EXHIBIT 13
<PAGE>

                               CCF HOLDING COMPANY

                                  ANNUAL REPORT
                               For the Year Ended
                                December 31, 1997





<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                                             4


Management's Discussion and Analysis or Plan of Operation                     7


Independent Auditors' Report                                                  16


Consolidated Financial Statements                                             17


Notes to Consolidated Financial Statements                                    22


Office Locations and Other Corporate Information                              49















<PAGE>



                           [CCF HOLDING COMPANY LOGO]






March 18, 1998


Dear Fellow Stockholders:

We are proud to report that 1997 has been a very  successful  year for  Heritage
Bank.

The Bank has undergone many changes  during the year,  the most obvious  perhaps
was our name. We feel that the "Heritage Bank" name more accurately reflects our
new approach to business and reflects favorably on our past success.

Accomplishments  since  our last  annual  report  include  asset  growth of over
$44,000,000,  the opening of two new offices in neighboring  counties of Fayette
and Henry, an increase in stock price of more than $7.00 per share, a payment of
$0.70  (restated for a 10% stock dividend) per share in dividends and a Bank now
positioned  to  compete  on a  much  broader  scale  in the  highly  competitive
financial services industry.

The Board of  Directors  appreciates  your  continued  support  and  confidence.
Through the collective  efforts of our loyal management team, and employees,  we
are pleased to report the  financial  results that are detailed in the following
pages.

We are  eagerly  looking  forward to 1998.  Banking  has never been  brighter at
Heritage Bank.

Very truly yours,


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



<PAGE>



                               CCF HOLDING COMPANY

Corporate Profile and Related Information

CCF Holding Company (the "Company") is a Georgia corporation  organized in March
1995 at the  direction  of Heritage  Bank (the  "Bank") in  connection  with the
Bank's   conversion   from  a  mutual  to  stock  form  of   organization   (the
"Conversion").  On July 11, 1995, the Bank completed the Conversion and became a
wholly owned  subsidiary  of the Company.  The Company is a unitary  savings and
loan holding company which, under existing laws,  generally is not restricted in
the  types of  business  activities  in which it may  engage  provided  the Bank
retains a specified amount of its assets in housing-related investments.

The Bank is a  federally  chartered  stock  savings and loan  association  which
originally  commenced  business  in 1955.  The  Bank's  primary  market  area is
currently  Clayton,  Fayette and Henry  Counties,  where the Bank  operates five
offices.  The  market  area  is  part  of  the  Atlanta,   Georgia  metropolitan
statistical  area.  To a much  lesser  extent,  the Bank also makes loans in the
surrounding Georgia counties of Coweta, Rockdale,  Spalding, and Lamar. The Bank
is subject to examination and  comprehensive  regulation by the Office of Thrift
Supervision  ("OTS")  and its  deposits  are  federally  insured by the  Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("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 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 bid  quotations as published by USA
Today  and  The  Wall  Street  Journal  as  well as  dividend  information.  The
quotations reflect inter-dealer prices,  without retail mark-up,  mark-down,  or
commission, and may not represent actual transactions.

                                        2

<PAGE>

<TABLE>
<CAPTION>
                                                                                                    Dividends          Dividends
Date                                                            High                Low             Declared(1)          Paid(1)
----                                                            ----                ---             -----------          -------

<S>                                                            <C>                <C>                  <C>               <C>
October 1, 1995 to December 31, 1995                           $12.75             $11.25               $.32              $  --

January 1, 1996 to March 31, 1996                               12.75              11.50                 --                .32

April 1, 1996 to June 30, 1996                                  12.50              11.31                .18                 --

July 1, 1996 to September 30, 1996                              13.25              11.50                 --                .18

October 1, 1996 to December 31, 1996                            13.40              11.70                .45                 --

January 1, 1997 to March 31, 1997                               15.00              13.40                 --                .45

April 1, 1997 to June 30, 1997                                  15.23              14.31                .25                 --

July 1, 1997 to September 30, 1997                              15.45              15.00                 --                .25

October 1, 1997 to December 31, 1997                            21.00              15.56                .27                 --
</TABLE>


----------------------------
(1)      Restated to reflect a 10% stock dividend declared on December 16, 1997.


The number of  shareholders  of record of Common  Stock as of December 31, 1997,
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, 1997,  there were 899,024  shares  outstanding,  net of 7,686 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. 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,  or (2) the regulatory capital requirements imposed by the OTS. As a
result of these  regulatory  limitations,  at December 31,  1997,  approximately
$8,182,000 of the Company's  investment in the Bank was restricted from transfer
by the Bank to the Company in the form of cash dividends.

Change in Reporting Periods

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  Company  filed a
transition report on Form 10-QSB for the period from October 1, 1996 to December
31,  1996.  The  Company did not recast  prior year  financial  statements  on a
calendar  year  basis so as to  compare  operating  results  for the year  ended
December  31,  1997 to the year  ended  December  31,  1996 due to the fact that
operating results for 1996 on a calendar year basis and comparative  discussions
of  operating  results  would  not  have  differed  significantly  from  what is
currently  presented  in  "Management's  Discussion  and  Analysis  or  Plan  of
Operation."

                                        3

<PAGE>





<TABLE>
<CAPTION>
                        SELECTED FINANCIAL AND OTHER DATA
                        ---------------------------------
                                                          At December 31,                         At September 30,
                                                          --------------- -------------------------------------------------------

                                                               1997           1996           1995          1994           1993
                                                               ----       -----------   ------------   -----------   ------------
<S>                                                           <C>            <C>            <C>           <C>            <C>
Financial Condition (Dollars in thousands)

Total Amount of:

  Assets                                                      $124,956       $80,283        $79,822       $69,080        $71,115

  Loans receivable, net                                         97,541        51,500         45,196        44,244         47,255

  Mortgage-backed securities                                     1,838        10,025          7,896         6,804          7,079

  Investment securities                                          9,722        13,353         15,671        12,795          9,528

  Liabilities                                                  113,436        65,843         62,501        62,866         65,214

  Deposits                                                      91,201        61,822         61,132        61,598         64,050

  Securities sold under agreements to
    repurchase                                                   2,393            --             --            --             --

  FHLB advances                                                 18,510         2,500             --            --             --

  Stockholders' equity                                          11,520        14,440         17,322         6,214          5,901


Other Data:

  Net income                                                       137           473            604           431            739

  Average assets                                                99,675        79,348         72,229        70,533         71,627

  Average equity                                                11,934        16,733          8,973         6,061          5,540

  Full service offices(1)                                            5             1              1             1              1

</TABLE>

----------------------
(1)      During 1997, the Bank opened two new offices and converted two existing
         customer service facilities into full service offices.

                                        4

<PAGE>


<TABLE>
<CAPTION>
                                                      Year Ended
                                                      December 31,                      Year Ended September 30,
                                                   ------------------     ---------------------------------------------------------
                                                          1997               1996          1995            1994            1993
                                                   ------------------     ----------   -------------   -------------   ------------
<S>                                                     <C>                <C>            <C>             <C>            <C>
Summary of Operations
(Dollars in thousands)

Total interest income                                   $7,605               5,573          $5,021          $4,872         $5,248

Total interest expense                                   3,921               2,527           2,479           2,245          2,637
                                                         -----               -----           -----           -----          -----

  Net interest income                                    3,684               3,046           2,542           2,627          2,611

Provision for loan losses                                  126                 130               5              69             98
                                                        ------              ------          ------          ------         ------

  Net interest income after provision
    for loan losses                                      3,558               2,916           2,537           2,558          2,513

Other income                                             1,394                 415             328             346            362

Other expenses(1)                                        4,746               2,715           1,968           1,904          1,750
                                                         -----               -----           -----           -----          -----

Income before income taxes and cumulative
  effect of change in accounting principle                 206                 616             897           1,000          1,125

Income tax expense                                          69                 143             293             363            386
                                                        ------               -----          ------          ------         ------

Income before cumulative effect of change
in accounting principle                                    137                 473             604             637            739

Cumulative effect of change in
  accounting principle                                      --                  --              --             206             --
                                                       -------              ------          ------          ------        -------

  Net income                                          $    137             $   473         $   604         $   431        $   739
                                                       =======              ======          ======          ======         ======

</TABLE>


(1)  For 1996,  included a $398,000  one time  assessment  to  recapitalize  the
     Savings Association Insurance Fund ("SAIF") of the FDIC.

                                        5

<PAGE>

<TABLE>
<CAPTION>
                                                    At or for
                                                    the Year
                                                      Ended
                                                  December 31,                 At or for the Year Ended September 30,
                                                  ------------      -------------------------------------------------------------
                                                      1997               1996            1995           1994            1993
                                               ------------------   --------------   ------------   -------------   -------------
<S>                                                  <C>              <C>            <C>             <C>             <C>
Key Operating Ratios

Performance Ratios:

Return on average assets (net income
  divided by average total assets)                      0.14%            0.60%          0.84%           0.61%           1.03%

Return on average equity (net income
  divided by average equity)                            1.14%            2.83%          6.73%           7.11%          13.34%

Average interest-earning assets to
  average interest-bearing liabilities                112.88%          122.83%        110.75%         106.50%         106.69%


Net interest rate spread                                3.36%            3.15%          3.31%           3.68%           3.52%

Net yield on average interest-earning
  assets                                                3.90%            4.04%          3.70%           3.89%           3.77%

Net interest income after provision for
  loan losses to total other expenses                  74.97%          107.40%        128.93%         134.38%         143.59%

Basic earnings per share (1)                          $ 0.17           $ 0.45          $0.17              N/A             N/A

Diluted earnings per share(1)                         $ 0.16            $0.43          $0.17              N/A             N/A

Capital Ratios:

Book value per share (1)                              $12.81           $13.35         $13.23              N/A             N/A

Average equity to average assets
  (average equity divided by average
  total assets)                                        11.97%           21.09%         12.42%           8.59%           7.73%

Equity-to-assets (End of Period)                        9.22%           17.99%          21.7%           9.00%           8.30%



Asset Quality Ratios:

Non-performing loans to total loans, net                0.38%            1.17%          0.39%           0.41%           2.31%

Non-performing loans to total assets                    0.29%            0.75%          0.22%           0.26%           1.53%

Allowance for loan losses to
  nonperforming loans                                 182.93%           89.90%        233.71%         237.63%          33.15%
</TABLE>

------------------------
(1)      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.

                                        6

<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                              OR PLAN OF OPERATION

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 interest  expense,  and other income
derived primarily from loan origination and commitment fees.  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, areas of Georgia.
The  management  of the Bank has  identified  and sought to pursue four  primary
strategic objectives: (1) maintain an adequate amount of regulatory capital; (2)
reduce  interest rate risk;  (3) maintain good asset quality  through  continued
emphasis on well underwritten consumer, commercial, and residential lending; and
(4) broaden our product and customer base to become a more diversified financial
institution.

          1.   Regulatory Capital.  Prior to the Conversion,  the Bank sought to
               manage its size and asset  quality in order to allow its  capital
               ratios to increase in order to comply with and safely  exceed the
               regulatory capital requirements.  During this period,  management
               did not price its deposits  competitively by increasing  interest
               rates paid,  which to a limited extent,  allowed the deposit base
               to  shrink.   To  further  this   strategy,   the  Bank  did  not
               aggressively  seek to increase  its market  share of loans nor to
               expand the market area for lending. This strategy resulted in the
               Bank  increasing its capital  ratios,  and when combined with the
               proceeds  from the  Conversion,  the Bank's  capital  was well in
               excess of all of its risk-based  capital  requirements.  The Bank
               has used the proceeds  from the  Conversion to expand its product
               line and branch  network in order to  increase  deposit  and loan
               growth.  In addition,  the Company has, on occasion,  repurchased
               shares of its common stock in order to manage excess  capital and
               increase  stockholder  value.  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 will
               be to  increase  the  volume  of  loans  that  reprice  at  least
               annually,  which  will  generally  match  the  repricing  of  its
               liabilities.


                                        7

<PAGE>



          3.   Asset  Quality.  The Bank continues to seek to maintain its asset
               quality through detailed  underwriting  and thorough  analysis of
               its loan  requests.  At December  31,  1997,  the Bank's ratio of
               nonperforming  loans to total  loans was .4% and to total  assets
               was .3%.

