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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-KSB/A
AMENDMENT NO. 1

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

For the Fiscal Year ended December 31, 2002

Commission File Number: 0-50106

LEGENDS FINANCIAL HOLDINGS, INC.

---

(Name of Small Business Issuer in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Tennessee                       |  | 32-0008963         
|                                |  |                    
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

|                                               |  |          
|---------------------------------------------- |  | ---------
|310 North First Street, Clarksville, Tennessee |  | 37040    
|                                               |  |          
|(Address of principal executive offices)       |  | Zip Code)

(931) 503-1234
(Issuers telephone number)

Securities registered under Section 12(g) of the Exchange Act:Common Stock, $1.00 par value per share
(Title of Class)

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

YES [   ]    NO [X ]

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

The issuers revenues for the fiscal year ended December 31, 2002 were
$6,840,000

The aggregate market value of the issuers voting stock held by
non-affiliates, computed by reference to the price at which the stock was sold
as of December 31, 2002, is $21,541,434 for 1,175,201 shares, at an estimated
$18.33 per share.

As of December 31, 2002, 1,379,083 shares of the issuers Common Stock
were outstanding.

Transitional Small Business Disclosure Format (check one):

YES [   ]    NO [X]

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants definitive proxy statement, which were filed
with the Securities and Exchange Commission on March 21, 2003, are incorporated
by reference into Part III of this annual report on Form 10-KSB.

EXPLANATORY NOTE: This Form 10-KSB/A is being filed in order to amend
information previously filed in Part II, Item 7.



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TABLE OF CONTENTS



|                                                  |  |  |  |  |  |  |  | 
|------------------------------------------------- |  |  |  |  |  |  |  | 
|PART II                                          
|INDEPENDENT AUDITORS REPORT                     
|Consolidated Balance Sheets                      
|Consolidated Statements of Earnings              
|Consolidated Statements of Comprehensive Earnings
|Statements of Changes in Stockholders Equity    
|Consolidated Statements of Cash Flows            
|Notes to Consolidated Financial Statements       
|SIGNATURES                                       



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##### Table of Contents






PART II

ITEM 7. FINANCIAL STATEMENTS




INDEPENDENT AUDITORS REPORT

The Board of Directors
Legends Financial Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Legends
Financial Holdings, Inc. and Subsidiaries as of December 31, 2002 and 2001 and
the related consolidated statements of earnings, comprehensive earnings,
changes in stockholders equity and cash flows for each of the three years
ended December 31, 2002. These financial statements are the responsibility of
Legends Financials management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Legends Financial Holdings,
Inc. and Subsidiaries as of December 31, 2002 and 2001, and the results of its
operations and its cash flows for each of the three years ended December 31,
2002, in conformity with accounting principles generally accepted in the United
States of America.

|                                      |  |                                                         
|------------------------------------- |  | --------------------------------------------------------
|                                      |  | /s/ Maggart & Associates, P.C.Maggart & Associates, P.C.
|                                     
|                                      |  |                                                         
|                                     
|January 22, 2003
Nashville, Tennessee |  |                                                         

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##### Table of Contents



Legends Financial Holdings, Inc.




Consolidated Balance Sheets

December 31, 2002 and 2001

|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |        |   |        |  | 
|------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ------ | - | ------------ | ------ | ------ | - | ------ |  | 
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   | In Thousands
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |             
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   | 2002         |        | 2001  
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        |                                      |                                            | ASSETS |   |              |        |        |   |        |  | 
|Loans, less allowance for possible loan losses of
$879,000 and $755,000, respectively                  |                                                                                                                                        | $                                    | 76,901                                     |        |   |              | 62,056 |       
|Securities available-for-sale, at market (amortized cost of
$24,338,000 and $19,695,000, respectively) |                                                                                                                                        |                                      | 24,593                                     |        |   |              | 19,740 |       
|Loans held for sale                                                                                    |                                                                                                                                        |                                      | 1,687                                      |        |   |              | 239    |       
|Federal funds sold                                                                                     |                                                                                                                                        |                                      | 1,225                                      |        |   |              |       |       
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        |                                      | Total earning assets                       |        |   | 104,406      |        |        |   | 82,035 | 
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|Cash and due from banks                                                                                |                                                                                                                                        |                                      | 5,287                                      |        |   |              | 3,826  |       
|Bank premises and equipment, net                                                                       |                                                                                                                                        |                                      | 4,079                                      |        |   |              | 3,418  |       
|Accrued interest receivable                                                                            |                                                                                                                                        |                                      | 511                                        |        |   |              | 445    |       
|Other real estate owned                                                                                |                                                                                                                                        |                                      |                                           |        |   |              | 174    |       
|Deferred tax asset, net                                                                                |                                                                                                                                        |                                      | 133                                        |        |   |              | 61     |       
|Other assets                                                                                           |                                                                                                                                        |                                      | 118                                        |        |   |              | 67     |       
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        |                                      | Total assets                               |        | $ | 114,534      |        |        |   | 90,026 | 
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        | LIABILITIES AND STOCKHOLDERS EQUITY |                                            |        |   |              |        |        |   |       
|Deposits                                                                                               |                                                                                                                                        | $                                    | 94,971                                     |        |   |              | 73,438 |       
|Securities sold under repurchase agreement                                                             |                                                                                                                                        |                                      | 3,682                                      |        |   |              |       |       
|Accrued interest payable                                                                               |                                                                                                                                        |                                      | 366                                        |        |   |              | 453    |       
|Accounts payable and other liabilities                                                                 |                                                                                                                                        |                                      | 114                                        |        |   |              | 563    |       
|Income taxes payable                                                                                   |                                                                                                                                        |                                      | 54                                         |        |   |              | 2      |       
|Advances from Federal Home Loan Bank                                                                   |                                                                                                                                        |                                      | 1,500                                      |        |   |              | 2,500  |       
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        |                                      | Total liabilities                          |        |   | 100,687      |        |        |   | 76,956 | 
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|Stockholders equity:                                                                                  |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       | Preferred stock, no par value, authorized 1,000,000 shares,
no shares issued                                                           |                                      |                                            |       |   |              |        |       |  
|                                                                                                       | Common stock, par value $1 per share, authorized 2,000,000 shares,
1,379,083 and 1,142,252 shares issued and outstanding,
respectively |                                      |                                            | 1,379  |   |              |        | 1,142  |  
|                                                                                                       | Additional paid-in capital                                                                                                             |                                      |                                            | 12,267 |   |              |        | 12,434 |  
|                                                                                                       | Retained earnings (deficit)                                                                                                            |                                      |                                            | 43     |   |              |        | (551   | )
|                                                                                                       | Net unrealized gains on available-for-sale securities, net of
income taxes of $97,000 in 2002                                          |                                      |                                            | 158    |   |              |        | 45     |  
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        |                                      | Total stockholders equity                 |        |   | 13,847       |        |        |   | 13,070 | 
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|COMMITMENTS AND CONTINGENCIES                                                                          |                                                                                                                                        |                                      |                                            |        |   |              |        |       
|                                                                                                       |                                                                                                                                        |                                      | Total liabilities and stockholders equity |        | $ | 114,534      |        |        |   | 90,026 | 
|                                                                                                       |                                                                                                                                        |                                      |                                            |        |   |              |        |       

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Legends Financial Holdings, Inc.




