnings                                                                                        |  | $    | 2,363,244   |   |      | 1,962,690   |  
|Adjustments to reconcile net earnings to net cash provided by operating activities:                 |  |      |             |   |      |             |  
|Provision for loan losses                                                                           |  |      | 540,000     |   |      | 1,053,750   |  
|Depreciation, amortization and accretion                                                            |  |      | 899,880     |   |      | 783,670     |  
|Deferred income tax benefit                                                                         |  |      | (106,736    | ) |      | (383,867    | )
|Net gain on sale of investment securities available-for-sale                                        |  |      | (61,985     | ) |      | (33,947     | )
|Net gain on sale of loans                                                                           |  |      | (104,291    | ) |      | (22,574     | )
|Net loss on sale of real estate                                                                     |  |      | 64,971      |   |      |            |  
|Net gain on sale of premises and equipment                                                          |  |      | (25,379     | ) |      | (59,482     | )
|Increase in cash surrender value of life insurance                                                  |  |      | (278,847    | ) |      | (213,319    | )
|Change in accrued interest receivable                                                               |  |      | 4,098       |   |      | 246,684     |  
|Change in other assets                                                                              |  |      | 141,402     |   |      | (23,072     | )
|Change in other liabilities                                                                         |  |      | 2,808,267   |   |      | (510,669    | )
|                                                                                                    |  |      |             |   |      |             |  
|Net cash provided by operating activities                                                           |  |      | 6,244,624   |   |      | 2,799,864   |  
|                                                                                                    |  |      |             |   |      |             |  
|Cash flows from investing activities:                                                               |  |      |             |   |      |             |  
|Net change in interest-bearing deposits                                                             |  |      | (1,386,075  | ) |      |            |  
|Proceeds from maturities and calls of investment securities available-for-sale                      |  |      | 28,902,854  |   |      | 30,871,688  |  
|Proceeds from sales of investment securities available-for-sale                                     |  |      | 18,592,328  |   |      | 2,043,990   |  
|Purchases of investment securities available-for-sale                                               |  |      | (50,860,799 | ) |      | (29,101,551 | )
|Proceeds from sale of Federal Home Loan Bank stock                                                  |  |      |            |   |      | 130,000     |  
|Net (increase) decrease in loans                                                                    |  |      | (15,396,071 | ) |      | 9,538,070   |  
|Proceeds from sale of foreclosed property                                                           |  |      | 181,033     |   |      | 228,195     |  
|Proceeds from sale of loans                                                                         |  |      | (22,737,376 | ) |      | (15,882,196 | )
|Purchases of premises and equipment                                                                 |  |      | (1,347,340  | ) |      | (371,030    | )
|Proceeds from sale of premises and equipment                                                        |  |      | 426,512     |   |      | 431,848     |  
|Purchase of life insurance policies                                                                 |  |      |            |   |      | (2,652,664  | )
|                                                                                                    |  |      |             |   |      |             |  
|Net cash used in investing activities                                                               |  |      | (43,624,934 | ) |      | (4,763,650  | )
|                                                                                                    |  |      |             |   |      |             |  
|Cash flows from financing activities:                                                               |  |      |             |   |      |             |  
|Net increase in deposits                                                                            |  |      | 17,849,366  |   |      | 14,533,341  |  
|Change in securities sold under agreements to repurchase                                            |  |      | 1,136,194   |   |      | (330,938    | )
|Federal Home Loan Bank advances                                                                     |  |      | 10,000,000  |   |      | 5,000,000   |  
|Repayment of Federal Home Loan Bank advances                                                        |  |      |            |   |      | (8,000,000  | )
|Repayment of line of credit                                                                         |  |      |            |   |      | (2,500,000  | )
|Proceeds from issuance of trust preferred securities                                                |  |      |            |   |      | 4,000,000   |  
|Dividends paid                                                                                      |  |      | (322,880    | ) |      |            |  
|Proceeds from repurchase of stock options                                                           |  |      | 37,436      |   |      | 4,999       |  
|Retirement of common stock                                                                          |  |      | (12,265     | ) |      | (44,322     | )
|                                                                                                    |  |      |             |   |      |             |  
|Net cash provided by financing activities                                                           |  |      | 28,687,851  |   |      | 12,663,080  |  
|                                                                                                    |  |      |             |   |      |             |  
|(Decrease) increase in cash and cash equivalents                                                    |  |      | (8,692,459  | ) |      | 10,699,294  |  
|Cash and cash equivalents at beginning of period                                                    |  |      | 22,698,187  |   |      | 11,998,893  |  
|                                                                                                    |  |      |             |   |      |             |  
|Cash and cash equivalents at end of period                                                          |  | $    | 14,005,728  |   |      | 22,698,187  |  
|                                                                                                    |  |      |             |   |      |             |  
|Supplemental disclosures for cash flow information and noncash, investing and financing activities: |  |      |             |   |      |             |  
|Interest paid                                                                                       |  | $    | 5,011,138   |   |      | 6,358,991   |  
|                                                                                                    |  |      |             |   |      |             |  
|Income taxes paid                                                                                   |  | $    | 1,041,070   |   |      | 1,237,217   |  
|                                                                                                    |  |      |             |   |      |             |  
|Transfer of loans to other real estate owned                                                        |  | $    | 332,180     |   |      | 111,255     |  
|                                                                                                    |  |      |             |   |      |             |  
|Changes in dividends payable                                                                        |  | $    | 14,779      |   |      | 73,339      |  
|                                                                                                    |  |      |             |   |      |             |  



See accompanying notes
to consolidated financial statements.



23



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CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements



|(1) | Summary of Significant Accounting Policies
|--- | ------------------------------------------

Organization

CCF Holding Company (the Company) is incorporated in the State of Georgia as a state
chartered bank holding company whose business is conducted by its wholly owned bank subsidiaries, Heritage Bank (the Bank) and CCF Capital Trust I (the Trust). The Company converted its charter effective September 1, 1998
from a federally chartered stock savings and loan association to a state chartered commercial bank. The Company and the Bank are primarily regulated by the State of Georgia Department of Banking and Finance (the DBF) and the Federal
Deposit Insurance Corporation (the FDIC) and are subject to periodic examinations by these regulatory authorities.



The Bank provides a full range of banking services to individual and corporate customers through its main office in Jonesboro, Georgia and five Georgia
branch offices located in Clayton, Fayette and Henry Counties. The Bank primarily competes with other financial institutions in its market area, which it considers to be south metropolitan Atlanta.



Basis of Presentation

The consolidated financial statements include the accounts of CCF Holding Company and its wholly owned subsidiaries, Heritage Bank and CCF Capital Trust
I. Certain 2002 amounts have been reclassified to conform to the 2003 presentation.