          4.   Product and  Customer  Base.  The Bank opened two new offices and
               increased  the size of its loan  portfolio by  approximately  $44
               million  between  September  30, 1996 and December 31, 1997.  The
               Bank  also  expanded  the  activities  of  its  customer  service
               facilities so that all five of our locations are now full service
               branches.  As a result of these changes,  loans  receivable,  net
               increased  89% between  September 30, 1996 and December 31, 1997.
               These increases were mainly in commercial lending (primarily real
               estate mortgages) and, to a lesser extent,  construction  lending
               (primarily residential) as the Bank begins to provide more of the
               products  and  services  that  are  offered  by its  competitors,
               including  commercial  banks.   Likewise,   the  Bank's  deposits
               increased by nearly 48% from $61.8  million at September 30, 1996
               to $91.2  million at  December  31, 1997 as a way to fund some of
               this  loan  growth.  The Bank has also  funded  some of this loan
               growth by  borrowing  more funds as it  strives  to  provide  its
               increasing  number  of loan  products  to more  customers  in its
               market  area.  During  1998,  it  is  expected  that  the  Bank's
               commercial  and  consumer  lending  will  continue to increase in
               relation to its  residential  mortgage  lending and will  include
               some indirect  lending,  primarily loans for home improvement and
               water  craft.  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
results of  operation  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  upon  achieving a positive  interest rate spread that can be
sustained during  fluctuations in prevailing interest rates. The Bank, like many
other thrift  institutions,  is subject to interest rate risk as a result of 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  traditional
mortgage  loans,  increases in interest  rates may have an adverse effect on the
Bank's  earnings.  The Bank is reducing this exposure by  diversifying  the loan
portfolio to include more consumer and  commercial  loans at primarily  variable
rates. Consumer and commercial loans by their nature have shorter maturities.

The Bank's net interest  rate spread was 3.31% for the year ended  September 30,
1995,  3.15% for the year ended  September 30, 1996 and 3.36% for the year ended
December 31, 1997. Results of the Company's  cumulative interest sensitivity gap
analysis indicate that a fluctuation in interest rates would

                                        8

<PAGE>



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 upon 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  (i)
mortgage-backed securities and (ii) 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 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.

                                        9

<PAGE>
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. Average balances
are derived from month-end balances. Management does not believe that the use of
month-end  balances  instead of daily  average  balances has caused any material
differences in the information presented.
<TABLE>
<CAPTION>
                                                                           For the Year  Ended         For the Year Ended
                                                        At December 31,         December 31,              September 30,
                                                  ---------------------- ------------------------- ----------------------------
                                                             1997                   1997                      1996
                                                  ---------------------- ------------------------- ----------------------------
                                                                Weighted          Interest                  Interest
                                                     Historical  Average Average   Income/         Average   Income/
                                                       Balance    Rates  Balance   Expense  Yield  Balance   Expense  Yield
                                                       -------    -----  -------   -------  -----  -------   -------  -----
                                                                                   (Dollars in Thousands)

<S>                                                 <C>         <C>      <C>       <C>     <C>     <C>      <C>      <C>
Assets
    Interest-earning assets:
    Loans(1)                                         $ 97,541      8.36% $82,973   $6,937    8.36% $47,293  $3,844     8.13%
    Mortgage-backed securities                          1,838      6.17    3,483      183    5.25    9,526     618     6.49
    Investment securities                               9,722      6.15    5,679      335    5.90   15,597     920     5.90
    FHLB Stock                                          1,013              1,013       74    7.31    1,013      74     7.31
    Interest-earning deposits in other
      financial institutions                            4,384      5.43    1,309       76    5.81    1,986     117     5.89
                                                      -------             ------   ------    ----   ------   -----     ----
      Total interest-earning assets                   114,498             94,457    7,605    8.05   75,415   5,573     7.39
                                                                                   ------    ----            -----     ----
 Other noninterest-earning assets                      10,458              5,218                     3,933
                                                      -------             ------                    ------
      Total assets                                   $124,956            $99,675                   $79,348
                                                      =======             ======                    ======
Liabilities and stockholders' equity:
  Interest-bearing liabilities:
    Demand deposits                                   $22,240      3.82  $15,477      473    3.06   11,240     236     2.10
    Passbook savings                                       --        --       --       --      --   11,817     274     2.32
    Regular savings                                     9,962      2.50   10,771      231    2.14       --      --       --
    Time deposits                                      54,451      5.67   48,143    2,721    5.65   36,140   2,001     5.54
    FHLB advances                                      18,510      6.50    9,154      489    5.34      423      16     3.78
    Securities sold under agreements to
      repurchase                                        2,393      5.15      135        7    5.15       --      --       --
                                                     --------               ----   ------    ----   ------  ------      -----
      Total interest-bearing liabilities              107,556             83,680    3,921    4.69   59,620   2,527     4.24
                                                      -------             ------   ------    ----   ------   -----     ----
Other noninterest-bearing liabilities                   5,880              4,061                     2,995
Stockholders' equity                                   11,520             11,934                    16,733
                                                      -------             ------                    ------
      Total liabilities and stockholders' equity     $124,956            $99,675                   $79,348
                                                      =======             ======                    ======
Excess of interest-earning assets
  over interest-bearing liabilities                    $6,942            $10,777                   $14,019
                                                        =====             ======                    ======
Ratio of interest-earning assets
  over interest-bearing liabilities                   106.45%            112.88%                   122.83%
                                                      ======             ======                    ======
Net interest income                                                                $3,684                   $3,046
                                                                                    =====                    =====
Net interest spread(2)                                                                       3.36%                     3.15%
                                                                                            =====                     =====
Net yield on average                                                                         3.90%                     4.04%
                                                                                            =====                     =====
  interest-earning assets(3)
</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.

                                       10

<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, 1997 and
                                                           September 30, 1996 and 1995
                                       ----------------------------------------------------------------
                                             1997 compared to 1996         1996 compared to 1995
                                       --------------------------------  ------------------------------
                                                Changes due to                 Changes due to
                                       --------------------------------  ------------------------------
                                                    Rate/                            Rate/
                                         Volume     Yield      Total     Volume      Yield      Total
                                         ------     -----      -----     ------      -----      -----
                                                               (In Thousands)
<S>                                    <C>        <C>        <C>        <C>        <C>        <C>
Interest income:
  Loans                                $ 3,013    $    80    $ 3,093    $   240    $    26    $   266
  Mortgage-backed securities              (312)      (123)      (435)       190       --          190
  Investment securities                   (585)         0       (585)       146         51        197
  FHLB Stock                                --         --         --         --         --         --
  Interest-earning deposits in other
    financial institutions                 (39)        (2)       (41)      (104)         3       (101)
                                       -------    -------    -------    -------    -------    -------


      Total interest income            $ 2,077    $   (45)   $ 2,032    $   472    $    80    $   552
                                       =======    =======    =======    =======    =======    -------

Interest expense:
   Demand deposits                     $    65    $   172    $   237    $    10    $   (45)   $   (35)
   Passbook savings                        (21)       (22)       (43)       (52)       (41)       (93)
   Time deposits                           708         12        720         21        139        160
   FHLB advances                           467          6        473         16         --         16
   Securities sold under
     agreements to repurchase                7         --          7         --         --         --
                                       -------    -------    -------    -------    -------    -------
      Total interest expense           $ 1,226    $   168    $ 1,394    $    (5)   $    53    $    48
                                       =======    =======    =======    =======    =======    =======

      Net interest income              $   851    $  (213)   $   638    $   477    $    27    $   504
                                       =======    =======    =======    =======    =======    =======

</TABLE>


Comparison of Financial Condition at December 31, 1997 and September 30, 1996

Total  assets  increased  $44.7  million  between the two dates due to increased
lending from funds  provided from  increased  deposits and use of FHLB advances.
Stockholders'  equity decreased by $2.9 million to $11.5 million at December 31,
1997 from $14.4 million at September 30, 1996. The decrease was  attributable to
repurchases  of Common  Stock  totaling  $2.7  million  and  dividends  declared
totaling  $861,000,  that were only partially  offset by net income of $226,000.
Other items contributing to the

                                       11

<PAGE>



change were employee stock ownership plan shares  allocated  totaling  $141,000,
management  stock bonus plan  compensation  expense of $127,000,  and unrealized
gains on the fair  value  of  securities  available  for sale of  $179,000.  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 of the  Company's  portfolio of securities
classified  as available  for sale,  the Company  could  continue to  experience
volatility  in the fair value of such  securities  during  periods  of  changing
market interest rates.  During fiscal year 1996, the Company decided to transfer
approximately $9.3 million of investment securities and $8.3 million of mortgage
backed  securities  from held to  maturity  to  available  for sale.  Management
decided to make this transfer in order to provide  additional  liquidity for the
purpose of funding its new commercial loan product line.

Comparison of Operating Results For The Fiscal Years Ended December 31, 1997 and
September 30, 1996

         General.  As noted  previously,  the Company  changed its year end from
September  30 to December  31. The  Company  filed a  transition  report on Form
10-QSB for the period from October 1, 1996 to December 31, 1996. The results for
this period are presented  separately in the audited financial  statements.  The
Company did not recast prior year financial  statements on a calendar year basis
so as to compare  operating  results for the year ended December 31, 1997 to the
year ended December 31, 1996 due to the fact that operating  results for 1996 on
a calendar year basis and comparative discussions of operating results would not
have differed  significantly from what is currently presented below. The quarter
ended  December 31, 1995 and the quarter ended  December 31, 1996 did not differ
significantly  except  for  increases  in other  expenses  due to the  Company's
expansion  into the Fayette and Henry county  markets  which are also  discussed
below and in the transition report on Form 10-QSB.

         Net  Income.  The  Company's  net income  decreased  by  $337,000  from
$473,000 in 1996 to $136,000 in 1997.  This  decrease was  primarily  due to the
expansion into the Fayette and Henry county markets; the staffing, marketing and
supplies associated with these start-up locations  considerably  increased other
expenses.  The  decrease  in net income  during 1997 was  partially  offset by a
$480,000  increase  in gains from sales of  investment  securities  and a $4,000
decrease in the  provision  for loan losses.  The decrease in net income  during
1997 was  expected due to the  expansion  and change in business  strategy.  The
Company believes that this expansion should enhance long term shareholder  value
and does not expect the decrease in earnings to be as great in the future.  This
statement of beliefs  concerning this expansion and the impact of this expansion
on the Company is a forward looking statement. The Private Securities Litigation
Reform Act of 1995 (the  "Act")  provides  protection  to the  Company in making
certain forward looking statements that are accompanied by meaningful cautionary
statements  that identify  important  factors that could cause actual results to
differ materially from the forward looking statement. As described more fully in
the following sections entitled "Net Interest Income," "Other Income" and "Other
Expenses," the expansion  resulted in both  increased net interest  income after
provision  for loan losses and  increased  other  income  between 1996 and 1997.
However,  the increase in other expenses more than offset these other increases.
If the expansion is  successful,  net interest  income after  provision for loan
losses and other income will increase during 1998 in greater dollar amounts than
the expected increase in other expense.  However, as with any expansion,  if new
offices or additional personnel do not ultimately result in sufficient increased
loan and deposit  activity and increased  net interest and other  income,  these
expenses  would continue to have an adverse effect on net income during 1998 and
in future periods.


                                       12

<PAGE>



         Net Interest  Income.  Net interest  income (before  provision for loan
losses)  increased  from $3.0  million  in 1996 to $3.6  million  in 1997.  This
increase was  primarily  due to an increase in interest  income on loans of $3.1
million,  more than offsetting the increase in interest  expense on deposits and
FHLB advances of $1.4 million.  Interest  income on  investment  securities  and
mortgage  backed  securities  also declined by $1.0 million as these  securities
were liquidated to fund lending activities.  These changes were due primarily to
the higher volume of average loan balances during 1997. The increases in lending
were primarily in commercial real estate and residential construction loans both
on a contract and speculative  basis.  Commercial  loans (primarily real estate)
increased   approximately  $29  million  and  construction  loans  increased  by
approximately $8.5 million from September 30, 1996 to December 31, 1997.

         Provision For Loan Losses.  The Bank  decreased  slightly the provision
for loan losses from $130,000 in 1996 to $126,000 in 1997. This decrease was due
to management's reassessment of the risk inherent in the residential real estate
portfolio  and the  assessment of the risk relative to the change in the type of
loans in the loan portfolio as the Bank's level of commercial  and  construction
lending has  increased.  Management's  reassessment  of the inherent risk in the
residential  real estate  portfolio,  which was primarily based on the Company's
excellent  historical  loss  experience  in  residential  real  estate  lending,
revealed  an  excess  in  the  unallocated  general  reserve.  This  excess  was
reallocated to the remainder of the portfolio and resulted in a lower  provision
expense in 1997. The Bank's allowance for loan losses increased from $540,000 at
September  30,  1996,  to $669,000 at December  31,  1997.  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.
<TABLE>
<CAPTION>
                                                            At December 31, 1997                       At September 30, 1996
                                                    ------------------------------------         -----------------------------------
                                                                         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...................   $    42                49.50%                   $316               80.79%
Construction.....................................       288                16.39                      52               12.53
Commercial real estate...........................       294                30.11                     155                4.79
Consumer and other...............................        46                 4.00                      17                1.89
                                                     ------               ------                     ---              ------
  Total..........................................   $   669               100.00%                   $540              100.00%
                                                     ======               ======                     ===              ======

</TABLE>


                                       13

<PAGE>




         Other  Income.   Other  income  increased  from  $415,000  in  1996  to
$1,393,000 in 1997. This increase was  attributable  primarily to an increase in
loan fees of $444,000 generated on new loan originations,  centered primarily in
commercial real estate, single family residential  construction and non mortgage
consumer loans. The Company also experienced a net increase of $480,000 on gains
from sales of investment  securities,  primarily related to the liquidation of a
portion of its holdings of equity securities.