Consolidated Statements of Earnings

For the Years Ended December 31, 2002, 2001 and 2000

|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |       |       | 
|------------------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------- | ----- | -------------------------- | ----- | ---- | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                                                              |                                                                             |                              |       | In Thousands              
|                                                              |                                                                             |                              |       | (except per share amounts)
|                                                              |                                                                             |                              |       | 2002                       |       | 2001 |       | 2000 
|                                                              |                                                                             |                              |       |                            |       |      |       |      
|Interest income:                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              | Interest and fees on loans                                                  |                              | $     | 4,925                      |       |      |       | 4,461 |       |  |       | 3,397 |      
|                                                              | Interest and dividends on taxable securities                                |                              |       | 1,084                      |       |      |       | 1,324 |       |  |       | 1,180 |      
|                                                              | Interest and dividends on securities exempt from
Federal income taxes       |                              |       | 17                         |       |      |       |      |       |  |       |      |      
|                                                              | Interest on loans held for sale                                             |                              |       | 21                         |       |      |       | 6     |       |  |       | 3     |      
|                                                              | Interest on Federal funds sold                                              |                              |       | 36                         |       |      |       | 52    |       |  |       | 113   |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              |                                                                             | Total interest income        |       |                            | 6,083 |      |       |       | 5,843 |  |       |       | 4,693 | 
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|Interest expense:                                             |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              | Interest on negotiable order of withdrawal accounts                         |                              |       | 273                        |       |      |       | 308   |       |  |       | 193   |      
|                                                              | Interest on money market and savings accounts                               |                              |       | 308                        |       |      |       | 419   |       |  |       | 538   |      
|                                                              | Interest on certificates of deposits over $100,000                          |                              |       | 758                        |       |      |       | 1,088 |       |  |       | 965   |      
|                                                              | Interest on certificates of deposits  other                                |                              |       | 601                        |       |      |       | 835   |       |  |       | 700   |      
|                                                              | Interest on Federal funds purchased                                         |                              |       | 12                         |       |      |       | 12    |       |  |       | 6     |      
|                                                              | Interest on advances from Federal Home Loan Bank                            |                              |       | 75                         |       |      |       | 122   |       |  |       | 41    |      
|                                                              | Interest on securities sold under repurchase
agreements and short-term debt |                              |       | 8                          |       |      |       |      |       |  |       |      |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              |                                                                             | Total interest expense       |       |                            | 2,035 |      |       |       | 2,784 |  |       |       | 2,443 | 
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|Net interest income before provision for possible
loan losses |                                                                             |                              | 4,048 |                            |       |      | 3,059 |       |       |  | 2,250 |      
|Provision for possible loan losses                            |                                                                             |                              | 703   |                            |       |      | 307   |       |       |  | 246   |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|Net interest income after provision for possible
loan losses  |                                                                             |                              | 3,345 |                            |       |      | 2,752 |       |       |  | 2,004 |      
|Non-interest income:                                          |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              | Other fees and commissions                                                  |                              |       | 617                        |       |      |       | 478   |       |  |       | 232   |      
|                                                              | Gain on sale of securities                                                  |                              |       | 140                        |       |      |       | 115   |       |  |       | 6     |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              |                                                                             | Total non-interest income    |       |                            | 757   |      |       |       | 593   |  |       |       | 238   | 
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|Non-interest expense:                                         |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              | Employee salaries and benefits                                              |                              |       | 1,732                      |       |      |       | 1,407 |       |  |       | 1,050 |      
|                                                              | Occupancy expenses                                                          |                              |       | 250                        |       |      |       | 242   |       |  |       | 135   |      
|                                                              | Furniture and equipment expense                                             |                              |       | 373                        |       |      |       | 337   |       |  |       | 308   |      
|                                                              | Other operating expenses                                                    |                              |       | 1,202                      |       |      |       | 860   |       |  |       | 661   |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              |                                                                             | Total non-interest expense   |       |                            | 3,557 |      |       |       | 2,846 |  |       |       | 2,154 | 
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              |                                                                             | Earnings before income taxes |       |                            | 545   |      |       |       | 499   |  |       |       | 88    | 
|Income tax benefit                                            |                                                                             |                              | 49    |                            |       |      |      |       |       |  |      |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |      
|                                                              |                                                                             | Net earnings                 |       | $                          | 594   |      |       |       | 499   |  |       |       | 88    | 
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |       |      
|Basic earnings per common share                               |                                                                             | $                            | .43   |                            |       |      | .36   |       |       |  | .06   |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |       |      
|Diluted earnings per common share                             |                                                                             | $                            | .43   |                            |       |      | .36   |       |       |  | .06   |      
|                                                              |                                                                             |                              |       |                            |       |      |       |       |       |  |       |       |      

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Legends Financial Holdings, Inc.




Consolidated Statements of Comprehensive Earnings

For the Years Ended December 31, 2002, 2001 and 2000

|                           |                                                                                                         |                              |     |              |     |      |     |      |     |  |    |     |     | 
|-------------------------- | ------------------------------------------------------------------------------------------------------- | ---------------------------- | --- | ------------ | --- | ---- | --- | ---- | --- |  | -- | --- | --- | 
|                           |                                                                                                         |                              |     | In Thousands
|                           |                                                                                                         |                              |     |             
|                           |                                                                                                         |                              |     | 2002         |     | 2001 |     | 2000
|                           |                                                                                                         |                              |     |              |     |      |     |     
|Net earnings               |                                                                                                         | $                            | 594 |              |     |      | 499 |      |     |  | 88 |    
|                           |                                                                                                         |                              |     |              |     |      |     |      |     |  |    |    
|Other comprehensive gains: |                                                                                                         |                              |     |              |     |      |     |      |     |  |    |    
|                           | Unrealized gains on available-for-sale securities
arising during year, net of taxes of $123,000
in 2002 |                              |     | 199          |     |      |     | 204  |     |  |    | 163 |    
|                           | Reclassification adjustment for gains included in
net earnings, net of taxes of $54,000 in 2002         |                              |     | (86          | )   |      |     | (115 | )   |  |    | (6  | )  
|                           |                                                                                                         |                              |     |              |     |      |     |      |     |  |    |    
|                           |                                                                                                         | Other comprehensive earnings |     |              | 113 |      |     |      | 89  |  |    |     | 157 | 
|                           |                                                                                                         |                              |     |              |     |      |     |      |     |  |    |    
|                           |                                                                                                         | Comprehensive earnings       |     | $            | 707 |      |     |      | 588 |  |    |     | 245 | 
|                           |                                                                                                         |                              |     |              |     |      |     |      |     |  |    |    

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Legends Financial Holdings, Inc.




Statements of Changes in Stockholders Equity

For the Years Ended December 31, 2002, 2001 and 2000

|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  |                |      |   |  |  |        | 
|------------------------------------------------------------------------------------------------------- |  | ------------ | ----- | ------- |  | ---------- | ------ | ---------- |  | ------------- | ------ | - |  | -------------- | ---- | - |  |  | ------ | 
|                                                                                                        |  | In Thousands
|                                                                                                        |  |             
|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  | Net Unrealized |      |   |  | 
|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  | Gain (Loss)    |      |   |  | 
|                                                                                                        |  |              |       |         |  | Additional |        | Retained   |  | On Available- |        |   |  |               
|                                                                                                        |  | Common       |       | Paid-In |  | Earnings   |        | For-Sale   |  |               |        |  
|                                                                                                        |  | Stock        |       | Capital |  | (Deficit)  |        | Securities |  | Total        
|                                                                                                        |  |              |       |         |  |            |        |            |  |              
|Balance December 31, 1999                                                                               |  | $            | 1,128 |         |  |            | 12,286 |            |  |               | (1,138 | ) |  |                | (201 | ) |  |  | 12,075 | 
|Issuance of 16,272 shares of
$1 par value common stock                                                  |  |              | 13    |         |  |            | 140    |            |  |               |       |   |  |                |     |   |  |  | 153    | 
|Net change in unrealized gain
(loss) on available-for-sale
securities during the year                   |  |              |      |         |  |            |       |            |  |               |       |   |  |                | 157  |   |  |  | 157    | 
|Net earnings for the year                                                                               |  |              |      |         |  |            |       |            |  |               | 88     |   |  |                |     |   |  |  | 88     | 
|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  |                |      |   |  |  |        | 
|Balance December 31, 2000                                                                               |  |              | 1,141 |         |  |            | 12,426 |            |  |               | (1,050 | ) |  |                | (44  | ) |  |  | 12,473 | 
|Issuance of 1,020 shares of
$1 par value common stock                                                   |  |              | 1     |         |  |            | 8      |            |  |               |       |   |  |                |     |   |  |  | 9      | 
|Net change in unrealized gain
(loss) on available-for-sale
securities during the year                   |  |              |      |         |  |            |       |            |  |               |       |   |  |                | 89   |   |  |  | 89     | 
|Net earnings for the year                                                                               |  |              |      |         |  |            |       |            |  |               | 499    |   |  |                |     |   |  |  | 499    | 
|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  |                |      |   |  |  |        | 
|Balance December 31, 2001                                                                               |  |              | 1,142 |         |  |            | 12,434 |            |  |               | (551   | ) |  |                | 45   |   |  |  | 13,070 | 
|Issuance of 8,400 shares of
$1 par value common stock                                                   |  |              | 8     |         |  |            | 62     |            |  |               |       |   |  |                |     |   |  |  | 70     | 
|Stock-split effected in the form
of a stock dividend declared
1 share for every 5 outstanding           |  |              | 229   |         |  |            | (229   | )          |  |               |       |   |  |                |     |   |  |  |       | 
|Net change in unrealized gain
on available-for-sale securities
during the year, net of taxes
of $97,000 |  |              |      |         |  |            |       |            |  |               |       |   |  |                | 113  |   |  |  | 113    | 
|Net earnings for the year                                                                               |  |              |      |         |  |            |       |            |  |               | 594    |   |  |                |     |   |  |  | 594    | 
|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  |                |      |   |  |  |        | 
|Balance December 31, 2002                                                                               |  | $            | 1,379 |         |  |            | 12,267 |            |  |               | 43     |   |  |                | 158  |   |  |  | 13,847 | 
|                                                                                                        |  |              |       |         |  |            |        |            |  |               |        |   |  |                |      |   |  |  |        | 

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Legends Financial Holdings, Inc.




