<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K

    x        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   ---                  SECURITIES EXCHANGE ACT OF 1934

     For the fiscal year ended December 31, 2002.

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____ to ___________________


                         Commission file number 0-13153

                                HABERSHAM BANCORP
         --------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Georgia                                         58-1563165
-------------------------------                    ----------------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                       Identification Number)

282 Historic Highway 441 North, P. O. Box 1980, Cornelia, Georgia       30531
--------------------------------------------------------------------------------
        (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:   (706) 778-1000

Securities registered pursuant to Section 12(b) of the Exchange Act:

     None

Securities registered pursuant to Section 12(g) of the Exchange Act:

                          Common Stock, $1.00 par value

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  x    No
    ---      ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x
           ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2): Yes       No  x
                                         ---      ---

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked prices of such common equity; as of
the last business day of the registrant's most recently completed second fiscal
quarter.

1,555,722 Shares of Common Stock, $1.00 par value--$32,670,162 as of June 30,
2002 (based upon market value of $21.00/share as of that date).

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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of March 7, 2003:

Common Stock, $1.00 par value--2,819,968 shares

DOCUMENTS INCORPORATED BY REFERENCE

(1) Portions of the Company's Annual Report to Shareholders for the year ended
December 31, 2002 (the "Annual Report") are incorporated by reference into Part
II.

(2) Portions of the Company's Proxy Statement relating to the 2003 Annual
Meeting of Shareholders (the "Proxy Statement") are incorporated by reference
into Part III.

                                     PART I

Item 1.  BUSINESS.

                             BUSINESS OF THE COMPANY

     Habersham Bancorp (the "Company"), a Georgia corporation, was organized on
March 9, 1984. Effective December 31, 1984, the Company acquired all of the
outstanding shares of common stock of Habersham Bank ("Habersham Bank"). As a
result of this transaction, the former shareholders of Habersham Bank became
shareholders of the Company, and the Bank became the wholly-owned subsidiary of
the Company. The Bank has one subsidiary, Advantage Insurers, Inc., a property,
casualty and life insurance agency. Effective June 30, 1995, the Company
acquired Security Bancorp, Inc. and its subsidiary bank, Security State Bank.


                              BUSINESS OF THE BANK

     Habersham Bank is a financial institution which was organized under the
laws of the State of Georgia in 1904. Habersham Bank operates a full-service
commercial banking business based in Habersham, White, Cherokee, and Warren
Counties, Georgia, providing such customary banking services as checking and
savings accounts, various types of time deposits, safe deposit facilities and
individual retirement accounts. It also makes secured and unsecured loans and
provides other financial services to its customers. Habersham Bank has a
full-time trust officer on staff and offers a full spectrum of trust services,
including trust administration, asset management services, estate and will
probate and administration, and other services in the area of personal trusts.

                    BUSINESS OF BANCMORTGAGE FINANCIAL CORP.

     Prior to December 2002, the Company conducted mortgage banking operations
through BancMorgage Financial Corp. ("BancMortgage"). BancMortgage was organized
as a wholly-owned nonblank subsidiary of Habersham Bank in 1996. BancMortgage
is a full service mortgage and construction lending company located in the
northern Atlanta metropolitan area. BancMorgage also does business in the
mid-Atlantic states as The Prestwick Mortgage Group and as BancFinancial
Services Corporation. During 1999, BancMortgage formed a wholly owned
subsidiary, BancMortgage Reinsurance LTD., a reinsurance company incorporated in
Turks and Caicos. This subsidiary provides reinsurance to companies offering
private mortgage insurance. During the year ended December 31, 2002, the Company
sold BancMortgage to the existing management of BancMortgage.


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                      BUSINESS OF ADVANTAGE INSURERS, INC.

     Advantage Insurers, Inc. was organized as a wholly-owned nonbank subsidiary
of Habersham Bank in 1997. Advantage Insurers, Inc. is a full service insurance
agency located in Cornelia, Georgia.


                                   COMPETITION

     The banking industry is highly competitive. Recent legislation, together
with other regulatory changes by the primary regulators of the various financial
institutions and competition from unregulated entities, has resulted in the
elimination of many traditional distinctions between commercial banks, thrift
institutions and other providers of financial services. Consequently,
competition among financial institutions of all types is virtually unlimited
with respect to legal ability and authority to provide most financial services.

     Habersham Bank's primary market area consists of Habersham, White,
Cherokee, and Warren Counties, Georgia. Habersham Bank competes principally for
all types of loans, deposits and other financial services with other commercial
banks located in Habersham, White, Cherokee, and Warren Counties, Georgia.

     Habersham Bank also competes with other financial institutions located in
Habersham and Cherokee counties and with commercial banks, savings and loan
associations, and other financial institutions located outside of Habersham and
Cherokee counties. To a lesser extent, Habersham Bank competes for loans with
insurance companies, regulated small loan companies, credit unions, and certain
governmental agencies.

     The Company and its nonbank subsidiaries also compete with numerous other
companies and financial institutions engaged in similar lines of business, such
as other bank holding companies, mortgage companies, mortgage servicers, leasing
companies, insurance companies, companies providing data processing services,
and companies providing bank consulting services.


                                    EMPLOYEES

     As of December 31, 2002, the Company had 131 full-time equivalent
employees. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement. In the opinion of management, the Company and
its subsidiaries enjoy satisfactory relations with their respective employees.


                           SUPERVISION AND REGULATION

     Both the Company and the Bank are subject to extensive state and federal
banking regulations that impose restrictions on and provide for general
regulatory oversight of their operations. These laws are generally intended to
protect depositors and not shareholders. The following discussion describes the
material elements of the regulatory framework that applies to us.

THE COMPANY

     Since the Company owns all of the capital stock of the Bank, it is a bank
holding company under the federal Bank Holding Company Act of 1956. As a result,
the Company is primarily subject to the supervision, examination, and reporting
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requirements of the Bank Holding Company Act and the regulations of the Federal
Reserve.

     ACQUISITIONS OF BANKS. The Bank Holding Company Act requires every bank
holding company to obtain the Federal Reserve's prior approval before:

     o    acquiring direct or indirect ownership or control of any voting shares
          of any bank if, after the acquisition, the bank holding company will
          directly or indirectly own or control more than 5% of the bank's
          voting shares;

     o    acquiring all or substantially all of the assets of any bank; or

     o    merging or consolidating with any other bank holding company.

     Additionally, the Bank Holding Company Act provides that the Federal
Reserve may not approve any of these transactions if it would result in or tend
to create a monopoly or, substantially lessen competition or otherwise function
as a restraint of trade, unless the anticompetitive effects of the proposed
transaction are clearly outweighed by the public interest in meeting the
convenience and needs of the community to be served. The Federal Reserve is also
required to consider the financial and managerial resources and future prospects
of the bank holding companies and banks concerned and the convenience and needs
of the community to be served. The Federal Reserve's consideration of financial
resources generally focuses on capital adequacy, which is discussed below.

     Under the Bank Holding Company Act, if adequately capitalized and
adequately managed, the Company or any other bank holding company located in
Georgia may purchase a bank located outside of Georgia. Conversely, an
adequately capitalized and adequately managed bank holding company located
outside of Georgia may purchase a bank located inside Georgia. In each case,
however, restrictions may be placed on the acquisition of a bank that has only
been in existence for a limited amount of time or will result in specified
concentrations of deposits. For example, Georgia law prohibits a bank holding
company from acquiring control of a financial institution until the target
financial institution has been incorporated for three years. Because the Bank
has been incorporated for more than three years, this limitation does not apply
to the Bank or to the Company.

     CHANGE IN BANK CONTROL. Subject to various exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with related
regulations, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is refutably presumed to exist
if a person or company acquires 10% or more, but less than 25%, of any class of
voting securities and either:

     o    the bank holding company has registered securities under Section 12 of
          the Securities Act of 1934; or

     o    no other person owns a greater percentage of that class of voting
          securities immediately after the transaction.

Our common stock is registered under the Securities Exchange Act of 1934. The
regulations provide a procedure for challenging any rebuttable presumption of
control.

     PERMITTED ACTIVITIES. A bank holding company is generally permitted under
the Bank Holding Company Act to engage in or acquire direct or indirect control
of more than 5% of the voting shares of any company engaged in the following
activities:

     o    banking or managing or controlling banks; and
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     o    any activity that the Federal Reserve determines to be so closely
          related to banking as to be a proper incident to the business of
          banking.

     Activities that the Federal Reserve has found to be so closely related to
banking as to be a proper incident to the business of banking include:

     o    factoring accounts receivable;

     o    making, acquiring, brokering or servicing loans and usual related
          activities;

     o    leasing personal or real property;

     o    operating a non-bank depository institution, such as a savings
          association;

     o    trust company functions;

     o    financial and investment advisory activities;

     o    conducting discount securities brokerage activities;

     o    underwriting and dealing in government obligations and money market
          instruments;

     o    providing specified management consulting and counseling activities;

     o    performing selected data processing services and support services;

     o    acting as agent or broker in selling credit life insurance and other
          types of insurance in connection with credit transactions; and

     o    performing selected insurance underwriting activities.

     Despite prior approval, the Federal Reserve may order a bank holding
company or its subsidiaries to terminate any of these activities or to terminate
its ownership or control of any subsidiary when it has reasonable cause to
believe that the bank holding company's continued ownership, activity or control
constitutes a serious risk to the financial safety, soundness, or stability of
it or any of its bank subsidiaries.

     In addition to the permissible bank holding company activities listed
above, a bank holding company may qualify and elect to become a financial
holding company, permitting the bank holding company to engage in additional
activities that are financial in nature or incidental or complementary to
financial activity. The Bank Holding Company Act expressly lists the following
activities as financial in nature:

     o    lending, trust and other banking activities;

     o    insuring, guaranteeing, or indemnifying against loss or harm, or
          providing and issuing annuities, and acting as principal, agent, or
          broker for these purposes, in any state;

     o    providing financial, investment, or advisory services;

     o    issuing or selling instruments representing interests in pools of
          assets permissible for a bank to hold directly;

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     o    underwriting, dealing in or making a market in securities;

     o    other activities that the Federal Reserve may determine to be so
          closely related to banking or managing or controlling banks as to be a
          proper incident to managing or controlling banks;

     o    foreign activities permitted outside of the United States if the
          Federal Reserve has determined them to be usual in connection with
          banking operations abroad;

     o    merchant banking through securities or insurance affiliates; and

     o    insurance company portfolio investments.

     To qualify to become a financial holding company, the Bank and any other
depository institution subsidiary of the Company must be well capitalized and
well managed and must have a Community Reinvestment Act rating of at least
satisfactory. Additionally, the Company must file an election with the Federal
Reserve to become a financial holding company and must provide the Federal
Reserve with 30 days' written notice prior to engaging in a permitted financial
activity. While the Company meets the qualification standards applicable to
financial holding companies, the Company has not elected to become a financial
holding company at this time.

     SUPPORT OF SUBSIDIARY INSTITUTIONS. Under Federal Reserve policy, the
Company is expected to act as a source of financial strength for the Bank and to
commit resources to support the Bank. This support may be required at times
when, without this Federal Reserve policy, the Company might not be inclined to
provide it. In addition, any capital loans made by the Company to the Bank will
be repaid only after its deposits and various other obligations are repaid in
full. In the unlikely event of the Company's bankruptcy, any commitment by it to
a federal bank regulatory agency to maintain the capital of the Bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment.

THE BANK

     Because the Bank is a commercial bank chartered under the laws of the State
of Georgia, it is primarily subject to the supervision, examination and
reporting requirements of the FDIC and the Georgia Department of Banking and
Finance. The FDIC and Georgia Department of Banking and Finance regularly
examine the Bank's operations and have the authority to approve or disapprove
mergers, the establishment of branches and similar corporate actions. Both
regulatory agencies have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law. Additionally,
the Bank's deposits are insured by the FDIC to the maximum extent provided by
law. The Bank is also subject to numerous state and federal statutes and
regulations that affect its business, activities and operations.

     BRANCHING. Under current Georgia law, the Bank may open branch offices
throughout Georgia with the prior approval of the Georgia Department of Banking
and Finance. In addition, with prior regulatory approval, the Bank may acquire
branches of existing banks located in Georgia. The Bank and any other national
or state-chartered bank generally may branch across state lines by merging with
banks in other states if allowed by the applicable states' laws. Georgia law,
with limited exceptions, currently permits branching across state lines through
interstate mergers.

     Under the Federal Deposit Insurance Act, states may "opt-in" and allow
out-of-state banks to branch into their state by establishing a new start-up
branch in the state. Currently, Georgia has not opted-in to this provision.
Therefore, interstate merger is the only method through which a bank located
outside of Georgia

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may branch into Georgia. This provides a limited barrier of entry into the
Georgia banking market, which protects us from an important segment of potential
competition. However, because Georgia has elected not to opt-in, our ability to
establish a new start-up branch in another state may be limited. Many states
that have elected to opt-in have done so on a reciprocal basis, meaning that an
out-of-state bank may establish a new start-up branch only if their home state
has also elected to opt-in. Consequently, until Georgia changes its election,
the only way we will be able to branch into states that have elected to opt-in
on a reciprocal basis will be through interstate merger.

     PROMPT CORRECTIVE ACTION. The Federal Deposit Insurance Corporation
Improvement Act of 1991 establishes a system of prompt corrective action to
resolve the problems of undercapitalized financial institutions. Under this
system, the federal banking regulators have established five capital categories
(well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized) in which all institutions are
placed.

     Federal banking regulators are required to take various mandatory
supervisory actions and are authorized to take other discretionary actions with
respect to institutions in the three undercapitalized categories. The severity
of the action depends upon the capital category in which the institution is
placed. Generally, subject to a narrow exception, the banking regulator must
appoint a receiver or conservator for an institution that is critically
undercapitalized. The federal banking agencies have specified by regulation the
relevant capital levels for each category.