         Other Expenses. Other expenses increased from $2.72 million during 1996
to $4.75  million  during 1997,  representing  an  approximate  74.6%  increase.
Included in this  increase is $1.7 million in salaries  and benefits  associated
with the expansion  into the new markets and the expansion of the Bank's product
line. Of the $468,000  increase in occupancy  expense,  $281,000 was  associated
with the opening of two  temporary  office  facilities  and  related  utilities,
leasehold improvements,  furniture, fixtures and equipment depreciation expense.
The remainder of the increases in other  expenses was  associated  with the name
change,  significantly  increased  advertising and upgrades  associated with the
Bank's  technology.  The  increase in other  expenses is  partially  offset by a
$100,000  decrease in federal  insurance  premiums and $398,000 in non-recurring
SAIF assessments which occurred in 1996.

         Income Tax  Expense.  Income tax expense as a percent of income  before
taxes  increased  from 23.1% in 1996 to 33.5% in 1997.  This  increase is due in
part to  costs  associated  with an  attempt  in 1995 at  establishing  a mutual
holding company and its effect on the 1996 taxes.

Liquidity and Capital Resources

The Bank is required to maintain  minimum  levels of liquid assets as defined by
the OTS regulations.  The OTS minimum required liquidity ratio is 4%. Short-term
liquidity at December 31, 1997 was 21.10%. 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.  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.

Year 2000

The Company recognizes that there is a business risk in computerized  systems as
the calendar  rolls into the next century.  The Federal  Financial  Institutions
Examination  Council  ("FFIEC") issued an interagency  statement on May 5, 1997,
providing  an  outline  for  institutions  to  effectively  manage the Year 2000
challenges.  The  Company  has  developed  an  ongoing  plan to ensure  that its
operational  and financial  systems will not be adversely  affected by year 2000
software failures due to processing  errors arising from calculations  using the
year 2000 date.  The Company has an internal task force assigned to this project
and the Board of Directors and management of the Company have  established  year
2000 compliance as a strategic initiative.


                                       14

<PAGE>



The Year 2000 Task Force of the Company has broken this  project  down into five
phases:  1) Awareness;  2)  Assessment;  3)  Renovation;  4)  Validation  and 5)
Implementation.  The task  force has  identified  to date all  mission  critical
issues and has taken a proactive and  aggressive  stance of monitoring  progress
with all vendors' Year 2000 Compliance initiatives. The task force will make all
necessary recommendations for the renovation and validation phases prior to June
30,  1998.  All  validation  and  implementation  procedures  are expected to be
completed by June 30, 1999.

Rapid  and  accurate  data  processing  is  essential  to  our  operation.  Data
processing is also essential to most other financial institutions and many other
companies.  All of our material data  processing  that could be affected by this
problem is provided by FISERV Solutions,  Inc.  (FISERV),  a third party service
bureau.  FISERV has advised us that it expects to resolve this potential problem
before the year 2000.  However,  if FISERV is unable to resolve  this  potential
problem in a timely manner,  the Bank will activate all contingency  plans in an
attempt to avoid what would  otherwise be significant  data  processing  delays,
mistakes or failures. Any delays,  mistakes or failures could have a significant
adverse impact on our financial condition and our results of 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.

Other Material Changes

In December  1997, the Company  declared a semiannual  cash dividend of $.27 per
share for  stockholders of record as of January 1, 1998 and a 10% stock dividend
for stockholders of record as of January 2, 1998.

                                       15

<PAGE>
                                  [Letterhead]



                          Independent Auditors' Report


The Board of Directors
CCF Holding Company:


We have  audited the  accompanying  consolidated  balance  sheets of CCF Holding
Company and subsidiary (the "Company") as of December 31, 1997 and September 30,
1996, and the related consolidated  statements of income,  stockholders' equity,
and cash flows for the year ended  December 31,  1997,  the  three-month  period
ended December 31, 1996, and for each of the years in the two-year  period ended
September  30,  1996.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of CCF Holding Company
and  subsidiary as of December 31, 1997 and September 30, 1996,  and the results
of their  operations  and their cash flows for the year ended December 31, 1997,
the three-month period ended December 31, 1996, and for each of the years in the
two-year period ended September 30, 1996, in conformity with generally  accepted
accounting principles.



                                              /s/KPMG Peat Marwick LLP

Atlanta, Georgia
February 6, 1998

                                       16
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                           Consolidated Balance Sheets

                    December 31, 1997 and September 30, 1996

<TABLE>
<CAPTION>

                                      Assets                                           1997              1996
                                      ------                                           ----              ----

<S>                                                                             <C>                    <C>
Cash and due from banks (note 16)                                               $       4,357,626         2,133,135
Interest-bearing deposits in other financial institutions                               4,383,690           512,610
Investment securities available for sale (note 2)                                       9,722,048        13,353,381
Mortgage-backed securities available for sale (note 3)                                  1,837,509        10,024,936
Federal Home Loan Bank stock, at cost (note 7)                                          1,013,200         1,013,200
Loans receivable, net (note 4)                                                         97,541,231        51,499,574
Accrued interest and dividends receivable (note 5)                                        784,852           511,072
Premises and equipment, net (note 6)                                                    5,112,338         1,119,628
Other assets                                                                              203,550           115,004
                                                                                    -------------      ------------

           Total assets                                                         $     124,956,044        80,282,540
                                                                                    =============      ============

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

Liabilities:
    Deposits (note 8)                                                           $      91,201,340        61,821,674
    Securities sold under agreements to repurchase (note 9)                             2,392,579                 -
    Federal Home Loan Bank advances (note 11)                                          18,510,000         2,500,000
    Advance payments by borrowers for property taxes and insurance                        142,111           531,105
    Deferred income taxes (note 10)                                                       456,116           206,536
    Savings Association Insurance Fund assessment
      payable (note 18)                                                                         -           397,568
    Other liabilities                                                                     734,293           385,753
                                                                                      -----------        ----------
           Total liabilities                                                          113,436,439        65,842,636

Stockholders' equity (notes 15 and 16):
    Preferred stock, no par value; 1,000,000 shares
      authorized; none issued and outstanding (note 12)                                         -                 -
    Common stock, $.10 par value, 4,000,000 shares
      authorized; 906,710 shares issued and 899,024 shares
      outstanding in 1997; 1,190,250 shares issued and
      983,332 shares outstanding in 1996 (note 13)                                         90,671           119,025
    Additional paid-in capital                                                          7,794,459        10,971,714
    Retained earnings (note 10)                                                         4,443,500         6,809,054
    Unearned ESOP shares (note 13)                                                       (540,000)         (630,000)
    Unearned compensation (note 13)                                                      (394,195)         (371,304)
    Treasury stock, at cost; 7,686 and 206,918 shares in
      1997 and 1996, respectively                                                         (96,800)       (2,502,009)
    Net unrealized holding gains on investment and
      mortgage-backed securities available for sale                                       221,970            43,424
                                                                                    -------------      ------------
           Total stockholders' equity                                                  11,519,605        14,439,904

Commitments and contingencies (notes 4, 13, and 17)


           Total liabilities and stockholders' equity                           $     124,956,044        80,282,540
                                                                                    =============      ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                      -17-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                        Consolidated Statements of Income

                   Year ended December 31, 1997, Three Months
                    ended December 31, 1996, and Years ended
                           September 30, 1996 and 1995
<TABLE>
<CAPTION>
                                                                                  Three months
                                                                  Year ended         ended            Year ended
                                                                 December 31,     December 31,        September 30,
                                                                 ------------     ------------   -----------------------
                                                                     1997            1996         1996          1995
                                                                     ----            ----         ----          ----
<S>                                                            <C>                  <C>          <C>          <C>
Interest and dividend income:
    Loans                                                      $   6,937,407        1,208,917    3,844,033    3,577,601
    Interest-bearing deposits in other financial institutions         75,804           18,727      116,986      217,758
    Investment securities - taxable                                  325,795          116,636      909,504      722,758
    Investment securities - nontaxable                                 9,720            7,110       11,152            -
    Mortgage-backed securities                                       182,630          153,800      617,592      428,325
    Dividends on Federal Home Loan Bank stock                         73,907           18,465       73,508       74,399
                                                                  ----------       ----------   ----------   ----------
           Total interest and dividend income                      7,605,263        1,523,655    5,572,775    5,020,841
                                                                   ---------        ---------    ---------    ---------
Interest expense:
    Deposit accounts (note 8)                                      3,424,439          631,824    2,510,350    2,478,869
    Federal Home Loan Bank advances and securities
      sold under agreements to repurchase                            496,458           64,263       16,444            -
                                                                  ----------       ----------   ----------   ----------
           Total interest expense                                  3,920,897          696,087    2,526,794    2,478,869
                                                                   ---------       ----------    ---------    ---------
           Net interest income                                     3,684,366          827,568    3,045,981    2,541,972

Provision for loan losses (note 4)                                   126,505            6,851      129,831        5,040
                                                                  ----------       ----------   ----------   ----------
           Net interest income after provision
               for loan losses                                     3,557,861          820,717    2,916,150    2,536,932
                                                                   ---------       ----------    ---------    ---------
Other income:
    Loan fees                                                        484,449           56,374       40,868       46,375
    Service charges on deposit accounts                              227,394           57,552      227,912      211,313
    Rental income                                                     42,790           10,900       49,279       51,335
    Gain on sale of loans                                             24,647                -       36,435            -
    Net gain on sale of investment and
      mortgage-backed securities                                     494,651            1,955       15,119            -
    Net gain on sale of equipment                                     36,898                -            -            -
    Other                                                             82,944           23,662       45,192       18,256
                                                                  ----------       ----------   ----------   ----------
           Total other income                                      1,393,773          150,443      414,805      327,279
                                                                   ---------       ----------   ----------   ----------
Other expenses:
    Salaries and employee benefits (note 13)                       2,879,088          483,099    1,188,265    1,031,018
    Occupancy                                                        934,775          117,212      466,760      440,920
    Federal insurance premiums                                        44,055           26,948      146,693      140,858
    Savings Association Insurance Fund assessment (note 18)                -                -      397,568            -
    Other                                                            888,064          205,560      515,833      354,867
                                                                  ----------       ----------   ----------   ----------
           Total other expenses                                    4,745,982          832,819    2,715,119    1,967,663
                                                                   ---------       ----------    ---------    ---------
           Income before income taxes                                205,652          138,341      615,836      896,548

Income tax expense (note 10)                                          69,052           48,760      142,500      293,000
                                                                  ----------       ----------   ----------   ----------
           Net income                                          $     136,600           89,581      473,336      603,548
                                                                  ==========       ==========   ==========   ==========
Basic net income per share (notes 1 and 15)                    $         .17              .10          .45          .17
                                                                  ==========       ==========   ==========   ==========
Diluted net income per share (notes 1 and 15)                  $         .16              .09          .43          .17
                                                                  ==========       ==========   ==========   ==========
Weighted-average shares outstanding - basic (notes 1,
    13, and 15)                                                      800,299          940,671    1,055,402    1,230,405
                                                                  ==========       ==========    =========    =========
Weighted-average shares outstanding - diluted (notes 1,
    13, and 15)                                                      856,662        1,012,946    1,089,438    1,230,405
                                                                  ==========       ==========    =========    =========
</TABLE>
See accompanying notes to consolidated financial statements.

