CCF HOLDING COMPANY
     and its wholly owned subsidiary
Heritage Bank


ANNUAL REPORT TO STOCKHOLDERS



Year Ended December 31, 1998


<PAGE>

                               CCF HOLDING COMPANY
                                  ANNUAL REPORT



                                TABLE OF CONTENTS



Letter to Stockholders                                             1


Corporate Profile and Stock Market Information                     2


Selected Financial and Other Data                                  3


Management's Discussion and Analysis                               6


Independent Auditor's Report                                      14


Consolidated Financial Statements                                 15


Notes to Consolidated Financial Statements                        22


Office Locations and Other Corporate Information                  40


<PAGE>



Dear Fellow Shareholder:

It is with a great deal of pride and pleasure  that we report to you the results
of operations of CCF Holding Company and its subsidiary,  Heritage Bank, for the
fiscal year ended  December 31, 1998. As you will see when you read the details,
the year proved to be successful as market share and earnings grew dramatically.

The  banking  talent  assembled  by the  Board  of  Directors  has  successfully
transformed us from our  "traditional  thrift" roots to a vibrant,  full service
financial  institution capable of competing equally against financial giants and
other community  institutions.  For that we take pride. The results contained in
the body of this  report  will show a strong  positive  trend in almost  all the
important areas.

Last year's annual report disclosed our intentions of entering into new markets.
By the end of 1998 those new markets have now grown to $54.6 million in deposits
and $42.6 million in loans outstanding.  We accomplished this substantial growth
by focusing on customer  service,  hiring and  maintaining  good  employees  and
applying sound banking principals.

Thank you for your continuing support. We are eagerly anticipating 1999.

Very truly yours,


/s/D. B. Turner
------------------
D. B. Turner
President & CEO

                                        1

<PAGE>

                               CCF HOLDING COMPANY

Corporate Profile and Related Information

CCF Holding Company (the  "Company") is a bank holding company  chartered by the
State of Georgia.  Heritage  Bank (the "Bank") is a commercial  bank that is the
wholly owned subsidiary of the Company.  Prior to September 1, 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 from a mutual to stock form of organization  (the  "Conversion") of a
predecessor  of the Bank in July  1995.  The  Bank,  through  its  predecessors,
commenced business in 1955.

The Bank  operates  five  offices  within its  primary  market  area in Clayton,
Fayette  and Henry  Counties.  The market area is part of the  Atlanta,  Georgia
metropolitan   statistical   area.  The  Bank  is  subject  to  examination  and
comprehensive  regulation  by the  State  of  Georgia  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 is also subject
to state 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,  Federal Home
Loan Bank borrowings and the amortization,  repayment, and maturity of loans and
investment  securities.  The Bank does not rely on brokered deposits.  Principal
sources of income are interest on loans and  investment  securities.  The Bank's
principal expense is interest paid on deposits.

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 daily stock  quotation for the Company is published under the symbols "CCF."
The following table reflects high and low prices paid on actual  transactions as
well as dividend  information.  The quotations reflect  inter-dealer prices, and
may not include retail mark-up, mark-down, or commission.

<TABLE>
<CAPTION>

                                                                      Dividends        Dividends
         Period                   High              Low               Declared         Paid 
         ------                   ----              ---               ---------        -----
<S>                             <C>               <C>               <C>              <C>    
1997 - First Quarter(1)          $15.00            $13.40            $   ---          $   .45
1997 - Second Quarter(1)          15.23             14.31               .25                ---
1997 - Third Quarter(1)           15.45             15.00                ---              .25
1997 - Fourth Quarter(1)          21.00             15.56               .27                ---

1998 - First Quarter             $22.00            $20.50            $  .16           $   .27
1998 - Second Quarter             24.00             21.50               .16               .16
1998 - Third Quarter              22.00             16.75               .16               .16
1998 - Fourth Quarter             18.00             13.00               .16               .16
</TABLE>

-----------------
(1)      Dividends  declared and  Dividends  Paid were restated to reflect a 10%
         stock dividend declared on December 16, 1997.

                                        2

<PAGE>


         The  number  of  stockholders  of record as of  December  31,  1998 was
approximately 400, inclusive of the number of persons or entities who held stock
in nominee or "street" name through  various  brokerage  firms.  At December 31,
1998,  there  were  895,148  shares  outstanding,  net of 5,441  shares  held as
treasury  shares.  The  Company's  ability to pay dividends to  stockholders  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.


                        SELECTED FINANCIAL AND OTHER DATA
                        ---------------------------------
<TABLE>
<CAPTION>

Financial Condition                       At December 31,                          At September 30,(1)
(Dollars in thousands)                ------------------------           ----------------------------------------
                                       1998             1997             1996             1995              1994
                                       ----             ----             ----             ----              ----
<S>                                <C>               <C>               <C>              <C>              <C>         
Total Amount of:
  Assets                             $169,860          124,956           80,283           79,822           69,080      
  Loans receivable, net               121,827           97,541           51,500           45,196           44,244
  Mortgage-backed securities              201            1,838           10,025            7,896            6,804
  Investment securities                29,256            9,722           13,353           15,671           12,795
  Liabilities                         158,234          113,436           65,843           62,501           62,866
  Deposits                            154,977           91,201           61,822           61,132           61,598
 Securities sold under                                                                                    
   agreements to repurchase             1,117            2,393             -                -                -   
  FHLB advances                          -              18,510            2,500             -                -   
  Stockholders' equity                 11,626           11,519           14,440           17,322            6,214
Other Data:                                                                                               
                                                                                                          
  Net income                              619              137              473              604              431
  Average assets                      152,652           99,675           79,348           72,229           70,533
  Average equity                       10,499           11,934           16,733            8,973            6,061
  Full service offices (2)                  5                5                1                1                1
                                                                                                    
</TABLE>

------------------------
(1)      The Company  changed its fiscal year end from  September 30 to December
         31 during December 1996.
(2)      During 1997, the Bank opened two new offices and converted two existing
         customer service facilities into full service offices.


                                        3

<PAGE>

<TABLE>
<CAPTION>

Summary of Operations (Dollars in thousands)                Year Ended December 31,      Year Ended September 30,(1)
                                                            -----------------------   ----------------------------------
                                                               1998        1997          1996        1995        1994
                                                               ----        ----          ----        ----        ----
<S>                                                       <C>            <C>          <C>          <C>          <C>           
Total interest income                                       $ 12,437        8,090(3)     5,573        5,021        4,872         
Total interest expense                                         6,800        3,921        2,527        2,479        2,245
                                                             -------      -------      -------      -------      -------
  Net interest income                                          5,637        4,169        3,046        2,542        2,627
Provision for loan losses                                        275          126          130            5           69
                                                             -------      -------      -------      -------      -------
  Net interest income after provision for loan losses          5,362        4,043        2,916        2,537        2,558
Other income                                                     968          909(3)       415          328          346
Other expenses(2)                                              5,380        4,746        2,715        1,968        1,904
                                                             -------      -------      -------      -------      -------
Income before income taxes and cumulative                                                                       
  effect of change in accounting principle                       950          206          616          897        1,000
Income tax expense                                               332           69          143          293          363
                                                             -------      -------      -------      -------      -------
Income before cumulative effect of change in accounting                                                         
  principle                                                      619          137          473          604          637
Cumulative effect of change in                                                                                  
  accounting principle                                            --           --           --           --          206
                                                             -------      -------      -------      -------      -------
  Net income                                                $    619          137          473          604          431
                                                             =======      =======      =======      =======      =======
                                                                                                                
</TABLE>
                                                                            
------------------------                                                    
(1)      The Company  changed its fiscal year end from  September 30 to December
         31 during December 1996.
(2)      In 1996,  the  Company  included  a  $398,000  one time  assessment  to
         recapitalize  the Savings  Association  Insurance  Fund ("SAIF") of the
         FDIC.
(3)      Number has been  adjusted  to include  fee income  reported  in 1997 as
         other  income and now  changed to  interest  income.  The fee income in
         years ended  September 30, 1994,  1995 and 1996 was not material to the
         balances  reported.  The fees in almost all cases are prepaid  interest
         that is  amortized  over the life of the loan or taken  into  income up
         front to offset loan booking expense per FASB 91.


                                        4

<PAGE>


Key Operating Ratios
<TABLE>
<CAPTION>
                                                       At or for the Year Ended          At or for the Year Ended
                                                       ------------------------          -------------------------
                                                            December 31,                      September 30,(1)
                                                            ------------                 -------------------------     
Performance Ratios:                                     1998           1997          1996          1995           1994
                                                        -----          ----          ----          ----           ----
<S>                                                  <C>           <C>           <C>           <C>           <C>    
Return on average assets (net income
  divided by average total assets)                        0.40%         0.14%         0.60%         0.84%         0.61%
Return on average equity (net income
  divided by average equity)                              5.34%         1.14%         2.83%         6.73%         7.11%
Average interest-earning assets to
  average interest-bearing liabilities                  107.14%       112.88%       122.83%       110.75%       106.50%
Net interest rate spread                                  3.61%         3.87%         3.15%         3.31%         3.68%
Net yield on average interest-earning assets              3.95%         4.41%         4.04%         3.70%         3.89%
Net interest income after provision for loan
  losses to total other expenses                         99.68%        74.97        107.40%       128.93%       134.38%
Basic earnings per share (2)                            $ 0.74         $0.17         $0.45         $0.17          N/A
Diluted earnings per share (2)                          $ 0.70         $0.16         $0.43         $0.17          N/A
Dividend payout (3)                                      86.49%       305.88%       111.11%         N/A           N/A
Capital Ratios

Book value per share (2)                                $12.99        $12.81        $13.35        $13.23          N/A
Average equity to average assets
  (average equity divided by average total
  assets)                                                 7.45%        11.97%        21.09%        12.42%         8.59%
Equity-to-assets (End of Period)                          6.84%         9.22%        17.99%         21.7%         9.00%
Asset Quality Ratios:

Non-performing loans to total loans, net                  0.09%         0.38%         1.17%         0.39%         0.41%
                                                                                      
Non-performing loans to total assets                      0.07%         0.29%         0.75%         0.22%         0.26%
Allowance for loan losses to nonperforming loans        865.70%       182.93%        89.90%       233.71%       237.63%

</TABLE>
--------------------------------
(1)      The Company  changed its fiscal year end from  September 30 to December
         31 during December 1996.
(2)      There  were no  shares  outstanding  prior to the  consummation  of the
         Company's  initial  public  offering on July 11, 1995.  For purposes of
         presenting net income per share for the year ended  September 30, 1995,
         only post  Conversion net income is considered.  All per share data has
         been restated to reflect a 10% stock dividend  declared on December 16,
         1997 and paid on January 2, 1998.
(3)      Dividends declared per share divided by net income per share.

                                        5

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

General

The earnings of the Company  depend  primarily on the earnings of the Bank.  The
largest  components of the Bank's net income are net interest  income,  which is
the difference  between interest income and loan fees and interest expense,  and
other  income  derived   primarily  from  service  fees  on  deposit   accounts.
Consequently,  the Bank's  earnings  are  dependent  on its ability to originate
loans, net interest income, and the relative amounts of interest-earning  assets
and interest-bearing  liabilities. The Bank's net income is also affected by its
provision  for loan losses and  foreclosed  real estate as well as the amount of
other expenses, such as salaries and employee benefits, occupancy and equipment,
and federal deposit insurance  premiums.  Earnings of the Bank also are affected
significantly  by general  economic  and  competitive  conditions,  particularly
changes in market interest rates, government policies, and actions of regulatory
authorities.

Business Strategy

The Bank's  business  strategy is to endeavor 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. The
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  our  product  and  customer  base to become a more
diversified financial institution.