     An institution that is categorized as undercapitalized, significantly
undercapitalized or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency. A
bank holding company must guarantee that a subsidiary depository institution
meets its capital restoration plan, subject to various limitations. The
controlling holding company's obligation to fund a capital restoration plan is
limited to the lesser of 5% of an undercapitalized subsidiary's assets at the
time it became undercapitalized or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches or engaging in any new line of business, except under
an accepted capital restoration plan or with FDIC approval. The regulations also
establish procedures for downgrading an institution to a lower capital category
based on supervisory factors other than capital.

     FDIC INSURANCE ASSESSMENTS. The FDIC has adopted a risk-based assessment
system for insured depository institutions that takes into account the risks
attributable to different categories and concentrations of assets and
liabilities. The system assigns an institution to one of three capital
categories: (1) well capitalized; (2) adequately capitalized; and (3)
undercapitalized. These three categories are substantially similar to the prompt
corrective action categories described above, with the "undercapitalized"
category including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. The FDIC also assigns an institution to one of three supervisory
subgroups based on a supervisory evaluation that the institution's primary
federal regulator provides to the FDIC and information that the FDIC determines
to be relevant to the institution's financial condition and the risk posed to
the deposit insurance funds. Assessments range from 0 to 27 cents per $100 of
deposits, depending on the institution's capital group and supervisory subgroup.
In addition, the FDIC imposes assessments to help pay off the $780 million in
annual interest payments on the $8 billion Financing Corporation bonds issued in
the late 1980s as part of the government rescue of the thrift industry. This
assessment rate is adjusted quarterly and is set at 1.68 cents per $100 of
deposits for the first quarter of 2003.

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     The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations, or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC.

     COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act requires that,
in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve or the FDIC shall evaluate the
record of each financial institution in meeting the credit needs of its local
community, including low and moderate-income neighborhoods. These facts are also
considered in evaluating mergers, acquisitions, and applications to open a
branch or facility. Failure to adequately meet these criteria could impose
additional requirements and limitations on the Bank and the Company.
Additionally, we must publicly disclose the terms of various Community
Reinvestment Act-related agreements.

         OTHER REGULATIONS. Interest and other charges collected or contracted
for by the Bank are subject to state usury laws and federal laws concerning
interest rates. For example, under the Soldiers' and Sailors' Civil Relief Act
of 1940, a lender is generally prohibited from charging an annual interest rate
in excess of 6% on any obligation for which the borrower is a person on active
duty with the United States military.

     The Bank's loan operations are also subject to federal laws applicable to
credit transactions, such as the:

     o    Federal Truth-In-Lending Act, governing disclosures of credit terms to
          consumer borrowers;

     o    Home Mortgage Disclosure Act of 1975, requiring financial institutions
          to provide information to enable the public and public officials to
          determine whether a financial institution is fulfilling its obligation
          to help meet the housing needs of the community it serves;

     o    Equal Credit Opportunity Act, prohibiting discrimination on the basis
          of race, creed or other prohibited factors in extending credit;

     o    Fair Credit Reporting Act of 1978, governing the use and provision of
          information to credit reporting agencies;

     o    Fair Debt Collection Act, governing the manner in which consumer debts
          may be collected by collection agencies;

     o    Soldiers' and Sailors' Civil Relief Act of 1940, governing the
          repayment terms of, and property rights underlying, secured
          obligations of persons in military service; and

     o    Rules and regulations of the various federal agencies charged with the
          responsibility of implementing these federal laws.

In addition to the federal and state laws noted above, the Georgia Fair Lending
Act ("GFLA") became effective on October 1, 2002. GFLA imposes new restrictions
and procedural requirements on most mortgage loans made in Georgia, including
home equity loans and lines of credit. While many of the GFLA requirements will
apply regardless of the interest rate or charges on the loan, "high cost home
loans," as defined by GFLA, are subject to the most requirements.

We have implemented procedures to comply with all GFLA requirements.

The deposit operations of the Bank are subject to:

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     o    The Right to Financial Privacy Act, which imposes a duty to maintain
          confidentiality of consumer financial records and prescribes
          procedures for complying with administrative subpoenas of financial
          records; and

     o    The Electronic Funds Transfer Act and Regulation E issued by the
          Federal Reserve to implement that act, which govern automatic deposits
          to and withdrawals from deposit accounts and customers' rights and
          liabilities arising from the use of automated teller machines and
          other electronic banking services.

CAPITAL ADEQUACY

     The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve, in the case of the Company, and
the FDIC and Georgia Department of Banking and Finance, in the case of the Bank.
The Federal Reserve has established a risk-based and a leverage measure of
capital adequacy for bank holding companies. The Bank is also subject to
risk-based and leverage capital requirements adopted by the FDIC, which are
substantially similar to those adopted by the Federal Reserve for bank holding
companies.

     The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items,
such as letters of credit and unfunded loan commitments, are assigned to broad
risk categories, each with appropriate risk weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.

     The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. Total capital consists of two components, Tier 1 Capital and Tier
2 Capital. Tier 1 Capital generally consists of common stock, minority interests
in the equity accounts of consolidated subsidiaries, noncumulative perpetual
preferred stock, and a limited amount of qualifying cumulative perpetual
preferred stock, less goodwill and other specified intangible assets. Tier 1
Capital must equal at least 4% of risk-weighted assets. Tier 2 Capital generally
consists of subordinated debt, other preferred stock and a limited amount of
loan loss reserves. The total amount of Tier 2 Capital is limited to 100% of
Tier 1 Capital. At December 31, 2002 our ratio of total capital to risk-weighted
assets was 15.47% and our ratio of Tier 1 Capital to risk-weighted assets was
14.41%.

     In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and other specified
intangible assets, of 3% for bank holding companies that meet specified
criteria, including having the highest regulatory rating and implementing the
Federal Reserve's risk-based capital measure for market risk. All other bank
holding companies generally are required to maintain a leverage ratio of at
least 4%. At December 31, 2002, our leverage ratio was 9.42%. The guidelines
also provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without reliance on intangible assets. The
Federal Reserve considers the leverage ratio and other indicators of capital
strength in evaluating proposals for expansion or new activities.

     The Bank and the Company are also both subject to leverage capital
guidelines issued by the Georgia Department of Banking and Finance, which
provide for minimum ratios of Tier 1 capital to total assets. These guidelines
are substantially similar to those adopted by the Federal Reserve in the case of
the Company and those adopted by the FDIC in the case of the Bank.

<PAGE>

     Failure to meet capital guidelines could subject a bank or bank holding
company to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the FDIC, a prohibition on
accepting brokered deposits, and certain other restrictions on its business. As
described above, significant additional restrictions can be imposed on
FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "--Prompt Corrective Action."

PAYMENT OF DIVIDENDS

     The Company is a legal entity separate and distinct from the Bank. The
principal sources of the Company's cash flow, including cash flow to pay
dividends to its shareholders, are dividends that the Bank pays to its sole
shareholder, the Company. Statutory and regulatory limitations apply to the
Bank's payment of dividends to the Company as well as to the Company's payment
of dividends to its shareholders.

     The payment of dividends by the Company and the Bank may also be affected
by other factors, such as the requirement to maintain adequate capital above
regulatory guidelines. If, in the opinion of the federal banking regulator, the
Bank were engaged in or about to engage in an unsafe or unsound practice, the
federal banking regulator could require, after notice and a hearing, that the
Bank stop or refrain from engaging in the practice. The federal banking agencies
have indicated that paying dividends that deplete a depository institution's
capital base to an inadequate level would be an unsafe and unsound banking
practice. Under the Federal Deposit Insurance Corporation Improvement Act of
1991, a depository institution may not pay any dividend if payment would cause
it to become undercapitalized or if it already is undercapitalized. Moreover,
the federal agencies have issued policy statements that provide that bank
holding companies and insured banks should generally only pay dividends out of
current operating earnings. See "--Prompt Corrective Action" above.

     The Georgia Department of Banking and Finance also regulates the Bank's
dividend payments and must approve dividend payments that would exceed 50% of
the Bank's net income for the prior year. Our payment of dividends may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.

     At January 1, 2003, the Bank was able to pay approximately $2,811,000 in
dividends to the Company without prior regulatory approval.


RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES

     The Company and the Bank are subject to the provisions of Section 23A of
the Federal Reserve Act. Section 23A places limits on the amount of:

     o    a bank's loans or extensions of credit to affiliates;

     o    a bank's investment in affiliates;

     o    assets a bank may purchase from affiliates, except for real and
          personal property exempted by the Federal Reserve;

     o    loans or extensions of credit to third parties collateralized by the
          securities or obligations of affiliates; and

<PAGE>

     o    a bank's guarantee, acceptance or letter of credit issued on behalf of
          an affiliate.

     The total amount of the above transactions is limited in amount, as to any
one affiliate, to 10% of a bank's capital and surplus and, as to all affiliates
combined, to 20% of a bank's capital and surplus. In addition to the limitation
on the amount of these transactions, each of the above transactions must also
meet specified collateral requirements. The Bank must also comply with other
provisions designed to avoid the taking of low-quality assets.

     The Company and the Bank are also subject to the provisions of Section 23B
of the Federal Reserve Act which, among other things, prohibit an institution
from engaging in the above transactions with affiliates unless the transactions
are on terms substantially the same, or at least as favorable to the institution
or its subsidiaries, as those prevailing at the time for comparable transactions
with nonaffiliated companies.

     The Bank is also subject to restrictions on extensions of credit to its
executive officers, directors, principal shareholders and their related
interests. These extensions of credit (1) must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with third parties, and (2) must not involve more
than the normal risk of repayment or present other unfavorable features.

PRIVACY

     Financial institutions are required to disclose their policies for
collecting and protecting confidential information. Customers generally may
prevent financial institutions from sharing nonpublic personal financial
information with nonaffiliated third parties except under narrow circumstances,
such as the processing of transactions requested by the consumer or when the
financial institution is jointly sponsoring a product or service with a
nonaffiliated third party. Additionally, financial institutions generally may
not disclose consumer account numbers to any nonaffiliated third party for use
in telemarketing, direct mail marketing or other marketing to consumers.

ANTI-TERRORISM LEGISLATION

     In the wake of the tragic events of September 11th, on October 26, 2001,
the President signed the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act
of 2001. Under the USA PATRIOT Act, financial institutions are subject to
prohibitions against specified financial transactions and account relationships
as well as enhanced due diligence and "know your customer" standards in their
dealings with foreign financial institutions and foreign customers. For example,
the enhanced due diligence policies, procedures, and controls generally require
financial institutions to take reasonable steps--

     o    to conduct enhanced scrutiny of account relationships to guard against
          money laundering and report any suspicious transaction;

     o    to ascertain the identity of the nominal and beneficial owners of, and
          the source of funds deposited into, each account as needed to guard
          against money laundering and report any suspicious transactions;

     o    to ascertain for any foreign bank, the shares of which are not
          publicly traded, the identity of the owners of the foreign bank, and
          the nature and extent of the ownership interest of each such owner;
          and
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     o    to ascertain whether any foreign bank provides correspondent accounts
          to other foreign banks and, if so, the identity of those foreign banks
          and related due diligence information.

     Under the USA PATRIOT Act, financial institutions must establish anti-money
laundering programs. The USA PATRIOT Act sets forth minimum standards for these
programs, including:

     o    the development of internal policies, procedures, and controls;

     o    the designation of a compliance officer;

     o    an ongoing employee training program; and

     o    an independent audit function to test the programs.

     Pursuant to the mandate of the USA PATRIOT Act, the Secretary of the
Treasury issued regulations effective April 24, 2002 applicable to financial
institutions. Because all federally insured depository institutions are required
to have anti-money laundering programs, the regulations provide that a financial
institution which is subject to regulation by a "federal functional" is in
compliance with the regulations if it complies with the rules of its primary
federal regulator governing the establishment and maintenance of anti-money
laundering programs.

     Under the authority of the USA PATRIOT Act, the Secretary of the Treasury
adopted rules on September 26, 2002 increasing the cooperation and information
sharing between financial institutions, regulators and law enforcement
authorities regarding individuals, entities and organizations engaged in, or
reasonably suspected based on credible evidence of engaging in, terrorist acts
or money laundering activities. Under the new rules, a financial institution is
required to:

     o    expeditiously search its records to determine whether it maintains or
          has maintained accounts, or engaged in transactions with individuals
          or entities, listed in a request submitted by the Financial Crimes
          Enforcement Network ("FinCEN");

     o    notify FinCEN if an account or transaction is identified;

     o    designate a contact person to receive information requests;

     o    limit use of information provided by FinCEN to: (1) reporting to
          FinCEN, (2) determining whether to establish or maintain an account or
          engage in a transaction and (3) assisting the financial institution in
          complying with the Bank Secrecy Act; and

     o    maintain adequate procedures to protect the security and
          confidentiality of FinCEN requests.

     Under the new rules, a financial institution may also share information
regarding individuals, entities, organizations and countries for purposes of
identifying and, where appropriate, reporting activities that it suspects may
involve possible terrorist activity or money laundering. Such information-
sharing is protected under a safe harbor if the financial institution:

     o    notifies FinCEN of its intention to share information, even when
          sharing with an affiliated financial institution;

     o    takes reasonable steps to verify that, prior to sharing, the financial
          institution or association of financial institutions with which it
          intends to share information has submitted a notice to FinCEN;
<PAGE>
     o    limits the use of shared information to identifying and reporting on
          money laundering or terrorist activities, determining whether to
          establish or maintain an account or engage in a transaction, or
          assisting it in complying with the Bank Security Act; and

     o    maintains adequate procedures to protect the security and
          confidentiality of the information.

     Any financial institution complying with these rules will not be deemed to
have violated the privacy requirements discussed above.