                                      -18-
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

                 Consolidated Statements of Stockholders' Equity

       Year ended December 31, 1997, Three Months ended December 31, 1996,
                   and Years ended September 30, 1996 and 1995

<TABLE>
<CAPTION>
                                                                                                              Net unrealized
                                                                                                                holding
                                                                                                              gains (losses)
                                                 Additional             Unearned                              on securities
            Preferred stock      Common stock     paid-in   Retained     ESOP     Unearned    Treasury stock    available
             Shares Amount     Shares    Amount   capital   earnings    shares  compensation  Shares   Amount   for sale     Total
             ------ ------     ------    ------   -------   --------    ------  ------------  ------   ------   --------     -----

<S>           <C>    <C>    <C>       <C>       <C>         <C>        <C>        <C>        <C>     <C>       <C>      <C>
Balance,
  September
  30, 1994       -   $   -          - $       -          -  6,332,331         -          -         - $        -(118,289) 6,214,042
Proceeds
  from sale
  of common
  stock, net
  of issuance
  costs
  (note 15)      -       -  1,190,250   119,025 10,964,983          -  (720,000)         -         -          -       - 10,364,008
Unrealized
  gains on
  investment
  and
  mortgage-
  backed
  securities
  available
  for sale,
  net of
  tax effect     -       -          -         -          -          -         -          -         -          - 140,160    140,160
Net income       -       -          -         -          -    603,548         -          -         -          -       -    603,548
                --      --   --------   -------  ---------   --------   -------    -------    ------   --------  ------   --------
Balance,
  September
  30, 1995       -       -  1,190,250   119,025 10,964,983  6,935,879  (720,000)         -         -          -  21,871 17,321,758

Treasury
  stock
  purchased      -       -          -         -          -          -         -          -   190,250 (2,299,490)      - (2,299,490)
Unrealized
  gains on
  investment
  and
  mortgage-
  backed
  securities
  available
  for sale,
  net of
  tax effect     -       -          -         -          -          -         -          -         -          -  21,553     21,553
Dividends
  declared,
  $0.50
  per share      -       -          -         -          -   (600,161)        -          -         -          -       -   (600,161)
ESOP shares
  allocated      -       -          -         -     11,372          -    90,000          -         -          -       -    101,372
Purchase of
  treasury
  stock
  and award
  of shares
  under
  management
  stock
  bonus plan     -       -          -         -     (4,641)         -         -   (371,304)   16,668   (202,519)      -   (578,464)
Net income       -       -          -         -          -    473,336         -          -         -          -       -    473,336
                --      --   --------   -------  ---------   --------   -------    -------    ------   --------  ------   --------
Balance,
  September
  30, 1996       -       -  1,190,250   119,025 10,971,714  6,809,054  (630,000)  (371,304)  206,918 (2,502,009) 43,424 14,439,904

Net income       -       -          -         -          -     89,581         -          -       -            -       -     89,581
Dividends
  declared
  ($.45
  per share)     -       -          -         -          -   (422,850)        -          -         -          -       -   (422,850)
Treasury stock
  purchased      -       -          -         -          -          -         -          -    84,100 (1,228,741)      - (1,228,741)
Retirement of
  treasury
  stock          -       -   (274,350)  (27,435)(3,500,796)         -         -          -  (274,350) 3,528,231       -          -
ESOP shares
  allocated      -       -          -         -          -          -    18,000          -         -          -       -     18,000
Unrealized
  gains on
  investment
  and
  mortgage-
  backed
  securities
  available
  for sale,
  net of
  tax effect     -       -          -         -          -          -         -          -         -          - 241,730    241,730
                --      --  ---------  -------- ----------  ---------      ----       ----     -----    ------- ------- ----------
Balance,
  December
  31, 1996       -       -    915,900    91,590  7,470,918  6,475,785  (612,000)  (371,304)   16,668   (202,519)285,154 13,137,624

Net income       -       -          -         -          -    136,600         -          -         -          -       -    136,600
Dividends
  declared
  ($.52
  per share)     -       -          -         -          -   (438,485)        -          -         -          -       -   (438,485)
Treasury
  stock
  purchased      -       -          -         -          -          -         -          -     2,820    (46,159)      -    (46,159)
Purchase and
  retirement
  of treasury
  stock          -       -    (91,590)   (9,159)(1,447,894)         -         -          -         -          -       - (1,457,053)
ESOP shares
  allocated      -       -          -         -     51,153         -     72,000          -         -          -       -    123,153
Award of
  shares
  under
  management
  stock
  bonus plan     -       -          -         -     (1,878)         -         -   (150,000)  (12,500)   151,878       -          -
Earned
  compensation
  under
  management
  stock
  bonus plan     -       -          -         -          -          -         -    127,109         -          -       -    127,109
Unrealized
  losses on
  investment
  and
  mortgage-
  backed
  securities
  available
  for sale,
  net of tax
  effect         -       -          -        -           -          -         -          -         -          - (63,184)   (63,184)
10% stock
  dividend
  declared on
  December
  16, 1997       -       -     82,400     8,240  1,722,160 (1,730,400)        -          -       698          -       -          -
                --      --   --------   -------  ---------  ---------   -------    -------    ------   --------  ------   --------

Balance,
  December
  31, 1997       -   $   -    906,710 $  90,671  7,794,459  4,443,500  (540,000)  (394,195)    7,686 $  (96,800)221,970 11,519,605
                ==      ==   ========   =======  =========  =========   =======    =======    ======   ======== ======= ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                      -19-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

       Year ended December 31, 1997, Three Months ended December 31, 1996,
                   and Years ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
                                                                                 Three months
                                                                  Year ended         ended            Year ended
                                                                 December 31,    December 31,        September 30,
                                                                 ------------    ------------        -------------
                                                                     1997            1996         1996          1995
                                                                     ----            ----         ----          ----
<S>                                                           <C>                  <C>         <C>          <C>
Cash flows from operating activities:
    Net income                                                $      136,600           89,581      473,336      603,548
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
        Provision for loan losses                                    126,505            6,851      129,831        5,040
        Depreciation expense                                         344,529           39,597      112,357      109,019
        Net (accretion) amortization of premiums and
          discounts on investment and mortgage-backed
          securities                                                  (4,865)          11,044       18,267       14,341
        ESOP shares allocated                                        123,153           18,000      101,372            -
        Compensation expense related to MSBP                         127,109           22,555       37,591            -
        Net gain on sale of investment and
          mortgage-backed securities                                (494,651)          (1,955)     (15,119)           -
        Amortization of deferred loan fees                          (143,126)         (36,312)    (115,856)     (83,683)
        Deferred income tax expense (benefit)                         61,418           94,939     (308,683)       4,784
        Gain on sale of loans                                        (24,647)               -      (36,435)           -
        Net gain on sale of equipment                                (36,898)               -            -            -
        (Increase) decrease in accrued interest and
          dividends receivable                                      (346,852)          73,072       13,776      (38,011)
        Decrease (increase) in other assets                           75,257         (163,803)      16,658       (8,388)
        (Decrease) increase in dividend payable to
          management stock bonus plan                                  3,667                -        6,188            -
        (Decrease) increase in Savings Association
          Insurance Fund assessment payable                                -         (397,568)     397,568            -
        Increase (decrease) in other liabilities                     381,228         (327,338)     137,895      (97,673)
                                                                 -----------       ----------   ----------   ----------
              Net cash provided by (used in)
                 operating activities                                328,427         (571,337)     968,746      508,977
                                                                 -----------       ----------   ----------   ----------

Cash flows from investing activities:
    Proceeds from maturing and called investment securities
      available for sale and certificates of deposit               1,423,077          500,000    1,576,924    2,000,000
    Proceeds from sales of investment securities
      available for sale                                           2,691,063        6,489,946    3,000,312            -
    Proceeds from maturing and called investment
      securities held to maturity                                          -                -    3,992,875            -
    Purchases of investment securities available for sale         (6,958,537)               -   (1,632,419)           -
    Purchases of investment securities held to maturity                    -                -   (4,363,209)  (4,658,756)
    Principal repayments on mortgage-backed securities
      available for sale                                           1,144,957          505,458      204,836       96,647
    Proceeds from sales of mortgage-backed securities
      available for sale                                           6,307,066          477,926      371,705            -
    Principal repayments on mortgage-backed securities
      held to maturity                                                     -                -    1,746,401      793,193
    Purchases of mortgage-backed securities available for sale             -                -   (1,823,455)           -
    Purchases of mortgage-backed securities held to maturity               -                -   (2,853,402)  (1,988,836)
    Net loan originations                                        (34,977,793)     (12,847,320)  (8,735,992)    (949,176)
    Proceeds from sale of loans                                    1,854,185                -    2,455,221            -
    Purchases of premises and equipment                           (3,669,458)        (791,386)    (366,169)     (62,848)
    Proceeds from sale of equipment                                  120,906                -            -        6,770
    Sale of real estate owned                                              -                -       75,626            -
                                                                 -----------       ----------   ----------   ----------
              Net cash used in investing activities              (32,064,534)      (5,665,376)  (6,350,746)  (4,763,006)
                                                                  ----------        ---------    ---------   ----------
</TABLE>

                                                                     (Continued)
                                      -20-

<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                 Three months
                                                                  Year ended         ended            Year ended
                                                                 December 31,    December 31,        September 30,
                                                                     1997            1996         1996          1995
                                                                     ----            ----         ----          ----
<S>                                                           <C>                 <C>          <C>         <C>
Cash flows from financing activities:
    Net increase (decrease) in savings and demand
      deposit accounts                                        $    8,967,499        2,029,967    1,317,457   (2,908,149)
    Net increase (decrease) in certificates of deposit            15,467,001        2,915,199     (627,298)   2,441,430
    Net increase in securities sold under agreements
      to repurchase                                                2,392,579                -            _            -
    (Decrease) increase in advance payments by
      borrowers for property taxes and insurance                     (11,023)        (377,971)    (131,745)     109,342
    Treasury stock purchased                                      (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                  (2,500,000)               -            -            -
    Proceeds from sale of common stock, net of
      issuance costs                                                       -                -            -   10,364,008
    Dividends paid                                                  (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                                         35,729,937        8,338,454     (419,701)  10,006,631
                                                                  ----------        ---------   ----------   ----------

            Increase (decrease) in cash and cash
               equivalents                                         3,993,830        2,101,741   (5,801,701)   5,752,602

Cash and cash equivalents at beginning of period                   4,747,486        2,645,745    8,447,446    2,694,844
                                                                 -----------        ---------    ---------  -----------
Cash and cash equivalents at end of period                    $    8,741,316        4,747,486    2,645,745    8,447,446
                                                                 ===========        =========    =========  ===========
Supplemental disclosure of cash flow information:
    Interest paid                                             $    3,806,229          684,795    2,531,331    2,480,389
                                                                 ===========       ==========    =========  ===========
    Income taxes paid                                         $       82,500          165,000      297,368      295,000
                                                                 ===========       ==========   ==========  ===========

Supplemental disclosures of noncash investing and financing activities:
      Real estate acquired through foreclosure of
        the loan receivable                                   $            -                -            -       75,626
                                                                 ===========       ==========   ==========  ===========
      Transfer of investment securities from held to
        maturity to available for sale at September 30,
        1996 (note 2)                                         $            -                -    9,270,179            -
                                                                 ===========       ==========    =========  ===========
      Transfer of mortgage-backed securities from held
        to maturity to available for sale at September 30,
        1996 (note 3)                                         $            -                -    8,284,643            -
                                                                 ===========       ==========    =========  ===========
      Treasury stock obtained to satisfy employee tax
        withholding liability under MSBP                      $       46,159                -            -            -
                                                                 ===========       ==========   ==========  ===========

</TABLE>

See accompanying notes to consolidated financial statements.

                                      -21-

<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                December 31, 1997 and September 30, 1996 and 1995


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

     CCF Holding Company (the "Parent"),  a federally  chartered  thrift holding
     company, is a Georgia corporation organized in March 1995 to acquire all of
     the common stock of Clayton  County  Federal  Savings and Loan  Association
     (the  "Association").  On July 11,  1995,  the Parent  completed an initial
     public  offering of common  stock and raised  $10,364,008  in net  proceeds
     through  the  issuance  of  1,190,250  common  shares,  at $10  per  share.
     Concurrently,  the  Association  completed  a  conversion  from a Federally
     chartered  mutual  savings and loan  association  to a Federally  chartered
     stock  savings  and loan  association.  Upon  the  conversion,  the  Parent
     acquired  all of the  outstanding  common  stock  of  the  Association  for
     $5,182,004,  at which time the Association became a wholly owned subsidiary
     of the  Parent.  Since the Parent  and the  Association  were under  common
     control,  the  transaction was accounted for at historical cost in a manner
     similar to a  pooling-of-interests.  The Parent  and the  Association  (the
     "Company")  are  primarily  regulated  by the Office of Thrift  Supervision
     ("OTS") and the Federal Deposit Insurance Corporation ("FDIC"), and undergo
     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.

     Effective  February 4, 1997,  the OTS gave approval for the  Association to
     change its name to Heritage Bank (the "Bank").

     The Company  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
     Company primarily competes with other financial  institutions in its market
     area, which it considers to be South Metropolitan Atlanta.

    (a)   Basis of Presentation
          ---------------------

          The  accounting  and  reporting  policies  of the  Company  conform to
          generally accepted accounting  principles and to prevailing  practices
          within the financial institutions industry. The following is a summary
          of the  significant  accounting  policies that the Company  follows in
          preparing and presenting its consolidated financial statements.

          The  consolidated  financial  statements  include the  accounts of the
          Parent  and  the  Bank.  All  significant  intercompany  accounts  and
          transactions  are eliminated in preparing the  consolidated  financial
          statements.


                                      -22-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


          In preparing  the  consolidated  financial  statements,  management is
          required to make  estimates and  assumptions  that affect the reported
          amounts of assets and  liabilities  and the  disclosure  of contingent
          assets  and  liabilities  as of the  date  of the  balance  sheet  and
          revenues  and  expenses for the period.  Actual  results  could differ
          significantly from those estimates.  One estimate that is particularly
          susceptible  to a  significant  change in the near term relates to the
          determination of the allowance for loan losses. In connection with the
          determination  of the  allowance for loan losses,  management  obtains
          independent appraisals for significant properties. Management believes
          that 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 Company's
          allowance  for loan losses.  Such  agencies may require the Company to
          recognize  additions to the allowance  based on their  judgment  about
          information available to them at the time of their examination.

     (b)  Cash and Cash Equivalents
          -------------------------

          For purposes of the consolidated statements of cash flows, the Company
          considers  amounts  due from banks and  interest-bearing  deposits  in
          other  financial  institutions  to  be  cash  equivalents.  Generally,
          interest-bearing  deposits  in other  financial  institutions  are for
          one-day periods.

     (c)  Investment and Mortgage-Backed Securities
          -----------------------------------------

          All investment and mortgage-backed  securities have been classified by
          management  as  available  for  sale.  The  Company  does not hold any
          derivative investments.