Consolidated Statements of Cash Flows

For the Years Ended December 31, 2002, 2001 and 2000

Increase (Decrease) in Cash and Cash Equivalents

|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------------- | --------------------------------------------------- | ----- | ------------ | ------- | ---- | ----- | ------- | ------- | - | ------ | ------- | ------- | -
|                                                     |                                                                                         |                                                     |       | In Thousands
|                                                     |                                                                                         |                                                     |       |             
|                                                     |                                                                                         |                                                     |       | 2002         |         | 2001 |       | 2000   
|                                                     |                                                                                         |                                                     |       |              |         |      |       |        
|Cash flows from operating activities:                |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |        
|                                                     | Interest received                                                                       |                                                     | $     | 6,005        |         |      |       | 5,874   |         |   |        | 4,493   |        
|                                                     | Fees received                                                                           |                                                     |       | 473          |         |      |       | 414     |         |   |        | 134     |        
|                                                     | Proceeds from sales of loans                                                            |                                                     |       | 9,375        |         |      |       | 6,778   |         |   |        | 2,178   |        
|                                                     | Origination of loans held for sale                                                      |                                                     |       | (10,676      | )       |      |       | (6,750  | )       |   |        | (2,291  | )      
|                                                     | Interest paid                                                                           |                                                     |       | (1,989       | )       |      |       | (2,821  | )       |   |        | (2,190  | )      
|                                                     | Cash paid to suppliers and employees                                                    |                                                     |       | (3,277       | )       |      |       | (2,574  | )       |   |        | (2,003  | )      
|                                                     | Income taxes paid                                                                       |                                                     |       | (69          | )       |      |       | (59     | )       |   |        |        |        
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|                                                     |                                                                                         | Net cash provided by (used in) operating
activities |       |              | (158    | )    |       |         | 862     |   |        |         | 321     |  
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|Cash flows from investing activities:                |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |        
|                                                     | Purchase of available-for-sale securities                                               |                                                     |       | (23,427      | )       |      |       | (11,304 | )       |   |        | (17,622 | )      
|                                                     | Proceeds from maturities, calls and principal
payments of available-for-sale securities |                                                     |       | 7,874        |         |      |       | 6,536   |         |   |        | 1,502   |        
|                                                     | Proceeds from sale of available-for-sale securities                                     |                                                     |       | 10,927       |         |      |       | 6,388   |         |   |        | 6,499   |        
|                                                     | Loans made to customers, net of repayments                                              |                                                     |       | (15,548      | )       |      |       | (20,353 | )       |   |        | (16,785 | )      
|                                                     | Purchase of bank premises and equipment, net                                            |                                                     |       | (958         | )       |      |       | (309    | )       |   |        | (736    | )      
|                                                     | Proceeds from sale of other real estate                                                 |                                                     |       | 174          |         |      |       | (174    | )       |   |        |        |        
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|                                                     |                                                                                         | Net cash used in investing activities               |       |              | (20,958 | )    |       |         | (19,216 | ) |        |         | (27,142 | )
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|Cash flows from financing activities:                |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |        
|                                                     | Net increase in non-interest bearing, savings and
NOW deposit accounts                  |                                                     |       | 4,094        |         |      |       | 3,035   |         |   |        | 16,795  |        
|                                                     | Net increase in time deposits                                                           |                                                     |       | 17,439       |         |      |       | 12,906  |         |   |        | 6,774   |        
|                                                     | Proceeds from sale of common stock                                                      |                                                     |       | 70           |         |      |       | 9       |         |   |        | 153     |        
|                                                     | Repayment of short-term borrowings                                                      |                                                     |       | (483         | )       |      |       | 483     |         |   |        |        |        
|                                                     | Repayment of advances from Federal Home Loan
Bank                                       |                                                     |       | (1,000       | )       |      |       | 1,000   |         |   |        | 1,500   |        
|                                                     | Repurchase agreements                                                                   |                                                     |       | 3,682        |         |      |       |        |         |   |        |        |        
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|                                                     |                                                                                         | Net cash provided by financing activities           |       |              | 23,802  |      |       |         | 17,433  |   |        |         | 25,222  |  
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|Net increase (decrease) in cash and cash equivalents |                                                                                         |                                                     | 2,686 |              |         |      | (921  | )       |         |   | (1,599 | )      
|Cash and cash equivalents at beginning of year       |                                                                                         |                                                     | 3,826 |              |         |      | 4,747 |         |         |   | 6,346  |        
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        
|Cash and cash equivalents at end of year             |                                                                                         | $                                                   | 6,512 |              |         |      | 3,826 |         |         |   | 4,747  |        
|                                                     |                                                                                         |                                                     |       |              |         |      |       |         |         |   |        |         |        

6



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##### Table of Contents



Legends Financial Holdings, Inc.

Consolidated Statements of Cash Flows, Continued

For the Years Ended December 31, 2002, 2001 and 2000

Increase (Decrease) in Cash and Cash Equivalents

|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |     |    |      |     | 
|-------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | --- | ------------ | ---- | ---- | --- | ---- | --- | --- | -- | ---- | --- | 
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     | In Thousands
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |             
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     | 2002         |      | 2001 |     | 2000
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |     
|Reconciliation of net earnings to net cash provided by
(used in) operating activities: |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |    
|                                                                                       |                                                                                                      | Net earnings                                                                                  |                                          | $                                                   | 594 |              |      |      | 499 |      |     |     | 88 |     
|                                                                                       |                                                                                                      | Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities: |                                          |                                                     |     |              |      |      |     |      |     |     |    |     
|                                                                                       |                                                                                                      |                                                                                               | Depreciation                             |                                                     |     | 297          |      |      |     | 284  |     |     |    | 229  |    
|                                                                                       |                                                                                                      |                                                                                               | Amortization and accretion               |                                                     |     | 124          |      |      |     | 90   |     |     |    | (69  | )  
|                                                                                       |                                                                                                      |                                                                                               | Gain on sale of securities, net          |                                                     |     | (140         | )    |      |     | (115 | )   |     |    | (6   | )  
|                                                                                       |                                                                                                      |                                                                                               | Provision for possible loan losses       |                                                     |     | 703          |      |      |     | 307  |     |     |    | 246  |    
|                                                                                       |                                                                                                      |                                                                                               | Increase in loans held for sale          |                                                     |     | (1,448       | )    |      |     | (86  | )   |     |    | (153 | )  
|                                                                                       |                                                                                                      |                                                                                               | Increase in accrued interest receivable  |                                                     |     | (66          | )    |      |     | (9   | )   |     |    | (206 | )  
|                                                                                       |                                                                                                      |                                                                                               | Increase in other assets                 |                                                     |     | (51          | )    |      |     | (15  | )   |     |    | (17  | )  
|                                                                                       |                                                                                                      |                                                                                               | Increase (decrease) in interest payable  |                                                     |     | (87          | )    |      |     | (37  | )   |     |    | 253  |    
|                                                                                       |                                                                                                      |                                                                                               | Increase (decrease) in other liabilities |                                                     |     | 14           |      |      |     | 3    |     |     |    | (44  | )  
|                                                                                       |                                                                                                      |                                                                                               | Increase in income taxes payable         |                                                     |     | 52           |      |      |     | 2    |     |     |    |     |    
|                                                                                       |                                                                                                      |                                                                                               | Increase in deferred taxes               |                                                     |     | (150         | )    |      |     | (61  | )   |     |    |     |    
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |     |    |     
|                                                                                       |                                                                                                      |                                                                                               |                                          | Total adjustments                                   |     |              | (752 | )    |     |      | 363 |     |    |      | 233 | 
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |     |    |     
|                                                                                       |                                                                                                      |                                                                                               |                                          | Net cash provided by (used in)
operating activities |     | $            | (158 | )    |     |      | 862 |     |    |      | 321 | 
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |     |    |     
|Supplemental Schedule of Non-Cash Activities:                                          |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |    
|                                                                                       | Increase in unrealized gain on available-for-sale
securities, net of income taxes of $97,000 in 2002 |                                                                                               | $                                        | 113                                                 |     |              |      | 89   |     |      |     | 157 |   
|                                                                                       |                                                                                                      |                                                                                               |                                          |                                                     |     |              |      |      |     |      |     |     |    |     



|(1) |  | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The consolidated financial statements include the accounts of Legends
Financial Holdings, Inc. (the Legends Financial), Legends Bank
(Legends Bank), its wholly-owned subsidiary, and Legends Financial
Services, Inc., a wholly-owned subsidiary of Legends Bank. On February
27, 2002, the stockholders of Legends Bank voted to exchange their stock
for stock in Legends Financial Holdings, Inc. Effective July 1, 2002,
Legends Financial Holdings, Inc. became a bank holding company within the
meaning of Bank Holding Company Act of 1956, as amended. The transaction
has been treated as a reorganization for accounting purposes. For
comparative purposes all financial information of Legends Bank prior to
the reorganization has been presented or included in the financial
information of Legends Financial.