     The Secretary of the Treasury also adopted a new rule on September 26, 2002
intended to prevent money laundering and terrorist financing through
correspondent accounts maintained by U.S. financial institutions on behalf of
foreign banks. Under the new rule, financial institutions:

     o    are prohibited from providing correspondent accounts to foreign shell
          banks;

     o    are required to obtain a certification from foreign banks for which
          they maintain a correspondent account stating the foreign bank is not
          a shell bank and that it will not permit a foreign shell bank to have
          access to the U.S. account;

     o    must maintain records identifying the owner of the foreign bank for
          which they may maintain a correspondent account and its agent in the
          United States designated to accept services of legal process;

     o    must terminate correspondent accounts of foreign banks that fail to
          comply with or fail to contest a lawful request of the Secretary of
          the Treasury or the Attorney General of the United States, after being
          notified by the Secretary or Attorney General.

     The new rule applies to correspondent accounts established after October
28, 2002.

PROPOSED LEGISLATION AND REGULATORY ACTION

     New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions operating and doing
business in the United States. We cannot predict whether or in what form any
proposed regulation or statute will be adopted or the extent to which our
business may be affected by any new regulation or statute.

EFFECT OF GOVERNMENTAL MONETARY POLICES

     Our earnings are affected by domestic economic conditions and the monetary
and fiscal policies of the United States government and its agencies. The
Federal Reserve Bank's monetary policies have had, and are likely to continue to
have, an important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to
curb inflation or combat a recession. The monetary policies of the Federal
Reserve affect the levels of bank loans, investments and deposits through its
control over the issuance of United States government securities, its regulation
of the discount rate applicable to member banks and its influence over reserve
requirements to which member banks are subject. We cannot predict the nature or
impact of future changes in monetary and fiscal policies.

Item 2.  PROPERTIES
<PAGE>
     The Company's principal office is located at Habersham Bank's Central
Habersham office, 282 Historic Highway 441, Cornelia, Georgia. The telephone
number of that office is (706) 778-1000.

     Habersham Bank's North Habersham (main) office is located at 1151
Washington Street, Clarkesville, Georgia. The telephone number of that office is
(706) 778-1000. Habersham Bank also has six full-service branch offices. Its
Central Habersham office is located at 282 Historic Highway 441, Cornelia,
Georgia, its South Habersham office is located at 186 441 By-Pass, Baldwin,
Georgia, its Cleveland Office is located at 575 South Main Street, Cleveland,
Georgia, its Canton Office is located at 1925 Marietta Highway, Canton, Georgia,
its Waleska Office is located at 7265 Reinhardt College Parkway, Waleska,
Georgia, and its Warrenton Office is located at 217 East Main Street, Warrenton,
Georgia. Each office has a 24-hour teller machine. Habersham Bank owns its
office properties without encumbrance, with the exception of the Warrenton
Office which is leased on a month to month basis.

     Advantage Insurers, Inc.'s principal office is located at 282 Historic
Highway 441, Cornelia, Georgia, and the telephone number of that office is (706)
778-2277.

Item 3.  LEGAL PROCEEDINGS

     The Company is not a party to, nor is any of its property the subject of,
any material pending legal proceedings, other than ordinary routine litigation
incidental to its business, and no such proceedings are known to be contemplated
by governmental authorities.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The common stock of Habersham Bancorp is traded on the Nasdaq Stock Market
("Nasdaq") under the symbol HABC. At December 31, 2002, Habersham Bancorp had
approximately 541 shareholders of record. The following table sets forth the
high and low sale prices, and the cash dividends paid on the Company's common
stock on a quarterly basis for the past two fiscal years and the first quarter
of 2003 to date.
<TABLE>
<CAPTION>
2003                                      HIGH          LOW         DIVIDENDS
----                                     ------        ------       ---------
<S>                                      <C>           <C>          <C>
First quarter
(through March 19, 2003)                 $19.50        $17.08         $0.06
</TABLE>

<TABLE>
<CAPTION>
2002                                      HIGH          LOW         DIVIDENDS
----                                     ------        ------       ---------
<S>                                      <C>           <C>          <C>
Fourth quarter                           $18.50        $16.26         $0.06
Third quarter                             20.76         17.64          0.06
Second quarter                            22.99         17.65          0.06
First quarter                             17.44         15.75          0.06
</TABLE>

<TABLE>
<CAPTION>
2001                                      HIGH          LOW         DIVIDENDS
----                                     ------        ------       ---------
<S>                                      <C>           <C>          <C>
Fourth quarter                           $16.50        $13.50         $0.06
Third quarter                             16.55         12.25          0.06
Second quarter                            13.00         11.44          0.06
First quarter                             12.75          9.88          0.06
</TABLE>

<PAGE>

     The approval of the Georgia Department of Banking and Finance is required
if dividends declared by the Bank to the Company in any year will exceed 50% of
the net income of the Bank for the previous calendar year. As of December 31,
2002 the Bank could declare dividends to the Company up to approximately
$2,811,000 without regulatory approval. See "Item 1 - Business - Supervision and
Regulation - Payment of Dividends" for additional information regarding
regulatory restrictions on our ability to pay dividends.


Item 6.  SELECTED FINANCIAL DATA


SELECTED FINANCIAL DATA
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                   FOR THE YEARS ENDED DECEMBER 31
                                               -------------------------------------------------------------------------
                                                   2002           2001            2000          1999            1998
                                               -----------    -----------     -----------    -----------     -----------
<S>                                            <C>            <C>             <C>            <C>             <C>
SUMMARY OF OPERATIONS
Interest income                                $    26,794    $    34,262     $    37,285    $    28,060     $    24,462
Interest expense                                    12,041         20,403          22,781         14,872          13,538
Provision for loan losses                            1,307          1,463             955            500             636
Other income                                         3,963          3,109           2,555          2,445           2,566
Other expense                                       12,787         12,290          11,872         12,532          12,772

Income from continuing operations                    3,493          2,396           2,903          2,710           1,457
Income (loss) from discontinued operations           2,337          3,109             124           (956)            601
Cumulative effect of change in accounting
  principle                                             --           (162)             --             --              --
                                               -----------    -----------     -----------    -----------     -----------
Net income                                           5,830          5,343           3,027          1,754           2,058

PER SHARE AMOUNTS
Income from continuing operations - diluted    $      1.24    $       .88     $      1.08    $      1.04     $       .59
Income (loss) from discontinued operations -
  diluted                                              .83           1.14             .04           (.37)            .24
Cumulative effect of change in accounting
  principle - diluted                                   --           (.06)             --             --              --
                                               -----------    -----------     -----------    -----------     -----------
Net income per common share-diluted            $      2.07    $      1.96     $      1.12    $       .67     $       .83

Dividends                                              .24            .24             .24            .20             .16
Weighted average number of common and
  common equivalent shares outstanding           2,815,972      2,729,291       2,699,949      2,609,360       2,481,630

AT DECEMBER 31
Total assets                                   $   429,411    $   546,503     $   543,108    $   461,976     $   384,069
Earning assets                                     395,047        503,562         504,640        424,663         359,838
Loans                                              303,813        440,527         441,850        365,499         281,898
Deposits                                           336,526        336,360         341,032        317,420         280,453
Long-term debt                                      30,000         35,775          21,950          1,950           2,700
Shareholders' equity                                50,743         43,982          38,751         35,429          32,214

RATIOS
Return on average assets                              1.41%          1.22%            .68%           .49%            .71%
Return on average equity                             12.24%         12.80%           8.21%          5.10%           6.63%
Dividend payout ratio                                11.59%         12.26%          21.41%         29.75%          19.29%
Average equity to average assets ratio               11.52%          9.55%           8.32%          9.64%          10.64%
</TABLE>

Balance sheet amounts have not been adjusted to reflect discontinued operations.
<PAGE>
Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion sets forth the major factors that affect the
Company's results of operations and financial condition. These comments should
be read in conjunction with the consolidated financial statements and related
notes.

     This discussion contains forward-looking statements involving risks and
uncertainties. Results may differ significantly from that discussed in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, risks involving the potential adverse effect of changes
in interest rates and the current interest rate environment, loan losses and the
adequacy of the Company's loan loss allowance, changes in regulation and
legislation, and competition.


ORGANIZATION

     Habersham Bancorp (the "Company") owns all of the outstanding stock of
Habersham Bank ("Habersham Bank") and The Advantage Group, Inc. Habersham Bank
owns all of the outstanding stock of Advantage Insurers, Inc. ("Advantage
Insurers"). Prior to December 2002, it also owned all of the outstanding stock
of BancMortgage Financial Corp. ("BancMortgage"). Advantage Insurers, which
began operations on March 31, 1997, offers a full line of property, casualty,
and life insurance products. Advantage Insurers does not comprise a significant
portion of the financial position, results of operations, or cash flows of the
Company.

     BancMortgage was organized in 1996 as a full service mortgage and
construction lending company located in the northern Atlanta metropolitan area.
During the year ended December 31, 2002, the Company sold BancMortgage to the
existing management of BancMortgage resulting in a loss of $110,064. The
Company's consolidated financial statements have been reclassified to reflect
the operations of BancMortgage as discontinued. Management's discussion and
analysis, which follows, relates primarily to Habersham Bank.

     The Company's continuing primary business is the operation of banks in
rural and suburban communities in Habersham, White, Cherokee, and Warren
counties in Georgia. The Company's primary source of revenue is providing loans
to businesses and individuals in its market area.


CRITICAL ACCOUNTING POLICIES

     In reviewing and understanding financial information for the Company, you
are encouraged to read and understand the significant accounting policies which
are used in preparing the consolidated financial statements of the Company.
These policies are described in Note 2 to the consolidated financial statements
which are presented
<PAGE>
elsewhere in this annual report. Of these policies, management believes that the
accounting for the allowance for loan losses is the most critical. Losses on
loans result from a broad range of causes, from borrower-specific problems to
industry issues to the impact of the economic environment. The identification of
the factors that lead to default or non-performance under a loan agreement and
the estimation of loss in these situations is very subjective. In addition, a
dramatic change in the performance of one or a small number of borrowers can
have a significant impact in the estimate of losses. As described further below,
management has implemented a process that has been applied consistently to
systematically consider the many variables that impact the estimation of the
allowance for loan losses.

     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, the financial condition of borrowers and other factors. 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
judgments about information available to them at the time of their examination.

     The allowance for loan losses methodology is based on a loan classification
system. For purposes of determining the required allowance for loan losses and
resulting periodic provisions, the Company identifies the problem loans in its
portfolio and segregates the remainder of the loan portfolio into broad
segments, such as commercial, commercial real estate, residential mortgage and
consumer. The Company provides for a general allowance for losses inherent in
the portfolio for each of the above categories. The general allowance is
calculated based on estimates of inherent losses which probably exist as of the
evaluation date. Loss percentages used for non-problem loans in this portion of
the portfolio are based on historical loss factors. The general allowance for
losses on problem loans is based on a review and evaluation of these loans,
taking into consideration financial condition and strengths of the borrower,
related collateral, cash flows available for debt repayment, and known and
expected economic conditions. General loss percentages for the problem loans are
determined based upon historical loss experience and regulatory requirements.

     For loans considered impaired, specific allowances are provided in the
event that the specific collateral analysis on each problem loan indicates that
the liquidation of the collateral would not result in repayment of these loans
if the loan is collateral dependent or if the present value of expected future
cash flows on the loan are less than the balance. In addition to these allocated
reserves, the Company has established an unallocated reserve of approximately
$222,000 at December 31, 2002. The basis for the unallocated reserve is due to a
number of qualitative factors, such as concentrations of credit and changes in
the outlook for local and regional economic conditions.

     Certain economic factors could have a material impact on the loan loss
allowance calculation and its adequacy. The depth and duration of any economic
recession would have an impact on the credit risk associated with the loan
portfolio. Another factor that can impact the calculation is a consideration for
concentrations in collateral which secure the loan portfolio. The Company's loan
portfolio is secured primarily by commercial and residential real estate loans
comprising approximately 87.5% of the total loan portfolio. While there is a
risk that the appraised value of the real estate securing the loans in the
portfolio could decrease in value during an economic recession, the majority of
the real estate securing the loan portfolio is 1 - 4 family residential
properties which are not generally as affected by the down turns economy.

     The Company will from time to time make unsecured loans. The risk to the
Company is greater for unsecured loans as the ultimate repayment of the loan is
only dependent on the borrowers ability to pay. The balance of unsecured loans
at December 31, 2002 was $8.8 million which does not pose a significant risk to
the Company.

     The Company is not aware of any large loan relationships that if defaulted
would have a significant impact on the allowance for loan losses.
<PAGE>

     Refer to the section entitled "Allowance for Loan Losses" for an additional
discussion of the key assumptions and methods used in determining the allowance
for loan losses, as well as inherent risks in estimating the allowance.


RESULTS OF OPERATIONS

     The Company's net income was $5,830,451, $5,342,791, and $3,027,308, for
the years ended December 31, 2002, 2001, and 2000, respectively, with related
diluted earnings per common and common equivalent share of $2.07, $1.96, and
$1.12, respectively, representing an increase of 5.61% from 2001 to 2002 and an
increase of 75.0% from 2000 to 2001.

     Net income represents a return on average equity of 12.24%, 12.80%, and
8.21% for 2002, 2001, and 2000, respectively.

     The Company's income from continuing operations was $3,493,000, $2,396,000
and $2,903,000 for the years ended December 31, 2002, 2001, and 2000,
respectively, with related diluted per common and common equivalent share
amounts of $1.24, $.88, and $1.08, respectively, representing an increase of
40.90% from 2001 to 2002 and a decrease of 18.52% from 2000 to 2001. The
increase in income from continuing operations for the year ended December 31,
2002, when compared to the year ended December 31, 2001, was primarily the
result of improvement in the Company's net interest margin which increased from
3.38% for the year ended December 31, 2001 to 3.91% for the year ended December
31, 2002. In addition, the Company recognized increased gains on sale of
investment securities available for sale of $851,000 for the year ended December
31, 2002 compared to $191,000 for the year ended December 31, 2001. The Company
also sold its investment in CB Financial Corp. common stock during 2002
resulting in a gain of $277,182.