          Available-for-sale   securities   are  reported  at  fair  value,   as
          determined by independent quotations, with unrealized holding gains or
          losses,  net of the related  income  taxes,  excluded  from income and
          reported  as a  separate  component  of  stockholders'  equity,  until
          realized.  Any  unrealized  holding  gains or losses  included  in the
          separate  component of  stockholders'  equity  relating to  securities
          subsequently  transferred  from available for sale to held to maturity
          are  maintained  and amortized  into income over the remaining life of
          the security as an adjustment to yield in a manner consistent with the
          amortization or accretion of the premium or discount on the associated
          security.  A decline in the market value below cost of any  investment
          or  mortgage-backed  security  that is deemed other than  temporary is
          charged to income,  resulting in the establishment of a new cost basis
          for the security.

          Purchase  premiums and discounts are amortized or accreted to interest
          income over the life of the related security as an adjustment to yield
          using the effective interest method. For  mortgage-backed  securities,
          such   amortization   and   accretion   is   determined   taking  into
          consideration  assumed  prepayment  patterns.  Dividend  and  interest
          income  are  recognized  when  earned.  Realized  gains and losses for
          securities  sold are  included  in income on the trade  date,  and are
          derived using the specific  identification  method for determining the
          cost of securities sold.


                                                                     (Continued)
                                      -23-

<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


          (d)  Loans
               -----

               Loans are stated at their unpaid principal balances,  less, where
               applicable, undisbursed proceeds on loans in process, unamortized
               loan origination fees, and allowance for loan losses.

               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.

               Interest income is recognized using the simple interest method on
               the balance of the principal amount  outstanding.  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.

               The Company  extends  credit to customers  throughout  its market
               area, which includes Clayton,  Henry, and Fayette Counties.  Most
               of the  Company's  loans  are  secured  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.

               The allowance for loan losses is established  through  provisions
               for loan  losses  charged to  operations.  Loans are  charged off
               against the  allowance for loan losses when  management  believes
               that the  collection  of the  principal is  unlikely.  Subsequent
               recoveries are added to the allowance. The allowance is an amount
               that  management  has  determined  to  be  adequate  through  its
               allowance for loan losses  methodology to absorb losses  inherent
               in existing loans and commitments to extend credit. The allowance
               is determined through consideration of such factors as changes in
               the  nature  and  volume  of  the  portfolio,  overall  portfolio
               quality,   delinquency  trends,  adequacy  of  collateral,   loan
               concentrations,  specific problem loans, and economic  conditions
               that may affect the borrowers' ability to pay.

               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 the
               fair value of the collateral if the loan is collateral dependent.
               Loans that are  determined  to be  impaired  require a  valuation
               allowance  equivalent to the amount of impairment.  The valuation
               allowance is to be  established  by a charge to the provision for
               loan losses.

               A loan is considered  impaired when, based on current information
               and  events,  it is probable  that the Company  will be unable to
               collect all amounts due according to the contractual terms of the
               note  agreement.  Cash  receipts  on  impaired  loans  which  are
               accruing interest are applied to principal and interest under the
               contractual  terms  of  the  loan  agreement.  Cash  receipts  on
               impaired  loans  for  which  the  accrual  of  interest  has been
               discontinued  are applied to reduce the principal  amount of such
               loans until all required contractual principal payments have been
               made and are recognized as interest income thereafter.

                                                                     (Continued)

                                      -24-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


               Additional  funds for lending are  provided by selling  whole and
               participating  interests in real estate loans. Gains or losses on
               the sale of such loans are recognized at settlement dates and are
               computed as the  difference  between the sales  proceeds  and the
               carrying  value of the loans.  No servicing  asset is  recognized
               because the Company  estimates that the benefits of servicing are
               just   adequate  to  compensate   for  the  Company's   servicing
               responsibilities.

          (e)  Premises and Equipment
               ----------------------

               Premises  and  equipment  are  stated  at cost  less  accumulated
               depreciation.  Depreciation is recorded on a straight-line  basis
               over the estimated  useful lives of the related  assets which are
               from three to forty years.

          (f)  Real Estate Owned
               -----------------

               Real  estate   acquired   through   foreclosure,   consisting  of
               properties obtained through foreclosure proceedings or acceptance
               of a deed in lieu of  foreclosure,  is reported on an  individual
               asset  basis at the lower of cost or fair  value,  less  disposal
               costs.   Fair  value  is  determined  on  the  basis  of  current
               appraisals,  comparable  sales,  and  other  estimates  of  value
               obtained  principally from independent  sources.  When properties
               are acquired through foreclosure,  any excess of the loan balance
               at the time of foreclosure over the fair value of the real estate
               held as  collateral  is charged to the allowance for loan losses.
               Subsequent   write-downs   are  charged  to   operations.   Gains
               recognized on the  disposition  of the properties are recorded in
               other income.

               Costs of improvements to real estate are capitalized, while costs
               associated   with   holding   the  real  estate  are  charged  to
               operations.

          (g)  Income Taxes
               ------------

               Income  taxes are  accounted  for  under the asset and  liability
               method.  Deferred tax assets and  liabilities  are recognized for
               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  those  temporary
               differences  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 in the period that includes the enactment
               date.

          (h)  Earnings Per Share
               ------------------

               In  February  1997,  the  Financial  Accounting  Standards  Board
               ("FASB")  issued  Statement  of  Financial  Accounting  Standards
               ("SFAS")  No. 128,  Earnings Per Share.  SFAS No. 128  supersedes
               Accounting  Principles  Board Opinion No. 15, Earnings Per Share,
               and  specifies  the  computation,  presentation,  and  disclosure
               requirements for earnings per share (EPS).  SFAS No. 128 replaces
               the  presentation  of primary  EPS and fully  diluted  EPS with a
               presentation of basic EPS and diluted EPS, respectively. SFAS No.
               128 also requires dual  presentation  of basic and diluted EPS on
               the face of the income  statement  for all entities  with complex
               capital  structures.  All prior period EPS data has been restated
               to conform with SFAS No. 128.

                                                                     (Continued)

                                      -25-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements



               Basic EPS  excludes  dilution  and is computed  by  dividing  net
               income by  weighted-average  shares  outstanding.  Diluted EPS is
               computed  by  dividing  net  income  by  weighted-average  shares
               outstanding  plus potential  common stock resulting from dilutive
               stock  options and  Management  Stock Bonus Plan shares that have
               not yet vested.  There were no options  outstanding  at September
               30, 1995.

               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.

               All  average  share  and  per  share  data  in  the  accompanying
               consolidated  financial  statements  and all  share and per share
               data in note 13 have  been  restated  to  reflect  the 10%  stock
               dividend declared in December 1997, which was effected on January
               15, 1998.

          (i)  Reclassifications
               -----------------

               Certain  1996  and  1995  amounts  have  been   reclassified  for
               comparative purposes in order to conform the prior periods to the
               1997 presentation.  Such  reclassifications  had no impact on net
               income or stockholders' equity.

          (j)  Recent Accounting Pronouncements
               ------------------------------------

               In  June  1997,   the  FASB  issued   SFAS  No.  130,   Reporting
               Comprehensive  Income. This statement  establishes  standards for
               reporting and displaying  comprehensive income and its components
               in a full set of general purpose financial  statements.  SFAS No.
               130 requires all items that are required to be  recognized  under
               accounting  standards as  components of  comprehensive  income be
               reported  in a financial  statement  that is  displayed  in equal
               prominence  with  the  other  financial   statements.   The  term
               "comprehensive  income" is used in the  statement to describe the
               total of all  components of  comprehensive  income  including net
               income.   "Other   comprehensive   income"  refers  to  revenues,
               expenses,  gains,  and losses that are included in  comprehensive
               income  but  excluded  from  earnings  under  current  accounting
               standards.   Currently,  "other  comprehensive  income"  for  the
               Company consists of items previously  recorded directly in equity
               under SFAS No. 115,  Accounting  for Certain  Investments in Debt
               and Equity  Securities.  SFAS No. 130 is effective  for financial
               statements  for years  beginning  after  December 15,  1997.  The
               Company will adopt SFAS No. 130 effective January 1, 1998.

                                                                     (Continued)

                                      -26-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


(2)  Investment Securities
     ---------------------

     At  December  31,  1997  and  September  30,  1996,  investment  securities
     available for sale consisted of the following:
<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
       Equity security                                    1,243,471      336,857           -      1,580,328
       Municipal securities                                 157,990          489           -        158,479
                                                         ----------    ---------    --------   ------------

                                                      $   9,385,610      347,597      11,159      9,722,048
                                                         ==========    =========    ========   ============
</TABLE>

<TABLE>
<CAPTION>
                                                                      September 30, 1996
                                                      -------------------------------------------------------
                                                                           Gross         Gross
                                                           Amortized    unrealized    unrealized      Fair
                                                             cost          gains        losses        value
                                                             ----          -----        ------        -----
<S>                                                   <C>              <C>          <C>         <C>

       U.S. Treasury and U.S. Government
          agency obligations                          $   11,405,631       11,699      83,549      11,333,781
       Equity security                                       782,790      387,335           -       1,170,125
       Municipal securities                                  868,807            -      19,332         849,475
                                                          ----------   ----------  ----------   -------------

                                                      $   13,057,228      399,034     102,881      13,353,381
                                                          ==========   ==========  ==========   =============
</TABLE>

     At September 30, 1996, the Company  transferred  all investment  securities
     held to maturity to available for sale.

     For the years ended  December 31, 1997 and September 30, 1996,  the Company
     sold certain  investment  securities  available for sale for $2,691,063 and
     $3,000,312, respectively, and recognized gross and net gains of $480,379 in
     1997 and gross gains of $2,065 and gross losses of $3,880 in 1996.  For the
     three months ended December 31, 1996,  the Company sold certain  investment
     securities  available for sale for $6,489,946 and recognized gross gains of
     $5,033 and gross losses of $8,846.  In addition,  the Company  recognized a
     gain of $7,125 on an investment security held to maturity and called during
     the year ended  September 30, 1996. The Company did not sell any investment
     securities in 1995.

                                                                     (Continued)

                                      -27-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       The amortized cost and fair values of  investments in debt  securities at
       December  31, 1997 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>
                                                                                  Investments
                                                                               available for sale
                                                                        -----------------------------
                                                                            Amortized
                                                                              cost         Fair value
                                                                              ----         ----------
<S>                                                                     <C>               <C>
                Due within one year                                     $   1,000,061         996,640
                Due after one year through five years                       5,991,199       5,990,039
                Due after five years                                        1,150,879       1,155,041
                                                                            ---------       ---------
                                                                        $   8,142,139       8,141,720
                                                                            =========       =========
</TABLE>
       Investment  securities with  aggregate  carrying  amounts  of  $8,141,720
       and $487,650 at December 31, 1997 and  September 30, 1996,  respectively,
       were  pledged  to  secure  public  deposits  and  securities  sold  under
       agreements to repurchase.

(3)    Mortgage-Backed Securities
       --------------------------

       At December 31, 1997 and September 30, 1996, mortgage-backed securities
       available for sale consisted of the following:
<TABLE>
<CAPTION>
                                                                                               December 31, 1997
                                                                            -------------------------------------------------
                                                                                           Gross        Gross
                                                                             Amortized  unrealized    unrealized      Fair
                                                                                cost       gains        losses        value
                                                                                ----       -----        ------        -----
<S>                                                                         <C>          <C>            <C>        <C>
Federal Home Loan Mortgage Corporation  Participation Certificate with an
  interest rate of 5.5%, with a
  scheduled principal maturity in 1998                                      $  234,972         --          1,358      233,614
Federal National Mortgage Association  Participation  Certificates,  with
  interest  rates  ranging  from  5.5% to 7.8% with  scheduled  principal
  maturities at various
  times through 2023                                                         1,597,482       12,600        6,187    1,603,895
                                                                            ----------   ----------   ----------   ----------
                                                                            $1,832,454       12,600        7,545    1,837,509
                                                                            ==========   ==========   ==========   ==========
</TABLE>
<TABLE>
<CAPTION>
                                                                                               September 30, 1996
                                                                            -------------------------------------------------------
                                                                                              Gross         Gross
                                                                               Amortized    unrealized    unrealized      Fair
                                                                                 cost         gains         losses        value
                                                                                 ----         -----        ------         -----
<S>                                                                         <C>             <C>           <C>        <C>
Government National Mortgage Association Participation  Certificates with
  interest  rates  primarily  ranging from 6.5% to 10.5%,  with scheduled
  principal maturities at various times through 2024                        $ 1,664,651        12,057        92,152     1,584,556
Federal Home Loan Mortgage  Corporation  Participation  Certificates with
  interest  rates ranging from 5.5% to 10.0%,  with  scheduled  principal
  maturities at various times through 2009                                    3,229,350        41,309        69,656     3,201,003
Federal National Mortgage Association  Participation  Certificates,  with
  interest  rates  ranging  from  5.5% to 7.8% with  scheduled  principal
  maturities at various times through 2023                                    5,357,364         2,199       120,186     5,239,377
                                                                            -----------   -----------   -----------   -----------

                                                                            $10,251,365        55,565       281,994    10,024,936
                                                                            ===========   ===========   ===========   ===========
</TABLE>
                                                                     (Continued)

                                      -28-
<PAGE>

                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       At  September  30,  1996,  the Company  transferred  all  mortgage-backed
       securities held to maturity to available for sale.