The accounting principles followed by the Company and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (GAAP) and with general
practices within the banking industry. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ
significantly from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and
the valuation of real estate acquired in connection with or in lieu of foreclosure on loans.



Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company
considers amounts due from banks, interest-bearing deposits in other financial institutions with maturities less than 90 days, and federal funds sold to be cash equivalents.



Investment Securities

The Company classifies its securities in one of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for sale in the near term. Held-to-maturity
securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held-to-maturity are classified as available-for-sale. The Companys current investment
policy prohibits trading activity. At December 31, 2003, and December 31, 2002, the Company classified all of their investment securities as available-for-sale.



Held-to-maturity securities are recorded at cost, adjusted for the amortization or accretion of premiums or discounts.
Transfers of securities between categories are recorded at fair value at the date of transfer. Unrealized holding gains or losses associated with transfers of securities from held-to-maturity to available-for-sale are recorded as a separate
component of shareholders equity.



Available-for-sale
securities consist of investment securities not classified as trading securities or held-to-maturity securities and are recorded at fair value. Unrealized holding gains and losses on securities available-for-sale are excluded from earnings and are
reported as a separate component of shareholders equity until realized. A decline in the market value of any available-for-sale or held-to-maturity investment below cost that is deemed other than temporary is charged to earnings and
establishes a new cost basis for the security.



24



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(1) | Summary of Significant Accounting Policies, continued
|--- | -----------------------------------------------------



Premiums and discounts are amortized or accreted over the life of the related security as an
adjustment to the yield. Realized gains and losses for securities classified as available-for-sale and held-to-maturity are included in earnings and are derived using the specific identification method for determining the cost of securities sold.



Federal Home Loan Bank Stock

Investment in Federal Home Loan Bank (FHLB) stock is required of federally insured financial institutions that utilize their services. No
ready market exists for the stock and it has no quoted market value.



Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at
the principal amount outstanding, net of the allowance for loan losses and any deferred fees or costs on originated loans. Interest on all loans is calculated using the simple interest method on the daily balance of the principal amount outstanding.



Loan origination fees collected, net of certain direct loan
origination costs, are deferred and recognized into income using the interest method as an adjustment of the yield over the lives of the underlying loans.



The accrual of interest income is discontinued on loans, which become contractually past due by 90 days. Interest previously accrued but not collected is
reversed against current period interest income when such loans are placed on nonaccrual status. Interest accruals are recorded on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment
of management, the loans are estimated to be fully collectible as to both principal and interest.



A loan is considered impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the
loan agreement will not be collected. Impaired loans are measured based on the present value of expected future cash flows discounted at the loans effective interest rate, or at the loans observable market price, or at the fair value of
the collateral of the loan if the loan is collateral dependent. Interest income from impaired loans is recognized using a cash basis method of accounting.



Allowance for Loan Losses

The
allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes that the collection of principal is unlikely. The Bank has established
a loan grading system whose classifications are consistent with those used by the Banks regulators. Management utilizes this system to evaluate the adequacy of its allowance for loan losses. Allocations of loss are calculated based on expected
loss ratios for each loan classification. These ratios have been determined considering the Banks historical loss rates and losses experienced by its peer group. For individually significant loans deemed to be impaired, a specific allowance is
established based on the expected collectibility considering the borrowers cash flow and the adequacy of the collateral coverage. The results of the Banks evaluation are compared to the recorded allowance for loan losses and significant
deviations are adjusted by increasing or decreasing the provision for loan losses. Additionally, management utilizes the services of an independent third party loan reviewer to validate its internal grading system and to provide additional analysis
in determining the adequacy of the allowance.



Management
believes the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgment of information available to them at the
time of their examination.



25



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(1) | Summary of Significant Accounting Policies, continued
|--- | -----------------------------------------------------



Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Major additions and improvements are charged to the asset accounts while
maintenance and repairs that do not improve or extend the useful lives of the assets are expensed. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is
reflected in earnings for the period. Depreciation is recorded on a straight-line basis over the following estimated useful lives of the related assets:



|                          |  |            
|------------------------- |  | -----------
|Building and improvements |  | 540 years 
|Furniture and equipment   |  | 2 10 years
|Leasehold improvements    |  | 7 20 years



Securities Sold
Under Agreements To Repurchase

Securities sold under agreement to repurchase are secured borrowings from customers and are treated as
financing activities and are carried at the amounts at which the securities will be subsequently reacquired as specified in the respective agreements.



Income Taxes

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



In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Companys assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to
realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In
assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.



Stock Compensation Plans

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



26



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(1) | Summary of Significant Accounting Policies, continued
|--- | -----------------------------------------------------



Had compensation cost for the plan been determined based upon the fair value of the options at the grant dates, the Companys net earnings and net
earnings per share would have been reduced to the proforma amounts indicated below:



|                           |  |             |  |      |           |      |          
|-------------------------- |  | ----------- |  | ---- | --------- | ---- | ---------
|                           |  |             |  | 2003 |           | 2002
|Net earnings               |  | As reported |  | $    | 2,363,244 |      | 1,962,690
|                           |  | Proforma    |  | $    | 2,261,376 |      | 1,889,294
|                           |  |             | 
|Basic earnings per share   |  | As reported |  | $    | 1.61      |      | 1.34     
|                           |  | Proforma    |  | $    | 1.54      |      | 1.29     
|                           |  |             | 
|Diluted earnings per share |  | As reported |  | $    | 1.47      |      | 1.26     
|                           |  | Proforma    |  | $    | 1.41      |      | 1.21     



The weighted average
fair value of options granted was $8.45 and $5.12 for the years ended December 31, 2003 and 2002, respectively, based on estimates as of the date of grant using the Black Scholes pricing model. The following weighted average assumptions were used
for grants in 2003 and 2002, respectively: dividend yield of 1.1% and .003%; a risk free interest rate of 4.2% and 3.5%, expected volatility of .32 and .23, respectively; and an expected life of seven years. The difference between the net earnings
as reported and proforma is the expense associated with the grants, which would have vested in the period.



Comprehensive Income

GAAP generally
requires that recognized revenues, expenses, gains and losses be included in net earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component
of the equity section of the consolidated balance sheets, such items along with net earnings, are components of comprehensive income. The Company presents comprehensive income in a separate consolidated statement of comprehensive income.



Net Earnings Per Share

During 2002, the Company announced a three-for-two stock split in the form of a stock dividend for shareholders of record on December 4, 2002. All
financial statements and per share amounts included in the financial statements and accompanying notes have been restated to reflect the change in the number of shares outstanding as of the beginning of the earliest period presented.