     The decrease in income from continuing operations for the year ended
December 31, 2001 compared to the year ended December 31, 2000 was primarily due
to the decreases in the loan portfolio, as well as, declining yields on loans
from 9.64% for the year ended December 31, 2000 to 9.18% for the year ended
December 31, 2001. The Company also increased its provision for loan losses from
$955,000 in 2000 to $1,493,000 in 2001. This was offset by increases in
noninterest income due to increases in gain on sale of loans of $448,000 for the
year ended December 31, 2001 compared to 2000 as well as a decrease in the
unrealized loss on trading securities of $306,000 for the year ended December
31, 2001 compared to 2000. The unrealized loss on trading securities resulted
from the Company marking to fair value its 244,960 shares of Flag Financial
Corp. ("FLAG") common stock. During 2000, the Company transferred its holdings
of FLAG common stock from trading securities to its available for sale portfolio
at fair value as of September 30, 2000.


NET INTEREST INCOME

     Net interest income is the largest single source of income for the Company.
Management strives to attain a level of earning asset growth while providing a
net yield on earning assets which will cover overhead and other costs and
provide a reasonable return to our shareholders.

     Net interest income for 2002 was approximately $14.8 million compared to
$13.9 million in 2001 and $14.5 million in 2000. Net interest income for 2002
increased approximately $894,000 or 6.44% when compared to 2001 and net interest
income decreased approximately $645,000 or 4.45% in 2001 when compared to 2000.

     Interest income decreased approximately $7.5 million or 21.8% in 2002 when
compared to 2001 and interest income decreased approximately $3.0 million or
8.1% in 2001 when compared to 2000. The decreases in interest income were
primarily due to decreases in interest rates which significantly impacted the
earnings on the Company's loan portfolio. The average yield on the Company's
loan portfolio decreased significantly from 9.18% in 2001 to 7.62% in 2002. The
yield on the

<PAGE>
Company's loan portfolio decreased from 9.64% for the year ended December 31,
2000 to 9.18% for the year ended December 31, 2001. Additionally during 2002,
the Company's loan portfolio decreased approximately $17.7 million due to the
sale of construction loans of approximately $31.7 million and decreases in the
commercial and consumer portfolios of approximately $11.0 million offset by new
residential and construction loans of approximately $25.0 million. The Company's
loan portfolio decreased approximately $57.1 million from December 31, 2000 to
December 31, 2001 due to sales of residential mortgage and construction loans of
approximately $110.0 million offset by new residential mortgage and construction
loans of approximately $52.9 million.

     Interest income on investment securities and federal funds sold was also
impacted by the declining interest rate environment during the three year period
ending December 31, 2002. The weighted average yield on investment securities
was 5.22%, 5.29%, and 5.77%, for the years ended December 31, 2002, 2001, and
2000, respectively. Average yields on federal funds sold were 1.39%, 3.22%, and
6.14%, for the years ended December 31, 2002, 2001, and 2000, respectively.

     Interest expense decreased approximately $8.4 million or 41.0% in 2002 when
compared to 2001 and interest expense decreased approximately $2.4 million or
10.4% in 2001 when compared to 2000. The decrease in interest expense for 2002
of $8.4 million over 2001 was primarily due to a continued declining interest
rate environment and decreases in average balances of time deposits of
approximately $23.8 million and borrowings of approximately $16.2 million. The
weighted average interest rate paid on deposits in 2002 decreased significantly
from 5.32% for the year ended December 31, 2001 to 3.29% for the year ended
December 31, 2002 as time deposits repriced at lower rates. The average interest
rate paid for borrowings decreased 59 basis points from 5.29% in 2001 to 4.70%
in 2002.

     The decrease in interest expense for 2001 of $2.4 million over 2000 was
primarily due to a declining interest rate environment as well as a decrease in
the average balances of borrowings of $29.3 million in 2001 compared to 2000.
The decrease in the average balance of borrowings was due to the repayment of
$48.9 million in Federal Home Loan Bank advances in 2001. The average interest
rate paid on borrowings decreased 87 basis points from 6.16% in 2000 to 5.29% in
2001. The average interest rate paid on deposits decreased only slightly from
5.65% in 2000 to 5.32% in 2001.

     The net interest margin of the Company was 3.91% in 2002, 3.38% in 2001,
and 3.44% in 2000. The increase in the Company's net interest margin for the
year ended December 31, 2002 was primarily due to better management of the
interest yields and rates on assets and liabilities during a period of declining
interest rates and the repricing of a large amount of the Company's deposits.


CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME AND EXPENSE, AND AVERAGE YIELDS
EARNED AND RATES PAID

     Average assets declined approximately $22.6 million or 4.91% in 2002 from
2001 and $2.8 million or .60% in 2001 from 2000. Average loan balances decreased
approximately $26.4 million or 7.91% in 2002 from 2001 and $13.4 million or
3.87% in 2001 from 2000. Average balances of investment securities increased
approximately $1.5 million or 2.71% in 2002 over 2001 and $970,000 or 1.79% in
2001 over 2000. The average balance of federal funds sold in 2002 increased
approximately $1.5 million or 87.02% when compared to 2001 and $1.3 million or
699.9% when compared to 2000.

     The average balance of deposits, excluding noninterest-bearing deposits,
for 2002 decreased by approximately $21.8 million or 6.80% from 2001 and
increased by approximately $18.4 million or 6.1% in 2001 from 2000.
<PAGE>

     The following table sets forth the consolidated average balance sheets for
the Company, average rates earned on interest-earning assets, average rates paid
on interest-bearing liabilities, interest income and interest expense for each
category of interest-earning assets and interest-bearing liabilities, and net
interest margin. This information is presented for the years ended December 31,
2002, 2001, and 2000.
<TABLE>
<CAPTION>
                                                     2002                                      2001
                                  ------------------------------------------ ----------------------------------------
                                       Average        Income/       Average    Average        Income/       Average
                                       Balance       (Expense)    Yield/Cost   Balance       (Expense)     Yield/Cost
                                    ------------   ------------   ---------- ------------   ------------   ----------
<S>                                 <C>            <C>               <C>     <C>            <C>              <C>
Interest-earning assets:
  Loans, net(1)                     $306,940,750   $ 23,380,051      7.62%   $333,320,432   $ 30,602,652     9.15%
  Investment securities:(2)
    Taxable                           37,013,214      2,025,239      5.47%     34,133,332      1,902,153     5.57%
    Tax exempt                        19,528,459        928,576      4.75%     20,916,246      1,012,499     4.84%
  Federal funds sold                   3,194,367         44,350      1.39%      1,708,000         55,009     3.22%
                                    ------------   ------------              ------------   ------------
    Total interest-earning assets    366,676,790     26,378,216      7.19%    390,078,010     33,572,313     8.61%
                                    ------------   ------------              ------------   ------------
Noninterest-earning assets            71,306,128                               70,524,835
                                    ------------                             ------------
    Total assets                    $437,982,918                             $460,602,845
                                    ============                             ============
Interest-bearing liabilities:
  Money market and NOW               $53,770,339       (495,558)     0.92%   $ 52,263,513       (996,734)    1.91%
  Savings accounts                     7,947,215        (63,280)     0.80%      7,431,483       (124,870)    1.68%
  Certificates of deposit            237,423,845     (9,271,035)     3.90%    261,260,988    (15,937,259)    6.10%
                                    ------------   ------------              ------------   ------------
    Total deposits                   299,141,399     (9,829,873)     3.29%    320,955,984    (17,058,863)    5.32%
Short-term and other borrowings       47,023,799     (2,211,214)     4.70%     63,238,289     (3,344,112)    5.29%
                                    ------------   ------------              ------------   ------------
Total interest-bearing
  liabilities                        346,165,198    (12,041,087)     4.12%    384,194,273    (20,402,975)    5.31%
                                    ------------   ------------              ------------   ------------
Noninterest-bearing liabilities       44,169,231                               34,675,505
                                    ------------                             ------------
    Total liabilities                390,334,429                              418,869,778
Shareholders' equity                  47,648,489                               41,733,067
                                    ------------                             ------------
    Total liabilities and
      shareholders' equity          $437,982,918                             $460,602,845
                                    ============                             ============
Net interest income                                $ 14,337,129                             $ 13,169,338
                                                   ============                             ============
    Net interest margin                                              3.91%                                    3.38%
                                                                     ====                                     ====
</TABLE>

<PAGE>
CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME AND EXPENSE, AND AVERAGE YIELDS
EARNED AND RATES PAID, CONTINUED
<TABLE>
<CAPTION>
                                                                        2000
                                                     ---------------------------------------
                                                        Average         Income/       Average
                                                        Balance        (Expense)    Yield/Cost
                                                     ------------    ------------   ----------
<S>                                                  <C>             <C>               <C>
Interest-earning assets:
  Loans, net(1)                                      $346,749,588    $ 33,442,213      9.64%
  Investment securities:(2)
    Taxable                                            30,149,707       1,943,371      6.45%
    Tax exempt                                         23,930,179       1,174,087      4.91%
  Federal funds sold                                      213,743          13,119      6.14%
                                                     ------------    ------------
    Total interest-earning assets                     401,043,217      36,572,790      9.12%
                                                     ------------    ------------
Noninterest-earning assets                             62,345,615
                                                     ------------
    Total assets                                     $463,388,832
                                                     ============
Interest-bearing liabilities:
  Money market and NOW                               $ 51,456,529      (1,528,005)     2.97%
  Savings accounts                                      7,630,427        (178,541)     2.34%
  Certificates of deposit                             243,416,390     (15,374,355)     6.32%
                                                     ------------    ------------
    Total deposits                                    302,503,346     (17,080,901)     5.65%
  Short-term and other borrowings                      92,502,995      (5,700,228)     6.16%
                                                     ------------    ------------
    Total interest-bearing liabilities                395,006,341     (22,781,129)     5.77%
                                                     ------------    ------------
Noninterest-bearing liabilities                        31,515,970
                                                     ------------
    Total liabilities                                 426,522,311
Shareholders' equity                                   36,866,521
                                                     ------------
    Total liabilities and shareholders' equity       $463,388,832
                                                     ============
Net interest income                                                  $ 13,791,661
                                                                     ============
    Net interest margin                                                                3.44%
                                                                                       ====
</TABLE>

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

(1)  Interest earnings on nonaccrual loans are included in the foregoing
     analysis to the extent that such interest earnings had been recorded during
     2002, 2001, and 2000.

(2)  Average yields for available for sale securities are computed using the
     historical cost balances. Such yields do not give effect to changes in fair
     value that are reflected as a component of shareholders' equity.

<PAGE>
The following table sets forth a summary of the changes in interest income and
interest expense resulting from changes in volume and rates for the periods
indicated:
<TABLE>
<CAPTION>
                                                        2002 vs. 2001                               2001 vs. 2000
                                                           Increase                                   Increase
                                                          (Decrease)                                 (Decrease)
                                                            Due to                                     Due to
                                         -----------------------------------------    -----------------------------------------
                                           Average         Average                       Average       Average
                                          Volume (1)      Rate (1)         Net         Volume (1)     Rate (1)          Net
                                         ------------   -----------    -----------    -----------    -----------    -----------
<S>                                      <C>            <C>            <C>            <C>            <C>            <C>
Interest Income:
  Loans                                  $(2,413,741)   $(4,808,860)   $(7,222,601)   $(1,294,571)   $(1,544,990)   $(2,839,561)
  Investment securities:
    Taxable                                  160,409        (37,323)       123,086        255,654       (296,872)       (41,218)
    Tax exempt                               (67,169)       (16,754)       (83,923)      (147,984)       (13,604)      (161,588)
  Federal funds Sold                          47,861        (58,520)       (10,659)        91,747        (49,857)        41,890
                                         -----------    -----------    -----------    -----------    -----------    -----------
    Total interest-earning assets         (2,272,640)    (4,921,457)    (7,194,097)    (1,095,154)    (1,905,323)    (3,000,477)
                                         ===========    ===========    ===========    ===========    ===========    ===========

Interest Expense:
  Money market and NOW                        28,780       (529,956)      (501,176)        23,967       (555,238)      (531,271)
  Savings accounts                             8,663        (70,253)       (61,590)        (4,655)       (49,016)       (53,671)
  Certificates of deposit                 (1,454,066)    (5,212,158)    (6,666,224)     1,127,779       (564,875)       562,904
  Short-term and other borrowings           (857,747)      (275,151)    (1,132,898)    (1,802,706)      (553,409)    (2,356,115)
                                         -----------    -----------    -----------    -----------    -----------    -----------
    Total interest-bearing liabilities    (2,274,370)    (6,087,518)    (8,361,888)      (655,615)    (1,722,538)    (2,378,153)
                                         ===========    ===========    ===========    ===========    ===========    ===========

  Change in net interest income          $     1,730    $ 1,166,061    $ 1,167,791    $  (439,539)   $  (182,785)   $  (622,324)
                                         ===========    ===========    ===========    ===========    ===========    ===========
</TABLE>

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

1)   The changes in interest income and/or expense not due solely to rate or
     volume have been allocated to the rate component.


NONINTEREST INCOME AND NONINTEREST EXPENSE

     Noninterest income in 2002 increased $854,000 or 27.48% when compared to
2001 and increased $553,000 or 21.66% in 2001 when compared to 2000. Noninterest
income in 2002 when compared to 2001 increased primarily due to an increase in
gains on sales of investment securities available for sale of $660,000 in 2002
compared to 2001. In addition, the Company sold its investment in CB Financial
Corp. common stock and Greater Rome common stock in 2002 resulting in gains of
$277,000 and $50,000, respectively. Income from trust services also increased in
2002 to $562,000 from $366,000 in 2001 due to growth in the trust department
operations in 2002. The above noted increases were offset by the decrease in the
gain on sale of loans of $357,000 in 2002 compared to 2001. The volume of loans
sold decreased during 2002 resulting in a lower gain on sale of loans when
compared to 2001.