  1.   Regulatory  Capital.  After the Conversion from mutual to stock, the Bank
       was confronted with issues new to its operating  strategies.  The primary
       issues  were that of managing  the excess  capital and doing so in a safe
       and sound  long term  manner.  The  ensuing  strategy  was to  repurchase
       shares,  grow market share and increase the dividend payout.  The results
       of this  strategy  have  been  the  repurchase  of more  than  30% of the
       original outstanding shares, a growth of 140% in deposits and the payment
       of $2.11 per share in dividends  since the  Conversion.  Indications  are
       that shareholder  value per share has increased and the Bank continues to
       exceed all regulatory capital guidelines.

  2.   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  continues to be to increase
       the volume of loans that reprice at least  annually,  this will match the
       repricing of its liabilities.

  3.   Asset  Quality.  The Bank continues to seek to maintain its asset quality
       through detailed  underwriting and through analysis of its loan requests.
       At December 31, 1998,  the Bank's ratio of  nonperforming  loans to total
       loans was .09% and to total assets was .07%.

  4.   Product  and  Customer  Base.  The  Bank  increased  the size of its loan
       portfolio  by  approximately  $25 million  between  December 31, 1997 and
       December 31, 1998.  The increase is  attributed to a growth in commercial
       lending   (primarily   real  estate   mortgages)   of  47%,   residential
       construction

                                        6

<PAGE>


       lending of 100%, and consumer lending  primarily through indirect lending
       activities  of 235%.  This  growth  more than offset the sale of seasoned
       residential mortgage loans that caused a 25% reduction in the residential
       mortgage loan portfolio. The Bank's deposits increased by nearly 70% from
       $91 million at December  31, 1997 to $155 million at December 31, 1998 as
       a way to fund this loan growth.  The Bank has also repaid all  borrowings
       of funds from the Federal  Home Loan Bank.  During  1999,  it is expected
       that the Bank's commercial and consumer lending will continue to increase
       in relation to its residential  mortgage  lending.  The Bank will seek to
       continue to expand its customer base through advertising, direct mail and
       one on one personal visits with prospective customers.

The  management  of the Bank believes  that there are  opportunities  for growth
within the Bank's  primary market area and adjacent  market areas,  and 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 is discussed  below,  with this growth comes new
risks, and the ability of the Bank to successfully complete the dramatic changes
it has begun will in large measure  directly impact its financial  condition and
operating  results in future periods.  This growth is designed to allow the Bank
to become  more like a  commercial  bank and  compete on a broader  scale in the
highly competitive financial services industry.

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. The Bank, like many
other  financial  institutions,  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 most deposit  accounts,  given their  shorter terms to
maturity,  react more quickly to market  interest  rate  movements  than do many
types of loans,  increases in interest  rates may have an adverse  effect on the
Bank's  earnings.  The Bank  reduces  this  exposure  by  diversifying  the loan
portfolio to include more loans at primarily variable rates.

The Bank's net  interest  rate spread was 3.87% for the year ended  December 31,
1997 and 3.61% for the year ended  December 31, 1998.  Results of the  Company's
cumulative  interest  sensitivity  gap analysis  indicate that a fluctuation  in
interest  rates would have only a slight  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  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 as its source of
funds.  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
mortgage-backed securities and high quality investment securities.

In an effort to manage  interest  rate  risk and  protect  it from the  negative
effect of increases in interest rates, the Bank has instituted certain asset and
liability management measures, including the following: 1) reduce the maturities
or terms 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) lengthen  the  maturities  of
interest-bearing liabilities by encouraging

                                        7

<PAGE>
depositors  to invest in longer term deposit  products  offered by the Bank;  3)
increase the amount of less  rate-sensitive  deposits by actively seeking demand
deposit  accounts;  and 4)  encourage  long-term  depositors  to maintain  their
accounts with the Bank through expanded customer products and services.

Average  Balance  Sheets.  The following  table sets forth  certain  information
relating to the Bank'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.
<TABLE>
<CAPTION>
                                                                     For the Year Ended December 31,
                                               --------------------------------------------------------------------------------
                                                               1998                                          1997
                                               ----------------------------------          ------------------------------------
                                                             Interest                                       Interest
                                               Average       Income/                       Average(4)       Income/
                                               Balance       Expense        Yield           Balance         Expense      Yield
                                               -------       -------        -----           -------         -------      -----
                                                                         (Dollars in Thousands)
<S>                                          <C>           <C>            <C>             <C>            <C>          <C>  
Assets
  Interest-earning assets:
    Loans(1) interest and fees                  $114,359      10,778         9.42%           82,973         7,414(5)     8.94%
    Mortgage-backed securities                       585          34         5.81%            3.483           183        5.25%
    Investment securities                         25,519       1,463         5.73%            5,679           335        5.90%
    FHLB Stock                                     1,013          75         7.40%            1,013            74        7.31%
    Interest-earning deposits in
    other financial institutions                   1,197          87         7.27%            1,309            84        6.42%
                                                 -------      ------                         ------        ------
      Total interest-earning assets              142,673      12,437         8.72%           94,457         8,090        8.56%
                                                              ------                                       ------
 Other noninterest-earning assets                  9,979                                      5,218
                                                 -------                                     ------
      Total assets                              $152,652                                     99,675
                                                 =======                                     ======
Liabilities and stockholders' equity:
  Interest-bearing liabilities:
    Demand deposits                             $ 34,346       1,318         3.84%           15,477           473        3.06%
    Regular savings                                9,590         235         2.45%           10,771           231        2.14%
    Time deposits                                 84,841       5,011         5.91%           48,143         2,721        5.65%
    FHLB advances                                  2,363         135         5.71%            9,154           489        5.34%
Securities sold under agreements to
  repurchase                                       2,027         101         4.98%              135             7        5.19%
                                                 -------      ------                         ------        ------
      Total interest-bearing liabilities         133,167       6,800         5.11%           83,680         3,921        4.69%
                                                 -------      ------                         ------        ------
Non-interest-bearing deposits                      7,076                                      3,758
Other noninterest-bearing liabilities              1,910                                        303
Stockholders' equity                              10,499                                     11,934
                                                 -------                                     ------
      Total liabilities and
        stockholders' equity                    $152,652                                     99,675
                                                 =======                                     ======
Excess of interest-earning assets
  over interest-bearing liabilities             $  9,506                                     10,777
                                                 =======                                     ======
Ratio of interest-earning assets
  to interest-bearing liabilities                 107.14%                                    112.88%
                                                 =======                                     ======
Net interest income                                            5,637                                        4,169
                                                              ======                                       ======
Net interest spread(2)                                                       3.61%                                       3.87%
                                                                             ====                                        ====
Net yield on average
  interest-earning assets(3)                                                 3.95%                                       4.41%
                                                                             ====                                        ====
</TABLE>
-----------------------------
(1)    Average balances include nonaccrual loans.
(2)    Net interest spread  represents the difference  between the average yield
       on  interest-earning  assets  and the  average  cost of  interest-bearing
       liabilities.
(3)    Net yield on average  interest-earning  assets  represents  net  interest
       income as a percentage of average interest-earning assets.
(4)    Average balances are derived from month end balances. Management does not
       believe the use of month end balances  rather than average daily balances
       has caused any material difference in the information presented.
(5)    Number has been adjusted to include fee income  reported in 1997 separate
       from interest income.

                                        8
<PAGE>


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  Bank'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.

<TABLE>
<CAPTION>
                                                        Years Ended December 31,                   Years Ended December 31,
                                                  ----------------------------------         -------------------------------------
                                                            1998 and 1997                         1997 and September 30, 1996
                                                  ----------------------------------         -------------------------------------
                                                        1998 compared to 1997                        1997 compared to 1996
                                                  ----------------------------------         -------------------------------------

                                                            Changes due to                                Changes due to
                                                  ----------------------------------         -------------------------------------
                                                                Rate/                                         Rate/
                                                  Volume        Yield          Total          Volume          Yield         Total
                                                  ------        -----          -----          ------          -----         -----
                                                            (In Thousands)                               (In Thousands)

<S>                                              <C>            <C>          <C>             <C>             <C>          <C>  
Interest income:

  Loans                                           $2,966          398          3,364           3,449             80         3,529
  Mortgage-backed securities                        (169)          20           (149)           (312)          (123)         (435)
  Investment securities                            1,128            -          1,128            (585)             -          (585)
  FHLB Stock                                           -            1              1               -              -             -
                                                                                                                                  
  Interest-earning deposits in other financial                                                                       
    institutions                                      14          (11)             3             (31)            (2)          (33)
                                                   -----         ----          -----           -----          -----         -----
      Total interest income                       $3,939          408          4,347           2,521            (45)        2,476
                                                   =====         ====          =====           =====          =====         =====
Interest expense:                                                                                                     

   Demand deposits                                $  724          121            845              65            172           237
   Regular savings                                   (29)          33              4             (21)           (22)          (43)
   Time deposits                                   2,184          106          2,290             708             12           720
   FHLB advances                                    (388)          34           (354)            467              6           473

   Securities sold under
     agreements to repurchase                         94            -             94               7              -             7
                                                   -----         ----          -----           -----          -----         -----
      Total interest expense                       2,585          294          2,879           1,226            168         1,394
                                                   -----         ----          -----           -----          -----         -----
      Net interest income                         $1,354          114          1,468           1,295           (213)        1,082
                                                   =====         ====          =====           =====          =====         =====

</TABLE>


Comparison of Financial Condition at December 31, 1998 and December 31, 1997

Total assets  increased  approximately  $45 million between the two dates due to
increased  lending from funds  provided from increased  deposits.  Stockholders'
equity increased by approximately $107,000 to $11.6 million at December 31, 1998
from $11.5 million at December 31, 1997.  The increase was  attributable  to net
income of approximately $619,000 that was partially offset by dividends declared
of
                                        9

<PAGE>


$534,000 and a reduction  of net  unrealized  holding  gains on  investment  and
mortgage backed  securities  available for sale of approximately  $183,000.  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
stockholders'  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.
Other items contributing to the change were employee stock ownership plan shares
allocated totaling $72,000 and management stock bonus plan compensation  expense
of $98,659.

Comparison of Operating Results For The Fiscal Years Ended December 31, 1998 and
December 31, 1997

Net Income. The Company's net income increased by $482,000 from $137,000 in 1997
to $619,000 in 1998.  The  increase  was  primarily  due to the  increase in net
interest  income from $4,169,000 in 1997 to $5,637,000 in 1998. This increase in
net interest  income was partially  offset by an increase in other expenses from
$4,746,000 in 1997 to $5,380,000 in 1998.  The net interest  income  increase is
primarily  due to the  increased  lending  activities  and the increase in other
expenses is due  primarily to the opening and staffing of our  permanent  branch
facility in Henry County.

Net Interest  Income.  Net interest  income  (before  provision for loan losses)
increased  from $4.2 million in 1997 to $5.6 million in 1998.  This increase was
primarily  due to an  increase  in  interest  and fee  income  on  loans of $3.4
million,  more than offsetting the increase in interest  expense on deposits and
FHLB advances of $2.9 million.  Interest  income on  investment  securities  and
mortgage backed  securities  also increased by $1.0 million as these  portfolios
increased  in size.  The  increases in lending  were  primarily  in  commercial,
residential   construction  and  consumer  loans.   Commercial  loans  increased
approximately  $12  million,  construction  loans  increased  approximately  $10
million and consumer loans increased approximately $11 million.