Basic earnings per share are based on the weighted average number of common
shares outstanding during the period while the effects of potential shares outstanding during the period are included in diluted earnings per share. The reconciliation of the amounts used in the computation of both basic earnings per
share and diluted earnings per share for each period is presented as follows:



|                                     |  |              |           |               |           |                  |   |      |  
|------------------------------------ |  | ------------ | --------- | ------------- | --------- | ---------------- | - | ---- | -
|For the year ended December 31, 2003 |  | Net Earnings |           | Common Shares |           | Per Share Amount |  
|Basic earnings per share             |  | $            | 2,363,244 |               | 1,467,247 |                  | $ | 1.61 |  
|Effect of stock options              |  |              |          |               | 140,629   |                  |   | (.14 | )
|                                     |  |              |           |               |           |                  |   |      |  
|Diluted earnings per share           |  | $            | 2,363,244 |               | 1,607,876 |                  | $ | 1.47 |  
|                                     |  |              |           |               |           |                  |   |      |  



|                                     |  |              |           |               |           |                  |   |      |  
|------------------------------------ |  | ------------ | --------- | ------------- | --------- | ---------------- | - | ---- | -
|For the year ended December 31, 2002 |  | Net Earnings |           | Common Shares |           | Per Share Amount |  
|Basic earnings per share             |  | $            | 1,962,690 |               | 1,467,371 |                  | $ | 1.34 |  
|Effect of stock options              |  |              |          |               | 96,417    |                  |   | (.08 | )
|                                     |  |              |           |               |           |                  |   |      |  
|Diluted earnings per share           |  | $            | 1,962,690 |               | 1,563,788 |                  | $ | 1.26 |  
|                                     |  |              |           |               |           |                  |   |      |  



27



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(1) | Summary of Significant Accounting Policies, continued
|--- | -----------------------------------------------------



Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46). This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities. The provisions of FIN 46
are effective immediately for all variable interest entities created after January 31, 2003 and, for the first fiscal year or interim period beginning after June 15, 2003, for variable interest entities in which an enterprise holds variable interest
that it acquired before February 1, 2003. The Company believes that the adoption of FIN 46 will not have a material impact on its financial position or results of operations.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity (SFAS 150), which changes the accounting for certain financial instruments that have characteristics of liabilities and equity. SFAS 150, which was effective for interim periods beginning after June 15, 2003,
requires that those instruments be classified as liabilities in statements of financial position. The Company believes the adoption of SFAS 150 will not have a material impact on its financial position or results of operations.



|(2) | Investment Securities Available-for-Sale
|--- | ----------------------------------------

At
December 31, 2003 and 2002, investment securities available-for-sale consisted of the following:



|                                                     |  |                   |            |                        |         |                         |         |            |           
|---------------------------------------------------- |  | ----------------- | ---------- | ---------------------- | ------- | ----------------------- | ------- | ---------- | ----------
|                                                     |  | December 31, 2003
|                                                     |  | Amortized Cost    |            | Gross Unrealized Gains |         | Gross Unrealized Losses |         | Fair Value
|U.S. Treasury and U.S. Government agency obligations |  | $                 | 26,074,504 |                        | 142,581 |                         | 71,231  |            | 26,145,854
|Municipal securities                                 |  |                   | 3,207,233  |                        | 281,049 |                         |        |            | 3,488,282 
|Mortgage-backed securities                           |  |                   | 6,931,550  |                        | 7,732   |                         | 49,213  |            | 6,890,069 
|                                                     |  |                   |            |                        |         |                         |         |            |           
|                                                     |  | $                 | 36,213,287 |                        | 431,362 |                         | 120,444 |            | 36,524,205
|                                                     |  |                   |            |                        |         |                         |         |            |           



|                                                     |  |                   |            |                        |         |                         |       |            |           
|---------------------------------------------------- |  | ----------------- | ---------- | ---------------------- | ------- | ----------------------- | ----- | ---------- | ----------
|                                                     |  | December 31, 2002
|                                                     |  | Amortized Cost    |            | Gross Unrealized Gains |         | Gross Unrealized Losses |       | Fair Value
|U.S. Treasury and U.S. Government agency obligations |  | $                 | 28,044,730 |                        | 268,934 |                         | 2,225 |            | 28,311,439
|Municipal securities                                 |  |                   | 3,556,263  |                        | 218,189 |                         |      |            | 3,774,452 
|Mortgage-backed securities                           |  |                   | 1,465,643  |                        | 18,309  |                         |      |            | 1,483,952 
|                                                     |  |                   |            |                        |         |                         |       |            |           
|                                                     |  | $                 | 33,066,636 |                        | 505,432 |                         | 2,225 |            | 33,569,843
|                                                     |  |                   |            |                        |         |                         |       |            |           



28



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(2) | Investment Securities Available-for-Sale, continued
|--- | ---------------------------------------------------

Unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2003 are summarized as follows:



|                                             |  |                     |            |                   |   |            |  |                   |  |            |  |                   |            |  |   |        
|-------------------------------------------- |  | ------------------- | ---------- | ----------------- | - | ---------- |  | ----------------- |  | ---------- |  | ----------------- | ---------- |  | - | -------
|                                             |  | Less than 12 Months |            | 12 Months or More |   | Total     
|                                             |  | Fair Value          |            | Unrealized Losses |   | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
|U.S. Treasuries and U.S. Government agencies |  | $                   | 8,429,168  |                   |   | 71,231     |  |                  |  |           |  |                   | 8,429,168  |  |   | 71,231 
|Mortgage-backed securities                   |  |                     | 4,648,190  |                   |   | 49,213     |  |                  |  |           |  |                   | 4,648,190  |  |   | 49,213 
|                                             |  |                     |            |                   |   |            |  |                   |  |            |  |                   |            |  |   |        
|                                             |  | $                   | 13,077,358 |                   | $ | 120,444    |  |                  |  |           |  | $                 | 13,074,358 |  | $ | 120,444
|                                             |  |                     |            |                   |   |            |  |                   |  |            |  |                   |            |  |   |        



At December 31, 2003,
the unrealized losses on the debt securities arose due to changing interest rates and market conditions and are considered to be temporary because of acceptable investment grades where the repayment sources of principal and interest are largely
backed by the U.S. Government. At December 31, 2003, there were no unrealized losses contained in securities issued by state and political subdivisions while 13 out of 38 securities issued by U.S. Government agencies and U. S. Government sponsored
corporations, including mortgage-backed securities, contained unrealized losses.