     The increase in noninterest income in 2001 of $553,000 when compared to
2000 was primarily due to the increase in the gain on sale of loans of $448,000
in 2001 compared to 2000 and the increase in the gain on sale of investment
securities available for sale of $155,000 in 2001. During 2001, the Company sold
a portion of its ARM product resulting in an increased gain on sale of loans. In
addition, in 2000 the Company recorded an unrealized loss on its holdings of
FLAG common stock of $306,000. At September 30, 2000, the Company transferred
its holdings of FLAG common stock from its trading portfolio to its available
for sale portfolio. These increases were offset by decreases in service charges
on deposit accounts and other service charges as the Company's deposit balances
decreased in 2001 compared to 2000.

<PAGE>

     Noninterest expense in 2002 increased by approximately $497,000 or 4.05% as
compared to 2001 and noninterest expense in 2001 increased by approximately
$417,000 or 3.51% as compared to 2000. The increase for 2002 was primarily due
to increases of $278,000 in salaries and employee benefits and $281,000 in
marketing expenses offset by a decrease of approximately $87,000 in outside
services expense. Salaries and employee benefits increased primarily as a result
of annual salary adjustments and additional staffing requirements. Outside
services expense consists of FDIC insurance, legal and professional services,
insurance, director fees, and Georgia Department of Banking and Finance fees.

     The increase for 2001 was primarily due to increases of $378,000 in
salaries and employee benefits, increases of approximately $164,000 in computer
services, and increases of approximately $281,000 in outside services expense
offset by decreases in overhead expenses of approximately $252,000. Salaries and
employee benefits primarily increased as a result of annual salary adjustments.
Advantage Insurers also expanded into other locations during 2001 resulting in
increases to salaries and employee benefits. Computer services increased
primarily due to upgrades and maintenance costs of approximately $168,000,
offset by reductions in data processing supplies of approximately $10,000.
Outside service costs increased primarily due to increases in FDIC and Georgia
Department of Banking and Finance fees of approximately $117,000, as well as,
increases in director fees, insurance costs, and legal and professional costs of
approximately $75,000, $21,000 and $18,000, respectively.


INCOME TAX EXPENSE

     The effective tax rate for the Company decreased during 2002 to 24.43%
compared to the effective tax rate during 2001 of 25.48%. The effective tax rate
for the year ended December 31, 2000 was 31.41%. The increase in the effective
tax rate in 2002 was primarily due to the adoption of SFAS No. 142 which
resulted in the Company no longer amortizing goodwill.


ALLOWANCE FOR LOAN LOSSES

     The allowance for loan losses represents a reserve for probable losses in
the loan portfolio. 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 determination of the allowance for loan
losses is subjective and based on consideration of a number of factors and
assumptions. As such, the accounting policy followed in the determination of the
allowance is considered a critical accounting policy.

     The allowance for loan losses methodology is based on a loan classification
system. For purposes of determining the required allowance for loan losses and
resulting periodic provisions, the Company identifies the problem loans in its
portfolio and segregates the remainder of the loan portfolio into broad
segments, such as commercial, commercial real estate, residential mortgage and
consumer. The Company provides for a general allowance for losses inherent in
the portfolio for each of the above categories. The general allowance is
calculated based on estimates of inherent losses which probably exist as of the
evaluation date. Loss percentages used for non-problem loans in the portfolio
are based on historical loss factors. The general allowance for losses on
problem loans is based on a review and evaluation of these loans, taking into
consideration financial condition and strengths of the borrower, related
collateral, cash flows available for debt repayment, and known and expected
economic conditions. General loss percentages for the problem loans are
determined based upon historical loss experience and regulatory requirements.
For loans considered impaired, specific allowances are provided in the event
that the specific collateral analysis on each problem loan

<PAGE>

indicates that the liquidation of the collateral would not result in repayment
of these loans if the loan is collateral dependent or if the present value of
expected future cash flows on the loan are less than the balance. In addition to
these allocated reserves, the Company has established an unallocated reserve of
approximately $222,000 at December 31, 2002. The basis for the unallocated
reserve is due to a number of qualitative factors, such as concentrations of
credit and changes in the outlook for local and regional economic conditions.
Management believes its allowance for loan losses is adequate to absorb losses
on loans outstanding at December 31, 2002.

    The allowance for loan losses allocation is based on subjective judgment and
estimates and, therefore, is not necessarily indicative of the specific amounts
or loan categories in which charge-offs may ultimately occur. The allocation of
the allowance for loan losses by loan category at December 31, 2002, 2001, 2000,
1999, and 1998 is as follows:
<TABLE>
<CAPTION>
                                  2002                  2001                 2000                 1999                  1998
                          --------------------  --------------------   ------------------  -------------------  --------------------
                                       Percent               Percent             Percent              Percent               Percent
                                      of Loans              of Loans             of Loans             of Loans              of Loans
                                      to Total              to Total             to Total             to Total              to Total
                             Amount    loans      Amount     loans      Amount    loans      Amount     loans     Amount      loans
                          ----------  --------  ----------  --------  ---------- --------  ---------- --------  ----------  --------
<S>                       <C>          <C>      <C>           <C>     <C>         <C>      <C>         <C>      <C>          <C>
Commercial, financial &
  agricultural            $  372,075     5.6%   $  859,875      7.4%  $  775,783    6.7%   $  921,585    5.2%   $  775,239     6.6%
Real estate                2,214,516    87.5%    1,968,745     84.8%   2,026,521   86.7%    1,619,563   89.4%    1,471,843    85.1%
Installment loans to
  individuals                724,794     6.9%      598,657      7.8%     386,883    6.6%      442,005    5.4%      405,988     8.3%
Unallocated                  221,924      --       174,600       --           --     --            --     --            --      --
                          ----------   -----    ----------    -----   ----------  -----    ----------  -----    ----------   -----
  Total                   $3,533,309   100.0%   $3,601,877    100.0%  $3,189,187  100.0%   $2,983,153  100.0%   $2,653,070   100.0%
                          ==========   =====    ==========    =====   ==========  =====    ==========  =====    ==========   =====
</TABLE>


     The Company's provision for loan losses is intended to create an adequate
allowance for losses in the loan portfolio at the end of each reporting period.
The provision for loan losses was $1,307,000 in 2002 as compared to $1,463,000
in 2001 and $955,000 in 2000. The Company's allowance for loan losses was
$3,533,309 at December 31, 2002, which was 1.15% of year-end loans and 73.82% of
total nonperforming loans, compared to $3,601,877 at December 31, 2001, which
was 1.11% of year-end loans and 61.90% of total nonperforming loans.

     At December 31, 2002, loans over 90 days past due and nonaccrual loans
totaled $4,294,383 or 1.40% of gross outstanding loans as compared to $5,129,086
or 1.58% of gross outstanding loans at December 31, 2001.

     The decrease in loans over 90 days past due during 2002 from 2001 of
approximately $852,000 is a result of foreclosures of notes secured by real
estate totaling approximately $2.1 million as well as payoffs of approximately
$884,000 offset by increases of approximately $1,533,000 in 90 day past due real
estate secured mortgages and approximately $611,000 in other loans. Nonaccrual
loans increased approximately $17,500 primarily due to increases of
approximately $1,444,000, $89,000, and $84,000 in real estate secured loans,
commercial loans and consumer loans, respectively, offset by paydowns of
approximately $982,000 and foreclosures of approximately $618,000.

     Management is not aware of any loans classified for regulatory purposes as
loss, doubtful, substandard or special mention that have not been disclosed
which 1) represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results, liquidity or
capital resources, or 2) represent material credits about which management is
aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.

     Net charge-offs amounted to $1,375,568 in 2002 representing .45% of average
loans, as compared to $1,050,310 in 2001 representing .32% of average loans. Net
charge-offs amounted to $748,966 in 2000 representing .20% of average loans.

<PAGE>

     The following table summarizes, for each of the years in the five year
period ended December 31, 2002, selected information related to the allowance
for loan losses.
<TABLE>
<CAPTION>
                                               2002          2001           2000           1999           1998
                                          ------------   ------------   ------------   ------------   ------------
<S>                                       <C>            <C>            <C>            <C>            <C>
Balance of allowance for loan
 losses at beginning of period            $  3,601,877   $  3,189,187   $  2,983,153   $  2,653,070   $  2,336,079
                                          ------------   ------------   ------------   ------------   ------------
Charge-offs:
 Commercial, financial and agricultural       (372,583)      (481,978)      (266,960)      (117,133)      (221,048)
 Real estate                                  (470,433)      (283,163)      (151,517)        (6,106)       (77,764)
 Installment loans to individuals             (670,977)      (444,584)      (324,084)      (141,661)      (140,809)
 Other                                         (33,729)       (47,415)       (43,377)       (32,059)       (22,157)
                                          ------------   ------------   ------------   ------------   ------------
Total charge-offs                           (1,547,722)    (1,257,140)      (785,938)      (296,959)      (461,778)
                                          ------------   ------------   ------------   ------------   ------------
Recoveries:
 Commercial, financial and agricultural         25,759         63,451             --          4,128         59,284
  Real estate                                   25,244         24,720            965         59,570         16,850
 Installment loans to individuals              112,017        105,671         32,052         57,872         55,071
 Other                                           9,134         12,988          3,955          5,472         11,564
                                          ------------   ------------   ------------   ------------   ------------
Total recoveries                               172,154        206,830         36,972        127,042        142,769
                                          ------------   ------------   ------------   ------------   ------------

 Net charge-offs                            (1,375,568)    (1,050,310)      (748,966)      (169,917)      (319,009)
 Provision for loan losses                   1,307,000      1,463,000        955,000        500,000        636,000
                                          ------------   ------------   ------------   ------------   ------------
 Balance of allowance for loan
  losses at end of period                 $  3,533,309   $  3,601,877   $  3,189,187   $  2,983,153   $  2,653,070
                                          ============   ============   ============   ============   ============
 Average amount of loans                  $306,940,750   $333,320,432   $346,749,588   $255,925,990   $196,617,301
                                          ============   ============   ============   ============   ============

 Ratio of net charge-offs during
  the period to average loans
  outstanding during the period                    .45%           .32%           .20%           .07%           .16%

 Ratio of allowance to year-end loans             1.15%          1.11%           .83%           .94%          1.26%
</TABLE>

     The risk associated with loans varies with the creditworthiness of the
borrower, the type of loan (consumer, commercial, or real estate) and its
maturity. Cash flows adequate to support a repayment schedule is an element
considered for all types of loans. Real estate loans are impacted by market
conditions regarding the value of the underlying property used as collateral.
Commercial loans are also impacted by the management of the business as well as
economic conditions.


LOANS

     Loans decreased approximately $17.7 million or 5.45% in 2002 as compared to
2001. The decrease in loans in 2002 resulted primarily from decreases in the
commercial and consumer loan portfolios of approximately $6.8 million and $4.2
million, respectively, in addition to the sale of residential mortgages and
construction loans of approximately $31.5 million offset by new residential
mortgage and construction loans of approximately $24.9 million.

     The amount of loans outstanding at December 31 for each of the last five
years is set forth in the following table according to type of loan and is net
of unamortized loan origination fees and unamortized discount on SBA loans sold.
The Company had no foreign loans at December 31 in any of the last five years.
<TABLE>
<CAPTION>
                                             2002           2001           2000           1999           1998
                                         ------------   ------------   ------------   ------------   ------------
<S>                                      <C>            <C>            <C>            <C>            <C>
Commercial, financial and agricultural   $ 17,070,602   $ 23,921,875   $ 25,566,931   $ 16,623,264   $ 13,829,965
Real estate - construction                106,759,853    119,663,535    113,201,531    106,915,963     66,359,030
Real estate - mortgage                    162,281,200    156,022,201    218,040,964    174,244,063    112,215,798
Installment loans to individuals           21,294,151     25,531,911     25,287,734     20,168,672     17,337,632
                                         ------------   ------------   ------------   ------------   ------------
    Total                                $307,405,806   $325,139,522   $382,097,160   $317,951,962   $209,742,425
                                         ============   ============   ============   ============   ============
</TABLE>

<PAGE>


    The following table sets forth the maturities and sensitivities to changes
in interest rates of loans at December 31, 2002.
<TABLE>
<CAPTION>
                                                          DUE AFTER
                                            DUE IN       ONE THROUGH     DUE AFTER
                                           ONE YEAR       FIVE YEARS    FIVE YEARS       TOTAL
                                         ------------   ------------   ------------   ------------
<S>                                      <C>            <C>            <C>            <C>
LOAN MATURITY:
Commercial, financial and agricultural   $ 10,378,978   $  6,182,709   $    508,915   $ 17,070,602
Real estate - construction                106,717,106         42,747             --    106,759,853
Real estate - mortgage                     87,694,757     55,448,376     19,138,067    162,281,200
Installment loans to individuals            6,607,521     14,496,040        190,590     21,294,151
                                         ------------   ------------   ------------   ------------
     TOTAL                               $211,398,362   $ 76,169,872   $ 19,837,572   $307,405,806
                                         ============   ============   ============   ============
LOAN INTEREST RATE SENSITIVITY:
Loans with:
 Predetermined interest rates            $114,221,941   $ 73,614,804   $ 19,837,572   $207,674,317
 Floating or adjustable interest rates     97,176,421      2,555,068             --     99,731,489
                                         ------------   ------------   ------------   ------------
    TOTAL                                $211,398,362   $ 76,169,872   $ 19,837,572   $307,405,806
                                         ============   ============   ============   ============
</TABLE>

NONPERFORMING ASSETS AND PAST DUE LOANS

     Nonperforming assets consist of nonaccrual loans, accruing loans 90 days
past due, restructured loans, and other real estate owned. Nonperforming assets
decreased $2,521,000 or 23.99% in 2002 compared to 2001 and increased $5,611,000
or 114.67% in 2001 compared to 2000. The decrease in 2002 was primarily due to
decreases in other real estate, accruing loans 90 days past due, and
restructured loans of approximately $1,489,000, $852,000, and $197,000,
respectively, offset by increases in nonaccrual loans of approximately $20,000.