Provision For Loan Losses. The Bank increased the provision for loan losses from
$127,000 in 1997 to  $275,000  in 1998.  The  increase  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.  The Bank's  allowance for
loan losses increased from $670,000 at December 31, 1997 to $943,000 at December
31,  1998.   The  adequacy  of  the  allowance  for  loan  losses  is  evaluated
periodically  based  on a  review  of all  significant  loans,  with  particular
emphasis on  impaired,  non-accruing,  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 its  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 and the
continued  expected changing mix of loans in the loan portfolio.  If the size of
the loan  portfolio  continues to increase and the relative  proportion  in that
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.


                                       10

<PAGE>


<TABLE>
<CAPTION>
                                                       At December 31, 1998              At December 31, 1997
                                                     ------------------------          ------------------------
                                                                Percent of                        Percent of
                                                                Loans in each                     Loans in each
                                                                Category to                       Category to
                                                       Amount   Total Loans             Amount    Total Loans
                                                       ------   -----------             ------    -----------
<S>                                                <C>         <C>                    <C>          <C>   
Balance at end of period applicable to:
Permanent residential mortgage. . . . . .            $  70       29.74%                 $  42        49.97%
Construction  . . . . . . . . . . . . . .              337       17.68                    288        14.30
Commercial. . . . . . . . . . . . . . . .              390       40.44                    294        31.33
Consumer and other. . . . . . . . . . . .              146       12.14                     46         4.40
                                                      ----       -----                   ----        -----
  Total . . . . . . . . . . . . . . . . .             $943         100%                  $670          100%

</TABLE>

Other Income.  Other income increased from $909,000 in 1997 to $968,000 in 1998.
This increase was  attributable  primarily to an increase in service  charges on
deposit  accounts of $166,000 which was partially  offset by a decrease in gains
from sales of investment securities primarily by equity securities in the amount
of $107,000.  Gains on sale of mortgage loans increased from $25,000 to $63,000.
The  portion  of the fixed rate  mortgage  loan  portfolio  of the Bank that was
eligible for sale was sold to the secondary  market.  Loans that will be sold in
future periods will be loans that are originated in the future (new  production)
rather than loans in the existing portfolio.

Other Expenses.  Other expenses  increased from $4.7 million during 1997 to $5.4
million during 1998,  representing an approximate  13.4%  increase.  Included in
this  increase  is  $247,000  in  salaries  and  benefits  associated  with  the
continuing  expansion of the Bank's  product line.  Of the $229,000  increase in
occupancy  expense,  almost all was associated with the opening of our permanent
Henry County facility and related utilities,  furniture,  fixtures and equipment
depreciation  expense.  The  remainder of the  increases  in other  expenses was
associated with increased  advertising  and upgrades  associated with the Bank's
technology.

Income Tax  Expense.  Income tax  expense  as a percent of income  before  taxes
increased  slightly  from 33.5% in 1997 to 34.9% in 1998.  The  increase  in the
effective rate is due to a reduction of tax free municipal  investments  held in
the investment portfolio.

Liquidity

The Bank is required to maintain  minimum  levels of liquid assets as defined by
the State of Georgia and the FDIC regulations.  Short-term liquidity at December
31, 1998 was 20.05%.  The Bank  adjusts  its  liquidity  levels in order to meet
funding  needs for deposit  outflows,  payment of real estate  taxes from escrow
accounts  on  mortgage  loans,  loan  funding  commitments,   and  repayment  of
borrowings, when applicable. The Bank adjusts its liquidity level as appropriate
to meets  it  asset/liability  objectives.  The  primary  source  of  funds  are
deposits,  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
Federal  Home  Loan  Bank  of  Atlanta  and  other  correspondent  banks.  These
commitments  totaled  $13.5 million at December 31, 1998 with zero drawn at that
time.  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.


                                       11

<PAGE>


Year 2000

The Company  recognized  early in 1997 the need to assess and remedy the effects
of the Year 2000 on operations  and automated  systems.  Many computer  programs
that can only  distinguish  the final two  digits of the year  entered (a common
programming  practice in prior  years) are expected to read entries for the Year
2000 as the year 1900 or as zero and  incorrectly  attempt  to  compute  payment
amounts,  interest  accruals,  delinquency  and other data.  Management has been
evaluating both information  technology (computer hardware and software systems)
and  non-information  technology  (e.g.  vault  timers,  electronic  door locks,
elevators and heating, ventilation and air conditioning controls) systems. These
systems and functions have been divided into two  categories,  mission  critical
and non-mission critical. This work has been conducted by a task force organized
in 1997 and chaired by a member of the executive management team.

The Year 2000  project is broken down into five phases;  Awareness,  Assessment,
Renovation, Validation and Implementation.  The awareness phase was completed at
CCF Holding  Company  prior to September 30, 1997. As each new employee is hired
the importance  placed on  satisfactory  compliance is stressed.  The assessment
phase was  completed in early 1998 and included  the  identification  of mission
critical items as discussed in the previous  paragraph.  The renovation phase is
approximately  85% complete as of year end 1998. All core processing,  ancillary
communications  and  micro-computer  software and hardware have been  renovated.
Those areas  lacking  renovation  at this time  include  vendors  such as power,
telephone and data  communications  and some federal  government  agencies.  The
validation,  commonly called the "certification" phase, is 85% complete as well.
Management  has certified,  through the internal  certification  committee,  all
systems listed as renovated at December 31, 1998. The  implementation  phase has
progressed   well  with  all  core  system   applications   and  micro  computer
applications  implemented with year 2000 upgrades.  The only items certified and
not  implemented  to date are  micro-computer  hardware  already  scheduled  for
replacement  in 1999.  Non-mission  critical  items  are in  various  levels  of
renovation,  validation  and  implementation  with all scheduled for  completion
prior to June 30, 1999.

Costs associated with the Year 2000 project have been negligible and have mostly
been  absorbed in the expansion  expenses  taking place over the past 24 months.
The new  technologies and processing  systems  installed during that period were
certified Y2K compliant at management's insistence, as they were added.

Management  has designed  contingency  and business  resumption  plans that will
allow basic services to be provided to our customers, in the event of unexpected
disruptions.

If the Company fails to significantly  address the Year 2000 issues of the Bank,
the following negative factors, among others, could occur:

                  (a)      utility  service  companies  may be unable to provide
                           the  necessary  service  to  drive  the  Bank's  data
                           systems or provide sufficient sanitary conditions for
                           the offices;

                  (b)      the  primary  software  provider  could  have a major
                           malfunction  in its system or their  service could be
                           disrupted  due  to its  utility  providers,  or  some
                           combination of the two; or

                  (c)      business may have to be transacted manually.


                                       12

<PAGE>



The Company will attempt to monitor these uncertainties by continuing to request
an update on all critical and  important  vendors  throughout  the  remainder of
1999.  If any  concerns  are  identified  related to any  critical  vendor,  the
contingency plans will be implemented immediately to assure continued service to
the Bank's customers.

Successful  and  timely  completion  of  the  Year  2000  project  is  based  on
management's best estimates  derived from various  assumptions of future events,
which are  inherently  uncertain,  including the progress and results of testing
plans and the readiness of all vendors, suppliers and customers.

Despite the best efforts of management to address this issue, the vast number of
external entities that have direct and indirect business  relationships with the
Company,  such  as  customers,  vendors,  payment  system  providers  and  other
financial  institution,  makes it impossible to assure that a failure to achieve
compliance  by one or more of these  entities  would not have  material  adverse
impact on operations.


Impact of Inflation and Changing Prices

The financial  statements and related data have been prepared in accordance with
generally  accepted  accounting  principles  which  require the  measurement  of
financial position and operating results in terms of historical dollars, without
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 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.



                                       13

<PAGE>

                     [PORTER KEADLE MOORE, LLP LETTERHEAD]




               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors
CCF Holding Company

We have  audited  the  accompanying  consolidated  balance  sheet of CCF Holding
Company  and  subsidiary  as of December  31, 1998 and the related  consolidated
statements of earnings,  comprehensive  income,  stockholders'  equity, and cash
flows  for the year  ended  December  31,  1998.  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 audit.  The  consolidated  financial  statements of CCF
Holding  Company and subsidiary as of December 31, 1997, the year ended December
31,  1997,  the three month  period  ended  December 31, 1996 and the year ended
September 30, 1996 were audited by other auditors  whose report,  dated February
6, 1998, expressed an unqualified opinion on those statements.

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

In our opinion,  the 1998 consolidated  financial  statements  referred to above
present fairly, in all material respects,  the financial position of CCF Holding
Company  and  subsidiary  as of  December  31,  1998,  and the  results of their
operations  and their  cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.



                                        /s/Porter Keadle Moore, LLP
                                        ----------------------------------------
                                        Porter Keadle Moore, LLP


Atlanta, Georgia
February 12, 1999

                                       14

<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

                           Consolidated Balance Sheets

                           December 31, 1998 and 1997

                                     Assets
                                     ------

<TABLE>
<CAPTION>
                                                                        1998                  1997
                                                                        ----                  ----
<S>                                                               <C>                   <C>      
Cash and due from banks, including reserve
requirements of  $766,000 and $458,000                              $  7,275,835              4,357,626  
Interest-bearing deposits in other financial institutions                756,687              4,383,690
Federal funds sold                                                     2,320,000         
                                                                     -----------            -----------
                                                                                         
Cash and cash equivalents                                             10,352,522              8,741,316
                                                                                         
Investment securities available for sale                              29,457,412             11,559,557
Loans, net                                                           121,827,463             97,541,231
Premises and equipment, net                                            5,422,602              5,112,338
Federal Home Loan Bank stock, at cost                                  1,013,200              1,013,200
Accrued interest and dividends receivable                              1,114,880                784,852
Other assets                                                             671,863                203,550
                                                                     -----------            -----------
                                                                    $169,859,942            124,956,044
                                                                     ===========            ===========
                                                                                         
                      Liabilities and Stockholders' Equity                               
                      ------------------------------------                               
                                                                                         
Deposits:                                                                                
Noninterest-bearing deposits                                        $  8,501,973              4,895,855    
Interest-bearing deposits                                             44,555,271             21,837,258
Savings accounts                                                       9,089,074              9,962,412
Time deposits less than $100,000                                      74,388,954             46,072,815
Time deposits greater than $100,000                                   18,441,449              8,433,000
                                                                     -----------            -----------
Total deposits                                                       154,976,721             91,201,340
                                                                                         
Securities sold under agreements to repurchase                         1,117,264              2,392,579
Federal Home Loan Bank advances                                             --               18,510,000
Other liabilities                                                      2,139,844              1,332,520
                                                                     -----------            -----------
Total liabilities                                                    158,233,829            113,436,439
                                                                     -----------            -----------
                                                                                         
Commitments                                                                              
                                                                                         
Stockholders' 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; 900,589 shares issued and 895,148                                           
 shares outstanding in 1998; 906,710 shares                                              
 issued and 899,024 shares outstanding in 1997                            90,059                 90,671
Additional paid-in capital                                             7,783,384              7,794,459
Retained earnings                                                      4,528,267              4,443,500
Unearned ESOP shares                                                    (468,000)              (540,000)
Unearned compensation                                                   (286,339)              (394,195)
Treasury stock, at cost; 5,441 and 7,686 shares                                          
 in 1998 and 1997, respectively                                          (59,777)               (96,800)
Accumulated other comprehensive income                                    38,519                221,970
                                                                     -----------            -----------
Total stockholders' equity                                            11,626,113             11,519,605
                                                                     -----------            -----------
                                                                                         
                                                                    $169,859,942            124,956,044
                                                                     ===========            ===========
</TABLE>                                                                     
See accompanying notes to consolidated financial statements.