For the years ended December 31, 2003 and 2002, the Company sold investment securities available-for-sale for $18,592,328 and $2,043,990, respectively, with the following gross gains and losses recognized:



|             |  |      |        |      |       
|------------ |  | ---- | ------ | ---- | ------
|             |  | 2003 |        | 2002
|Gross gains  |  | $    | 74,636 |      | 33,947
|Gross losses |  |      | 12,651 |      |      
|             |  |      |        |      |       
|Net gain     |  | $    | 61,985 |      | 33,947
|             |  |      |        |      |       

|
|



The amortized
cost and fair values of securities available-for-sale at December 31, 2003, by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with
or without call or prepayment penalties.



|                                      |  |               |            |            |           
|------------------------------------- |  | ------------- | ---------- | ---------- | ----------
|                                      |  | AmortizedCost |            | Fair Value
|Due within one year                   |  | $             | 5,077,207  |            | 5,099,328 
|Due after one year through five years |  |               | 16,896,910 |            | 17,021,837
|Due after five years                  |  |               | 7,307,620  |            | 7,512,971 
|Mortgage-backed securities            |  |               | 6,931,550  |            | 6,890,069 
|                                      |  |               |            |            |           
|                                      |  | $             | 36,213,287 |            | 36,524,205
|                                      |  |               |            |            |           



Investment securities
with approximate aggregate carrying amounts of $21,182,000 and $23,385,000 at December 31, 2003 and December 31, 2002, respectively, were pledged to secure public deposits and securities sold under agreements to repurchase.



29



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(3) | Loans
|--- | -----

Major classifications of loans at December
31, 2003 and 2002 are presented below:



|                               |  |      |             |      |            
|------------------------------ |  | ---- | ----------- | ---- | -----------
|                               |  | 2003 |             | 2002
|Commercial real estate         |  | $    | 124,012,412 |      | 89,009,212 
|Commercial                     |  |      | 20,407,477  |      | 18,356,555 
|Real estatemortgage           |  |      | 8,158,084   |      | 11,528,958 
|Real estate construction      |  |      | 63,151,324  |      | 53,322,147 
|Installment and other consumer |  |      | 15,873,030  |      | 21,972,117 
|                               |  |      |             |      |            
|Total loans                    |  |      | 231,602,327 |      | 194,188,989
|Less: Unearned fees            |  |      | 575,048     |      | 366,431    
|Allowance for loan losses      |  |      | 2,692,913   |      | 2,853,750  
|                               |  |      |             |      |            
|Total loans, net               |  | $    | 228,334,366 |      | 190,968,808
|                               |  |      |             |      |            



The Company extends
credit to customers throughout its market area, which includes the Georgia counties of Clayton, Fayette and Henry. Most of the Companys loans are collateralized by real estate in these Georgia counties and a substantial portion of its
borrowers ability to repay such loans is dependent upon the economy in the Companys market area. As of December 31, 2003 and 2002, loans outstanding totaling approximately $20,000,000 and $21,495,000, respectively, were pledged to the
FHLB as collateral for outstanding borrowings.



An analysis of
the activity in the allowance for loan losses is presented below:



|                               |  |      |           |   |      |            |  
|------------------------------ |  | ---- | --------- | - | ---- | ---------- | -
|                               |  | 2003 |           |   | 2002 |           
|Balance at beginning of period |  | $    | 2,853,750 |   |      | 2,149,364  |  
|Provision for losses on loans  |  |      | 540,000   |   |      | 1,053,750  |  
|Loan charge-offs               |  |      | (813,511  | ) |      | (1,018,009 | )
|Loan recoveries                |  |      | 112,674   |   |      | 668,645    |  
|                               |  |      |           |   |      |            |  
|Balance at end of period       |  | $    | 2,692,913 |   |      | 2,853,750  |  
|                               |  |      |           |   |      |            |  



As of December 31,
2003 and 2002, the Bank serviced loans for others with approximate outstanding balances of $30,486,000 and $29,369,000, respectively. At December 31, 2003 and 2002, the mortgage servicing asset had balances of approximately $136,000 and $192,000,
respectively.



30



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(4) | Premises and Equipment
|--- | ----------------------

A summary of premises and
equipment at December 31, 2003 and 2002, is as follows:



|                               |  |      |            |      |           
|------------------------------ |  | ---- | ---------- | ---- | ----------
|                               |  | 2003 |            | 2002
|Land                           |  | $    | 1,809,183  |      | 1,670,272 
|Buildings and improvements     |  |      | 4,161,412  |      | 4,504,274 
|Furniture and equipment        |  |      | 3,803,332  |      | 3,854,971 
|Construction in progress       |  |      | 394,154    |      | 104,632   
|Leasehold improvements         |  |      | 327,556    |      | 136,654   
|                               |  |      |            |      |           
|                               |  |      | 10,495,637 |      | 10,270,803
|Less: Accumulated depreciation |  |      | 3,309,881  |      | 3.412,325 
|                               |  |      |            |      |           
|                               |  | $    | 7,185,756  |      | 6,858,478 
|                               |  |      |            |      |           



Depreciation expense
for the years ended December 31, 2003 and 2002 was approximately $619,000 and $657,000, respectively.



|(5) | Deposits
|--- | --------

At December 31, 2003, the scheduled
maturities of time deposits are as follows:



|     |  |   |            
|---- |  | - | -----------
|2004 |  | $ | 80,992,734 
|2005 |  |   | 22,943,457 
|2006 |  |   | 4,658,067  
|2007 |  |   | 1,300,790  
|2008 |  |   | 13,813,150 
|     |  |   |            
|     |  | $ | 123,708,198
|     |  |   |            



|(6) | Income Taxes
|--- | ------------

The components of income tax expense
are as follows:



|                 |  |      |           |   |      |           |  
|---------------- |  | ---- | --------- | - | ---- | --------- | -
|                 |  | 2003 |           |   | 2002 |          
|Current expense  |  | $    | 1,244,921 |   |      | 1,294,937 |  
|Deferred benefit |  |      | (106,736  | ) |      | (383,867  | )
|                 |  |      |           |   |      |           |  
|                 |  | $    | 1,138,185 |   |      | 911,070   |  
|                 |  |      |           |   |      |           |  



The differences
between income tax expense and the amount computed by applying the statutory federal income tax rate to earnings before taxes for the years ended December 31, 2003 and 2002, are as follows:



|                                                   |  |      |           |   |      |         |  
|-------------------------------------------------- |  | ---- | --------- | - | ---- | ------- | -
|                                                   |  | 2003 |           |   | 2002 |        
|Pretax income at statutory rate                    |  | $    | 1,190,486 |   |      | 977,078 |  
|Add (deduct):                                      |  |      |           |   |      |         |  
|State income taxes, net of federal effect          |  |      | (34,090   | ) |      |        |  
|Tax exempt interest                                |  |      | (58,649   | ) |      | (63,160 | )
|Increase in cash surrender value of life insurance |  |      | (94,808   | ) |      | (80,172 | )
|Other                                              |  |      | 135,246   |   |      | 77,324  |  
|                                                   |  |      |           |   |      |         |  
|                                                   |  | $    | 1,138,185 |   |      | 911,070 |  
|                                                   |  |      |           |   |      |         |  