7



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##### Table of Contents



Legends Financial Holdings, Inc.




Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



| |  | The accounting and reporting policies of Legends Financial Holdings,
Inc., its wholly-owned subsidiary, Legends Bank and Legends Banks
wholly-owned subsidiary, Legends Financial Services, Inc. are in
accordance with accounting principles generally accepted in the United
States of America and conform to general practices within Legends Banking
industry. The following is a brief summary of the more significant
policies.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The consolidated financial statements include the accounts of
Legends Financial, its wholly-owned subsidiary, Legends Bank and
Legends Banks wholly-owned subsidiary, Legends Financial Services,
Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (b) |  | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | Legends Financial is registered as a one bank holding company under
Bank Holding Company Act of 1956. Legends Bank operates under a
state bank charter and provides full banking services. As a state
bank, Legends Bank is subject to regulations of the Tennessee
Department of Financial Institutions and the Federal Deposit
Insurance Corporation. The area served by Legends Bank is
Montgomery County, Tennessee and surrounding counties of Middle
Tennessee. Services are provided at the main office and two
branches in Clarksville, Tennessee. Legends Financial Services,
Inc. was formed in 2002 to offer a wide array of financial products
such as annuities, stocks, bonds, mutual funds and other investment
products.
|
| | (c) |  | Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant
change in the near term relate to determination of the allowance
for possible loan losses and the valuation of debt and equity
securities and the related deferred taxes.                                         

8



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



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



| | (d) |  | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Loans are stated at the principal amount outstanding. Unearned
discount, deferred loan fees net of loan acquisition costs, and the
allowance for possible loan losses are shown as reductions of
loans. Loan origination and commitment fees and certain
loan-related costs are being deferred and the net amount amortized
as an adjustment of the related loans yield over the contractual
life of the loan. Unearned discount represents the unamortized
amount of finance charges, principally related to certain
installment loans. Interest income on most loans is accrued based
on the principal amount outstanding.                                                                                                                                                                                                                                                     
|
| |     |  | Legends Financial follows the provisions of Statement of Financial
Accounting Standards (SFAS) No. 114, Accounting by Creditors for
Impairment of a Loan and SFAS No. 118, Accounting by Creditors
for Impairment of a Loan by Creditors for Impairment of a Loan -
and SFAS No. 118, Accounting Income Recognition and Disclosures.
These pronouncements apply to impaired loans except for large
groups of smaller-balance homogeneous loans that are collectively
evaluated for impairment including residential mortgage and
installment loans.                                                                                                                                                                                                                                                                                                                         
|
| |     |  | A loan is impaired when it is probable that Legends Financial will
be unable to collect the scheduled payments of principal and
interest due under the contractual terms of the loan agreement.
Impaired loans are measured at the present value of expected future
cash flows discounted at the loans effective interest rate, at the
loans observable market price, or the fair value of the collateral
if the loan is collateral dependent. If the measure of the
impaired loan is less than the recorded investment in the loan,
Legends Financial shall recognize an impairment by creating a
valuation allowance with a corresponding charge to the provision
for possible loan losses or by adjusting an existing valuation
allowance for the impaired loan with a corresponding charge or
credit to the provision for possible loan losses.                             
|
| |     |  | Legends Financials residential mortgage and installment loans are
divided into various groups of smaller-balance, homogeneous loans
that are collectively evaluated for impairment and, thus, are not
subject to the provisions of SFAS Nos. 114 and 118. Substantially
all other loans of Legends Financial are evaluated for impairment
under the provisions of SFAS Nos. 114 and 118.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | Legends Financial considers all loans subject to the provisions of
SFAS Nos. 114 and 118 that are on a nonaccrual status to be
impaired. Loans are placed on nonaccrual status when doubt as to
timely collection of principal or interest exists, or when
principal or interest is past due 90 days or more unless such loans
are well-secured and in the process of collection. Delays or
shortfalls in loan payments are evaluated along with various other
factors to determine if a loan is impaired. Generally,
delinquencies under 90 days are considered insignificant unless
certain other factors are present which indicate impairment is
probable. The decision to place a loan on nonaccrual status is
also based on an evaluation of the borrowers financial condition,
collateral, liquidation value, and other factors that affect the
borrowers ability to pay.

9



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



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



| | (d) |  | Loans, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Generally, at the time a loan is placed on nonaccrual status, all
interest accrued and uncollected on the loan in the current fiscal
year is reversed from income, and all interest accrued and
uncollected from the prior year is charged off against the
allowance for possible loan losses. Thereafter, interest on
nonaccrual loans is recognized as interest income only to the
extent that cash is received and future collection of principal is
not in doubt. If the collectibility of outstanding principal is
doubtful, such cash received is applied as a reduction of
principal. A nonaccrual loan may be restored to an accruing status
when principal and interest are no longer past due and unpaid and
future collection of principal and interest on a timely basis is
not in doubt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | Loans not on nonaccrual status are classified as impaired in
certain cases when there is inadequate protection by the current
net worth and financial capacity of the borrower or of the
collateral pledged, if any. In those cases, such loans have a
well-defined weakness or weaknesses that jeopardize the liquidation
of the debt, and if such deficiencies are not corrected, there is a
probability that Legends Financial will sustain some loss. In such
cases, interest income continues to accrue as long as the loan does
not meet Legends Financials criteria for nonaccrual status.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Generally, Legends Financial also classifies as impaired any loans
the terms of which have been modified in a troubled debt
restructuring. Interest is generally accrued on such loans that
continue to meet the modified terms of their loan agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | Legends Financials charge-off policy for impaired loans is similar
to its charge-off policy for all loans in that loans are charged
off in the month when they are considered uncollectible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (e) |  | Allowance for Possible Loan Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | The provision for possible loan losses represents a charge to
earnings necessary, after loan charge-offs and recoveries, to
maintain the allowance for possible loan losses at an appropriate
level which is adequate to absorb estimated losses inherent in the
loan portfolio. Such estimated losses arise primarily from the
loan portfolio but may also be derived from other sources,
including commitments to extend credit and standby letters of
credit. The level of the allowance is determined on a quarterly
basis using procedures which include: (1) categorizing commercial
and commercial real estate loans into risk categories to estimate
loss probabilities based primarily on the historical loss
experience of those risk categories and current economic
conditions; (2) analyzing significant commercial and commercial
real estate credits and calculating specific reserves as necessary;
(3) assessing various homogeneous consumer loan categories to
estimate loss probabilities based primarily on historical loss
experience; (4) reviewing unfunded commitments (included in other
liabilities); and (5) considering various other factors, such as
changes in credit concentrations, loan mix, and economic conditions
which may not be specifically quantified in the loan analysis
process.