       Mortgage-backed  securities with aggregate carrying amounts of $1,837,477
       at  December  31,  1997  were  pledged  to  secure  public  deposits  and
       securities   sold  under   agreements  to   repurchase.   There  were  no
       mortgage-backed securities pledged at September 30, 1996.

       For the years ended December 31, 1997 and September 30, 1996, the Company
       sold for  $6,307,066  and  $371,705  certain  mortgage-backed  securities
       available for sale and recognized gross gains of $35,662 and gross losses
       of $21,390 in 1997 and gross  gains of $9,894 and gross  losses of $85 in
       1996.  For the three months ended December 31, 1996, the Company sold for
       $477,926  certain  mortgage-backed  securities  available  for  sale  and
       recognized  gross and net gains of $5,768.  The  Company did not sell any
       mortgage-backed securities in 1995.

(4)    Loans Receivable
       ----------------
       At December 31, 1997 and September 30, 1996, loans  receivable  consisted
       of the following:
<TABLE>
<CAPTION>
                                                                                      1997              1996
                                                                                      ----              ----

<S>                                                                           <C>                  <C>
           First mortgage loans, substantially secured
               by single family residential dwellings                         $      49,031,131       45,509,936
           Real estate construction loans                                            16,231,115        7,056,182
           Commercial loans, primarily real estate mortgages                         29,822,333                -
           Other mortgage loans                                                       1,287,926        2,698,314
           Consumer and other installment loans                                       2,680,145        1,065,437
                                                                                  -------------    -------------
                                                                                     99,052,650       56,329,869
           Less:
               Undisbursed proceeds on loans in process                                 205,720        3,789,924
               Unamortized loan origination fees, net                                   636,194          500,080
               Allowance for loan losses                                                669,505          540,291
                                                                                  -------------    -------------

                      Loans receivable, net                                   $      97,541,231       51,499,574
                                                                                     ==========       ==========
</TABLE>

       At December 31,  1997 and  September 30, 1996, loan  participations  sold
       to, without recourse,  and serviced for others amounted to  approximately
       $8,459,000 and $8,320,000, respectively.

       The  following is a summary of  transactions  in the  allowance  for loan
       losses:
<TABLE>
<CAPTION>
                                                                          Three months
                                                          Year ended          ended            Year ended
                                                         December 31,      December31,        September 30,
                                                         ------------      -----------   ------------------------
                                                             1997             1996          1996         1995
                                                             ----             ----          ----         ----

<S>                                                     <C>               <C>            <C>          <C>
           Balance at beginning of period               $   547,142         540,291        408,848      430,103
           Provision for losses on loans                    126,505           6,851        129,831        5,040
           Loan charge-offs                                  (4,142)              -              -      (26,295)
           Loan recoveries                                        -               -          1,612            -
                                                            -------        --------       --------      -------

           Balance at end of period                     $   669,505         547,142        540,291      408,848
                                                            =======         =======        =======      =======
</TABLE>

                                                                     (Continued)


                                      -29-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       The  Company  adopted  the  provisions  of SFAS No.  114,  Accounting  by
       Creditors  for  Impairment  of a  Loan,  as  amended  by  SFAS  No.  118,
       Accounting by Creditors for Impairment of a Loan - Income Recognition and
       Disclosures,  effective  October 1,  1995.  Prior  periods  have not been
       restated.

       Impaired loans at December 31, 1997 totaled  $152,000,  all of which were
       classified as non-accrual. Impairment is measured based on the fair value
       of the loan's collateral. There are no impairment allowances required for
       impaired  loans at December  31,  1997.  There were no impaired  loans at
       September 30, 1996.

       The average balance of impaired loans  for  the  year  ended December 31,
       1997 was approximately  $13,000. No interest  income  on  impaired  loans
       after  determination  as  impaired  was  recognized  for  the  year ended
       December 31, 1997.

       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 nor present  other
       unfavorable  features.  The following is a summary of activity during the
       year ended  December  31, 1997 with  respect to such  aggregate  loans to
       these individuals and their associates:

           Balance at beginning of year                            $ 1,545,457
           Adjustment for executive officer and director changes       (73,727)
                                                                    ----------
           Adjusted balance at beginning of year                     1,471,730

           New loans                                                   568,911
           Principal repayments                                       (331,170)

           Balance at end of year                                  $ 1,709,471
                                                                    ==========

       At  December  31,  1997  and   September   30,  1996,   the  Company  had
       approximately  $366,000 and $601,000,  respectively,  of nonaccrual loans
       primarily consisting of residential first mortgage loans. Interest income
       on nonaccrual  loans for the years ended  December 31, 1997 and September
       30, 1996 and 1995,  which would have been  reported on an accrual  basis,
       amounted to approximately  $30,000,  $18,000,  and $6,000,  respectively.
       Interest  income on nonaccrual  loans for the three months ended December
       31, 1997 was not considered significant.

       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.

                                                                     (Continued)

                                      -30-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       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. At December 31, 1997, commitments under
       standby letters of credit aggregated $69,000.

       The Company's  exposure to credit loss, in the event of nonperformance by
       the customer  for  commitments  to extend  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.

       A summary of the Company's  commitments  to extend credit at December 31,
       1997 is as follows:

           Financial instruments whose contract amounts
           represent credit risk --  commitments:

                Mortgage loans:
                  Fixed rate                              $       722,000
                  Adjustable rate                                       -
                Commercial loans:
                  Fixed rate                                       49,000
                  Adjustable rate                               3,081,000
                Acquisition and development loans:
                  Fixed rate                                            -
                  Adjustable rate                               1,554,000
                Construction loans:
                  Fixed rate                                            -
                  Adjustable rate                                 200,000

                      Total commitments                   $     5,606,000
                                                                =========

       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.

       At December 31, 1997, the Company had outstanding commitments to purchase
       variable rate loans of $1,000,000 and  outstanding  commitments  to  sell
       variable rate loans of $200,000.

                                                                     (Continued)

                                      -31-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       In the origination of mortgage loans,  the Company enters into adjustable
       interest rate  contracts  with caps and floors written with the intent of
       managing its interest rate exposure. Interest rate caps and floors enable
       customers and the Company to transfer,  modify,  or reduce their interest
       rate risk.  At December 31, 1997,  adjustable  rate  mortgage  loans with
       interest rate caps and floors amounted to approximately $25,617,000.

(5)    Accrued Interest and Dividends Receivable
       -----------------------------------------

       At  December  31, 1997 and  September  30,  1996,  accrued  interest  and
       dividends receivable consisted of the following:

                                                        1997         1996
                                                        ----         ----

           Loans                                      $  645,635      257,252
           Investment securities                         129,609      180,100
           Mortgage-backed securities                      9,608       73,720
                                                      ----------   ----------

                                                      $  784,852      511,072
                                                      ==========   ==========

(6)    Premises and Equipment
       ----------------------

       A summary of premises and  equipment  at December 31, 1997 and  September
       30, 1996 is as follows:

                                                   1997             1996
                                                   ----             ----

           Land                                     803,927           248,273
           Landscaping                                    -            32,258
           Office buildings                     $ 2,392,646         1,043,487
           Furniture and equipment                2,102,817           805,338
           Construction in progress               1,143,739            91,856
                                                  ---------         ---------
                                                  6,443,129         2,221,212
           Less accumulated depreciation          1,330,791         1,101,584
                                                  ---------         ---------

                                                $ 5,112,338         1,119,628
                                                  =========         =========

       During 1997, the  Company  capitalized  interest  cost  of  approximately
       $23,000 as a component of construction in progress  in  conjunction  with
       branch construction during 1997.

(7)    Required Investment
       -------------------

       Investment  in stock of a Federal Home Loan Bank is required of federally
       insured  financial  institutions  who utilize  their  services.  No ready
       market  exists  for the  stock  and it has no  quoted  market  value.  In
       accordance with SFAS No. 115,  Accounting for Certain Investments in Debt
       and Equity Securities, the investment is carried at cost.

                                                                     (Continued)

                                      -32-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


(8)    Deposits
       --------

       At December 31, 1997 and  September 30, 1996,  deposits  consisted of the
       following:
<TABLE>
<CAPTION>
                                                            1997                               1996
                                               -------------------------------      -------------------------------
                                                                      Weighted                            Weighted
                                                                       average                             average
                                                              Range   interest                    Range   interest
                                               Amount       of rates    rate        Amount      of rates    rate
                                               ------       --------    ----        ------      --------    ----
<S>                                      <C>               <C>         <C>      <C>            <C>
       Noninterest-bearing demand
          deposits                       $    4,548,285        -  %        -%   $   3,139,469     -        %-   %
       Passbook savings accounts              9,962,412       2.50      2.50       11,659,255     2.03      2.03
       Negotiable order of withdrawal
          accounts/money market
          accounts                           22,240,116     2.25-5.29   3.82       10,954,623   1.67-2.99   2.12
       Certificates of deposit               54,450,527     2.10-6.37   5.67       36,068,327   2.03-6.46   5.49
                                             ----------                            ----------

                                         $   91,201,340                 4.58%   $  61,821,674               3.96%
                                             ==========                 ====       ==========               ====
</TABLE>

       A summary  of  certificates  of  deposit by  scheduled  maturities  as of
       December 31, 1997 follows:

         Maturing in:
            Less than one year                                 $      39,598,175
            1-2 years                                                 13,054,766
            2-3 years                                                  1,720,372
            3-4 years                                                     77,214
                                                                   -------------

                                                               $      54,450,527
                                                               =================

       At December 31, 1997,  the Company had  approximately  $8,433,000 in time
       deposits that were greater than or equal to $100,000.

       Interest expense on deposits is summarized as follows:
<TABLE>
<CAPTION>
                                                                         Three
                                                  Year ended         months ended          Year ended
                                                 December 31,        December 31,          September 30,
                                                 ------------        ------------    -------------------------
                                                     1997                1996          1996           1995
                                                     ----                ----          ----           ----

<S>                                          <C>                       <C>            <C>           <C>
       Passbook savings accounts             $        230,671             58,089         274,209       366,507
       Negotiable order of withdrawal
          accounts/ money market
          accounts                                    473,043             61,831         235,225       271,371
       Certificates of deposit                      2,720,725            511,904       2,000,916     1,840,991
                                                    ---------            -------       ---------     ---------

                                             $      3,424,439            631,824       2,510,350     2,478,869
                                                    =========            =======       =========     =========
</TABLE>
                                                                     (Continued)

                                      -33-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


(9)    Securities Sold Under Agreements to Repurchase
       ----------------------------------------------

       The Company's  activity  related to securities  sold under  agreements to
       repurchase at December 31, 1997 is summarized as follows:

           Balance at year-end                                    $   2,392,579
           Maximum outstanding during the year                        3,698,746
           Average outstanding during the year                        2,240,096
           Average interest rate during the year                        5.15%

       At December 31, 1997, the securities sold under  agreements to repurchase
       renew daily and bear interest at a variable  rate.  All  securities  sold
       under repurchase agreements are held by independent trustees.  There were
       no securities sold under agreements to repurchase at September 30, 1996.

(10)   Income Taxes
       ------------

       The components of income tax expense are as follows:
<TABLE>
<CAPTION>
                                                                                   Three
                                                                  Year ended    months ended        Year ended
                                                                 December 31,   December 31,       September 30,
                                                                 ------------   ------------   ---------------------
                                                                     1997           1996         1996       1995
                                                                     ----           ----         ----       ----

<S>                                                             <C>             <C>            <C>        <C>
       Current expense (benefit) - Federal                      $    7,634        (46,179)       451,183    288,216
       Deferred tax (benefit) expense - Federal                     52,235         80,743       (272,239)     8,365
       Deferred tax (benefit) expense - State                        9,183         14,196        (36,444)    (3,581)
                                                                   -------         ------      ---------  ---------

                                                                $   69,052         48,760        142,500    293,000
                                                                    ======         ======        =======    =======
</TABLE>

       The  Company  has not  incurred  current  state  income  taxes due to net
       operating loss and credit carryforwards for state income tax purposes.