31



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CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(6) | Income Taxes, continued
|--- | -----------------------



The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at December 31, 2003 and 2002 are presented below:



|                                                                 |  |      |           |      |          
|---------------------------------------------------------------- |  | ---- | --------- | ---- | ---------
|                                                                 |  | 2003 |           | 2002
|Deferred tax assets:                                             |  |      |           |      |          
|Allowance for loan losses                                        |  | $    | 1,022,230 |      | 1,094,986
|Deferred compensation                                            |  |      | 127,800   |      | 56,005   
|Other                                                            |  |      | 27,214    |      | 12,832   
|                                                                 |  |      |           |      |          
|Total gross deferred tax assets                                  |  |      | 1,177,244 |      | 1,163,823
|                                                                 |  |      |           |      |          
|Deferred tax liabilities:                                        |  |      |           |      |          
|Deferred loan fees                                               |  |      | 192,335   |      | 243,167  
|Net unrealized gains on investment securities available-for-sale |  |      | 108,821   |      | 176,122  
|Premises and equipment                                           |  |      | 284,221   |      | 304,970  
|FHLB stock dividends                                             |  |      | 147,095   |      | 147,095  
|Other                                                            |  |      | 36,493    |      | 58,227   
|                                                                 |  |      |           |      |          
|Total gross deferred tax liabilities                             |  |      | 768,965   |      | 929,581  
|                                                                 |  |      |           |      |          
|Net deferred tax assets                                          |  | $    | 408,279   |      | 234,242  
|                                                                 |  |      |           |      |          



Prior to January 1,
1996, the Company was permitted under the Internal Revenue Code (the Code) a special bad debt deduction related to additions to tax bad debt reserves established for the purpose of absorbing losses. The provisions of the Code permitted
the Company to deduct from taxable income an allowance for bad debts based on the greater of a percentage of taxable income before such deduction or actual loss experience. Retained earnings include approximately $675,000 for which no deferred
Federal income tax liability has been recognized. The amounts represent an allocation of income for bad debt deductions for tax purposes only. Reduction of amounts allocated for purposes other than tax bad debt losses or adjustments arising from
carryback of net operating losses would create income for tax purposes only, which would be subject to the current corporate income tax rate.



|(7) | Federal Home Loan Bank Advances and Lines of Credit
|--- | ---------------------------------------------------

At December 31, 2003, the Bank has $14,000,000 available under a $29,000,000 secured line of credit with the FHLB of Atlanta. Under the terms of the loan agreement, the FHLB will extend funding to the Bank up to 10% of the Banks
assets based on the total assets reported for the most recent quarter. The available amount is also subject to the availability of qualifying collateral. The total available line noted was based on the Banks total assets as of December 31,
2003. At December 31, 2002, the Bank had $21,000,000 available under a $26,000,000 secured line of credit with the FHLB.



The following advances were outstanding at December 31, 2003 and 2002, and require quarterly interest payments:



|                  |  |                |  |              |   |  |          
|----------------- |  | -------------- |  | ------------ | - |  | ---------
|Advance           |  | Interest Basis |  | Current Rate |   |  | Maturity 
|December 31, 2003 |  |                |  |              |   |  |          
|$5,000,000        |  | Fixed          |  | 2.71         | % |  | July 2004
|$10,000,000       |  | Fixed          |  | 1.98         | % |  | May 2013 
|December 31, 2002 |  |                |  |              |   |  |          
|$5,000,000        |  | Fixed          |  | 2.71         | % |  | July 2004



32



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CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(7) | Federal Home Loan Bank Advances and Lines of Credit, continued
|--- | --------------------------------------------------------------

The Bank also had unused lines of credit for overnight borrowing of $14,800,000 and $8,500,000 at December 31, 2003 and 2002, respectively. During 2002, the Company entered into an additional line of credit with a
correspondent bank totaling $1,000,000. Under the agreement, the line accrues interest at prime minus 100 basis points and matures January 1, 2014. The facility is collateralized by the stock of the Bank. The line of credit also includes certain
covenants including requirements to maintain defined levels of tangible net worth, net earnings and capital. Additionally, the note includes limitations on the Companys leveraging and dividend payments. As of December 31, 2003 and December 31,
2002, management believes the Company is in compliance with stated covenants. There were no funds drawn on this line at December 31, 2002 and no funds drawn at December 31, 2003.



|(8) | Junior subordinated debentures
|--- | ------------------------------

In 2002, the
Company issued $4,000,000 of Trust Preferred Securities (the Securities) through a wholly owned subsidiaries of the Company. The Trust Preferred Securities pay semi-annual dividends based on a rate of prime plus 75 basis points. At
December 31, 2003, the prime rate was 4.00%. The Securities cannot be redeemed for a period of ten years from the date of issuance and have a final maturity of 30 years from the date of issuance. Dividends are cumulative and deferrable for a period
not to exceed five years. The Securities also qualify as Tier I capital, with certain limitations, and amounts not qualified for Tier I capital are included in Tier II capital. The Company has fully and unconditionally guaranteed the trusts
obligations under the trusts capital securities to the extent set forth in the guarantee.



|(9) | Preferred Stock
|--- | ---------------

The Board of Directors of the
Company is authorized to issue preferred stock and to fix and state voting powers, designations, preferences, or other special rights of such shares and the qualifications, limitations, and restrictions thereof, subject to regulatory approval but
without stockholder approval.



|(10) | Employee Benefit Plans
|---- | ----------------------

401(k) Profit Sharing
Plan

The Company has a tax-qualified defined contribution profit sharing plan (the Plan) for the benefit of its employees.
All full-time employees become eligible to participate under the Plan after completing one year of service. Under the Plan, employees may voluntarily elect to defer up to 15% of their compensation, not to exceed applicable limits. Company
contributions in 2003 and 2002 were $1.00 for each $1.00 of employee contribution up to 5% of the employees compensation. Such matching contributions begin to vest after the first year at a rate of 20% per year with full vesting after five
years. Additionally, the Company may contribute an annual discretionary contribution to the Plan based upon a number of factors, such as the Companys retained earnings, profits, regulatory capital, and employee performance. Contributions by
the Company to the Plan during the years ended December 31, 2003 and 2002 totaled approximately $121,000 and $105,000, respectively.