                                       15

<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

                       Consolidated Statements of Earnings
                 For the Years Ended December 31, 1998 and 1997,
 the Three Months Ended December 31, 1996 and the Year Ended September 30, 1996
<TABLE>
<CAPTION>

                                                                              Three
                                               Year ended     Year ended    months ended   Year ended
                                               December 31,   December 31,  December 31,  September 30,
                                                  1998            1997         1996          1996
                                                  ----            ----         ----          ----
<S>                                          <C>             <C>           <C>           <C>      
Interest and dividend income:
Interest and fees on loans                     $10,778,100     7,413,839     1,265,291     3,884,901
Interest-bearing deposits in other
financial institutions                              87,321        84,196        18,727       116,986
Interest and dividends on taxable
investment securities                            1,570,866       582,336       288,901     1,600,604
Interest on nontaxable investment securities           600         9,720         7,110        11,152
                                                ----------     ---------     ---------     ---------
Total interest and dividend income              12,436,887     8,090,091     1,580,029     5,613,643
                                                ----------     ---------     ---------     ---------
Interest expense:
Deposit accounts                                 6,563,637     3,424,439       631,824     2,510,350
Other borrowings                                   235,923       496,458        64,263        16,444
                                                ----------     ---------     ---------     ---------
Total interest expense                           6,799,560     3,920,897       696,087     2,526,794
                                                ----------     ---------     ---------     ---------
Net interest income                              5,637,327     4,169,194       883,942     3,086,849

Provision for loan losses                          275,000       126,505         6,851       129,831
                                                ----------     ---------     ---------     ---------
Net interest income after provision
     for loan losses                             5,362,327     4,042,689       877,091     2,957,018
                                                ----------     ---------     ---------     ---------
Other operating income:
Service charges on deposit accounts                436,886       270,679        64,501       249,067
Net gain on sale of loans                           62,628        24,647          --          36,435
Net gain on sale of investment securities          387,282       494,651         1,955        15,119
Other                                               80,934       118,970        27,613        73,316
                                                ----------     ---------     ---------     ---------
Total other operating income                       967,730       908,947        94,069       373,937
                                                ----------     ---------     ---------     ---------
Other operating expenses:
Salaries and employee benefits                   3,083,362     2,836,395       471,213     1,171,405
Occupancy                                        1,017,073       788,147        94,939       427,826
Savings Association Insurance Fund
assessment                                           --            --            --          397,568
Other                                            1,279,157     1,121,442       266,667       718,320
                                                ----------     ---------     ---------     ---------
Total other operating expenses                   5,379,592     4,745,984       832,819     2,715,119
                                                ----------     ---------     ---------     ---------
Earnings before income taxes                       950,465       205,652       138,341       615,836

Income tax expense                                 331,689        69,052        48,760       142,500
                                                ----------     ---------     ---------     ---------
Net earnings                                       618,776       136,600        89,581       473,336
                                                ==========     =========     =========     =========
Basic earnings per share                       $      0.74          0.17          0.10          0.45
                                                ==========     =========     =========     =========
Diluted earnings per share                     $      0.70          0.16          0.09          0.43
                                                ==========     =========     =========     =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       16
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

                 Consolidated Statements of Comprehensive Income
                 For the Years Ended December 31, 1998 and 1997,
                  the Three Months Ended December 31, 1996 and
                        the Year Ended September 30, 1996

<TABLE>
<CAPTION>

                                                                                   Three
                                             Year ended       Year ended        months ended      Year ended        
                                             December 31,     December 31,      December 31,      September 30,
                                                1998              1997             1996               1996
                                                ----              ----             ----               ----
<S>                                        <C>                <C>                <C>              <C>    
Net earnings                                 $ 618,776           136,600            89,581           473,336
                                              --------          --------           -------           -------
Other comprehensive income, net of tax:                                                             
Unrealized gains (losses) on investment                                                             
securities available for sale:                                                                      
Holding gains arising during the                                                                    
   period, net of taxes of $34,695,                                                                 
   $149,363, $148,901 and $19,293               56,608           243,698           242,943            31,532
                                                                                                    
Less: Reclassification adjustments for                                                              
  gains included in earnings, net                                                                   
  of taxes of $147,223,$187,769,                                                                    
  $742 and $5,140                             (240,059)         (306,882)           (1,213)           (9,979)
                                                                                                    
Other comprehensive income (loss)             (183,451)          (63,184)          241,730            21,553
                                              --------          --------           -------           -------
                                                                                                    
Comprehensive income                         $ 435,325            73,416           331,311           494,889
                                              ========          ========           =======           =======
                                                                                               
</TABLE>


See accompanying notes to consolidated financial statements.

                                       17
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

                 Consolidated Statements of Stockholders' Equity

                    For the Years Ended December 31, 1998 and
           1997, the Three Months Ended December 31, 1996 and the Year
                            Ended September 30, 1996

<TABLE>
<CAPTION>
                                       
                                               Common Stock                   Additional                               Unearned
                                       ----------------------------            Paid-In             Retained               ESOP
                                        Shares              Amount             Capital             Earnings              Shares  
                                       ---------           --------           ----------          -----------         ------------ 
<S>                                 <C>                 <C>                <C>                 <C>                  <C>          
Balance, September 30, 1995            1,190,250          $ 119,025           10,964,983           6,935,879           (720,000) 

Net earnings                                -                  -                    -                473,336               -     
Dividends declared ($.50 per share)         -                  -                    -               (600,161)              -  
Treasury stock purchased                    -                  -                    -                   -                  -
ESOP shares allocated                       -                  -                  11,372                -                90,000 
Unrealized gains on investment                                                                                        
  securities available for                                                                                              
  sale, net of tax effect                   -                  -                    -                   -                  -
Purchase of treasury stock and                                                                                        
  award of shares under                                                                                                 
  management stock bonus plan               -                  -                  (4,641)               -                  -
                                       ---------            -------           ----------           ---------           --------
Balance, September 30, 1996            1,190,250            119,025           10,971,714           6,809,054           (630,000)
                                                                                                                      
Net earnings                                -                  -                    -                 89,581               -  
Dividends declared ($.45 per share)         -                  -                    -               (422,850)              - 
Treasury stock purchased                    -                  -                    -                                      -
Retirement of treasury stock            (274,350)           (27,435)          (3,500,796)               -                  - 
ESOP shares allocated                       -                  -                    -                   -                18,000
Unrealized gains on investment                                                                                        
  securities available for sale,                                                                                        
  net of tax effect                         -                  -                    -                   -                  - 
                                       ---------            -------           ----------           ---------           -------- 
Balance, December 31, 1996               915,900          $  91,590            7,470,918           6,475,785           (612,000)
                                       =========            =======           ==========           =========           ========
</TABLE>

            SECOND HALF OF TABLE CONTINUED BELOW           
<TABLE>
<CAPTION>
                                                                                                 Accumulated   
                                                                    Treasury Stock                  Other 
                                        Unearned            ----------------------------        Comprehensive
                                      Compensation          Shares              Amount              Income             Total
                                      ------------          -------           ----------           ---------         ---------- 
<S>                                 <C>                  <C>               <C>                   <C>               <C>       
Balance, September 30, 1995                 -                  -             $      -                 21,871         17,321,758

Net earnings                                -                  -                    -                   -               473,336
Dividends declared ($.50 per share)         -                  -                    -                   -              (600,161)
Treasury stock purchased                    -               190,250           (2,299,490)               -            (2,299,490)
ESOP shares allocated                       -                  -                    -                   -               101,372 
Unrealized gains on investment             
  securities available for
  sale, net of tax effect                   -                  -                    -                 21,553             21,553
Purchase of treasury stock and
  award of shares under
  management stock bonus plan           (371,304)            16,668             (202,519)               -              (578,464)
                                       ---------            -------           ----------           ---------         ---------- 
Balance, September 30, 1996             (371,304)           206,918           (2,502,009)             43,424         14,439,904

Net earnings                                -                  -                    -                   -                89,581
Dividends declared ($.45 per share)         -                  -                    -                   -              (422,850)
Treasury stock purchased                    -                84,100           (1,228,741)               -            (1,228,741)
Retirement of treasury stock                -              (274,350)           3,528,231                -                   -
ESOP shares allocated                       -                  -                    -                   -                18,000
Unrealized gains on investment
  securities available for sale,
  net of tax effect                         -                  -                    -                241,730            241,730
                                       ---------            -------           ----------           ---------         ---------- 
Balance, December 31, 1996              (371,304)            16,668          $  (202,519)            285,154         13,137,624
                                       =========            =======           ==========           =========         ========== 
</TABLE>
                                       18
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY
           Consolidated Statements of Stockholders' Equity, continued

                    For the Years Ended December 31, 1998 and
           1997, the Three Months Ended December 31, 1996 and the Year
                            Ended September 30, 1996

<TABLE>
<CAPTION>
                                       
                                               Common Stock                   Additional                               Unearned
                                       ----------------------------            Paid-In             Retained               ESOP
                                        Shares              Amount             Capital             Earnings              Shares  
                                       ---------           --------           ----------          -----------         ------------ 
<S>                                  <C>                <C>                <C>                 <C>                  <C>          
Balance, December 31, 1996               915,900          $  91,590            7,470,918           6,475,785           (612,000) 
Net earnings                                -                  -                    -                136,600               -     
Dividends declared ($.52 per share)         -                  -                    -               (438,485)              -  
Treasury stock purchased                    -                  -                    -                   -                  -
Retirement of treasury stock             (91,590)            (9,159)          (1,447,894)               -                  - 
ESOP shares allocated                       -                  -                  51,153                -                72,000
Award of shares under management
  stock bonus plan                          -                  -                  (1,878)               -                  -
Earned compensation under
  management stock bonus plan               -                  -                    -                   -                  -
Unrealized losses on investment                                                                                        
  securities available for                                                                                              
  sale, net of tax effect                   -                  -                    -                   -                  -
10% stock dividend declared on
  December 16, 1997                       82,400             8,240             1,722,160          (1,730,400)              -
                                       ---------            -------           ----------           ---------           -------- 
Balance, December 31, 1997               906,710             90,671            7,794,459           4,443,500           (540,000)
                                                                                                                      
Net earnings                                -                  -                    -                618,776               -  
Dividends declared ($.64 per share)         -                  -                    -               (534,009)              - 
Retirement of treasury stock              (6,121)              (612)            (105,953)                                    
ESOP shares allocated                       -                  -                  94,878                -                72,000
Forfeited awards of shares
  under management
  stock bonus plan                          -                  -                    -                   -                  -
Award of shares under management
  stock bonus plan                          -                  -                    -                   -                  -
Earned compensation under
  management stock bonus plan               -                  -                    -                   -                  -
Treasury stock purchased                    -                  -                    -                   -                  -
Unrealized losses on investment                                                                                        
  securities available for                                                                                              
  sale, net of tax effect                   -                  -                    -                   -                  -
                                       ---------            -------           ----------           ---------           -------- 
Balance, December 31, 1998               900,589          $  90,059            7,783,384           4,528,267           (468,000)
                                       =========            =======           ==========           =========           ========
</TABLE>

               [SECOND HALF OF TABLE CONTINUED ON FOLLOWING PAGE]
<PAGE>

                     [SECOND HALF OF TABLE CONTINUED BELOW]