     The following table sets forth the totals of nonperforming assets, selected
ratios, and accruing loans past due 90 days or more at December 31 for each of
the last five years.
<TABLE>
<CAPTION>

NONPERFORMING ASSETS:                      2002           2001           2000           1999           1998
                                       -----------    -----------    -----------    -----------    -----------
<S>                                    <C>            <C>            <C>            <C>            <C>
Accruing loans 90 days past due        $ 2,178,898    $ 3,031,122    $ 1,814,820    $   319,731    $   778,782
Nonaccrual                               2,115,485      2,097,964        789,341        623,114      1,025,632
Restructured loans                         492,064        689,510        709,787        781,803        849,963
Other real estate owned                  3,197,020      4,685,704      1,579,245      1,440,084      1,539,900
                                       -----------    -----------    -----------    -----------    -----------
Total nonperforming assets             $ 7,983,467    $10,504,300    $ 4,893,193    $ 3,164,732    $ 4,194,277
                                       ===========    ===========    ===========    ===========    ===========
RATIOS:
Nonperforming loans (excluding
  restructured loans) to total loans          1.40%          1.58%           .68%           .30%           .68%
Nonperforming assets to total loans
  plus other real estate owned                2.57%          3.18%          1.28%           .99%          1.99%
Allowance to nonperforming assets            44.26%         34.29%         65.18%         94.26%         63.25%
</TABLE>

     The reduction in other real estate owned during 2002 resulted from the
sales of foreclosed property of approximately $4,405,000 offset by additional
foreclosures of residential properties of approximately $2,013,000 and
foreclosures of commercial properties of approximately $879,000. At December 31,
2002, other real estate consisted of four commercial properties and eight
residential properties valued approximately at $1,725,000 and $1,471,000,
respectively.

     The decrease in accruing loans over 90 days past due in 2002 compared to
2001 is due to the result of foreclosures of loans secured by real estate
totaling approximately $2.1 million and decreases resulting from payoffs of
approximately

<PAGE>

$884,000 offset by increases of approximately $1,659,000 in 90 day past due real
estate secured mortgages and approximately $480,000 in other loans. At December
31, 2002, accruing loans over 90 days past due consisted primarily of twenty
loans collateralized with residential properties with an average balance of
approximately $83,000. At December 31, 2002, consumer accruing loans over 90
days past due, of which 76% were secured primarily by vehicles, totaled
approximately $335,000, and commercial accruing loans over 90 days past due,
primarily secured by equipment, totaled approximately $145,000.

     Accrual of interest is discontinued when either principal or interest
becomes 90 days past due unless the loan is both well secured and in the process
of collection, or in management's opinion, when reasonable doubt exists as to
the full collection of interest or principal. Interest income that would have
been recorded on these nonaccrual and restructured loans in accordance with
their original terms totaled $298,461, $353,847, and $135,033 in 2002, 2001, and
2000, respectively, compared with interest income recognized of $91,914,
$145,584, and $43,558, respectively.

     At December 31, 2002, the Company had no significant loans which management
designated as potential problem loans which have not been disclosed above as
nonaccrual or past due loans.

     Habersham Bank held a concentration in mortgages for agribusiness purposes
in the poultry industry which totaled approximately $6 million and $9 million at
December 31, 2002 and 2001, or approximately 1.97% and 2.80% of total net loans
at December 31, 2002 and 2001, respectively. These mortgages for agribusiness
purposes are primarily secured by real estate consisting of residences, poultry
houses, and equipment. None of the mortgages are considered individually
significant.


INVESTMENT SECURITIES

     The Company has classified its investment securities as available for sale
and held to maturity. The classification of certain investment securities as
available for sale is consistent with the Company's investment philosophy of
maintaining flexibility to manage the securities portfolio. At December 31, 2002
approximately $54.8 million of investment securities were classified as
available for sale. Approximately $677,000 of net unrealized gain, net of income
taxes, was included in shareholders' equity related to the available for sale
investment securities.

     The following table sets forth the carrying amounts of investment
securities at December 31, 2002, 2001, and 2000.
<TABLE>
<CAPTION>
                                                2002          2001          2000
                                            -----------   -----------   -----------
<S>                                         <C>           <C>           <C>
Investment securities available for sale:
    U.S. Treasury                           $   514,608   $ 1,544,065   $ 2,528,975
    U.S. Government agencies                 41,589,860    31,131,435    23,296,280
    States & political subdivisions          12,011,458    12,176,829    14,391,722
    Other investments                           702,974     2,768,062     2,769,297
                                            -----------   -----------   -----------
      Total                                 $54,818,900   $47,620,391   $42,986,274
                                            ===========   ===========   ===========
 Investment securities held to maturity:
    U.S. Government agencies                $   248,840   $ 2,100,963   $ 3,466,302
    States & political subdivisions           6,640,464     7,545,175     9,658,100
                                            -----------   -----------   -----------
      Total                                 $ 6,889,304   $ 9,646,138   $13,124,402
                                            ===========   ===========   ===========
</TABLE>

<PAGE>

     The following table sets forth the maturities of debt investment securities
at carrying value at December 31, 2002 and the related weighted yields of such
securities on a tax equivalent basis (assuming a 34% tax rate).
<TABLE>
<CAPTION>
                                                                   MATURING IN
                                            -----------------------------------------------------------
                                              ONE YEAR          1-5            5-10          AFTER 10
                                              OR LESS          YEARS          YEARS            YEARS
                                            -----------     -----------    -----------     ------------
<S>                                         <C>             <C>            <C>             <C>
Investment securities available for sale:

Carrying value:
 U.S. Treasury                              $  514,608      $       --     $       --      $        --
 U.S. Government agencies                      204,276       4,552,160      5,426,076       31,407,348
 States & political subdivisions               863,341       1,759,469      3,281,074        6,107,574

Weighted average yields:

 U.S. Treasury                                    5.87%             --%            --%              --%
 U.S. Government agencies                         7.63%           4.49%          4.53%            4.94%
 States & political subdivisions                  6.56%           6.44%          7.39%            7.52%

Investment securities held to maturity:

Carrying value:
 U.S. Government agencies                   $       --      $       --     $  199,977      $    48,863
 States & political subdivisions             1,234,046       2,162,542      1,525,692        1,718,184


Weighted average yields:
 U.S. Government agencies                           --              --           7.35%            5.14%
 States & political subdivisions                  6.88%           7.58%          6.92%            7.41%
</TABLE>

     No securities were held which represent a combined total for one issuer
which is in excess of 10% of the Company's shareholders' equity at December 31,
2002.


OTHER STOCK INVESTMENT

     The investment in CB Financial Corp. common stock was accounted for using
the equity method. Included in the initial investment in CB Financial Corp.
common stock was approximately $1,278,000 in excess cost over the Company's
underlying equity in the net assets of this investee. For the years ended
December 31, 2002, 2001, and 2000, the Company recorded $(45,233), $120,336, and
$153,348, respectively, as equity in (loss) earnings of CB Financial Corp.
Amortization of related excess cost over basis in CB Financial Corp. common
stock for the years ended December 31, 2001 and 2000 totaled $85,212. During the
year ended December 31, 2002, the Company sold its investment in CB Financial
Corp. common stock for proceeds of $3,308,879 and recorded a gain of $277,182.


DERIVATIVE INSTRUMENTS

     The Company adopted Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities", as amended,
on January 1, 2001. In accordance with the transition provisions of SFAS No.
133, the Company recorded a net-of-tax cumulative effect loss of $162,000 on
January 1, 2001 to reflect the fair value of forward commitments to sell
mortgage-backed securities
<PAGE>
held by BancMortgage. The provisions of SFAS No. 133 allow for a one time
transfer of investment securities previously classified as held to maturity to
available for sale upon adoption. As a result, the Company transferred
approximately $999,000 of investment securities previously classified as held to
maturity to its available for sale portfolio on January 1, 2001.

     In the normal course of business, as part of its former mortgage banking
operations, the Company extended interest rate lock commitments to borrowers who
applied for loan funding and met certain credit and underwriting criteria. Such
commitments were typically for short terms. Such commitments to originate
fixed-rate mortgage loans for resale and forward commitments to sell
mortgage-backed securities were the Company's only derivative instruments.

     The Company's objective in entering into forward commitments to sell
mortgage-backed securities was to mitigate the interest rate risk associated
with mortgage loans held for sale and commitments to originate fixed-rate
mortgage loans for resale. If the fair value of the Company's commitments to
originate fixed-rate mortgage loans for resale resulted in an asset, such asset
was recorded only to the extent of losses in the forward commitments to sell
mortgage-backed securities. Losses were recorded on the Company's commitments to
originate fixed rate mortgage loans for resale when fair values were less than
the carrying values. The Company recorded its forward commitments to sell
mortgage-backed securities at fair value and did not account for these as
hedges. During the year ended December 31, 2001, a gain in the amount of
$235,000 relating to the change in fair value of forward commitments to sell
mortgage-backed securities was recorded in other income.

     At December 31, 2002, the Company did not have any derivative instruments.
At December 31, 2001, the fair value of the Company's commitments to sell
mortgage-backed securities was not significant and the fair value of the
Company's commitments to originate mortgage loans for resale was approximately
$150,000.


DEPOSITS

     Average deposits decreased approximately $14.2 million and increased
approximately $21.4 million during 2002 and 2001, respectively.

     The following table sets forth the average amount of deposits and average
rate paid on such deposits for each category which exceeds 10% of average total
deposits for the years ended December 31, 2002, 2001, and 2000.
<TABLE>
<CAPTION>
                                             2002                  2001                    2000
                                           AVG. AMT      AVG     AVG. AMT        AVG     AVG. AMT       AVG
                                         OUTSTANDING    RATE    OUTSTANDING     RATE    OUTSTANDING     RATE
                                        ------------    ----    ------------    ----    ------------    ----
<S>                                     <C>              <C>    <C>             <C>     <C>             <C>
Interest-bearing demand deposits        $ 53,770,339     .92%   $ 52,263,513    1.91%   $ 51,456,529    2.97%
Non-interest bearing demand deposits      36,264,247     n/a      28,669,906     n/a      25,683,053     n/a
Time certificates of deposit             237,423,845    3.90%    261,260,988    6.10%    243,416,390    6.32%
</TABLE>



     At December 31, 2002, time certificates of deposit of $100,000 or more
totaled $93,366,488. The maturities of all time certificates of deposit over
$100,000 are as follows:

<TABLE>
<S>                                                <C>
3 months or less                                   $31,415,070
Over 3 but less than 6 months                       17,143,486
Over 6 but not more than 12 months                  20,942,151
Over 1 year but not more than 5 years               23,865,781
                                                   -----------
  TOTAL                                            $93,366,488
                                                   ===========
</TABLE>

<PAGE>
BORROWINGS

     Borrowings decreased approximately $27 million during 2002 compared to 2001
primarily due to decreases in Federal funds purchased and securities sold under
repurchase agreements of approximately $22.2 million. In addition, Habersham
Bancorp repaid borrowed funds totaling $5.7 million.

     At December 31, 2002, the Company has a Daily Rate Credit line and a
Warehouse line of credit with the Federal Home Loan Bank totaling $230,833,000
of which $$30,000,000 was advanced and $200,833,000 was available. Both of these
lines of credit are specific collateral agreements. The Daily Rate Credit line
is secured by qualifying first mortgage loans, commercial loans, and pledged
securities. The Warehouse line of credit is secured by qualifying first mortgage
loans.

     The advances outstanding at December 31, 2002 and 2001 consist of three
fixed rate advances of $10,000,000 each that bear interest at 6.72%, 6.02%, and
4.93% and mature in 2005, 2010, and 2011 (callable each year), respectively.

     At December 31, 2002, the Company had available repurchase agreement line
of credit commitments with Compass Bank totaling $1,570,000 of which none was
advanced. The Company also had available repurchase agreement line of credit
commitments with the National Bank of Commerce totaling $222,000 at December 31,
2002 of which none was advanced.


CAPITAL RESOURCES

     The Company is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimal capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve quantitative measures
of the Company's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Company'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 regulations to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth below in
the table) 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, 2002, that the
Company meets all capital adequacy requirements to which it is subject.

     As of December 31, 2002, the most recent notifications from both the
Federal Deposit Insurance Corporation and the Federal Reserve Bank of Atlanta
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios
as set forth in the following table. There are no conditions or events since
that notification that management believes have changed the Bank's categories.
<PAGE>
     The Company's and the Bank's actual capital amounts and ratios as of
December 31, 2002 follow (in thousands):
<TABLE>
<CAPTION>
                                                                                         TO BE WELL
                                                                                        CAPITALIZED
                                                                                        UNDER PROMPT
                                                                                         CORRECTIVE
                                                                     FOR CAPITAL           ACTION
                                                    ACTUAL        ADEQUACY PURPOSES      PROVISIONS
                                            -------------------   -----------------   -----------------
                                             AMOUNT      RATIO      AMOUNT    RATIO   AMOUNT      RATIO
<S>                                          <C>         <C>        <C>       <C>     <C>         <C>
As of December 31, 2002:
Total Capital (to risk-weighted assets):
  Company                                   $51,009      15.47%    $26,386      8%        N/A       N/A
  Habersham Bank                             47,789      14.59%     26,212      8%    $32,765        10%

Tier I Capital (to risk-weighted assets):
  Company                                   $47,530      14.41%    $13,193      4%        N/A       N/A
  Habersham Bank                             44,310      13.52%     13,106      4%    $19,659         6%

Tier I Capital (to average assets):
  Company                                   $47,530       9.42%    $ 20,176     4%        N/A       N/A
  Habersham Bank                             44,310       8.85%      20,018     4%    $25,022         5%
</TABLE>

     While management believes that the current level of capital is sufficient
for the current and foreseeable needs of the Company, capital needs are
continually evaluated by management.

     Cash dividends were paid at a rate of $.06 per share in each of March,
June, September, and December for both 2002 and 2001.

     Management is not aware of any required regulatory changes or any
recommendation by any regulatory authority which will have a material effect on
the Company's liquidity, capital or results of operations.