Stock Option Plan

The Company
sponsors a stock option plan (the 1996 Option Plan) whereby 205,228 authorized shares of common stock are reserved for issuance by the Company upon exercise of stock options granted to officers, directors, and employees of the Company
from time to time. Options constitute both incentive stock options and non-qualified stock options. Options awarded to officers and directors are exercisable at a rate of 20% annually with the first 20% exercisable on the one-year anniversary of the
date of grant. Any shares subject to an award, which expire or is terminated unexercised will again be available for issuance. The 1996 Option Plan has a term of ten years, unless terminated earlier. The exercise price per share for non-qualified
and incentive stock options shall be the price as determined by an option committee, but not less than the fair market value of the common stock on the date of grant.



33



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(10) | Employee Benefit Plans, continued
|---- | ---------------------------------

In 2000, the
Company approved a second stock option plan (the 2000 Option Plan) whereby 119,250 shares of common stock (either authorized shares or shares purchased in the market) are available to be granted to officers, directors, and employees of
the Company from time to time. Options constitute both incentive stock options and non-qualified stock options. Terms of the 2000 Option Plan are similar to that of the 1996 Option Plan with the exception that options granted are immediately vested
and that a minimum of six months must elapse between the date of the grant of an option and the date of the sale of the common stock received through the exercise of the option. At December 31, 2003, there were an aggregate of 62,585 share of common
stock available for grant under the 1996 Option Plan and the 2000 Option Plan.



Stock option activity is as follows:



|                                           |  |      |         |   |      |         |  
|------------------------------------------ |  | ---- | ------- | - | ---- | ------- | -
|                                           |  | 2003 |         |   | 2002 |        
|Options outstanding at beginning of period |  |      | 246,667 |   |      | 231,291 |  
|Options granted                            |  |      | 16,275  |   |      | 17,175  |  
|Options exercised                          |  |      | (2,575  | ) |      | (750    | )
|Options canceled                           |  |      |        |   |      | (1,049  | )
|                                           |  |      |         |   |      |         |  
|Options outstanding at end of period       |  |      | 260,367 |   |      | 246,667 |  
|                                           |  |      |         |   |      |         |  
|Options exercisable at end of period       |  |      | 245,607 |   |      | 217,508 |  
|                                           |  |      |         |   |      |         |  
|Weighted-average option prices per share:  |  |      |         |   |      |         |  
|Options granted during the period          |  | $    | 22.93   |   |      | 17.10   |  
|                                           |  |      |         |   |      |         |  
|Options canceled during the period         |  | $    |        |   |      | 14.49   |  
|                                           |  |      |         |   |      |         |  
|Options exercised during the period        |  | $    | 9.94    |   |      | 6.67    |  
|                                           |  |      |         |   |      |         |  
|Options outstanding at end of period       |  | $    | 9.90    |   |      | 8.81    |  
|                                           |  |      |         |   |      |         |  



A summary of options
and warrants outstanding as of December 31, 2003 is presented below:



|                    |  |                                   |  |                                           |  |                 |  |                               |  |                                          
|------------------- |  | --------------------------------- |  | ----------------------------------------- |  | --------------- |  | ----------------------------- |  | -----------------------------------------
|Options Outstanding |  | Range of Exercise Price per Share |  | Weighted Average Exercise Price Per Share |  | Years Remaining |  | Options Currently Exercisable |  | Weighted Average Exercise Price Per Share
|183,789             |  | $  6.67    9.50                  |  | $  7.14                                   |  | 4.0             |  | 172,029                       |  | $  7.03                                  
|43,500              |  | 10.14  14.49                     |  | 12.68                                     |  | 7.1             |  | 40,500                        |  | 13.90                                    
|33,078              |  | 17.10  22.93                     |  | 19.97                                     |  | 9.5             |  | 33,078                        |  | 19.97                                    
|                    |  |                                   |  |                                           |  |                 |  |                               |  |                                          
|260,367             |  | $  6.67  22.93                   |  | $  9.69                                   |  | 5.2             |  | 245,607                       |  | $  9.90                                  
|                    |  |                                   |  |                                           |  |                 |  |                               |  |                                          



Life Insurance
Policies

The Company adopted a defined contribution post retirement benefit plan to provide retirement benefits to certain of the
Companys executive officers and to provide death benefits for the designated beneficiaries. Under this plan, single-premium, split-dollar, whole-life insurance contracts were purchased on certain executive officers. The increase in the cash
surrender value of the contracts, less the Banks cost of funds, constitutes the Companys contribution to the plan each year. In the event the insurance contracts fail to produce positive returns, the Company has no obligations to
contribute to the plan. For the years ended December 31, 2003 and 2002, the Company incurred expenses of $189,000 and $96,000, respectively, in connection with this plan.



34



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(11) | Commitments
|---- | -----------

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



Standby letters
of credit are conditional commitments issued by the Company guaranteeing the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral supporting these commitments, as deemed necessary.



The Companys exposure to credit loss, in the event of nonperformance by the customer for commitments to extend credit
and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for recorded loans.



The following summarizes commitments as of December 31, 2003 and 2002:



|                                                                    |  |                             |        |      |       
|------------------------------------------------------------------- |  | --------------------------- | ------ | ---- | ------
|                                                                    |  | Approximate Contract Amount
|                                                                    |  | 2003                        |        | 2002
|                                                                    |  | (in thousands)             
|Financial instruments whose contract amounts represent credit risk: |  |                             |        |      |       
|Commitments to extend credit                                        |  | $                           | 46,197 |      | 23,696
|Standby letters of credit                                           |  | $                           | 2,101  |      | 950   



Commitments to extend
credit are agreements to lend to a customer as long as there is no violation of any condition established in the agreement. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some
of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customers creditworthiness on a case-by-case basis. The amount
of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the borrower.



The Company has entered into contracts with certain members of management which stipulate a term and annual base salary. The contracts include provisions
to terminate the agreements for just cause which is defined in the contracts. If such members of management are relieved of their position without just cause, the employee is entitled to a continuation of salary from the termination date
through the remaining term of the agreement. Certain of these employment agreements contain a provision stating that in the event of any change in control of the Company which results in voluntary or involuntary termination of employment within one
year, the officer will be paid a lump sum distribution equal to 2.99 times the individuals base compensation.



|(12) | Fair Values of Financial Instruments
|---- | ------------------------------------

The
Company is required to disclose the fair value of its financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. Those



35



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(12) | Fair Values of Financial Instruments, continued
|---- | -----------------------------------------------

techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets
and, in many cases, could not be realized in immediate settlement of the instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes
in assumptions would significantly affect the estimates.



Fair
value estimates are based on existing on- and off-balance-sheet financial instruments and other recorded assets and liabilities without attempting to estimate the fair value of anticipated future business. In addition, tax ramifications related to
the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. Accordingly, the aggregate fair value amounts presented do not represent the underlying value
of the Company.