10



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



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



| | (e) |  | Allowance for Possible Loan Losses, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The allowance for possible loan losses consists of an allocated
portion and an unallocated, or general portion. The allocated
portion is maintained to cover estimated losses applicable to
specific segments of the loan portfolio. The unallocated portion
is maintained to absorb losses which probably exist as of the
evaluation date but are not identified by the more objective
processes used for the allocated portion of the allowance due to
risk of errors or imprecision. While the total allowance consists
of an allocated portion and an unallocated portion, these terms are
primarily used to describe a process. Both portions of the
allowance are available to provide for inherent loss in the entire
portfolio.
|
| |     |  | The allowance for possible loan losses is increased by provisions
for possible loan losses charged to expense and is reduced by loans
charged off net of recoveries on loans previously charged off. The
provision is based on managements determination of the amount of
the allowance necessary to provide for estimated loan losses based
on its evaluation of the loan portfolio. Determining the
appropriate level of the allowance and the amount of the provision
involves uncertainties and matters of judgment and therefore cannot
be determined with precision.                                                                                                                                                            
|
| | (f) |  | Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | Legends Financial accounts for securities under the provisions of
Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
Under the provisions of the Statement, securities are to be
classified in three categories and accounted for as follows:                                                                                                                                                                                                                                                                                                                                                                                                             



| |  |  | Securities Held-to-Maturity                                                                                                                                                                                                                                                                            
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Debt securities that the enterprise has the positive intent and
ability to hold to maturity are classified as held-to-maturity
securities and reported at amortized cost. No securities have been
classified as securities held-to-maturity.                                                           
|
| |  |  | Trading Securities                                                                                                                                                                                                                                                                                     
|
| |   |  | Debt and equity securities that are bought and held principally for
the purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and
losses included in earnings. No securities have been classified as
trading securities.     
|
| |  |  | Securities Available-for-Sale                                                                                                                                                                                                                                                                          
|
| |   |  | Debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available-for-sale
securities and reported at fair value, with unrealized gains and
losses excluded from earnings and reported in a separate component of
stockholders equity.

11



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



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



| | (f) |  | Securities, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Legends Financial has classified all its securities as securities
available-for-sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | Realized gains or losses from the sale of securities are recognized
upon realization based upon the specific identification method.                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (g) |  | Premises and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Premises and equipment are stated at cost. Depreciation is
computed by the straight-line method over the estimated useful
lives of the related assets. Gain or loss on items retired and
otherwise disposed of is credited or charged to operations and cost
and related accumulated depreciation are removed from the asset and
accumulated depreciation accounts.                                                                                                                                                                                          
|
| |     |  | Expenditures for major renewals and improvements of premises and
equipment are capitalized and those for maintenance and repairs are
charged to earnings as incurred.                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (h) |  | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | Legends Financial uses the fair value method to calculate the
compensation reported in the proforma earnings in note 15 to the
consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (i) |  | Other Real Estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Real estate acquired in settlement of loans is initially recorded
at the lower of cost (loan value of real estate acquired in
settlement of loans plus incidental expense) or estimated fair
value, less estimated cost of disposal. Based on periodic
evaluations by management, the carrying values are reduced by a
direct charge to earnings when they exceed net realizable value.
Costs relating to the development and improvement of the property
are capitalized, while holding costs of the property are charged to
expense in the period incurred.
|
| | (j) |  | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and Federal funds
sold. Generally, Federal funds sold are purchased and sold for
one-day periods. Legends Bank maintains deposits in excess of the
Federal insurance amounts with other financial institutions.
Management makes deposits only with financial institutions it
considers to be financially sound.                                                                                                                               
|
| | (k) |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | Provisions for income taxes are based on taxes payable or
refundable for the current year (after exclusion of non-taxable
income such as interest on state and municipal securities) and
deferred taxes on temporary differences between the amount of
taxable and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in                                                                                                   

12



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



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



| | (k) |  | Income Taxes, Continued                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | the financial statements at currently enacted income tax rates
applicable to the period in which the deferred tax asset and
liabilities are expected to be realized or settled as prescribed in
Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes. As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.
|
| |     |  | Legends Financial and its subsidiary file a consolidated Federal
income tax return. Each corporation provides for income taxes on a
separate return basis.                                                                                                                                                                                                                                                                      
|
| | (l) |  | Advertising Costs                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | Advertising costs are expensed when incurred.                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (m) |  | Off-Balance-Sheet Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | In the ordinary course of business Legends Financial has entered
into off balance sheet financial instruments consisting of
commitments to extend credit, commitments under credit card
arrangements, commercial letters of credit and standby letters of
credit. Such financial instruments are recorded in the financial
statements when they are funded or related fees are incurred or
received.                            
|
| | (n) |  | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | Certain reclassifications have been made to the 2001 and 2000
figures to conform to the presentation for 2002.                                                                                                                                                                                                                                                                                                                  



|(2) |  | Loans and Allowance for Possible Loan Losses                    
|--- |  | ----------------------------------------------------------------
|   
|    |  | The detail of loans at December 31, 2002 and 2001 is as follows:

|                                       |  |              |        |      |  |  |        |  
|-------------------------------------- |  | ------------ | ------ | ---- |  |  | ------ | -
|                                       |  | In Thousands
|                                       |  |             
|                                       |  | 2002         |        | 2001
|                                       |  |              |        |     
|Commercial, financial and agricultural |  | $            | 15,947 |      |  |  | 17,641 |  
|Installment                            |  |              | 4,090  |      |  |  | 4,222  |  
|Real estate  mortgage                 |  |              | 43,022 |      |  |  | 28,202 |  
|Real estate  construction             |  |              | 14,721 |      |  |  | 12,746 |  
|                                       |  |              |        |      |  |  |        |  
|                                       |  |              | 77,780 |      |  |  | 62,811 |  
|Allowance for possible loan losses     |  |              | (879   | )    |  |  | (755   | )
|                                       |  |              |        |      |  |  |        |  
|                                       |  | $            | 76,901 |      |  |  | 62,056 |  
|                                       |  |              |        |      |  |  |        |  



| |  | At December 31, 2002, variable rate and fixed rate loans totaled
$20,326,000 and $57,454,000, respectively. At December 31, 2001,
variable rate and fixed rate loans totaled $29,304,000 and $33,507,000,
respectively.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(2) |  | Loans and Allowance for Possible Loan Losses, Continued               
|--- |  | ----------------------------------------------------------------------
|   
|    |  | The principal maturities on loans at December 31, 2002 are as follows:

|                 |  |              |        |             |  |          |       |               |  |               |        |  |  |  |        |  |  |  |        | 
|---------------- |  | ------------ | ------ | ----------- |  | -------- | ----- | ------------- |  | ------------- | ------ |  |  |  | ------ |  |  |  | ------ | 
|                 |  | In Thousands
|                 |  |             
|                 |  | Commercial,  |        |             |  |          |       |               |  |               |        |  |  |  |        |  |  | 
|                 |  | Financial    |        |             |  |          |       |               |  |               |        |  |  |  |        |  |  | 
|                 |  | and          |        |             |  |          |       | Real estate - |  | Real estate - |        |  |  | 
|                 |  | Agricultural |        | Installment |  | Mortgage |       | Construction  |  | Total        
|                 |  |              |        |             |  |          |       |               |  |              
|3 months or less |  | $            | 5,924  |             |  |          | 717   |               |  |               | 5,412  |  |  |  | 8,824  |  |  |  | 20,877 | 
|3 to 12 months   |  |              | 2,729  |             |  |          | 743   |               |  |               | 2,617  |  |  |  | 5,749  |  |  |  | 11,838 | 
|1 to 5 years     |  |              | 6,483  |             |  |          | 2,576 |               |  |               | 32,302 |  |  |  | 148    |  |  |  | 41,509 | 
|over 5 years     |  |              | 811    |             |  |          | 54    |               |  |               | 2,691  |  |  |  |       |  |  |  | 3,556  | 
|                 |  |              |        |             |  |          |       |               |  |               |        |  |  |  |        |  |  |  |        | 
|                 |  | $            | 15,947 |             |  |          | 4,090 |               |  |               | 43,022 |  |  |  | 14,721 |  |  |  | 77,780 | 
|                 |  |              |        |             |  |          |       |               |  |               |        |  |  |  |        |  |  |  |        | 

| |  | In the normal course of business, Legends Financial has made loans at
prevailing interest rates and terms to its executive officers, directors
and their affiliates aggregating $2,398,000 and $2,460,000 at December
31, 2002 and 2001, respectively. As of December 31, 2002 and 2001, none
of these loans were restructured, nor were any related party loans
charged off in 2002 or 2001.
An analysis of the activity with respect to such loans to related parties
is as follows:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           |  |              |        |      |  |  |        |  
|-------------------------- |  | ------------ | ------ | ---- |  |  | ------ | -
|                           |  | In Thousands
|                           |  |             
|                           |  | 2002         |        | 2001
|                           |  |              |        |     
|Balance, January 1         |  | $            | 2,460  |      |  |  | 2,431  |  
|New loans during the year  |  |              | 1,456  |      |  |  | 1,701  |  
|Repayments during the year |  |              | (1,518 | )    |  |  | (1,672 | )
|                           |  |              |        |      |  |  |        |  
|Balance, December 31       |  | $            | 2,398  |      |  |  | 2,460  |  
|                           |  |              |        |      |  |  |        |  



| |  | Transactions in the allowance for possible loan losses of Legends
Financial for the years ended December 31, 2002 and 2001 are summarized
as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

|                                       |  |              |      |      |  |  |      |  
|-------------------------------------- |  | ------------ | ---- | ---- |  |  | ---- | -
|                                       |  | In Thousands
|                                       |  |             
|                                       |  | 2002         |      | 2001
|                                       |  |              |      |     
|Balance  beginning of year            |  | $            | 755  |      |  |  | 552  |  
|Provision charged to operating expense |  |              | 703  |      |  |  | 307  |  
|Loans charged off                      |  |              | (628 | )    |  |  | (109 | )
|Recoveries                             |  |              | 49   |      |  |  | 5    |  
|                                       |  |              |      |      |  |  |      |  
|Net charge-offs                        |  |              | (579 | )    |  |  | (104 | )
|                                       |  |              |      |      |  |  |      |  
|Balance  end of year                  |  | $            | 879  |      |  |  | 755  |  
|                                       |  |              |      |      |  |  |      |  