INTEREST RATE SENSITIVITY

     The objective of asset and liability management is to manage and measure
the level and volatility of earnings and capital by controlling interest rate
risk. To accomplish this objective, management makes use of interest rate and
income simulation models to perform current and dynamic projections of interest
income and equity, as well as more traditional asset and liability management
methods.

     The Company's historical performance in various economic climates is
considered by management in making long-term asset and liability decisions for
the Company.

     The relative interest rate sensitivity of the Company's assets and
liabilities indicates the extent to which the Company's net interest income may
be affected by interest rate movements. The Company's ability to reprice assets
and liabilities in the same dollar amounts and at the same time minimizes
interest rate risks. One method of measuring the impact of interest rate changes
on net interest income is to measure, in a number of time frames, the interest
sensitivity gap by subtracting interest sensitive liabilities from interest
sensitive assets, as reflected in the
<PAGE>
following table. Such an interest sensitivity gap represents the risk, or
opportunity, in repricing. If more assets than liabilities are repriced at a
given time in a rising rate environment, net interest income improves; in a
declining rate environment, net interest income deteriorates. Conversely, if
more liabilities than assets are repriced while interest rates are rising, net
interest income deteriorates; if interest rates are falling, net interest income
improves.

INTEREST RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>


                                       DUE IN        DUE AFTER        DUE AFTER     DUE AFTER       DUE AFTER
                                        THREE      THREE THROUGH     SIX THROUGH   ONE THROUGH        FIVE
INTEREST-EARNING ASSETS:               MONTHS        SIX MONTHS     TWELVE MONTHS   FIVE YEARS        YEARS          TOTAL
                                    ------------    ------------     -----------    -----------    -----------    ------------
<S>                                 <C>             <C>              <C>            <C>            <C>            <C>
Federal funs sold                   $ 27,137,000              --              --             --             --    $ 27,137,000
Investment securities                    175,185    $    753,782     $ 1,887,304    $ 8,474,171    $49,714,788    $ 61,005,230
Loans                                124,875,952      19,067,247      67,455,163     76,169,872     19,837,572     307,405,806
                                    ------------    ------------     -----------    -----------    -----------    ------------
Total interest-earning assets        152,188,137      19,821,029      69,342,467     84,644,043     69,552,360     395,548,036
                                    ------------    ------------     -----------    -----------    -----------    ------------
INTEREST-BEARING LIABILITIES:
Deposits:
 Money market and NOW                 53,998,843              --              --             --             --      53,998,843
 Savings                               8,312,857              --              --             --             --       8,312,857
 Certificates of deposit              64,416,790      53,518,087      41,028,106     67,284,685             --     226,247,668
 Borrowings                            9,158,779              --              --     10,000,000     20,000,000      39,158,779
                                    ------------    ------------     -----------    -----------    -----------    ------------
Total interest-bearing liabilities   135,887,269      53,518,087      41,028,106     77,284,685     20,000,000     327,718,147
                                    ------------    ------------     -----------    -----------    -----------    ------------
Excess (deficiency) of interest-
 earning assets over interest-
 bearing liabilities                $ 16,300,868    $(33,697,058)    $28,314,361    $ 7,359,358    $49,552,360    $ 67,829,889
                                    ============    ============     ===========    ===========    ===========    ============
Cumulative gap                      $ 16,300,868    $(17,396,190)    $10,918,171    $18,277,529    $67,829,889

Ratio of cumulative gap to
 total cumulative earning-assets           10.71%         (10.11)%          4.52%          5.61%         17.15%

Ratio of interest-earning assets
 to interest-bearing liabilities          112.00%           90.82%        104.74%        105.94%        120.70%
</TABLE>


     The Company's strategy is to maintain a ratio of interest sensitive assets
to interest sensitive liabilities in the range of 80% to 120% at the less-than
one-year-time frame. At December 31, 2002, the Company was able to meet such
objective. The interest rate sensitivity analysis has a positive one year gap of
approximately $11 million (excess of interest-earning assets to interest-bearing
liabilities repricing within one year). However, the Company's experience has
shown that NOW, money market, and savings deposits of approximately $62.3
million are less sensitive to short term rate movements, thus the positive one
year gap is likely higher.


MARKET RISK

     Market risk reflects the risk of economic loss resulting from adverse
changes in market prices and interest rates. The risk of loss can be reflected
in either diminished current market values or reduced potential net interest
income in future periods.

     Market risk arises primarily from interest rate risk inherent in the
Company's lending and deposit taking activities. The structure of the Company's
loan and deposit portfolios is such that a significant decline in the prime rate
may adversely impact net market values and interest income. Management seeks to
manage this risk through the use of its investment securities portfolio. The
composition and size of the investment portfolio is managed so as to reduce the
interest rate

<PAGE>
risk in the deposit and loan portfolios while at the same time maximizing the
yield generated from the portfolio. The Company is also subject to equity risk
as a result of changes in market values of its equity securities.

     The table below presents in tabular form the contractual balances and the
estimated fair value of the Company's balance sheet financial instruments and
their expected maturity dates as of December 31, 2002. The expected maturity
categories take into consideration historical prepayments experience as well as
management's expectations based on the interest rate environment as of December
31, 2002.

MARKET RISK INFORMATION (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                     PRINCIPAL/NOTIONAL AMOUNT MATURING IN:
                                       ---------------------------------------------------------------                FAIR
                                          2003       2004       2005       2006      2007   THEREAFTER     TOTAL      VALUE
                                       ---------   --------   --------   -------   -------  ----------   ---------   --------
<S>                                    <C>         <C>        <C>        <C>       <C>       <C>         <C>         <C>
RATE-SENSITIVE ASSETS:
Fixed interest rate loans              $114,222    $31,537    $30,799    $7,934    $3,344    $19,838     $207,674    $220,750
Average interest rate                      6.51%      7.63%      7.90%     8.56%     7.78%      6.51%        6.98%
Variable interest rate loans             97,176        656      1,899        --        --         --       99,731      99,731
Average interest rate                      5.36       7.95%      7.97%       --%       --%        --%        5.43%
Fixed interest rate securities            2,612      1,114        486     1,150     4,324     49,506       59,192      59,512
Average interest rate                      4.74%      4.94%      4.43%     4.59%     4.30%      4.89%        4.83%
Variable interest rate securities           204         --      1,401        --        --        209        1,814       1,814
Average interest rate                      7.64%        --%      5.04%       --%       --%      5.97%        5.44%
RATE-SENSITIVE LIABILITIES:
Savings and interest-bearing deposits    62,312         --         --        --        --         --       62,312      62,312
Average interest rate                       .80%        --%        --%       --%       --%        --%         .80%
Fixed interest rate time deposits       158,836     39,100      9,370    17,749     1,166         --      226,221     292,338
Average interest rate                      2.98%      4.73%      4.68%     4.96%     4.32         --%        3.52%
Variable interest rate time deposits         27         --         --        --        --         --           27          27
Average interest rate                      1.85         --%        --%       --%       --%        --%        1.85%
Fixed interest rate
  Borrowings                                 --         --     10,000        --        --     20,000       30,000      30,000
Average interest rate                        --%        --%      6.72%       --%       --%      5.48%        5.89%
Variable interest rate borrowings         9,159         --         --        --        --         --        9,159       9,159
Average interest rate                      1.63%        --%        --%       --        --%        --%        1.63%
</TABLE>

Equity investments of $750,000 are subject to changes in market values.

INFLATION

     The Company's assets and liabilities are generally monetary in nature.
Therefore, interest rates have a greater impact on the Company's performance
than the effects of general levels of inflation. Interest rates do not
necessarily move in the same direction or magnitude as the prices of goods and
services. See "Interest Rate Sensitivity" above.
<PAGE>
LIQUIDITY

     Liquidity management involves the matching of the cash flow requirements of
customers, either depositors withdrawing funds or borrowers needing loans, and
the ability of the Company to meet those requirements.

     The Company's liquidity program is designed and intended to provide
guidance in funding the credit and investment activities of the Company while at
the same time ensuring that the deposit obligations of the Company are met on a
timely basis. In order to permit active and timely management of assets and
liabilities, these accounts are monitored regularly in regard to volume, mix,
and maturity.

     Scheduled amortization and prepayments of loans, maturities and calls of
investment securities and funds from operations provide a daily source of
liquidity. In addition, the Company may and does seek outside sources of funds.

     The Company has the ability, on a short-term basis, to purchase federal
funds from other financial institutions up to $20,000,000. At December 31, 2002,
no federal funds were purchased from other financial institutions. The Company
can borrow funds from the FHLB, subject to eligible collateral of loans. At
December 31, 2002, our maximum borrowing capacity from the FHLB was
$230,833,000. At December 31, 2002, the Company had outstanding borrowings of
$30,000,000 with unused borrowing capacity of $200,833,000. In addition, the
Company has made arrangements with commercial banks for short-term advances up
to $1,792,000 under repurchase agreement lines of credit of which none was
advanced at December 31, 2002.

     Loan repayments and maturing investment securities are a relatively
predictable source of funds. However, deposit flows, calls of investment
securities and prepayment of loans are strongly influenced by interest rates,
general and local economic conditions and competition in the marketplace. These
factors reduce the predictability of the timing of these sources of funds.

     Habersham Bank's liquidity policy requires a minimum ratio of 20% of cash
and certain short-term investments to net withdrawable deposit accounts. The
Bank's liquidity ratios at December 31, 2002 and 2001 were 21.11% and 18.02%,
respectively. Prompt action was taken in January 2002 to bring the liquidity
ratio up to the minimum required resulting in a liquidity ratio of 21.11% at
January 31, 2002.


COMMITMENTS AND CONTRACTUAL OBLIGATIONS

     The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of its lending activities to meet the financing needs of
its customers. These financial instruments include commitments to extend credit
and standby letters of credit. The Company's exposure to credit losses in the
event of nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is represented by the
contractual amounts of those instruments. The Company uses the same credit
policies in making these commitments as it does for on-balance-sheet instruments
and evaluates each customer's creditworthiness on a case by case basis. At
December 31, 2002, the Company had outstanding loan commitments approximating
$76,807,000 and standby letters of credit approximating $2,788,000. The amount
of collateral obtained, if deemed necessary, for these financial instruments by
the Company, upon extension of credit, is based on management's credit
evaluation of the customer. Collateral held, if any, varies but may include
inventory, equipment, real estate, or other property. The accounting loss the
Company would incur if any party to the financial instrument failed completely
to perform according to the term of the contract and the collateral proved to be
of no value is equal to the face amount of the financial instrument.

     The Company's commitments are funded through internal funding sources of
scheduled repayments of loans and sales and maturities of investment securities
<PAGE>
available for sale or external funding sources through acceptance of deposits
from customers or borrowing from other financial institutions.

     The following table is a summary of the Company's commitments to extend
credit, commitments under contractual leases as well as the Company's
contractual obligations, consisting of deposits, FHLB advances and borrowed
funds by contractual maturity date.

<TABLE>
<CAPTION>
                                                    2003           2004           2005           2006           2007
                                                ------------   ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>            <C>
Commitments on lines of credit                    76,807,463             --             --             --             --
Standby letters of credit                          2,787,662             --             --             --             --
Commitments under lease agreements                   125,846        116,364         98,493         59,495          2,712
Deposits                                         269,141,050     39,100,353      9,369,731     17,748,984      1,166,322
FHLB advances                                             --             --     10,000,000             --             --
Short-term borrowings                                961,665             --             --             --             --
Securities sold under repurchase agreements        8,227,114             --             --             --             --
                                                ------------   ------------   ------------   ------------   ------------
Total commitments and contractual obligations   $358,050,800   $ 39,216,717   $ 19,468,224   $ 17,808,479   $  1,169,034
                                                ============   ============   ============   ============   ============
</TABLE>


     Although management regularly monitors the balance of outstanding
commitments to fund loans to ensure funding availability should the need arise,
management believes that the risk of all customers fully drawing on all these
lines of credit at the same time is remote.


ACCOUNTING PRONOUNCEMENTS

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations," which
is effective for all business combinations initiated after June 30, 2001. SFAS
No. 141 requires companies to account for all business combinations using the
purchase method of accounting and to recognize intangible assets if certain
criteria are met, as well as provide detail disclosures regarding business
combinations and allocation of purchase price. Since the Company has not
initiated any business combinations during 2001 or 2002, this pronouncement has
not impacted the Company's consolidated financial statements.

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which eliminates amortization of goodwill and intangible assets that
have indefinite useful lives and requires annual tests of impairments of those
assets. SFAS No. 142 also provides specific guidance about how to determine and
measure goodwill and intangible asset impairments, and requires additional
disclosures of information about goodwill and other intangible assets. The
provisions of SFAS No. 142 were required to be applied starting with fiscal
years beginning after

<PAGE>
December 15, 2001 and applied to all goodwill and other intangible assets
recognized in financial statements at the date of adoption.

     In accordance with the provisions of SFAS No. 142, the Company tested its
goodwill for impairment. To accomplish this, the Company identified its
reporting units and determined the carrying value of each reporting unit by
assigning the assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units as of the date of adoption. The
Company completed the test for goodwill impairment as required under SFAS No.
142 during the second quarter of 2002 and determined that the goodwill recorded
as of January 1, 2002 was not impaired.