The following methods and assumptions were
used by the Company in estimating its fair value disclosures for financial instruments and certain other assets and liabilities:



Cash and cash equivalents

The
carrying amounts of cash and cash equivalents approximate fair values.



Interest-bearing deposits in other financial institutions

The carrying amounts of interest-bearing deposits in other
financial institutions approximate fair values.



Investment
securities available-for-sale

Fair values for investment securities available-for-sale are based on quoted market prices.



FHLB stock

The carrying amount is considered a reasonable estimate of fair value.



Loans

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for all other loans are estimated based upon a discounted cash flow analysis, using
interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.



Cash surrender value of life insurance

The carrying value of this asset approximates its fair value.



Deposits

Fair values for fixed-rate time deposits are estimated using a discounted cash flow analysis that applies interest
rates currently being offered on deposits of similar terms of maturity. The carrying amounts of all other deposits, due to their short-term nature, approximate their fair values.



Securities sold under agreements to repurchase

Fair value approximates the carrying value of such liabilities due to their short-term nature.



FHLBadvances

The fair values of the FHLB fixed rate borrowings are estimates using discounted cash flows, based on the current incremental borrowing rates for similar
types of borrowing arrangements.



36



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(12) | Fair Values of Financial Instruments, continued
|---- | -----------------------------------------------

Junior subordinated debentures

Junior subordinated debentures bear interest on a floating basis, and as such, the carrying
amount approximates fair value.



Commitments to extend
credit, standby letters of credit

Off-balance-sheet instruments (commitments to extend credit and standby letters of credit) are
generally short-term and are issued at variable interest rates. Therefore, both the carrying value and estimated fair value associated with these instruments are immaterial.



The estimated fair value of the Companys financial instruments as of December 31, 2003 and December 31, 2002 are as
follows:



|                                               |  |                   |         |                   |         |                |         |            |        
|---------------------------------------------- |  | ----------------- | ------- | ----------------- | ------- | -------------- | ------- | ---------- | -------
|                                               |  | December 31, 2003 |         | December 31, 2002
|                                               |  | Carrying Value    |         | Fair Value        |         | Carrying Value |         | Fair Value
|                                               |  | (in thousands)   
|Assets:                                        |  |                   |         |                   |         |                |         |            |        
|Cash and cash equivalents                      |  | $                 | 14,006  |                   | 14,006  |                | 22,698  |            | 22,698 
|Interest-bearing deposit accounts              |  |                   | 1,386   |                   | 1,386   |                |        |            |       
|Investment securities available-for-sale       |  |                   | 36,524  |                   | 36,524  |                | 33,570  |            | 33,570 
|FHLB stock                                     |  |                   | 750     |                   | 750     |                | 750     |            | 750    
|Loans, net                                     |  |                   | 228,334 |                   | 231,000 |                | 190,969 |            | 200,557
|Cash surrender value of life insurance         |  |                   | 4,620   |                   | 4,620   |                | 4,342   |            | 4,342  
|                                               |  |                   |         |                  
|Liabilities:                                   |  |                   |         |                   |         |                |         |            |        
|Deposits                                       |  |                   | 249,637 |                   | 252,212 |                | 231,787 |            | 233,313
|Securities sold under agreements to repurchase |  |                   | 3,221   |                   | 3,221   |                | 2,085   |            | 2,085  
|FHLB advances                                  |  |                   | 15,000  |                   | 14,445  |                | 5,000   |            | 5,000  
|Junior Subordinated Debentures                 |  |                   | 4,000   |                   | 4,000   |                | 4,000   |            | 4,000  



|(13) | Related Party Transactions
|---- | --------------------------

It is the Banks
policy to make loans to officers, directors, and their associates in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons. The following is a summary of
activity during the year ended December 31, 2003 with respect to such aggregate loans to these individuals and their associates:



|                                                 |  |   |            |  
|------------------------------------------------ |  | - | ---------- | -
|Related party loan balances at beginning of year |  | $ | 1,069,575  |  
|New loans                                        |  |   | 3,929,682  |  
|Principal repayments                             |  |   | (2,378,933 | )
|                                                 |  |   |            |  
|Related party loan balances at end of year       |  | $ | 2,620,324  |  
|                                                 |  |   |            |  



Deposits from related
parties totaled approximately $1,063,000 and $669,000, at December 31, 2003 and 2002, respectively.



37



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(14) | Parent Company Financial Information
|---- | ------------------------------------

The
following represents condensed financial information of the holding company:



Condensed Balance Sheets



December 31, 2003 and 2002



|                                     |  |      |            |      |           
|------------------------------------ |  | ---- | ---------- | ---- | ----------
|                                     |  | 2003 |            | 2002
|Assets                               |  |      |            |      |           
|Cash                                 |  | $    | 289,241    |      | 496,374   
|Investment in subsidiaries           |  |      | 22,872,740 |      | 20,878,423
|Other assets                         |  |      | 920,734    |      | 822,656   
|                                     |  |      |            |      |           
|                                     |  | $    | 24,082,715 |      | 22,197,453
|                                     |  |      |            |      |           
|Liabilities and Shareholders Equity |  |      |            |      |           
|Junior subordinated debentures       |  | $    | 4,250,000  |      | 4,250,000 
|Dividends payable                    |  |      | 88,117     |      | 73,339    
|Other liabilities                    |  |      | 78,599     |      | 133,884   
|                                     |  |      |            |      |           
|Total liabilities                    |  |      | 4,416,716  |      | 4,457,223 
|Total shareholders equity           |  |      | 19,665,999 |      | 17,740,230
|                                     |  |      |            |      |           
|                                     |  | $    | 24,082,715 |      | 22,197,453
|                                     |  |      |            |      |           



Condensed Statements of
Earnings



For the Years Ended December 31, 2003 and 2002



|                                                                 |  |      |           |   |      |           |  
|---------------------------------------------------------------- |  | ---- | --------- | - | ---- | --------- | -
|                                                                 |  | 2003 |           |   | 2002 |          
|Dividends from subsidiaries                                      |  | $    | 500,000   |   |      | 400,000   |  
|Interest expense                                                 |  |      | (200,393  | ) |      | (205,263  | )
|Other operating expenses                                         |  |      | (179,243  | ) |      | (108,930  | )
|Income tax benefit                                               |  |      | 123,575   |   |      | 109,565   |  
|                                                                 |  |      |           |   |      |           |  
|Earnings before equity in undistributed earnings of subsidiaries |  |      | 243,939   |   |      | 195,372   |  
|Equity in undistributed earnings of subsidiaries                 |  |      | 2,119,304 |   |      | 1,767,318 |  
|                                                                 |  |      |           |   |      |           |  
|Net earnings                                                     |  | $    | 2,363,244 |   |      | 1,962,690 |  
|                                                                 |  |      |           |   |      |           |  