14



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(2) |  | Loans and Allowance for Possible Loan Losses, Continued                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Legends Financials principal customers are basically in the Middle
Tennessee area with a concentration in Montgomery County. Credit is
extended to businesses and individuals and is evidenced by promissory
notes. The terms and conditions of the loans including collateral varies
depending upon the purpose of the credit and the borrowers financial
condition.                                               
|   
|    |  | There were no restructured loans outstanding at December 31, 2002 and
2001. Legends Financial had $268,000 and $18,000, respectively, of
nonaccrual loans outstanding as of December 31, 2002 and 2001,
respectively. The impact on interest income in 2001 and 2000 was not
significant. Had interest income been recognized on non-accrual loans in
2002 net earnings would have increased by approximately $11,000.
|   
|    |  | Impaired loans and related loan loss reserve amounts at December 2002 and
2001 were as follows:                                                                                                                                                                                                                                                                                                                       

|                     |  |              |       |      |  |  |       | 
|-------------------- |  | ------------ | ----- | ---- |  |  | ----- | 
|                     |  | In Thousands
|                     |  |             
|                     |  | 2002         |       | 2001
|                     |  |              |       |     
|Recorded investment  |  | $            | 2,013 |      |  |  | 2,055 | 
|Loan loss allocation |  | $            | 244   |      |  |  | 146   | 



| |  | The average recorded investment in impaired loans for the years ended
December 31, 2002 and December 31, 2001 was $2,034,000 and $1,394,000,
respectively.                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The related total amount of interest income recognized on the accrual
basis for the period that such loans were impaired was $143,000 for 2002,
$120,000 in 2001 and $68,000 in 2000.                                                                                                                                                                                                                                                                                                                                                        
|
| |  | In 2002, 2001 and 2000, Legends Financial originated loans for sale in
the secondary market of $10,676,000, $6,750,000 and $2,291,000. At
December 31, 2002, the wholly-owned subsidiary Bank had not been required
to repurchase any of the loans originated by Legends Bank and sold in the
secondary market. The gain on sale of these loans totaled $147,000,
$114,000 and $40,000 in 2002, 2001 and 2000, respectively.                                                                                                                 
|
| |  | Of the loans sold in the secondary market, the recourse to the
wholly-owned subsidiary Bank is limited. Nearly all other loans sold in
the secondary market provide the purchase recourse to Legends Bank for a
period of 60 to 90 days from the date of purchase and only in the event
of a default by the borrower pursuant to the terms of the individual loan
agreement. At December 31, 2002, total loans sold with recourse to
Legends Bank aggregated $5,835,000. Management expects no loss to result
from these recourse provisions.

15



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(3) |  | Debt and Equity Securities                                                                                                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Debt and equity securities have been classified in the balance sheet
according to managements intent. Legends Financials classification of
securities at December 31, 2002 was as follows:

|                                                                 |  |                               |        |            |  |            |     |        |  |           |    |  |  |  |        | 
|---------------------------------------------------------------- |  | ----------------------------- | ------ | ---------- |  | ---------- | --- | ------ |  | --------- | -- |  |  |  | ------ | 
|                                                                 |  | In Thousands                 
|                                                                 |  |                              
|                                                                 |  | Securities Available-For-Sale
|                                                                 |  |                              
|                                                                 |  | 2002                         
|                                                                 |  |                              
|                                                                 |  |                               |        |            |  | Gross      |     | Gross  |  | Estimated
|                                                                 |  | Amortized                     |        | Unrealized |  | Unrealized |     | Market
|                                                                 |  | Cost                          |        | Gains      |  | Losses     |     | Value 
|                                                                 |  |                               |        |            |  |            |     |       
|U.S. Treasury and other U.S
government agencies and
corporations |  | $                             | 3,757  |            |  |            | 7   |        |  |           | 28 |  |  |  | 3,736  | 
|Obligations of states and
political subdivisions                 |  |                               | 974    |            |  |            |    |        |  |           | 7  |  |  |  | 967    | 
|Mortgage-backed securities                                       |  |                               | 19,212 |            |  |            | 283 |        |  |           |   |  |  |  | 19,495 | 
|Federal Home Loan Bank stock                                     |  |                               | 233    |            |  |            |    |        |  |           |   |  |  |  | 233    | 
|The Bankers Bank stock                                           |  |                               | 162    |            |  |            |    |        |  |           |   |  |  |  | 162    | 
|                                                                 |  |                               |        |            |  |            |     |        |  |           |    |  |  |  |        | 
|                                                                 |  | $                             | 24,338 |            |  |            | 290 |        |  |           | 35 |  |  |  | 24,593 | 
|                                                                 |  |                               |        |            |  |            |     |        |  |           |    |  |  |  |        | 



| |  | Legends Financials classification of securities at December 31, 2001 was
as follows:
| |  | -------------------------------------------------------------------------------------

|                                                                 |  |                               |        |            |  |            |    |        |  |           |    |  |  |  |        | 
|---------------------------------------------------------------- |  | ----------------------------- | ------ | ---------- |  | ---------- | -- | ------ |  | --------- | -- |  |  |  | ------ | 
|                                                                 |  | In Thousands                 
|                                                                 |  |                              
|                                                                 |  | Securities Available-For-Sale
|                                                                 |  |                              
|                                                                 |  | 2001                         
|                                                                 |  |                              
|                                                                 |  |                               |        |            |  | Gross      |    | Gross  |  | Estimated
|                                                                 |  | Amortized                     |        | Unrealized |  | Unrealized |    | Market
|                                                                 |  | Cost                          |        | Gains      |  | Losses     |    | Value 
|                                                                 |  |                               |        |            |  |            |    |       
|U.S. Treasury and other U.S
government agencies and
corporations |  | $                             | 4,363  |            |  |            | 12 |        |  |           | 30 |  |  |  | 4,345  | 
|Mortgage-backed securities                                       |  |                               | 14,969 |            |  |            | 63 |        |  |           |   |  |  |  | 15,032 | 
|Federal Home Loan Bank stock                                     |  |                               | 201    |            |  |            |   |        |  |           |   |  |  |  | 201    | 
|The Bankers Bank stock                                           |  |                               | 162    |            |  |            |   |        |  |           |   |  |  |  | 162    | 
|                                                                 |  |                               |        |            |  |            |    |        |  |           |    |  |  |  |        | 
|                                                                 |  | $                             | 19,695 |            |  |            | 75 |        |  |           | 30 |  |  |  | 19,740 | 
|                                                                 |  |                               |        |            |  |            |    |        |  |           |    |  |  |  |        | 



| |  | Included in mortgage backed securities as of December 31, 2002 and 2001,
are collateralized mortgage obligations with a market value of $4,759,000
(amortized cost of $4,767,000) and $6,211,000 (amortized cost of
$6,195,000), respectively. The effective yield at December 31, 2002 and
2001, on collateralized mortgage obligations was 3.3% and 4.7%,
respectively.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(3) |  | Debt and Equity Securities, Continued                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The amortized cost and estimated market value of debt and equity
securities at December 31, 2002, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with
or without call or prepayment penalties.