<TABLE>
<CAPTION>
                                                                                                 Accumulated   
                                                                    Treasury Stock                  Other 
                                        Unearned            ----------------------------        Comprehensive
                                      Compensation          Shares              Amount              Income             Total
                                      ------------          -------           ----------           ---------         ---------- 
<S>                                 <C>                  <C>               <C>                  <C>                <C>          
Balance, December 31, 1996              (371,304)            16,668            $(202,519)            285,154         13,137,624 
Net earnings                                -                  -                    -                   -               136,600  
Dividends declared ($.52 per share)         -                  -                    -                   -              (438,485)
Treasury stock purchased                    -                 2,820              (46,159)               -               (46,159)
Retirement of treasury stock                -                  -                    -                   -            (1,457,053)
ESOP shares allocated                       -                  -                    -                   -               123,153
Award of shares under management
  stock bonus plan                      (150,000)           (12,500)             151,878                -                  -
Earned compensation under
  management stock bonus plan            127,109               -                    -                   -               127,109
Unrealized losses on investment                                                                                        
  securities available for                                                                                              
  sale, net of tax effect                   -                  -                    -                (63,184)           (63,184)
10% stock dividend declared on
  December 16, 1997                         -                   698                 -                   -                  -
                                         -------             ------             --------             -------         ---------- 
Balance, December 31, 1997              (394,195)             7,686              (96,800)            221,970         11,519,605
                                                                                                                      
Net earnings                                -                  -                    -                   -               618,776
Dividends declared ($.64 per share)         -                  -                    -                   -              (534,009)
Retirement of treasury stock                                 (6,121)             106,565                -                  - 
ESOP shares allocated                       -                  -                    -                   -               166,878
Forfeited awards of shares
  under management
  stock bonus plan                        25,692              2,357              (25,692)               -                  -
Award of shares under management
  stock bonus plan                       (16,495)            (1,500)              16,495                -                  -
Earned compensation under
  management stock bonus plan             98,659               -                    -                   -                98,659
Treasury stock purchased                    -                 3,019              (60,345)               -               (60,345)
Unrealized losses on investment                                                                                        
  securities available for                                                                                              
  sale, net of tax effect                   -                  -                    -               (183,451)          (183,451)
                                         -------             ------             --------             -------         ---------- 
Balance, December 31, 1998              (286,339)             5,441            $ (59,777)             38,519         11,626,113
                                         =======             ======             ========             =======         ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       19
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                 For the Years Ended December 31, 1998 and 1997,
                  the Three Months Ended December 31, 1996 and
                        the Year Ended September 30, 1996

<TABLE>
<CAPTION>

                                                                                           Three
                                                      Year ended      Year ended       months ended      Year ended
                                                      December 31,    December 31,     December 31,     September 30,
                                                          1998             1997             1996            1996
                                                          ----             ----             ----            ----
<S>                                                <C>                <C>              <C>            <C>    
Cash flows from operating activities:
Net earnings                                          $   618,776         136,600          89,581         473,336     
Adjustments to reconcile net earnings                
 to net cash provided by (used in)                   
 operating activities:                               
  Provision for loan losses                               275,000         126,505           6,851         129,831
  Depreciation, amortization and accretion                311,766         196,538          14,329          14,768
  ESOP shares allocated                                   166,878         123,153          18,000         101,372
  Compensation expense related to MSBP                     98,659         127,109          22,555          37,591
  Net gain on sale of investment securities          
    available for sale                                   (387,282)       (494,651)         (1,955)        (15,119)
  Deferred income tax expense (benefit)                  (131,348)         61,418          94,939        (308,683)
  Net gain on sale of loans                               (62,628)        (24,647)           -            (36,435)
                                                                                              
  Net loss (gain) on sale of equipment                        452         (36,898)           -               -        

  (Increase) decrease in accrued                     
    interest and dividends receivable                    (330,028)       (346,852)         73,072          13,776
  Decrease (increase) in other assets                    (468,313)         78,924        (163,803)         16,658
  (Decrease) increase in Savings Association         
    Insurance Fund assessment payable                        -               -           (397,568)        397,568
  Increase (decrease) in other liabilities              1,091,540         381,228        (327,338)        144,083
                                                       ----------       ---------       ---------       ---------
          Net cash provided by (used in)             
            operating activities                        1,183,472         328,427        (571,337)        968,746
                                                       ----------       ---------       ---------       ---------
Cash flows from investing activities:                
  Proceeds from maturities and called                
    investment securities available for sale           29,328,303       2,568,034       1,005,458       1,781,760
  Proceeds from sales of investment                  
    securities available for sale                       3,021,729       8,998,129       6,967,872       3,372,017
  Proceeds from maturities and called                
    investment securities held to maturity                   -               -               -          5,739,276 
  Purchases of investment securities                 
    available for sale                                (50,012,878)     (6,958,537)           -         (3,455,874)
  Purchases of investment securities                 
    held to maturity                                         -               -               -         (7,216,111)        
  Net increase in loans                               (41,676,028)    (34,977,793)    (12,847,320)     (8,735,992)
  Proceeds from sale of loans                          17,177,424       1,854,185            -          2,455,221
  Purchases of premises and equipment                    (754,597)     (3,669,458)       (791,386)       (366,169)
  Proceeds from sale of equipment                           2,155         120,906            -               -
  Sale of real estate owned                                  -               -               -             75,626
                                                       ----------       ---------       ---------       ---------
          Net cash used in investing                 
            activities                                (42,913,892)    (32,064,534)     (5,665,376)     (6,350,746)
                                                       ----------      ----------       ---------       ---------
</TABLE>                                       


                                       20
<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

                Consolidated Statements of Cash Flows, continued

                    For the Years Ended December 31, 1998 and
           1997, the Three Months Ended December 31, 1996 and the Year
                            Ended September 30, 1996


<TABLE>
<CAPTION>
                                                                                              Three months
                                                            Year ended        Year ended        ended          Year ended
                                                            December 31,      December 31,    December 31,     September 30,
                                                               1998              1997            1996             1996
                                                               ----              ----            ----             ----
<S>                                                      <C>                <C>              <C>             <C>      
Cash flows from financing activities:
  Net increase in demand and savings deposits             $  25,450,793        8,967,499        2,029,967       1,317,457          
  Net increase (decrease) in time deposits                   38,324,588       15,467,001        2,915,199        (627,298)
  Net increase (decrease) in securities sold                                                                   
   under agreements to repurchase                            (1,275,315)       2,392,579             -               -    
  Increase (decrease) in advance payments by                                                                   
   borrowers for property taxes and insurance                    38,830          (11,023)        (377,971)       (131,745)
  Treasury stock purchased                                      (60,345)      (1,457,053)      (1,228,741)     (2,299,490)
  Federal Home Loan Bank advances                                  -          13,510,000        5,000,000       2,500,000
  Repayment of Federal Home Loan                                                                               
   Bank advances                                            (18,510,000)      (2,500,000)            -               -
  Dividends paid                                               (626,925)        (639,066)            -           (600,161)
  Contribution to management stock bonus                                                                       
   plan for the purchase of treasury shares                        -                -                -           (578,464)        
                                                             ----------       ----------        ---------      ----------
          Net cash provided by (used in)                                                                       
            financing activities                             43,341,626       35,729,937        8,338,454        (419,701)
                                                             ----------       ----------        ---------      ----------
          Increase (decrease) in cash and                                                                      
            cash equivalents                                  1,611,206        3,993,830        2,101,741      (5,801,701)
                                                                                                               
Cash and cash equivalents at beginning of                                                                      
 period                                                       8,741,316        4,747,486        2,645,745       8,447,446
                                                             ----------       ----------        ---------      ----------
                                                                                                               
Cash and cash equivalents at end of period                $  10,352,522        8,741,316        4,747,486       2,645,745
                                                             ==========       ==========        =========      ==========
                                                                                                               
Supplemental disclosure of cash flow information:                                                              
  Interest paid                                           $   6,533,149        3,806,229          684,795       2,531,331
                                                             ==========       ==========        =========      ==========
  Income taxes paid                                       $      15,000           82,500          165,000         297,368
                                                             ==========       ==========        =========      ==========
Supplemental disclosures of noncash                                                                            
 investing and financing activities:                                                                           
   Transfer of investment securities from                                                                      
     held to maturity to available for sale               $        -               -                -          17,554,822
                                                             ==========       ==========        =========      ==========
   Changes in dividends payable                           $     (92,916)        (200,581)         429,038            - 
                                                             ==========       ==========        =========      ==========
   Changes in unrealized gains (losses) on                                                                     
     investment securities available for sale             $    (183,451)         (63,184)         241,730          21,553
                                                             ==========       ==========        =========      ==========
Retirement of treasury stock                              $     106,565        1,457,053        3,528,231            -
                                                             ==========       ==========        =========      ==========
</TABLE>                                                          
                                                                            
See accompanying notes to consolidated financial statements.

                                       21
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

                   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 subsidiary,  Heritage Bank (the "Bank").  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.

     On December 10, 1996, the Company's Board of Directors approved a change in
     the Company's year-end from September 30 to December 31.

     The Bank  provides a full  range of  banking  services  to  individual  and
     corporate customers through its main office in Jonesboro,  Georgia and four
     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 the Company
     and the Bank. All significant  intercompany  accounts and transactions have
     been eliminated in  consolidation.  Certain 1997 and 1996 amounts have been
     reclassified to conform to the 1998 presentation.

     The  accounting  principles  followed  by the  Company  and the  methods of
     applying  these  principles,  conform with  generally  accepted  accounting
     principles ("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 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.

     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 stockholders' 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 stockholders' equity until realized.

                                       22

<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(1)  Summary of Significant Accounting Policies, continued
     Investment Securities, continued
     ---------------------
     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.

     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 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  principally
     by 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  principle  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  consideration  of 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.

                                       23
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY
              Notes to Consolidated Financial Statements, continued

(1)  Summary of Significant Accounting Policies, continued
     Allowance for Loan Losses, continued
     -------------------------
     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 judgments of information  available to them at the
     time of their examination.

     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  currently.  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


     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.

     Net Earnings Per Share
     ----------------------
     Statement of Financial  Accounting  Standards  No. 128 "Earnings Per Share"
     (SFAS No. 128) became effective for the Company for the year ended December
     31,  1997.  This  standard  specifies  the  computation,  presentation  and
     disclosure  requirements for earnings per share and is designed to simplify
     previous   earnings  per  share   standards   and  to  make   domestic  and
     international practices more compatible. 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.



                                       24
<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued

(1)   Summary of Significant Accounting Policies, continued
      Net Earnings Per Share, continued
      ---------------------- 
      SFAS No. 128 requires  the  presentation  on the face of the  statement of
      earnings of earnings  per share with and without the  dilutive  effects of
      potential  common  stock  issuances  from  instruments  such  as  options,
      convertible securities and warrants.  Additionally, the statement requires
      the  reconciliation  of the amounts used in the computation of both "basic
      earnings  per share" and  "diluted  earnings per share" for each period an
      earnings statement is presented as follows:

<TABLE>
<CAPTION>


            For the year ended December 31, 1998                    Net            Common        Per Share
                                                                 Earnings          Shares         Amount
                                                                 --------          ------         ------
<S>                                                           <C>             <C>               <C>   
            Basic earnings per share                            $ 618,776         839,641         $ 0.74
                                                                                                    ==== 
            Effect of stock options                                  -             43,496
                                                                  -------       ---------    
            Diluted earnings per share                          $ 618,776         883,137         $ 0.70
                                                                  =======       =========           ====


            For the year ended December 31, 1997                    Net            Common        Per Share
                                                                 Earnings          Shares         Amount
                                                                 --------          ------         ------

            Basic earnings per share                            $ 136,600         800,299         $ 0.17
                                                                                                    ====               
            Effect of stock options                                  -             56,363
                                                                  -------       ---------    
            Diluted earnings per share                          $ 136,600         856,662         $ 0.16
                                                                  =======       =========           ====

            For the three months ended December 31, 1996            Net            Common        Per Share
                                                                 Earnings          Shares         Amount
                                                                 --------          ------         ------

            Basic earnings per share                            $  89,581         940,671         $ 0.10
                                                                                                    ====
            Effect of stock options                                  -             72,275
                                                                  -------       ---------    

            Diluted earnings per share                          $  89,581       1,012,946         $ 0.09
                                                                   ======       =========           ====


            For the year ended September 30, 1996                   Net            Common        Per Share
                                                                 Earnings          Shares         Amount
                                                                 --------          ------         ------

            Basic earnings per share                            $ 473,336       1,055,402         $ 0.45
                                                                                                    ====
            Effect of stock options                                  -             34,036
                                                                  -------       ---------    
            Diluted earnings per share                          $ 473,336       1,089,438         $ 0.43
                                                                  =======       =========           ====
</TABLE>


For  purposes of  computing  weighted-average  shares  outstanding,  unallocated
shares under the Company's  employee  stock  ownership  plan are not  considered
outstanding until they are committed to be released for allocation.