38



---

CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(14) | Parent Company Financial Information, continued
|---- | -----------------------------------------------



Condensed Statements of Cash Flows



For the Years Ended December 31, 2003 and 2002



|                                                                                          |  |      |            |   |      |            |  
|----------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | ---------- | -
|                                                                                          |  | 2003 |            |   | 2002 |           
|Cash flows from operating activities:                                                     |  |      |            |   |      |            |  
|Net earnings                                                                              |  | $    | 2,363,244  |   |      | 1,962,690  |  
|Adjustment to reconcile net earnings to net cash (used) provided by operating activities: |  |      |            |   |      |            |  
|Equity in undistributed earnings of subsidiaries                                          |  |      | (2,119,304 | ) |      | (1,767,318 | )
|Increase (decrease) in other assets / other liability                                     |  |      | (153,364   | ) |      | (440,105   | )
|                                                                                          |  |      |            |   |      |            |  
|Net cash provided (used) by operating activities                                          |  |      | 90,576     |   |      | (244,733   | )
|                                                                                          |  |      |            |   |      |            |  
|Cash flows used by investing activities consisting of capital infusion in subsidiaries    |  |      |           |   |      | (900,000   | )
|                                                                                          |  |      |            |   |      |            |  
|Cash flows from financing activities:                                                     |  |      |            |   |      |            |  
|Dividends paid                                                                            |  |      | (322,880   | ) |      |           |  
|Exercise of stock options                                                                 |  |      | 37,436     |   |      | 4,999      |  
|Retirement of common stock                                                                |  |      | (12,265    | ) |      | (44,322    | )
|Repayment of line of credit                                                               |  |      |           |   |      | (2,500,000 | )
|Proceeds from issuance of Trust Preferred Securities                                      |  |      |           |   |      | 4,000,000  |  
|                                                                                          |  |      |            |   |      |            |  
|Net cash (used) provided by financing activities                                          |  |      | (297,709   | ) |      | 1,460,677  |  
|                                                                                          |  |      |            |   |      |            |  
|Change in cash and cash equivalents                                                       |  |      | (207,133   | ) |      | 315,944    |  
|Cash and cash equivalents at beginning of period                                          |  |      | 496,374    |   |      | 180,430    |  
|                                                                                          |  |      |            |   |      |            |  
|Cash and cash equivalents at end of period                                                |  | $    | 289,241    |   |      | 496,374    |  
|                                                                                          |  |      |            |   |      |            |  



|(15) | Regulatory Matters
|---- | ------------------

Dividends paid by the
Bank are the primary source of funds available to the Company. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory authorities. These restrictions are based on the level of regulatory
classified assets, the prior years net earnings, and the ratio of equity capital to total assets. At December 31, 2003, the Bank could pay approximately $1,310,000 in dividends without obtaining prior regulatory approval.



The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material
effect on the Companys or Banks financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the
Banks assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.



Quantitative
measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets. Management believes,
as of December 31, 2003, that the Company and the Bank meet all capital adequacy requirements to which they are subject.



39



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CCF HOLDING COMPANY AND SUBSIDIARIES



Notes to Consolidated Financial Statements, continued



|(15) | Regulatory Matters
|---- | ------------------

As of December 31, 2003, the
most recent notification from the FDIC 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 below. There are no conditions or events since that notification that management believes have changed the Banks capital category.



The actual capital amounts and ratios at December 31, 2003 and 2002, are
presented in the table below (in thousands):



|                                                      |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|----------------------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | -------------------------------------------------------------- | ------ |  | - | ------ |  | ----- | ------ |  | ---
|                                                      |  | Actual |        |       | For Capital AdequacyPurposes |   |        | To Be Well CapitalizedUnder PromptCorrective Action Provisions
|                                                      |  | Amount |        | Ratio |                              |   | Amount |                                                                | Ratio  |  |   | Amount |  | Ratio
|As of December 31, 2003:                              |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Total capitalrisk-based (to risk-weighted assets)    |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Bank                                                  |  | $      | 25,179 |       | 10.5                         | % |        | $                                                              | 19,248 |  | 8 | %      |  | $     | 24,060 |  | 10%
|Consolidated                                          |  | $      | 25,973 |       | 10.8                         | % |        | $                                                              | 19,273 |  | 8 | %      |  |       | N/A    |  | N/A
|Tier I capitalrisk-based (to risk-weighted assets)   |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Bank                                                  |  | $      | 22,656 |       | 9.4                          | % |        | $                                                              | 9,624  |  | 4 | %      |  | $     | 14,436 |  | 6% 
|Consolidated                                          |  | $      | 23,450 |       | 9.7                          | % |        | $                                                              | 9,636  |  | 4 | %      |  |       | N/A    |  | N/A
|Tier I capitalleverage (to average assets)           |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Bank                                                  |  | $      | 22,656 |       | 7.7                          | % |        | $                                                              | 11,729 |  | 4 | %      |  | $     | 14,661 |  | 5% 
|Consolidated                                          |  | $      | 23,450 |       | 8.0                          | % |        | $                                                              | 11,730 |  | 4 | %      |  |       | N/A    |  | N/A
|                                                      |  |        |        |       |                              |  
|As of December 31, 2002:                              |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Total capitalrisk-based (to risk-weighted assets)    |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Bank                                                  |  | $      | 20,878 |       | 10.2                         | % |        | $                                                              | 16,323 |  | 8 | %      |  | $     | 20,403 |  | 10%
|Consolidated                                          |  | $      | 17,740 |       | 8.7                          | % |        | $                                                              | 16,345 |  | 8 | %      |  |       | N/A    |  | N/A
|Tier I capital  risk-based (to risk-weighted assets) |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Bank                                                  |  | $      | 20,532 |       | 10.0                         | % |        | $                                                              | 8,161  |  | 4 | %      |  | $     | 12,242 |  | 6% 
|Consolidated                                          |  | $      | 21,394 |       | 10.5                         | % |        | $                                                              | 8,172  |  | 4 | %      |  |       | N/A    |  | N/A
|Tier I capitalleverage (to average assets)           |  |        |        |       |                              |   |        |                                                                |        |  |   |        |  |       |        |  |    
|Bank                                                  |  | $      | 20,532 |       | 7.7                          | % |        | $                                                              | 10,644 |  | 4 | %      |  | $     | 13,306 |  | 5% 
|Consolidated                                          |  | $      | 21,394 |       | 8.4                          | % |        | $                                                              | 10,173 |  | 4 | %      |  |       | N/A    |  | N/A



40