|                                       |  |              |        |       |  |           |        | 
|-------------------------------------- |  | ------------ | ------ | ----- |  | --------- | ------ | 
|                                       |  | In Thousands
|                                       |  |             
|                                       |  |              |        |       |  | Estimated
|                                       |  |              |        |       |  | Market   
|Securities Available-For-Sale          |  | Cost         |        | Value
|                                       |  |              |        |      
|Due in one year or less                |  | $            |       |       |  |           |       | 
|Due after one year through five years  |  |              | 250    |       |  |           | 260    | 
|Due after five years through ten years |  |              | 257    |       |  |           | 261    | 
|Due after ten years                    |  |              | 4,224  |       |  |           | 4,182  | 
|                                       |  |              |        |       |  |           |        | 
|                                       |  |              | 4,731  |       |  |           | 4,703  | 
|Mortgage-backed securities             |  |              | 19,212 |       |  |           | 19,495 | 
|Federal Home Loan Bank stock           |  |              | 233    |       |  |           | 233    | 
|The Bankers Bank stock                 |  |              | 162    |       |  |           | 162    | 
|                                       |  |              |        |       |  |           |        | 
|                                       |  | $            | 24,338 |       |  |           | 24,593 | 
|                                       |  |              |        |       |  |           |        | 



| |  | Included within the securities portfolio is stock of The Bankers Bank and
the Federal Home Loan Bank amounting to $162,000 and $233,000,
respectively, at December 31, 2002 and 2001. The stock can be sold back
to The Bankers Bank and the Federal Home Loan Bank or to another member
institution.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Results from sales of debt and equity securities are as follows:                                                                                                                                                                                                                                     

|                      |                    |   |                |     |      |  |       |     |  |  |       |   | 
|--------------------- | ------------------ | - | -------------- | --- | ---- |  | ----- | --- |  |  | ----- | - | 
|                      |                    |   | (In Thousands)
|                      |                    |   |               
|                      |                    |   | 2002           |     | 2001 |  | 2000 
|                      |                    |   |                |     |      |  |      
|Gross proceeds        |                    | $ | 10,927         |     |      |  | 6,388 |     |  |  | 6,499 |  
|                      |                    |   |                |     |      |  |       |     |  |  |       |  
|Gross realized gains  |                    | $ | 140            |     |      |  | 115   |     |  |  | 6     |  
|Gross realized losses |                    |   |               |     |      |  |      |     |  |  |      |  
|                      |                    |   |                |     |      |  |       |     |  |  |       |  
|                      | Net realized gains |   | $              | 140 |      |  |       | 115 |  |  |       | 6 | 
|                      |                    |   |                |     |      |  |       |     |  |  |       |  



| |  | Investment securities carried in the balance sheet of $19,480,000
(amortized cost of $19,184,000) and $14,107,000 (amortized cost of
$14,012,000) as of December 31, 2002 and 2001, respectively, were pledged
to secure public and trust deposits and for other purposes as required or
permitted by law.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(4) |  | Bank Premises and Equipment                                                      
|--- |  | ---------------------------------------------------------------------------------
|   
|    |  | The detail of premises and equipment at December 31, 2002 and 2001 is as
follows:

|                              |  |              |       |      |  |  |       |  
|----------------------------- |  | ------------ | ----- | ---- |  |  | ----- | -
|                              |  | In Thousands
|                              |  |             
|                              |  | 2002         |       | 2001
|                              |  |              |       |     
|Land                          |  | $            | 1,134 |      |  |  | 599   |  
|Buildings                     |  |              | 2,053 |      |  |  | 2,053 |  
|Leasehold improvements        |  |              | 310   |      |  |  | 299   |  
|Furniture and fixtures        |  |              | 183   |      |  |  | 178   |  
|Equipment and software        |  |              | 1,088 |      |  |  | 906   |  
|Construction in process       |  |              | 212   |      |  |  |      |  
|                              |  |              |       |      |  |  |       |  
|                              |  |              | 4,980 |      |  |  | 4,035 |  
|Less accumulated depreciation |  |              | (901  | )    |  |  | (617  | )
|                              |  |              |       |      |  |  |       |  
|                              |  | $            | 4,079 |      |  |  | 3,418 |  
|                              |  |              |       |      |  |  |       |  



|(5) |  | Deposits                                                         
|--- |  | -----------------------------------------------------------------
|   
|    |  | Deposits at December 31, 2002 and 2001 are summarized as follows:

|                                                   |  |              |        |      |  |  |        | 
|-------------------------------------------------- |  | ------------ | ------ | ---- |  |  | ------ | 
|                                                   |  | In Thousands
|                                                   |  |             
|                                                   |  | 2002         |        | 2001
|                                                   |  |              |        |     
|Demand deposits                                    |  | $            | 16,524 |      |  |  | 13,816 | 
|Savings deposits                                   |  |              | 1,653  |      |  |  | 956    | 
|Negotiable order of withdrawal                     |  |              | 20,355 |      |  |  | 6,145  | 
|Money market demand accounts                       |  |              | 18,596 |      |  |  | 12,832 | 
|Certificates of deposit $100,000 or greater        |  |              | 23,056 |      |  |  | 22,063 | 
|Other certificates of deposit                      |  |              | 13,397 |      |  |  | 16,225 | 
|Individual retirement accounts $100,000 or
greater |  |              | 348    |      |  |  | 625    | 
|Other individual retirement accounts               |  |              | 1,042  |      |  |  | 776    | 
|                                                   |  |              |        |      |  |  |        | 
|                                                   |  | $            | 94,971 |      |  |  | 73,438 | 
|                                                   |  |              |        |      |  |  |        | 



| |  | Principal maturities of certificates of deposit and individual retirement
accounts at December 31, 2002 are as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------

|                 |  |                 |        |                 |  |       |        |  |  |  |        | 
|---------------- |  | --------------- | ------ | --------------- |  | ----- | ------ |  |  |  | ------ | 
|                 |  | In Thousands   
|                 |  |                
|                 |  | Single Deposits |        | Single Deposits |  |       |        | 
|Maturity         |  | Under $100,000  |        | Over $100,000   |  | Total
|                 |  |                 |        |                 |  |      
|3 months or less |  | $               | 4,041  |                 |  |       | 9,555  |  |  |  | 13,596 | 
|3 to 12 months   |  |                 | 6,938  |                 |  |       | 8,775  |  |  |  | 15,713 | 
|1 to 5 years     |  |                 | 2,799  |                 |  |       | 4,845  |  |  |  | 7,644  | 
|After 5 years    |  |                 | 661    |                 |  |       | 229    |  |  |  | 890    | 
|                 |  |                 |        |                 |  |       |        |  |  |  |        | 
|                 |  | $               | 14,439 |                 |  |       | 23,404 |  |  |  | 37,843 | 
|                 |  |                 |        |                 |  |       |        |  |  |  |        | 

18



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(5) |  | Deposits, Continued                                                                                                                                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | At December 31, 2002 and 2001 certificates of deposit and other deposits
in denominations of $100,000 or more amounted to $63,865,000 and
$40,949,000, respectively.                                                                                                                                             
|   
|    |  | Legends Financial is required to maintain cash balances or balances with
the Federal Reserve Bank or other correspondent banks based on certain
percentages of deposit types. The average required amounts for the years
ended December 31, 2002 and 2001 were approximately $425,000 and
$300,000, respectively.
|   
|(6) |  | Securities Sold Under Repurchase Agreements                                                                                                                                                                                                                                                                      
|   
|    |  | The maximum amounts of outstanding repurchase agreements during 2002 were
$3,682,000. The average daily balance outstanding during 2002 was
$684,000. The underlying securities are typically held by other
financial institutions and are designated as pledged.                                                
|   
|(7) |  | Advances from Federal Home Loan Bank                                                                                                                                                                                                                                                                             
|   
|    |  | Advances from Federal Home Loan Bank (FHLB) at December 31, 2002 and 2001
consist of the following:                                                                                                                                                                                                              

|                 |  |                   |  |                   |      |         |  |      |       |                |       |  |       |  |       | 
|---------------- |  | ----------------- |  | ----------------- | ---- | ------- |  | ---- | ----- | -------------- | ----- |  | ----- |  | ----- | 
|                 |  |                   |  |                   |      |         |  |      |       | (IN THOUSANDS)
|ORIGINAL         |  |                   |  |                   |      | RATE AT |  |      |       |                |       |  |       | 
|NOTE DATE        |  | MATURITY DATE     |  | DECEMBER 31, 2002 |      | 2002    |  | 2001
|                 |  |                   |  |                   |      |         |  |     
|October 20, 2000 |  | October 26, 2002  |  |                   | 2.25 | %       |  | $    |      |                |       |  | 500   | 
|May 17, 2001     |  | February 15, 2002 |  |                   | 4.16 | %       |  |      |      |                |       |  | 1,000 | 
|July 18, 2001    |  | July 18, 2002     |  |                   | 2.52 | %       |  |      |      |                |       |  | 1,000 | 
|May 3, 2002      |  | May 3, 2003       |  |                   | 2.71 | %       |  |      | 500   |                |       |  |      | 
|July 15, 2002    |  | July 15, 2003     |  |                   | 1.92 | %       |  |      | 1,000 |                |       |  |      | 
|                 |  |                   |  |                   |      |         |  |      |       |                |       |  |       |  |       | 
|                 |  |                   |  |                   |      |         |  |      |       | $              | 1,500 |  |       |  | 2,500 | 
|                 |  |                   |  |                   |      |         |  |      |       |                |       |  |       |  |       | 



| |  | Interest on the $1,000,000 advance is based on the three months LIBOR
(LIBOR plus 10 basis points) and is adjusted quarterly. The 2.71% rate
on the $500,000 advance is fixed.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Loans totaling $2,025,000 were pledged to FHLB as collateral at December
31, 2002.                                                                                            