       Income tax expense of the Company differed from the amounts  computed  by
       applying the statutory  Federal income tax rate of 34% to  income  before
       income taxes as follows:
<TABLE>
<CAPTION>
                                                                                  Three
                                                                  Year ended    months ended        Year ended
                                                                 December 31,   December 31,       September 30,
                                                                 ------------   ------------   ---------------------
                                                                     1997           1996         1996       1995
                                                                     ----           ----         ----       ----

<S>                                                             <C>             <C>           <C>        <C>
       Tax expense at statutory rate                            $   69,922         47,036        209,384    304,826
       Increase (decrease) in tax expense resulting from:
         State income taxes, net of Federal tax effect               6,061          9,369        (24,053)    (2,363)
         Municipal investments                                      (2,645)        (2,063)        (3,792)         -
         Other, net                                                 (4,286)        (5,582)       (39,039)    (9,463)
                                                                    ------         ------        -------   --------

                                                                $   69,052         48,760        142,500    293,000
                                                                    ======         ======        =======    =======
</TABLE>

                                                                     (Continued)

                                      -34-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       The tax effects of temporary  differences  that give rise to  significant
       portions of the deferred  tax  assets  and  deferred  tax  liabilities at
       December 31, 1997 and September 30, 1996 are presented below:
<TABLE>
<CAPTION>
                                                                                       1997            1996
                                                                                       ----            ----

<S>                                                                               <C>              <C>
         Deferred tax assets:
             Loans receivable, due to allowance for loan losses                   $       8,225              -
             State tax credit carryforwards                                              55,164         51,121
             Savings Association Insurance Fund assessment payable                            -        149,963
             Employee Stock Ownership Plan accrual                                       62,713         38,261
             Management stock bonus plan                                                 23,790         14,179
             Other                                                                        9,600          9,420
                                                                                     ----------     ----------
                    Total gross deferred tax assets                                     159,492        262,944

             Less valuation allowance                                                         -              -
                                                                                     ----------     ----------
                    Net deferred tax assets                                             159,492        262,944
                                                                                     ----------     ----------
         Deferred tax liabilities:
             Loans receivable, due to allowance for loan losses                               -         67,357
             Deferred loan fees                                                         315,183        194,926
             Unrealized holding gains on securities available
               for sale                                                                 119,523         26,300
             Premises and equipment, primarily due to
               differences in depreciation                                               17,963         19,660
             Federal Home Loan Bank stock dividends                                     146,165        146,165
             Prepaid expenses                                                            16,774         15,072
                                                                                     ----------     ----------
                    Total gross deferred tax liabilities                                615,608        469,480
                                                                                     ----------     ----------

                    Net deferred tax liabilities                                  $     456,116        206,536
                                                                                     ==========     ==========
</TABLE>

       There was no valuation  allowance  for deferred tax assets as of December
       31, 1997 and  September  30, 1996.  In  assessing  the  realizability  of
       deferred tax assets,  management considers whether it is more likely than
       not that some  portion  or all of the  deferred  tax  assets  will not be
       realized.  The ultimate  realization  of deferred tax assets is dependent
       upon the  generation of future taxable income during the periods in which
       the  temporary  differences  resulting in the deferred tax assets  become
       deductible.  Management  considers the scheduled reversal of deferred tax
       liabilities, projected future taxable income, and tax planning strategies
       in making  the  assessment.  Based upon the level of  historical  taxable
       income and  projections  for future taxable income over the periods which
       the related temporary differences are deductible,  management believes it
       is more likely than not the Company  will  realize the  benefits of these
       deductible differences.

       At December 31, 1997 and September 30,  1996, the Company has state gross
       receipts tax credit carryforwards  of  approximately $83,582 and $77,455,
       respectively, which are available to reduce future state income taxes, if
       any, through 2002.

                                                                     (Continued)

                                      -35-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       Prior to January 1, 1996,  the Company was  permitted  under the Internal
       Revenue Code ("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, 1997 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.

(11)   Federal Home Loan Bank Advances
       -------------------------------

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

       Federal  Home  Loan  Bank  advances  at  September  30, 1996 consist   of
       unsecured  term loans with  principal  payable at maturity  and  interest
       due monthly  based  on  floating  daily  interest  rates, as follows:


                  6.05% maturing June 26, 1997                 $       500,000
                  6.05% maturing July 17, 1997                         500,000
                  6.05% maturing August 15, 1997                       500,000
                  6.05% maturing September 19, 1997                  1,000,000
                                                               ---------------

                                                               $     2,500,000
                                                               ===============

(12)   Preferred Stock
       ---------------

       The  Company  is  authorized  to issue  1,000,000  shares of no par value
       serial preferred stock. At December 31, 1997, 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.

                                                                     (Continued)

                                      -36-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


(13)   Employee Benefit Plans
       ----------------------

      (a)  401(k) Profit Sharing Plan
           --------------------------

           During  fiscal  1995,  the Company  adopted 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.  The  first  5% of
           employees' savings were matched during 1995 by a Company contribution
           of $2.00 for each $1.00 of employee  contribution.  Effective October
           1,  1995,  such  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, 1997 and September 30, 1996  and  1995 totaled  $43,200,
           $29,116,  and $60,247, respectively.  Contributions by the Company to
           the Plan during  the  three  months  ended  December 31, 1996 totaled
           $8,792.

      (b)  Pension Plan
           ------------

           The Company formerly maintained a noncontributory  pension plan which
           covered  substantially  all full-time  employees of the Company.  The
           benefits  were  based on years of  service  and the  employee's  five
           highest years of compensation.  The Company's  philosophy was to fund
           annually  the maximum  amount  allowable  as a deduction  for Federal
           income tax purposes.  During  fiscal 1995,  the Board of Directors of
           the Company  approved the  termination of the defined benefit pension
           plan and the  establishment  of the 401(k) plan. The defined  benefit
           pension plan went through the process of  termination  and settlement
           during  1995,  and the plan  assets for those  participants  who were
           still  active  employees  at time  of  termination  were  distributed
           primarily through deposits into individual  retirement plan accounts,
           with the remainder  transferred  to the 401(k) plan, or paid in cash.
           These  distributions  occurred March 1, 1995. In conjunction with the
           termination,  the Company  reversed  previously  accrued pension cost
           totaling $84,000, which was recognized as a reduction in salaries and
           employee benefits expense in 1995.

      (c)  Employee Stock Ownership Plan
           -----------------------------

           During 1995, the Company also established 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.

                                                                     (Continued)

                                      -37-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


           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 repaid  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, 1997,  19,800 ESOP shares have been  allocated to the
           participating  employees.  For purposes of  computing  net income per
           share,  the remaining  59,400  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, 1997 and September 30, 1996 and 1995 totaled
           $123,153,  $83,372, and $18,000,  respectively.  Compensation expense
           recognized by the Company  during the three months ended December 31,
           1996 totaled $18,000.

      (d)  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  nonqualified
           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 expires or is terminated  unexercised will again be
           available  for  issuance.  The  Option  Plan has a term of ten years,
           unless  sooner  terminated.  The  exercise  price for the purchase of
           shares subject to an incentive  stock option may not be less than 100
           percent of the fair market  value of the common  stock on the date of
           grant of such option.  The exercise price per share for  nonqualified
           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.

                                                                     (Continued)

                                      -38-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


           Stock option activity is as follows:
<TABLE>
<CAPTION>
                                                                                        Three
                                                                  Year ended        months ended        Year ended
                                                                 December 31,       December 31,       September 30,
                                                                     1997               1996               1996
                                                                     ----               ----               ----
           <S>                                                    <C>                  <C>              <C>
           Options outstanding at beginning
               of period                                            112,599              85,099                -
           Options granted                                                -              27,500           85,099
           Options exercised                                              -                   -                -
           Options canceled                                           6,546                   -                -
                                                                 ----------          ----------         --------

           Options outstanding at end of period                     106,053             112,599           85,099
                                                                    =======             =======           ======

           Options exercisable at end of period                      21,211                   -                -
                                                                 ==========          ==========         ========

           Weighted-average option prices per share:
               Options granted during
                  the period                                    $         -               12.18            11.25
               Options exercised during
                  the period                                              -                   -                -
               Options canceled during
                  the period                                          11.25                   -                -
               Options outstanding at
                  end of period                                       11.49               11.48            11.25
</TABLE>

       The  options  outstanding  at December  31,  1997 had a  weighted-average
       contractual  maturity of 8.1  years  and  exercise  prices  ranging  from
       $11.02 to $13.47.

       The per share  weighted-average  fair value of stock options granted with
       an exercise  price equal to market during the three months ended December
       31,  1996 and the year  ended  September  30,  1996 was $5.74 and  $5.29,
       respectively,  using  the Black  Scholes  option-pricing  model  with the
       following  weighted-average  assumptions:  expected  life of seven years,
       expected  annual dividend rate of 2%,  risk-free  interest rate of 5.45%,
       and an expected volatility of 42%.

                                                                     (Continued)

                                      -39-

<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       The  Company  applies  Accounting  Principles  Board  Opinion  No.  25 in
       accounting for stock  options.  Had the Company  determined  compensation
       cost  based on the fair  value at the grant  date for its  stock  options
       under SFAS No. 123, the  Company's  net income would have been reduced to
       the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                                                              Three months
                                                           Year ended             ended            Year ended
                                                          December 31,        December 31,        September 30,
                                                              1997                1996                1996
                                                              ----                ----                ----
           <S>                                            <C>                 <C>                   <C>
           Net income:
               As reported                                  136,600              89,581              473,336
               Pro forma                                     62,324              71,722              431,502

           Net income per share:
               As reported:
                 Basic net income per share                    .17                  .10                 .45
                 Diluted net income per share                  .16                  .09                 .43

           Pro forma:
               Basic net income per share                      .08                  .08                 .41
               Diluted net income per share                    .07                  .07                 .40
</TABLE>

      (e)  Management Stock Bonus Plan
           ---------------------------

           In January 1996,  the Company  adopted a Management  Stock Bonus Plan
           ("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 and subsequently awarded 34,036 of such treasury
           shares to employees  during the year ended  September  30, 1996.  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.  Aggregate  compensation expense with respect to the foregoing
           MSBP awards was approximately $131,242,  $22,555, and $37,591 for the
           year ended  December  31, 1997,  the three months ended  December 31,
           1996, and the year ended September 30, 1996, respectively.

           Dividends  paid on the MSBP shares granted are held by the Company in
           a trust account and may be distributed upon the vesting of the shares
           awarded.  Dividends  payable on the MSBP  shares  totaled  $9,855 and
           $6,188 at December 31, 1997 and September 30, 1996, respectively.

                                                                     (Continued)

                                      -40-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


           Summary information regarding outstanding MSBP awards at December 31,
           1997 is presented below:
<TABLE>
<CAPTION>

                      Period in which                            Market value        Shares       Vesting
                      awards granted                             at award date       awarded      period
                      --------------                             -------------       -------      ------
           <S>                                                <C>                    <C>         <C>
           Year ended September 30, 1996                      $     371,304            34,036     5 years
           Three months ended December 31, 1996                     150,000            13,750     5 years
</TABLE>

(14)   Fair Values of Financial Instruments
       ------------------------------------

       SFAS No.  107,  Disclosures  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. SFAS No. 107 excludes certain financial instruments
       and all nonfinancial instruments from its disclosure requirements.

       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 due from banks:  The  carrying  amounts of cash and due from
           banks approximate those assets' fair values.

           Interest-bearing  deposits  in  other  financial  institutions:   The
           carrying  amounts of  interest-bearing  deposits  in other  financial
           institutions  approximate  their fair  value,  due to the  short-term
           nature of these instruments.

           Investment and mortgage-backed securities: Fair values for investment
           and  mortgage-backed  securities  are based on quoted market  prices,
           where  available.  If quoted  market prices are not  available,  fair
           values are based on quoted market prices of comparable instruments.

           Federal Home Loan Bank stock:  The  carrying  amount is  considered a
           reasonable estimate of fair value.

                                                                    (Continued)

                                      -41-

<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


           Loans receivable: 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.

           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.
           These  instruments   approximate  fair  value  considering  they  are
           primarily variable rate instruments.

           Deposits:  Fair  values for  fixed-rate  certificates  of deposit 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.

       The estimated  fair value of the Company's  financial  instruments  as of
       December 31, 1997 and September 30, 1996 are as follows:
<TABLE>
<CAPTION>
                                                                      December 31, 1997        September 30, 1996
                                                                    ---------------------    ----------------------
                                                                      Carrying     Fair       Carrying     Fair
                                                                        value      value        value      value
                                                                        -----      -----        -----      -----
                                                                                      (In thousands)
<S>                                                                 <C>         <C>          <C>         <C>
       Assets:
          Cash and due from banks                                   $   4,358      4,358        2,133       2,133
          Interest-bearing deposits in other financial institutions     4,384      4,384          513         513
          Investment and mortgage-backed securities                    11,560     11,560       23,378      23,378
          Federal Home Loan Bank stock                                  1,013      1,013        1,013       1,013
          Loans receivable, net                                        97,541     95,711       51,500      52,548
          Accrued interest receivable                                     785        785          511         511

       Liabilities:
          Deposits:
             Noninterest-bearing demand deposits                        4,548      4,548        3,139       3,139
             Interest-bearing demand and savings                       32,203     32,203       22,614      22,614
             Certificates of deposit                                   54,451     54,575       36,068      36,145
          Securities sold under agreements to repurchase                2,393      2,393            -           -
          Federal Home Loan Bank advances                              18,510     18,510        2,500       2,500
</TABLE>

                                                                     (Continued)

                                      -42-

<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


(15)   Parent Company Financial Information
       ------------------------------------

       The following represents condensed financial information of the Parent.