                                       25
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued

(1)   Summary of Significant Accounting Policies, continued
      Recent Accounting Pronouncements
      --------------------------------      
      In 1998,  the Financial  Accounting  Standards  Board issued SFAS No. 133,
      "Accounting for Derivative  Instruments and Hedging Activities".  SFAS No.
      133 establishes  accounting and reporting standards for hedging activities
      and for derivative  instruments including derivative  instruments embedded
      in other contracts.  It requires the fair value recognition of derivatives
      as assets or liabilities in the financial  statements.  The accounting for
      the changes in the fair value of  derivatives  depends on the intended use
      of the derivative instruments at inception. Instruments used as fair value
      hedges  account for the change in fair value in the earnings of the period
      simultaneous  with  accounting for the fair value change of the item being
      hedged.  Cash flow  hedges  account  for the  change in fair  value of the
      effective  portion in  comprehensive  income  rather  than  earnings,  and
      foreign currency hedges are accounted for in comprehensive  income as part
      of  the  translation  adjustment.  Derivative  instruments  that  are  not
      intended as a hedge  account for the change in fair value in the  earnings
      of the  period of the  change.  SFAS No. 133 is  effective  for all fiscal
      quarters of all fiscal years  beginning  after June 15, 1999,  but initial
      application  of the  statement  must be made  as of the  beginning  of the
      quarter.  At the date of initial  application,  an entity may transfer any
      held  to  maturity  security  into  the  available  for  sale  or  trading
      categories without calling into question the entity's intent to hold other
      securities to maturity in the future. The Company believes the adoption of
      SFAS No. 133 will not have a material  impact on its  financial  position,
      results of operations or liquidity.

(2)  Investment Securities
     At December 31, 1998 and 1997,  investment  securities  available  for sale
consisted of the following:
<TABLE>
<CAPTION>
                                                         December 31,   1998
                                       --------------------------------------------------------
                                                          Gross       Gross
                                        Amortized      Unrealized   Unrealized         Fair
                                          Cost            Gains       Losses           Value
                                          ----            -----       ------           -----
<S>                                  <C>                <C>          <C>           <C>         
U.S. Treasury and U.S. Government                                                 
  agency obligations                   $29,137,872        13,964       29,894        29,121,942
Equity security                             64,455        69,545         -              134,000
Mortgage-backed securities                 195,825         5,645         -              201,470
                                        ----------        ------       ------        ----------
                                       $29,398,152        89,154       29,894        29,457,412
                                        ==========        ======       ======        ==========
</TABLE>                   
<TABLE>                                                
<CAPTION>                                                                           
                                                         December 31,   1997
                                       ---------------------------------------------------------
                                                          Gross         Gross
                                        Amortized      Unrealized     Unrealized       Fair
                                          Cost            Gains         Losses         Value
                                          ----            -----         ------         -----
<S>                                   <C>              <C>            <C>          <C>      
U.S. Treasury and U.S. Government                                                  
  agency obligations                   $ 7,984,149        10,251        11,159        7,983,241  
Municipal securities                       157,990           489          -             158,479
Equity security                          1,243,471       336,857          -           1,580,328
Mortgage-backed securities               1,832,454        12,600         7,545        1,837,509
                                        ----------       -------        ------       ----------
                                                                                   
                                       $11,218,064       360,197        18,704       11,559,557
                                        ==========       =======        ======       ==========
</TABLE>
     For the years ended  December  31, 1998 and 1997,  the Company sold certain
     investment  securities  available for sale for $3,021,729  and  $8,998,129,
     respectively,  and  recognized  gross gains of $392,479 and gross losses of
     $5,197 in 1998 and gross gains of $516,041  and gross  losses of $21,390 in
     1997.  For the three  months  ended  December  31,  1996,  the Company sold
     certain  investment  securities  available  for  sale  for  $6,967,872  and
     recognized gross gains of $10,801 and gross losses of $8,846.  For the year
     ended  September 30, 1996, the Company sold certain  investment  securities
     available for sale for $3,372,017 and recognized gross gains of $11,959 and
     gross losses of $3,965.

                                       26
<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued

(2)    Investment Securities, continued
       The amortized  cost and fair values of  securities  available for sale at
       December  31, 1998 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.

<TABLE>
<CAPTION>

                                                                     Amortized      Fair
                                                                       Cost         Value
                                                                       ----         -----
<S>                                                             <C>             <C>      
            U.S. Treasury and agencies:
            Due within one year                                    $ 7,954,713      7,952,899
            Due after one year through five years                   20,673,660     20,660,137
            Due after five years                                       509,499        508,906
                                                                    ----------     ----------

            Total securities other than mortgage-backed
               securities and equity securities                     29,137,872     29,121,942

            Equity securities                                           64,455        134,000

            Mortgage-backed securities                                 195,825        201,470
                                                                    ----------     ----------

                                                                  $ 29,398,152     29,457,412
                                                                    ==========     ==========
</TABLE>


       Investment  securities with  approximate  aggregate  carrying  amounts of
       $22,380,000  and  $9,979,000  at December 31, 1998 and December 31, 1997,
       respectively,  were pledged to secure public deposits and securities sold
       under agreements to repurchase.

(3)    Loans
       Major  classifications  of  loans  at  December  31,  1998  and  1997 are
presented below.
<TABLE>
<CAPTION>

                                                                   1998              1997
                                                                   ----              ----
<S>                                                          <C>                <C>      
           Commercial                                          $ 14,487,698         2,531,962
           Real estate - mortgage                                68,527,720        77,403,708
           Real estate - construction                            26,187,280        16,231,115
           Installment and other consumer                        14,154,498         2,680,145
                                                                -----------        ----------

                   Total loans                                  123,357,196        98,846,930

                   Less:  Unearned fees                             586,584           636,194
                             Allowance for loan losses              943,149           669,505
                                                                -----------        ----------

                   Total loans, net                            $121,827,463        97,541,231
                                                                ===========        ==========
</TABLE>

       Included  in real  estate-mortgage  at December  31,  1998 and 1997,  was
       approximately  $30,890,000  and  $28,373,000,  respectively,  related  to
       commercial real estate  lending.  The Company extends credit to customers
       throughout  its market  area,  which  includes  the  Georgia  counties of
       Clayton,   Henry,   and  Fayette.   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.

                                       27
<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(3)    Loans, continued
       An analysis of the activity in the allowance for loan losses is presented
below:

<TABLE>
<CAPTION>
                                                                                       Three
                                                  Year ended       Year ended       months ended         Year ended
                                                 December 31,     December 31,      December 31,       September 30,
                                                     1998             1997              1996                1996
                                                     ----             ----              ----                ----
<S>                                           <C>                 <C>              <C>                 <C>    
     Balance at beginning of period              $ 669,505           547,142          540,291             408,848
     Provision for losses on loans                 275,000           126,505            6,851             129,831  
     Loan charge-offs                               (2,674)           (4,142)            -                   -
     Loan recoveries                                 1,318              -                -                  1,612
                                                   -------           -------          -------             -------
     Balance at end of period                    $ 943,149           669,505          547,142             540,291
                                                   =======           =======          =======             =======
</TABLE>

       As of December 31, 1998 and 1997, the Bank serviced loans for others with
       approximate   outstanding   balances  of  $22,396,000   and   $8,459,000,
       respectively.

(4)    Premises and Equipment
       A summary of premises  and  equipment at December 31, 1998 and 1997 is as
follows:

                                             1998            1997
                                             ----            ----

Land                                     $   803,927        803,927        
Buildings and improvements                 3,719,942      2,392,646
Furniture and equipment                    2,286,524      2,102,817
Construction in progress                      17,400      1,143,739
                                           ---------      ---------
                                           6,827,793      6,443,129
                                                         
Less accumulated depreciation              1,405,191      1,330,791
                                           ---------      ---------
                                                         
                                         $ 5,422,602      5,112,338
                                           =========      =========


         Depreciation expense for the years ended December 31, 1998 and 1997 was
         $441,726 and $344,529, respectively. Depreciation expense for the three
         months ended  December 31, 1996 was $39,597.  Depreciation  expense for
         the year ended September 30, 1996 was $112,357.

(5)     Deposits
        At December 31, 1998, the  scheduled  maturities of time deposits are as
follows:


     1999                                       $  45,673,595
     2000                                          36,876,025
     2001                                           4,962,887
     2002                                              84,632
     2003                                           5,199,127
     2004 and thereafter                               34,137
                                                 ------------

                                                $  92,830,403
                                                 ============      

                                       28
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(6)    Income Taxes
       The components of income tax expense are as follows:

<TABLE>
<CAPTION>

                                                                                  Three months
                                             Year ended         Year ended           ended            Year ended
                                             December 31,        December 31,       December 31,      September 30,
                                                1998                1997               1996                1996
                                                ----                ----               ----                ----
<S>                                      <C>                  <C>               <C>                 <C>        
       Current expense (benefit)             $ 463,037               7,634            (46,179)            451,183    
       Deferred tax (benefit) expense         (131,348)             61,418             94,939            (308,683)
                                               -------              ------             ------             -------
                                                                                                       
                                             $ 331,689              69,052             48,760             142,500
                                               =======              ======             ======             =======
</TABLE>                             

       Income tax expense of the Company  differed from the amounts  computed by
       applying the  statutory  Federal  income tax rate to income before income
       taxes as follows:

<TABLE>
<CAPTION>
                                                                                  Three months
                                             Year ended         Year ended           ended            Year ended
                                             December 31,        December 31,       December 31,      September 30,
                                                1998                1997               1996                1996
                                                ----                ----               ----                ----
<S>                                       <C>                  <C>               <C>                 <C>        

       Tax expense at statutory rate         $ 323,158              69,922              47,036            209,384
       Add (deduct):
         State income taxes, net of Federal
          tax effect                             7,781               6,061               9,369            (24,053)
         Municipal investments                    -                 (2,645)             (2,063)            (3,792)
         Other, net                                750              (4,286)             (5,582)           (39,039)
                                               -------              ------              ------            -------

                                            $  331,689              69,052              48,760            142,500
                                               =======              ======              ======            =======
</TABLE>

       The tax effects of temporary  differences  that give rise to  significant
       portions of the  deferred  tax assets and  deferred  tax  liabilities  at
       December 31, 1998 and 1997 are presented below:

                                                           1998           1997
                                                           ----           ----

       Deferred tax assets:
       Allowance for loan losses                        $ 194,108        8,225
       State tax credit carryforwards                      58,893       55,164
       Employee Stock Ownership Plan accrual               99,147       62,713
       Management stock bonus plan                           -          23,790
       Other                                                6,720        9,600
                                                         --------      -------
           Total gross deferred tax assets                358,868      159,492
                                                         --------      -------

       Deferred tax liabilities:
       Deferred loan fees                                 366,168      315,183
       Net unrealized gains on investment
         securities available for sale                     20,741      119,523
       Premises and equipment                              23,084       17,963
       Federal Home Loan Bank stock dividends             146,165      146,165
       Other                                               28,696       16,774
                                                         --------      -------

           Total gross deferred tax liabilities           584,854      615,608
                                                         --------      -------

Net deferred tax liabilities                            $ 225,986      456,116
                                                          =======      =======

                                       29

<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY
              Notes to Consolidated Financial Statements, continued

(6)    Income Taxes, continued
       At December 31, 1998 and 1997,  the Company had state gross  receipts tax
       credit carryforwards of approximately $89,000 and $84,000,  respectively,
       which are available to reduce future state income taxes payable,  if any,
       through 2003.