     At December 31, 2002 and 2001, the Company had net unamortized goodwill of
approximately $2,489,000. At December 31, 2001, the Company had net unamortized
equity method goodwill of approximately $1,058,000. The Company recorded
amortization expense relating to such goodwill in the amount of approximately
$257,000 for the years ended December 31, 2001 and 2000. The following is a
summary of net income and net income per share for the years ended December 31,
2001 and 2000 excluding goodwill amortization expense.
<TABLE>
<CAPTION>
                                            2001                2000
                                         ----------         ------------
<S>                                      <C>                   <C>
Reported net income                      $5,342,791            3,027,308
Add back goodwill amortization              257,300              257,300
                                         ----------         ------------
    Adjusted net income                  $5,600,091            3,284,608
                                         ==========         ============
Basic net income per share:
  Reported net income                    $     1.98                 1.12
  Add back goodwill amortization               0.10                 0.10
                                         ----------         ------------
    Adjusted net income                  $     2.08                 1.22
                                         ==========         ============
Diluted net income per share:
  Reported net income                    $     1.96                 1.12
  Add back goodwill amortization               0.09                 0.10
                                         ----------         ------------
    Adjusted net income                  $     2.05                 1.22
                                         ==========         ============
</TABLE>

     Other intangible assets consist of an amount assigned to a noncompete
agreement representing the difference between fair value at date of acquisition
and recorded amounts which has been amortized on a straight-line basis over five
years.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" (SFAS No. 143). SFAS No. 143 requires the Company to
record the fair value of an asset retirement obligation as a liability in the
period in which it incurs a legal obligation associated with the retirement of
tangible long-lived assets that result from acquisition, construction,
development, and/or normal use of the assets. The Company would also be required
to record a corresponding asset which is depreciated over the life of the asset.
Subsequent to the initial measurement of the asset retirement obligation, the
obligation will be adjusted at the end of each period to reflect the passage of
time and changes in the estimated future cash flows underlying the obligation.
The Company is required to adopt SFAS No. 143 on January 1, 2003. The adoption
of SFAS No. 143 is not expected to have a material impact on the Company's
consolidated financial statements.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The provisions of SFAS No. 144 are
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The adoption of SFAS No. 144 did not have a material effect
on the Company's consolidated results of operations, financial position, or cash
flows.

<PAGE>
     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 updates, clarifies, and simplifies existing
accounting pronouncements. SFAS No. 145 requires that in certain circumstances
previous items classified as extraordinary that do not meet the criteria in APB
Opinion No. 30 must be reclassified. SFAS No. 145 is effective for fiscal years
beginning after May 15, 2002. Management does not expect the adoption of SFAS
No. 145 to have a material effect on the Company's financial condition or
results of operations.

     In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities.
SFAS No. 146 requires recognition of a liability for a cost associated with an
exit or disposal activity when the liability is incurred, as opposed to when the
entity commits to an exit plan. SFAS No. 146 is effective prospectively for exit
or disposal activities initiated after December 31, 2002. Management does not
anticipate that SFAS No. 146 will have a material impact on the Company's
financial condition or results of operations.

     In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes acquisitions of financial
institutions from the scope of both SFAS No. 72, "Accounting for Certain
Acquisitions of Banking or Thrift Institutions," and FASB Interpretation No. 9,
"Applying APB Opinions No. 16 and 17, When a Savings and Loan Association or a
Similar Institution is Acquired in a Business Combination Accounted for by the
Purchase Method," and requires that those transactions be accounted for in
accordance with SFAS No. 141, Business Combinations, and SFAS No. 142, "Goodwill
and Other Intangible Assets." In addition, SFAS No. 147 amends SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," to include in
its scope long-term customer-relationship intangible assets of financial
institutions such as depositor- and borrower-relationship intangible assets and
credit cardholder intangible assets. SFAS No. 147's transition provisions
require affected institutions to reclassify their SFAS No. 72 goodwill as SFAS
No. 142 goodwill as of the date the Company initially applied SFAS No. 142 in
its entirety. The adoption of SFAS No. 147 did not have a material impact on the
Company's financial condition or results of operations.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee compensation. It also amends the disclosure provisions of SFAS No. 123
to require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. Finally, SFAS No. 148 also amends Accounting Principles Board
(APB) Opinion No. 28, "Interim Financial Reporting," to require disclosure about
those effects in the interim financial information. The Bank adopted the
provisions of SFAS No. 148 effective December 31, 2002.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that the
guarantor recognize, at the inception of certain guarantees, a liability for the
fair value of the obligation undertaken in issuing such guarantee. FIN 45 also
requires additional disclosure about the guarantor's obligations under certain
guarantees that it has issued. The initial recognition and measurement
provisions of this interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002 and the disclosure
requirements are effective after for financial

<PAGE>

statements for periods ending December 15, 2002. Management does not anticipate
that the adoption of FIN 45 will have a material impact on the Company's
financial condition or results of operations.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities and Interpretation of ARB No. 51" (FIN 46). FIN 46
establishes the criteria for consolidating variable interest entities. FIN 46 is
effective for fiscal years or interim periods beginning after June 15, 2003, to
variable entities that were acquired before February 1, 2003. Management does
not anticipate that the adoption of FIN 46 will have a material impact on the
Company's financial condition or results of operations.

Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     See "Market Risk" under Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated balance sheets of the Company and subsidiaries as of
December 31, 2002 and 2001, the related consolidated statements of income,
shareholders' equity and comprehensive income, and cash flows and notes to the
consolidated financial statements for each of the years in the three year period
ended December 31, 2002, the report issued thereon by the Company's independent
auditors and quarterly financial data (unaudited) are incorporated herein by
reference to the Company's 2002 Annual Report to Shareholders and are attached
as Exhibit 13 hereto.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

    None

                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information concerning the Company's directors and executive officers
appears in the Proxy Statement under the headings "Election of
Directors-Nominees" and " -Compliance with Section 16(a) of the Exchange Act"
and "Executive Officers" and is incorporated by reference herein.

Item 11. EXECUTIVE COMPENSATION

     Additional information concerning the compensation of the Company's
management appears in the Proxy Statement under the headings "Executive
Compensation" and "Election of Directors - Compensation of Directors" and is
incorporated by reference herein.

<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table provides information regarding compensation plans under
which equity securities of the Company are authorized for issuance. All data is
presented as of December 31, 2002.



<TABLE>
<CAPTION>

                                                              Equity Compensation Plan Table
                                ------------------------------------------------------------------------------------
                                          (a)                            (b)                         (c)
                                --------------------------       --------------------      -------------------------
                                                                                             Number of securities
                                                                                            remaining available for
                                Number of securities to be         Weighted-average          future issuance under
                                  issued upon exercise of         exercise price of        equity compensation plans
                                   outstanding options,          outstanding options,        (excluding securities
Plan category                      warrants and rights           warrants and rights        reflected in column (a))
-------------                   --------------------------       --------------------      -------------------------
<S>                                       <C>                           <C>                           <C>
Equity compensation plans
approved by security holders              306,039                       $15.45                        507,747

Equity compensation plans not
approved by security holders                    0                            0                              0
                                          -------                       ------                        -------
Total                                     306,039                       $15.45                        507,747
                                          =======                       ======                        =======
</TABLE>

    Additional information concerning beneficial owners of more than 5% of the
Company's stock and information concerning the stock owned by the Company's
management appears in the Proxy Statement under the heading "Ownership of Stock"
and is incorporated by reference herein.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information concerning certain relationships and related transactions
appears in the Proxy Statement under the heading "Certain Transactions" and is
incorporated by reference herein.
<PAGE>

Item 14. CONTROLS AND PROCEDURES

     Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) that is required to be
included in the Company's periodic filings with the Securities and Exchange
Commission. There have been no significant changes in the Company's internal
controls or, to the Company's knowledge, in other factors that could
significantly affect those internal controls subsequent to the date the Company
carried out its evaluation, and there have been no corrective actions with
respect to significant deficiencies or material weaknesses.


Item 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Information concerning principal accountant fees and services appears in
the Proxy Statement under the heading "Audit Committee Members - Audit Fees" and
"Other Fees" and is incorporated herein by reference.


                                     PART IV

Item 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  See Item 8 for a list of the financial statements filed as a part of this
     report. No financial statement schedules are applicable as the required
     information is included in the financial statements in Item 8.

     The registrant submits herewith as exhibits to this report on Form 10-K the
exhibits required by Item 601 of Regulation S-K, subject to Rule 12b-32 under
the Securities Exchange Act of 1934.
<TABLE>
<CAPTION>
Exhibit No.                             Document
-----------                             --------

<S>            <C>
3.1            Amended and restated Articles of Incorporation of Habersham
               Bancorp, as amended by amendment dated April 16, 1988 (1) and
               further amended by amendment dated April 15, 2000 (2)

3.2            By-laws of Habersham Bancorp, as amended as of November 20, 1989
               (3) and as of March 16, 1991. (4)

10.1*          Habersham Bancorp Savings Investment Plan, as amended and
               restated March 17, 1990, and the related Trust Agreements, as
               amended March 17, 1990. (3)

10.2*          Habersham Bancorp Incentive Stock Option Plan, as amended
               February 26, 1994. (5)

10.3*          Habersham Bancorp Outside Directors Stock Option Plan. (6)

10.4*          Habersham Bancorp 1996 Incentive Stock Option Plan, as amended by
               the First Amendment thereto dated January 29, 2000. (7)

10.5*          Mortgage Banking Agreement Dated as of January 2, 1996 among
               Habersham Bancorp, Habersham Bank, BancMortgage Financial Corp.
               and Robert S. Cannon and Anthony L. Watts. (8)
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
Exhibit No.                             Document
-----------                             --------

<S>            <C>
13.0           Financial statements and notes thereto contained in the Habersham
               Bancorp 2002 Annual Report and quarterly financial data
               (unaudited).

21.0           Subsidiaries of Habersham Bancorp.

23.1           Independent Accountants' Consent
</TABLE>

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

(1) Incorporated herein by reference to exhibit 3(a) in Amendment No. 1 to
Registrant's Registration Statement on Form S-4 (Regis. No. 33-57915).

(2) Incorporated herein by reference to exhibit 3.1 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 0-13153).

(3) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989
(File No. 0-13153).

(4) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1991
(File No. 0-13153).

(5) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1993
(File No. 0-13153).

(6) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1994
(File No. 0-13153).

(7) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1995
(File No. 0-13153).

(8) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1997
(File No. 0-13153).

* Indicates the Registrant's plans, management contracts and compensatory
arrangements.

(b)  Reports on Form 8-K:

     No reports on Form 8-K were filed during the last quarter of the year ended
December 31, 2002.

<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                         HABERSHAM BANCORP (Registrant)


By:  /s/ David D. Stovall                  Date: March 31, 2003
     --------------------------------            -------------------------------
     Director, President and
     Chief Executive Officer



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
          Signature                       Title                      Date
          ---------                       -----                      ----
<S>                               <C>                           <C>
/s/ Thomas A. Arrendale, Jr.      Chairman of the Board         March 31, 2003
----------------------------      and Director



/s/ Thomas A. Arrendale, III      Vice Chairman of the Board    March 31, 2003
----------------------------      and Director



/s/ David D. Stovall              Director, President and       March 31, 2003
----------------------------      Chief Executive Officer*



/s/ Edward D. Ariail              Director, Vice President      March 31, 2003
----------------------------      and Corporate Secretary



/s/ James E. McCollum             Director, Executive Vice      March 31, 2003
----------------------------      President and Chief
                                  Operating Officer


/s/  Michael C. Martin            Director                      March 31, 2003
----------------------------



/s/ James A. Stapleton, Jr.       Director                      March 31, 2003
----------------------------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
          Signature                       Title                      Date
          ---------                       -----                      ----
<S>                               <C>                           <C>
/s/ Calvin R. Wilbanks            Director                      March 31, 2003
----------------------------



/s/ Annette Banks                Vice President and             March 31, 2003
----------------------------     Chief Financial Officer**
</TABLE>

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

*   Principal executive officer.
**  Principal financial and accounting officer.

<PAGE>

                                  Certification

I, David D. Stovall, Chief Executive Officer of Habersham Bancorp, certify that:

1.   I have reviewed the annual report on Form 10-K of Habersham Bancorp;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

<PAGE>

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: March 31, 2003

                                               /s/ David D. Stovall
                                               ---------------------------------
                                               David D. Stovall
                                               Chief Executive Officer

<PAGE>
                                  Certification

I, Annette Banks, Chief Financial Officer of Habersham Bancorp, certify that:

1.   I have reviewed this annual report on Form 10-K of Habersham Bancorp;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: March 31, 2003

                                              /s/ Annette Banks
                                              ----------------------------------
                                              Annette Banks
                                              Chief Financial Officer

<PAGE>
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.                       Document
-----------                       --------
<S>            <C>

    3.1        Amended and restated Articles of Incorporation of Habersham
               Bancorp, as amended by amendment dated April 16, 1998 (1) and as
               further amended by amendment dated April 15, 2000. (2)

    3.2        By-laws of Habersham Bancorp, as amended as of November 20, 1989
               (3) and as of March 16, 1991. (4)

   10.1*       Habersham Bancorp Savings Investment Plan, as amended and
               restated March 17, 1990, and the related Trust Agreements, as
               amended March 17, 1990. (3)

   10.2*       Habersham Bancorp Incentive Stock Option Plan, as amended
               February 26, 1994. (5)

   10.3*       Habersham Bancorp Outside Directors Stock Plan. (6)

   10.4*       Habersham Bancorp 1996 Incentive Stock Option Plan, as amended by
               the First Amendment thereto dated January 29, 2000. (7)

   10.5*       Mortgage Banking Agreement dated as of January 2, 1996 among
               Habersham Bancorp, Habersham Bank, BancMortgage Financial Corp.,
               and Robert S. Cannon and Anthony L. Watts. (8)

   13.0        Financial statements and notes thereto contained in the Habersham
               Bancorp 2002 Annual Report and quarterly financial data.

   21.0        Subsidiaries of Habersham Bancorp

   23.1        Independent Accountants' Consent

   99.1        Certification Pursuant to 18 U.S.C. Section 1380 as adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

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

(1) Incorporated herein by reference to exhibit 3(a) in Amendment No. 1 to the
Registrant's Registration Statement on Form S-4 (Regis. No. 33-57915).

(2) Incorporated herein be reference to exhibit 3.1 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 0-13153).

(3) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-K for the year December 31, 1989 (File No.
0-13153).

(4) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991.(File No. 0-13153).

<PAGE>

(5) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1993.
(File No. 0-13153).

(6) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1994.
(File No. 0-13153).

(7) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1995.
(File No. 0-13153).

(8) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1997.
(File No. 0-13153).

* Indicates the Registrant's plans, management contracts and compensatory
arrangements.