                            Condensed Balance Sheets

                    December 31, 1997 and September 30, 1996
<TABLE>
<CAPTION>
                                         Assets                                    1997              1996
                                         ------                                    ----              ----

<S>                                                                         <C>                  <C>
           Cash                                                             $      347,570                -
           Investment securities available for sale, at fair value               1,580,328        1,170,125
           Note receivable from subsidiary                                               -        1,064,136
           Investment in subsidiary, at equity                                  10,353,620       12,214,811
           Land                                                                          -           10,000
           Other assets                                                             29,284          126,935
                                                                                ----------       ----------

                      Total assets                                          $   12,310,802       14,586,007
                                                                                ==========       ==========

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

           Liabilities:
               Deferred income taxes                                        $      117,900          146,103
               Dividends payable                                                   228,457                -
               Other liabilities                                                   444,840                -
                                                                                ----------       ----------
                                                                                   791,197          146,103
                                                                                ----------       ----------

           Stockholders' equity:
               Common stock                                                         90,671          119,025
               Additional paid-in capital                                        7,794,459       10,971,714
               Retained earnings                                                 4,443,500        6,809,054
               Unearned ESOP shares                                               (540,000)        (630,000)
               Unearned compensation                                              (394,195)        (371,304)
               Treasury stock, at cost                                             (96,800)      (2,502,009)
               Net unrealized holding gains on investment and
                 mortgage-backed securities available for sale                     221,970           43,424
                                                                                ----------       ----------
                      Total stockholders' equity                                11,519,605       14,439,904
                                                                                ----------       ----------

                      Total liabilities and stockholders' equity            $   12,310,802       14,586,007
                                                                                ==========       ==========
</TABLE>

                                                                     (Continued)

                                      -43-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


                         Condensed Statements of Income

                Year ended December 31, 1997, Three Months ended
         December 31, 1996, and Years ended September 30, 1996 and 1995
<TABLE>
<CAPTION>

                                                                                   Three
                                                                Year ended      months ended        Year ended
                                                               December 31,     December 31,       September 30,
                                                               ------------     ------------  ----------------------
                                                                   1997             1996         1996       1995
                                                                   ----             ----         ----       ----

<S>                                                          <C>                   <C>          <C>       <C>
Dividends from subsidiary                                    $   2,000,000               -             -          -
Interest income from subsidiary                                     25,231          10,092       203,450     63,974
Gain on sale of investment securities                              477,691               -             -          -
Other operating income                                              12,244           5,750         9,775          -
Other operating expenses                                           (54,676)        (33,334)      (14,647)         -
Income tax (expense) benefit                                      (160,943)          6,140       (62,047)   (21,905)
                                                                ----------         -------      --------    -------
           Income before equity in undistributed
               income (distributions in excess of
               income) of subsidiary                             2,299,547         (11,352)      136,531     42,069

Equity in undistributed income (distributions in
    excess of income) of subsidiary                             (2,162,947)        100,933       336,805    561,479
                                                                 ---------         -------       -------    -------

           Net income                                        $     136,600          89,581       473,336    603,548
                                                                ==========         =======       =======    =======

</TABLE>

                                                                     (Continued)

                                      -44-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


                       Condensed Statements of Cash Flows

                Year ended December 31, 1997, Three Months ended
         December 31, 1996, and Years ended September 30, 1996 and 1995
<TABLE>
<CAPTION>

                                                                             Three months
                                                             Year ended          ended            Year ended
                                                            December 31,     December 31,        September 30,
                                                            ------------     ------------  --------------------------
                                                                1997             1996         1996         1995
                                                                ----             ----         ----         ----
<S>                                                         <C>              <C>          <C>           <C>
Cash flows from operating activities:
    Net income                                              $    136,600          89,581      473,336       603,548
    Adjustment to reconcile net income to net cash
      provided by operations:
        Distributions in excess of income (equity in
          undistributed income) of subsidiary                  2,162,947        (100,933)    (336,805)     (561,479)
        Compensation expense related to MSBP                     127,109          22,555       37,591             -
        ESOP shares allocated                                    123,153          18,000      101,372             -
        Gain on sale of investment security                     (477,691)              -            -             -
        Decrease (increase) in other assets                       44,147          53,504     (148,840)            -
        (Decrease) increase in other liabilities                (173,595)        578,464            -        21,905
                                                              ----------      ----------    ---------   -----------
           Net cash provided by operating activities           1,942,670         661,171      126,654        63,974
                                                               ---------      ----------    ---------   -----------
Cash flows from investing activities:
    Purchase of investment security                             (976,321)              -     (138,240)     (644,550)
    Purchase of land                                                   -               -      (10,000)            -
    Acquisition of subsidiary                                          -               -            -    (5,182,004)
    Proceeds from sale of investment security                    993,329               -            -             -
    Net change in loan to subsidiary                             484,011         567,570    3,499,701    (4,601,428)
                                                              ----------      ----------    ---------   -----------
           Net cash provided by (used in)
              investing activities                               501,019         567,570    3,351,461   (10,427,982)
                                                              ----------      ----------    ---------   -----------
Cash flows from financing activity:
    Treasury stock purchased                                  (1,457,053)     (1,228,741)  (2,299,490)            -
    Dividends paid                                              (639,066)              -     (600,161)            -
    Contribution to management stock bonus plan                        -               -     (578,464)            -
    Proceeds from sale of common stock, net of
      issuance costs                                                   -               -            -    10,364,008
                                                              ----------      ----------    ---------    ----------
           Net cash used in financing activities              (2,096,119)     (1,228,741)  (3,478,115)   10,364,008
                                                              ----------      ----------    ---------    ----------

           Increase in cash and cash equivalents                 347,570               -            -             -
Cash and cash equivalents at beginning of period                       -               -            -             -
                                                              ----------      ----------    ---------   -----------
Cash and cash equivalents at end of year                    $    347,570               -            -             -
                                                              ==========      ==========    =========   -----------
Supplemental disclosures of noncash investing activities:
      Contribution of land to subsidiary                    $          -          10,000            -             -
                                                              ==========      ==========    =========   ===========
      Treasury stock obtained to satisfy employee
        tax withholding liability under MSBP                $     46,159               -            -             -
                                                              ==========      ==========    =========   ===========
</TABLE>
                                                                     (Continued)

                                      -45-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       On December 16, 1997, the Company declared a 10% stock dividend effective
       January 15, 1998 to shareholders of record January 2, 1998. Average share
       and  per  share  data  for  all  periods  presented  in the  accompanying
       consolidated  financial  statements  and all share and per share  data in
       note 13 have been restated to reflect the additional  shares  outstanding
       resulting from the stock dividend.

       On July 11, 1995, the Parent  completed an  initial  public  offering  of
       common stock and raised  $10,364,008 in proceeds,  net of issuance  costs
       of $818,492.  For  purposes  of  presenting  net  income per  share, only
       postconversion net income is considered.

       At the time of conversion,  the Bank established a "liquidation  account"
       in an amount equal to the regulatory  capital of the Bank as shown on its
       latest statement of financial condition contained in the final prospectus
       used in connection with the conversion.  The liquidation  account will be
       maintained for the benefit of depositors,  as of the  eligibility  record
       date, June 30, 1993, or supplemental  eligibility  record date, March 31,
       1995,  who  continue  to  maintain  their  deposits  in  the  Bank  after
       conversion.  In the event of a complete  liquidation (and only in such an
       event), each eligible depositor will be entitled to receive a liquidation
       distribution from the liquidation account, in the proportionate amount of
       the then  current  adjusted  balance for deposits  then held,  before any
       liquidation  distribution  may be made with respect to the  stockholders.
       Except for the  repurchase of stock and payment of dividends by the Bank,
       the  existence  of the  liquidation  account will not restrict the use or
       application of regulatory capital.

       The amount of  dividends  paid to the Parent  from the Bank is limited by
       various  regulatory  agencies.  Under the  regulations  of the  Office of
       Thrift Supervision ("OTS"), the Bank is not permitted to pay dividends on
       its stock after the conversion if its regulatory capital would thereby be
       reduced  below  (i) the  amount  then  required  for  the  aforementioned
       liquidation  account or (ii) the Bank's regulatory capital  requirements.
       Under the  Bank's  regulatory  capital  requirements,  the Bank can pay a
       dividend  during a calendar  year equal to the greater of (1) 100% of its
       net income to date  during the  calendar  year plus the amount that would
       reduce by one-half its "surplus  capital  ratio" at the  beginning of the
       calendar  year  or  (2)  75% of its  net  income  over  the  most  recent
       four-quarter  period.  As a result of these  regulatory  limitations,  at
       December 31, 1997, approximately $8,182,000 of the Parent's investment in
       the Bank was  restricted  from  transfer by the Bank to the Parent in the
       form of cash dividends.

(16)   Regulatory Matters
       ------------------

       The  Company is required to  maintain  noninterest-bearing  cash  reserve
       balances. The aggregate average cash reserve balances to be maintained at
       December  31,  1997 and  September  30,  1996 to satisfy  the  regulatory
       requirement was $458,000 and $195,000, respectively.

                                                                     (Continued)

                                      -46-
<PAGE>



                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


       The  Bank  is  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 Bank to maintain  minimum  amounts and ratios (set
       forth in the table  below) of total and Tier I capital (as defined in the
       regulations) to risk-weighted assets (as defined),  and of Tier I capital
       (as defined) to average assets (as defined).  Management believes,  as of
       December 31, 1997, that the Bank meets all capital adequacy  requirements
       to which it is subject.

       As of December 31, 1997, the most recent  notification from the Office of
       Thrift  Supervision  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.
<TABLE>
<CAPTION>
                                                                                          Minimum to be well
                                                                       Minimum for          capitalized under
                                                                         capital            prompt corrective
                                                  Actual            adequacy purposes      action provisions
                                        ------------------------  -----------------------  ----------------------
                                             Amount      Ratio        Amount      Ratio(1)    Amount     Ratio(1)
                                             ------      -----        ------      --------    ------     --------

<S>                                     <C>                <C>    <C>                <C> <C>              <C>
     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

     As of September 30, 1996:
       Total capital - risk-based
         (to risk-weighted assets)           12,951,093    38        2,755,360       8       3,444,200    10
       Tier I capital - risk-based
         (to risk-weighted assets)           12,412,619    36        1,377,680       4       2,066,520     6
       Tier I capital - leverage
         (to average assets)                 12,412,619    16        3,136,880       4       3,921,100     5
</TABLE>

(1)  Compliance with the requirement results from a value that must  be  greater
     than or equal to the ratio shown.


                                                                     (Continued)
                                      -47-
<PAGE>
                       CCF HOLDING COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements


(17)   Commitments and Contingencies
       -----------------------------

      (a)  Employment Agreements
           ---------------------

           The Company  entered into an employment  agreement with its president
           and chief  executive  officer on January 26,  1995.  As renewed,  the
           employment  agreement is for a term of three years with a base salary
           of $103,000. The agreement may be terminated by the Company for "just
           cause" as defined in the agreement. If the Company terminates without
           just cause,  the  president  will be entitled  to a  continuation  of
           salary from the date of termination through the remaining term of the
           agreement. The employment agreement contains 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 president  will be paid a lump-sum equal to 2.99 times his "base"
           salary (five-year average).  The agreement may be renewed annually by
           the  Board  of  Directors  upon  a   determination   of  satisfactory
           performance within the Board's sole discretion.

           The  Company  entered  into an  employment  agreement  with its Chief
           Administrative  Officer on July 15, 1996. The employment agreement is
           for a term of two years with a base salary of $80,000.  The agreement
           may be  terminated  by the Company for "just cause" as defined in the
           agreement. If the Company terminates without just cause, this officer
           will be  entitled  to a  continuation  of  salary  from  the  date of
           termination  through  the  remaining  term  of  the  agreement.   The
           employment  agreement  contains 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 equal to 2.99 times his "base salary"
           (five-year  average).  The agreement  may be renewed  annually by the
           Board of Directors upon a determination  of satisfactory  performance
           within the Board's sole discretion.

(18)   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.

                                      -48-


<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                                  Gary D. McGaha
                  Executive Vice President                             Executive Vice President*
                  and Chief Administrative Officer*

                  John T. Mitchell
                  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
                  Vice President and Chief Financial Officer           Vice President and Chief Operating Officer

                  Richard P. Florin                                    Charles S. Tucker
                  Senior Vice President                                Secretary and Treasurer

                  Gary D. McGaha
                  Executive Vice President
</TABLE>

                        --------------------------------
<TABLE>
<CAPTION>
              <S>                                                 <C>
              Corporate Counsel                                   Independent Auditors
              Edwin S. Kemp, Jr., Esquire                         KPMG Peat Marwick LLP
              101 North Main Street                               303 Peachtree Street, N.W.
              Suite 203                                           Suite 2000
              Jonesboro, Georgia  30236                           Atlanta, Georgia  30308

              Special Counsel                                     Transfer Agent and Registrar
              Malizia, Spidi, Sloane & Fisch, P.C.                Registrar & Transfer Company
              One Franklin Square                                 10 Commerce Drive
              1301 K Street, N.W., Suite 700 East                 Cranford, New Jersey  07016
              Washington, D.C. 20005                              (908) 272-8511
</TABLE>
The Company's  Annual Report for the year ended December 31, 1997 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 21, 1998 at
4:00 p.m. at the Fayetteville office of the Company.

                                       49