       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  at  December  31,  1998  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 so
       allocated  for  purposes  other than tax bad debt  losses or  adjustments
       arising from  carryback of net  operating  losses would create income for
       tax purposes only,  which would be subject to the then current  corporate
       income tax rate.

(7)    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, 1998 and 1997:

                                                            Approximate
                                                          Contract Amount
                                                    ---------------------------
                                                        1998            1997
                                                        ----            ----
          Financial instruments whose contract
            amounts represent credit risk:
               Commitments to extend credit         $   22,209,000    5,606,000
               Standby letters of credit            $      195,000       69,000

       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  contract  includes
       provisions  to terminate  the agreement 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  involuntary  termination  of  employment in
       connection  with or within one year  after,  any change in control of the
       Company,  the officer will be paid a lump sum distribution  equal to 2.99
       times the individual's base compensation.

                                       30
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued

(8)    Federal Home Loan Bank Advances
       Federal  Home Loan Bank  advances at December  31,  1997  consisted  of a
       $18,510,000  term loan secured by a blanket lien on residential  mortgage
       loans.  Principal  was payable at maturity on June 26, 1998 and  interest
       was due  monthly  based on a  floating  daily  interest  rate of 6.50% at
       December 31, 1997.

(9)    Preferred Stock
       The  Company  is  authorized  to issue  1,000,000  shares of no par value
       serial preferred stock. At December 31, 1998, there were no shares issued
       and  outstanding.  The Board of Directors of the Company is authorized to
       issue  serial  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
       (a) 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 were $1.00 for each
           $1.00 of employee contribution.  Such matching contributions begin to
           vest after  three  years at a rate of 20% per year with full  vesting
           after seven 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, 1998 and 1997 and  September  30, 1996 totaled  $67,774,
           $43,200 and $29,116,  respectively.  Contributions  by the Company to
           the Plan during the three  months  ended  December  31, 1996  totaled
           $8,792.

       (b) Employee Stock Ownership Plan
           The Company also has an employee  stock  ownership plan (the "ESOP"),
           for the  exclusive  benefit  of  participating  employees,  who  have
           completed  one year of service with the Company and have attained age
           21.

           The ESOP is funded by periodic  contributions  made by the Company in
           cash or common stock.  Benefits to participants may be paid either in
           shares  of the  Company's  common  stock  or in  cash.  The  ESOP was
           approved to borrow funds from the Company to acquire up to 10% of the
           common stock of the Company.  During 1995, the ESOP borrowed $720,000
           from the Company to acquire  79,200 shares of Company common stock at
           approximately  $9 per  share.  The  loan  is  secured  by the  shares
           purchased and earnings of the ESOP assets, and is at an interest rate
           equal to a published prime rate, adjusted  quarterly.  The loan is to
           be paid over a  ten-year  period at  $72,000  per  year.  The  shares
           purchased  are  held  in a  suspense  account  for  allocation  among
           participants as the loan is repaid.

           At December 31, 1998,  27,720 ESOP shares have been  allocated to the
           participating  employees.  For purposes of computing net earnings per
           share,  the remaining  51,480  unallocated  shares are not considered
           outstanding until they are  committed-to-be-released  for allocation.
           The Company is  recognizing as  compensation  expense the fair market
           value  of the  Company's  common  stock  allocated  to  participating
           employees.  Compensation expense recognized by the Company during the
           years ended December 31, 1998 and 1997 and September 30, 1996 totaled
           $166,878,  $123,153 and $83,372,  respectively.  Compensation expense
           recognized by the Company  during the three months ended December 31,
           1996 totaled  $18,000.  The fair value of the  unallocated  shares at
           December 31, 1998 was approximately $753,000.


                                       31

<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(10)   Employee Benefit Plans, continued
       (c) Stock Option Plan
           -----------------
           In  January  1996,  the  Company  approved a stock  option  plan (the
           "Option Plan")  whereby  130,928  authorized  shares 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 are terminated  unexercised will again be
           available  for  issuance.  The  Option  Plan has a term of ten years,
           unless  sooner   terminated.   The  exercise   price  per  share  for
           nonqualified  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.

           Stock option activity is as follows:

<TABLE>
<CAPTION>

                                                                                     Three
                                              Year ended        Year ended        months ended         Year ended
                                             December 31,      December 31,       December 31,        September 30,
                                                 1998              1997             1996                 1996
                                                 ----              ----             ----                 ----
<S>                                        <C>                <C>               <C>                  <C>            
     Options outstanding at
     beginning of period                       106,053            112,599           85,099                -
     Options granted                             9,000               -              27,500              85,099
     Options canceled                           (7,854)            (6,546)            -                   -
                                              --------           --------         --------              ------
     Options outstanding
       at end of period                        107,199            106,053          112,599              85,099
                                              ========           ========         ========              ======
     Options exercisable
       at end of period                         40,458             21,211              -                   -
                                              ========           ========         ========              ======
     Weighted-average option prices
       per share:
     
     Options granted during
       the period                           $    20.44               -               12.18               11.25
     Options canceled during                   
       the period                           $    11.25              11.25              -                    -
     Options outstanding at end
       of period                            $    12.26              11.49            11.48               11.25

</TABLE>

         The options  outstanding  at December  31, 1998 had a  weighted-average
         contractual  maturity of 7.2 years and  exercise  prices  ranging  from
         $11.02 to $21.00.

                                       32
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued

(10)   Employee Benefit Plans, continued
       (c) Stock Option Plan, continued
           -----------------
           The  Company is  encouraged,  but not  required,  to compute the fair
           value of options at the date of grant and to recognize  such costs as
           compensation  expense  immediately if there is no vesting period,  or
           ratably  over the  vesting  period of the  options.  The  Company has
           chosen not to adopt these cost  recognition  principles  and accounts
           for all options under Accounting  Principles Board Opinion No. 25 and
           its  related  interpretations.   No  compensation  expense  has  been
           recognized  related to the Option Plan.  Had  compensation  cost 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:
<TABLE>
<CAPTION>
                                                       Year ended     Year ended     Three months       Years ended
                                                        December       December        December          September
                                                        31, 1998       31, 1997        31, 1996          30, 1996
                                                        --------       --------        --------          --------
<S>                              <C>                <C>               <C>            <C>              <C>    
      Net earnings                 As reported        $ 618,776          136,600        89,581           473,336
                                   Proforma           $ 554,730           62,324        71,722           431,502

      Basic earnings per share     As reported        $     .74             .17           .10              .45
                                   Proforma           $     .66             .08           .08              .41

      Diluted earnings             As reported        $     .70             .16           .09              .43
          per share                Proforma           $     .63             .07           .07              .40
</TABLE>

            The weighted  average  grant-date  fair value of options granted was
            $1.10,  $5.74 and $5.29 for the periods ended  December 31, 1998 and
            1996 and September 30, 1996, respectively,  based on estimates as of
            the date of  grant  using  the  Black  Scholes  pricing  model.  The
            weighted  average  assumptions used for grants in 1998 and 1996 were
            as follows:  dividend  yield of 4.6% and 2.0%, a risk free  interest
            rate  of  4.7%  and  5.5%,  expected  volatility  of  20%  and  42%,
            respectively, and an expected life of 7 years for both years.

       (d) Management Stock Bonus Plan
           ---------------------------
           In January 1996,  the Company  adopted a Management  Stock Bonus Plan
           (the  "MSBP").  Under the terms of the MSBP, a total of 52,371 shares
           of the Company's common stock is available for the granting of awards
           during a period of up to ten years.  In connection  with the adoption
           of the MSBP, the Company purchased treasury shares in the open market
           at a total cost of $578,464 to cover the total shares  available  for
           grant under the MSBP.  Through December 31, 1998, the Company awarded
           42,169 of such treasury shares to employees.  The market value of the
           common  stock  at the date of award is  included  as a  reduction  of
           stockholders'  equity  in  the  consolidated  balance  sheets  and is
           recorded as compensation  expense using the straight-line method over
           the vesting period of the awards.  The awards vest pro rata over five
           years at each  anniversary  of the award.  Compensation  expense with
           respect to the foregoing MSBP awards was $98,659, $131,242,  $22,555,
           and $37,591 for the years ended December 31, 1998 and 1997, the three
           months  ended  December 31, 1996,  and the year ended  September  30,
           1996, respectively.

(11)   Fair Values of Financial Instruments
       SFAS No. 107,  "Disclosure  About Fair Value of  Financial  Instruments",
       requires   disclosure   of  fair  value   information   about   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  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.

                                       33
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(11)   Fair Values of Financial Instruments, continued
       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.

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

       Federal Home Loan Bank 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.

       Accrued interest and dividends receivable
       -----------------------------------------
       The carrying amount approximates fair value, due to the short-term nature
       of these receivables.

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

       Federal Home Loan Bank advances
       -------------------------------
       The carrying  amounts of the Federal Home Loan Bank advances  approximate
       their fair values as the advances are based on a floating interest rate.

       Off-balance-sheet instruments
       -----------------------------
       Fair values for the Company's off-balance-sheet  instruments are based on
       a comparison with terms,  including  interest rate and commitment  period
       currently  prevailing  to enter  into  similar  agreements,  taking  into
       account  credit  standings.   Because  these  instruments  are  primarily
       variable rate instruments, the contract value is a reasonable estimate of
       fair value.

                                       34
<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(11)   Fair Values of Financial Instruments, continued
       The estimated  fair value of the Company's  financial  instruments  as of
       December 31, 1998 and December 31, 1997 are as follows:

<TABLE>
<CAPTION>


                                                                December 31, 1998                 December 31, 1997
                                                         ----------------------------       ----------------------------
                                                            Carrying           Fair           Carrying           Fair
                                                              Value            Value            Value            Value
                                                              -----            -----            -----            -----
                                                                                       (in thousands)
<S>                                                    <C>                 <C>               <C>              <C>  
         Assets:
         Cash and cash equivalents                        $   10,353           10,353            8,741            8,741
         Investment securities available for sale         $   29,457           29,457           11,560           11,560
         Loans, net                                       $  121,827          125,517           97,541           95,711
         Federal Home Loan Bank stock                     $    1,013            1,013            1,013            1,013

         Liabilities:
         Deposits                                         $  154,977          157,987           91,201           91,326
         Securities sold under agreements to              
         repurchase                                       $    1,117            1,117            2,393            2,393
         Federal Home Loan Bank advances                  $     -                -              18,510           18,510

         Unrecognized financial instruments:
         Commitments to extend credit                     $   22,209           22,209             -                -
         Standby letters of credit                        $      195              195             -                -

</TABLE>

(12)   Related Party Transactions
       Loans  are made 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 and
       do not involve  more than the normal  credit  risk.  The  following  is a
       summary of activity  during the year ended December 31, 1998 with respect
       to such aggregate loans to these individuals and their associates:


       Related party loan balances at beginning of year     $  1,709,476
       New loans                                               1,152,964
       Principal repayments                                     (819,690)
                                                               ---------
       Related party loan balances at end of year           $  2,042,750
                                                               =========


       Deposits  from  related  parties  totaled  approximately   $1,005,000  at
December 31, 1998.

                                       35

<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(13)   Parent Company Financial Information
       The following represents condensed financial information of the Parent.

                            Condensed Balance Sheets

                           December 31, 1998 and 1997

                                     Assets
                                     ------

                                                      1998           1997
                                                      ----           ----

       Cash                                      $   294,503          347,570
       Investment securities available for sale      134,000        1,580,328
       Investment in subsidiary                   11,480,697       10,353,620
       Other assets                                   10,000           29,284
                                                  ----------       ----------

                                                 $11,919,200       12,310,802
                                                  ==========       ==========

                      Liabilities and Stockholders' Equity
                      ------------------------------------

       Liabilities:
       Deferred income taxes                     $   104,407          117,900
       Dividends payable                             135,541          228,457
       Other liabilities                              53,139          444,840
                                                  ----------       ----------
                                                     293,087          791,197


       Stockholders' equity                       11,626,113       11,519,605
                                                  ----------       ----------
                                                 $11,919,200       12,310,802
                                                  ==========       ==========

                        Condensed Statements of Earnings

                    For the Years Ended December 31, 1998 and
             1997, Three Months Ended December 31, 1996 and the Year
                            Ended September 30, 1996

<TABLE>
<CAPTION>
                                                                                            Three
                                                Year ended           Year ended          months ended           Year ended
                                               December 31,          December 31,        December 31,          September 30,
                                                   1998                1997                  1996                  1996
                                                   ----                ----                  ----                  ----
<S>                                           <C>                  <C>                  <C>                  <C>        
Dividends from subsidiary                       $    -              $2,000,000                 -                    -        
Interest income from subsidiary                    26,196               25,231               10,092              203,450    
Gain on sale of investment securities             386,187              477,691                 -                    -
Other operating income                              9,386               12,244                5,750                9,775
Other operating expenses                          (64,635)             (54,676)             (33,334)             (14,647)
Income tax (expense) benefit                     (125,134)            (160,943)               6,140              (62,047)
                                                ---------           ----------             --------            ---------
Earnings (loss) before equity in                                                                               
undistributed earnings (distributions                                                                          
in excess of earnings) of subsidiary              232,000            2,299,547              (11,352)             136,531
                                                                                                               
Equity in undistributed earnings                                                                               
(distributions in excess of earnings)                                                                          
of subsidiary                                     386,776           (2,162,947)             100,933              336,805
                                                ---------           ----------             --------            ---------
                                                                                                               
Net earnings                                    $ 618,776              136,600               89,581              473,336
                                                 ========           ==========             ========            =========       
</TABLE>

                                       36
<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(13)   Parent Company Financial Information, continued

                       Condensed Statements of Cash Flows

                    For the Years Ended December 31, 1998 and
             1997, Three Months Ended December 31, 1996 and the Year
                            Ended September 30, 1996

<TABLE>
<CAPTION>
                                                                                  Three
                                               Year ended       Year ended     months ended   Year ended
                                               December 31,     December 31,   December 31,  September 30,
                                                  1998             1997           1996          1996
                                                  ----             ----           ----          ----
<S>                                         <C>               <C>           <C>           <C>    
Cash flows from operating activities:                                                                
  Net earnings                                $   618,776        136,600         89,581        473,336     
  Adjustment to reconcile net earnings        
    to net cash provided (used) by            
    operations:                               
      (Equity in undistributed earnings)      
       distributions in excess of earnings     
       of subsidiary                             (386,776)     2,162,947       (100,933)      (336,805)
      Compensation expense related to             
       MSBP                                        98,659        127,109         22,555         37,591
      ESOP shares allocated                       166,878        123,153         18,000        101,372
      Gain on sale of investment security        (386,187)      (477,691)          -              -
      Decrease (increase) in other assets          19,284         44,147         53,504       (148,840)
      (Decrease) increase in other                
         liabilities                             (311,634)      (173,595)       578,464           -
                                                ---------      ---------      ---------      ---------
          Net cash provided (used) by            
            operating activities                 (181,000)     1,942,670        661,171        126,654
                                                ---------      ---------      ---------      ---------
Cash flows from investing activities:         
  Proceeds from sale of investment            
    security                                    1,565,203        993,329           -              -
  Purchase of investment security                    -          (976,321)          -          (138,240)
  Capital infusion in subsidiary                 (750,000)          -              -              -
  Purchase of land                                   -              -              -           (10,000)
  Net change in loan to subsidiary                   -           484,011        567,570      3,499,701
                                                ---------      ---------      ---------      ---------
          Net cash provided by                   
            investing activities                  815,203        501,019        567,570      3,351,461
                                                ---------      ---------      ---------      ---------
Cash flows from financing activities:        
   Dividends paid                                (626,925)      (639,066)          -          (600,161)
   Treasury stock purchased                       (60,345)    (1,457,053)    (1,228,741)    (2,299,490)
   Contribution to management stock            
    bonus plan                                       -              -              -          (578,464)
                                                ---------      ---------      ---------      ---------
          Net cash used in financing             
            activities                           (687,270)    (2,096,119)    (1,228,741)    (3,478,115)
                                                ---------      ---------      ---------      ---------
    Change in cash and cash equivalents           (53,067)       347,570           -              -
                                              
    Cash and cash equivalents at                
      beginning of period                         347,570           -              -              -
                                                ---------      ---------      ---------      ---------
    Cash and cash equivalents at                
      end of period                           $   294,503        347,570           -              -
                                                =========      =========      =========      =========
</TABLE>
                                             
                                       37

<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued

(14)   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. The Bank has specific  requirements to maintain its ratio of Tier
       I capital to  adjusted  assets of 6.22%.  At  December  31, 1998 the Bank
       could pay  approximately  $193,000 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 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, 1998,
       that the Company and the Bank meets all capital adequacy  requirements to
       which it is subject.

       As of December 31, 1998,  the most recent  notification  from the Federal
       Deposit  Insurance  Corporation  categorized the Bank as well capitalized
       under the  regulatory  framework  for  prompt  corrective  action.  To be
       categorized  as well  capitalized,  the Bank must maintain  minimum total
       risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in
       the  table  below.   There  are  no   conditions  or  events  since  that
       notification  that  management  believes have changed the Bank's  capital
       category.

       The Bank's actual  capital  amounts and ratios are also  presented in the
       table below. At December 31, 1998, consolidated amounts do not materially
       differ from Bank-only capital amounts and ratios.

<TABLE>
<CAPTION>
                                                                                                    To Be Well
                                                                                                 Capitalized Under
                                                                           For Capital           Prompt Corrective
                                                     Actual              Adequacy Purposes       Action Provisions
                                              --------------------   ----------------------- -------------------------
                                              Amount        Ratio      Amount         Ratio     Amount        Ratio
                                              ------        -----      ------         -----     ------        -----
<S>                                     <C>              <C>      <C>              <C>     <C>              <C>
         As of December 31, 1998:
         Total capital - risk-based
         (to risk-weighted assets)        $12,430,531      11%      $9,370,240       >8%     $11,712,800       >10%
         Tier I capital - risk-based                                                 -                         -
         (to risk-weighted assets)        $11,487,382      10%      $4,685,120       >4%     $ 7,027,680       > 6%
         Tier I capital - leverage                                                   -                         -
         (to average assets)              $11,487,382       8%      $6,106,077       >4%     $ 7,632,597       > 5%
                                                                                     -                         -
         As of December 31, 1997:
         Total capital - risk-based
         (to risk-weighted assets)        $11,020,111      13%      $6,676,002       >8%     $ 8,345,003       >10%
         Tier I capital - risk-based                                                 -                         -
         (to risk-weighted assets)        $10,350,606      12%      $3,338,001       >4%     $ 5,007,002       > 6%
         Tier I capital - leverage                                                   -                         -
         (to average assets)              $10,350,606      10%      $4,069,905       >4%     $ 5,087,381       > 5%
                                                                                     -                         - 
</TABLE>
                                       38

<PAGE>


                       CCF HOLDING COMPANY AND SUBSIDIARY

              Notes to Consolidated Financial Statements, continued


(15)   Savings Association Insurance Fund Assessment
       On September 30, 1996, the Deposit Insurance Funds Act of 1996 was passed
       which,  among other  provisions,  empowered the Federal Deposit Insurance
       Corporation  to  impose  a  special  assessment  on  Savings  Association
       Insurance Fund ("SAIF") assessable  deposits of depository  institutions.
       This special  assessment was based on  SAIF-assessable  deposits at March
       31, 1995.  Based on the Company's level of insured deposits held on March
       31, 1995, the Company  recorded a charge against earnings for its accrual
       of the assessment totaling $397,568 at September 30, 1996.



                                       39

<PAGE>

                               CCF HOLDING COMPANY
                               101 N. Main Street
                            Jonesboro, Georgia 30236
                                 (770) 478-8881

                                  HERITAGE BANK
<TABLE>
<CAPTION>

<S>                     <C>                      <C>                          <C>                         <C>   
Main Office                Forest Park Office       Morrow Office               McDonough Office             Fayetteville Office
101 N. Main Street         822 Main Street          2236 Lake Harbin Road       203 Keys Ferry Street        440 N. Jeff Davis Drive
Jonesboro, Georgia         Forest Park, Georgia     Morrow, Georgia             McDonough, Georgia           Fayetteville, Georgia
</TABLE>

                    Board of Directors of CCF Holding Company
                                       and
                                  Heritage Bank
<TABLE>
<CAPTION>

<S>                                                  <C>    
    John B. Lee, Jr.                                     Edwin S. Kemp, Jr.
    Chairman of the Board                                Attorney at Law
    Public Relations Consultant to Spartan
    Lincoln-Mercury, Inc. and Loewen Group               David B. Turner
    International, Inc.                                  President and Chief Executive Officer

    Joe B. Mundy                                         Charles S. Tucker
    Retired (Former circuit court clerk)                 Retired (former county agent for University
                                                         of Georgia)

    Leonard A. Moreland                                  John T. Mitchell
    Executive Vice President*                            Adams Mitchell Realty, Inc.*
</TABLE>

------------------------
* Director of Bank only

                  Executive Officers of CCF Holding Company and
                                  Heritage Bank
<TABLE>
<CAPTION>

<S>                                                       <C>   
              David B. Turner                                              Leonard A. Moreland
    President and Chief Executive Officer                              Executive Vice President

              Mary Jo Rogers                                               Edith W. Stevens
   Sr. Vice President and Chief Financial Officer              Sr. Vice President and Chief Operating Officer

             Richard P. Florin                                             Charles S. Tucker
            Senior Vice President                                      Secretary and Treasurer
</TABLE>

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

   Independent Auditors                    Corporate Counsel
   Porter Keadle Moore, LLP                Edwin S. Kemp, Jr., Esquire
   235 Peachtree Street, N.W.              101 North Main Street
   Suite 1800                              Suite 203
   Atlanta, GA  30303                      Jonesboro, Georgia 30236


   Transfer Agent and Registrar            Special Counsel
   Registrar & Transfer Company            Malizia, Spidi, Sloane & Fisch, P.C.
   10 Commerce Drive                       One Franklin Square
   Cranford, New Jersey  07016             1301 K Street, N.W., Suite 700 East
   (908) 272-8511                          Washington, D.C.  20005

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

The Company's  Annual Report for the year ended December 31, 1998 on Form 10-KSB
is available without charge upon written request.  For a copy of the Form 10-KSB
or any  other  investor  information,  please  write or call  David  B.  Turner,
President  and Chief  Executive  Officer at the  Company's  Office in Jonesboro,
Georgia.  The Annual Meeting of  Stockholders  will be held on April 27, 1999 at
4:30 p.m. at the main office.

                                      40