19



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##### Table of Contents



Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(8) |  | Income Taxes                                                                                     
|--- |  | -------------------------------------------------------------------------------------------------
|   
|    |  | The components of the net deferred income tax asset at December 31, 2002
and 2001 are as follows:

|                         |         |                           |      |              |     |      |      |     |     | 
|------------------------ | ------- | ------------------------- | ---- | ------------ | --- | ---- | ---- | --- | --- | 
|                         |         |                           |      | In Thousands
|                         |         |                           |      |             
|                         |         |                           |      | 2002         |     | 2001
|                         |         |                           |      |              |     |     
|Deferred tax asset:      |         |                           |      |              |     |      |      |    
|                         | Federal |                           | $    | 242          |     |      |      | 254 |    
|                         | State   |                           |      | 50           |     |      |      | 48  |    
|                         |         |                           |      |              |     |      |      |    
|                         |         |                           | 292  |              |     |      | 302  |    
|                         |         |                           |      |              |     |      |      |    
|Deferred tax liability:  |         |                           |      |              |     |      |      |    
|                         | Federal |                           |      | (132         | )   |      |      | (27 | )  
|                         | State   |                           |      | (27          | )   |      |      | (5  | )  
|                         |         |                           |      |              |     |      |      |    
|                         |         |                           | (159 | )            |     |      | (32  | )  
|                         |         |                           |      |              |     |      |      |    
|                         |         | Total net deferred assets |      |              | 133 |      |      |     | 270 | 
|Less valuation allowance |         |                           |     |              |     |      | (209 | )  
|                         |         |                           |      |              |     |      |      |     |    
|                         |         | Net deferred assets       |      | $            | 133 |      |      |     | 61  | 
|                         |         |                           |      |              |     |      |      |     |    



| |  | The tax effects of each type of significant item that gave rise to
deferred taxes at December 31, 2002 and 2001 are:
| |  | --------------------------------------------------------------------------------------------------------------------

|                                                                                                                        |  |              |     |      |  |  |      |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------ | --- | ---- |  |  | ---- | -
|                                                                                                                        |  | In Thousands
|                                                                                                                        |  |             
|                                                                                                                        |  | 2002         |     | 2001
|                                                                                                                        |  |              |     |     
|Financial statement allowance for loan losses in
excess of the tax allowance                                            |  | $            | 263 |      |  |  | 253  |  
|Excess of depreciation deducted for tax purposes over
the amounts deducted in the financial statements                  |  |              | (48 | )    |  |  | (7   | )
|Pre-opening costs amortized over a five-year period for
tax purposes, expensed for financial statements in
initial year |  |              | 28  |      |  |  | 49   |  
|Excess of estimated market value over amortized cost
related to available-for-sale securities                           |  |              | (97 | )    |  |  | (17  | )
|Financial statement income on FHLB stock dividends
not recognized for tax purposes                                      |  |              | (13 | )    |  |  | (8   | )
|                                                                                                                        |  |              |     |      |  |  |      |  
|                                                                                                                        |  |              | 133 |      |  |  | 270  |  
|Valuation allowance                                                                                                     |  |              |    |      |  |  | (209 | )
|                                                                                                                        |  |              |     |      |  |  |      |  
|                                                                                                                        |  | $            | 133 |      |  |  | 61   |  
|                                                                                                                        |  |              |     |      |  |  |      |  

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Legends Financial Holdings, Inc.

Notes to Consolidated Financial Statements

December 31, 2002, 2001 and 2000



|(8) |  | Income Taxes, Continued                                                  
|--- |  | -------------------------------------------------------------------------
|   
|    |  | The components of income tax expense (benefit) are summarized as follows:

|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |     |     |  
|---------------------------------------------------------------- | ------- | ------- | ------------------ | -- | ------------ | --- | ---- | --- | ---- | --- | --- | --- | --- | --- | -
|                                                                 |         |         |                    |    | In Thousands
|                                                                 |         |         |                    |    |             
|                                                                 |         |         |                    |    | 2002         |     | 2001 |     | 2000
|                                                                 |         |         |                    |    |              |     |      |     |     
|Current:                                                         |         |         |                    |    |              |     |      |     |      |     |     |    
|                                                                 | Federal |         | $                  | 81 |              |     |      | 52  |      |     |     | 68  |    
|                                                                 | State   |         |                    | 20 |              |     |      | 9   |      |     |     | 12  |    
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|                                                                 |         |         | 101                |    |              |     | 61   |     |      |     | 80  |    
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|Deferred:                                                        |         |         |                    |    |              |     |      |     |      |     |     |    
|                                                                 | Federal |         |                    | 49 |              |     |      | (29 | )    |     |     | (37 | )  
|                                                                 | State   |         |                    | 10 |              |     |      | (5  | )    |     |     | (7  | )  
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|                                                                 |         |         | 59                 |    |              |     | (34  | )   |      |     | (44 | )  
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|Benefits from utilization of net operating
loss carryforwards:   |         |         |                    |    |              |     |      |     |      |     |     |    
|                                                                 |         | Federal |                    |    |             |     |      |     | (52  | )   |     |     | (68 | )  
|                                                                 |         | State   |                    |    |             |     |      |     | (9   | )   |     |     | (12 | )  
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|                                                                 |         |         |                   |    |              |     | (61  | )   |      |     | (80 | )  
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|                                                                 |         |         | Subtotal           |    |              | 160 |      |     |      | (34 | )   |     |     | (44 | )
|Adjustment of valuation allowance
related to deferred tax assets |         |         | (209               | )  |              |     | 34   |     |      |     | 44  |    
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    
|                                                                 |         |         | Actual tax benefit |    | $            | (49 | )    |     |      |    |     |     |     |    |  
|                                                                 |         |         |                    |    |              |     |      |     |      |     |     |     |    





| |  | A reconciliation of actual income tax expense (benefit) in the financial
statements to the expected tax expense (benefit) (computed by applying
the statutory Federal income tax rate of 34% to earnings before income
taxes) is as follows:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                          |                              |   |              |     |      |  |      |   |  |  |     |   | 
|--------------------------------------------------------- | ---------------------------- | - | ------------ | --- | ---- |  | ---- | - |  |  | --- | - | 
|                                                          |                              |   | In Thousands
|                                                          |                              |   |             
|                                                          |                              |   | 2002         |     | 2001 |  | 2000
|                                                          |                              |   |              |     |      |  |     
|Computed expected tax expense                           |                              | $ | 185          |     |      |  | 170  |   |  |  | 30  |  
|State income taxes, net of effect of Federal
income taxes |                              |   | 18           |     |      |  | 2    |   |  |  | 6   |  
|Disallowed expenses                                       |                              |   | 5            |     |      |  | 1    |   |  |  |    |  
|Utilization of book net operating loss
carryovers         |                              |   |             |     |      |  | (100 | ) |  |  | (80 | )
|Benefit of graduated rates                                |                              |   | (1           | )   |      |  | (12  | ) |  |  |    |  
|Benefit related to nonqualified stock options             |                              |   | (35          | )   |      |  |     |   |  |  |    |  
|Tax exempt interest, net of interest expense
exclusion    |                              |   | (12          | )   |      |  |     |   |  |  |    |  
|Deferred tax benefits not recognized                      |                              |   |             |     |      |  |     |   |  |  | 44  |  
|Recognition of deferred tax assets                        |                              |   | (209         | )   |      |  | (61  | ) |  |  |    |  
|                                                          |                              |   |              |     |      |  |      |   |  |  |     |  
|                                                          | Actual tax expense (benefit) |   | $            | (49 | )    |  |      |  |  |  |     |  | 
|                                                          |                              |   |              |     |      |  |      |   |  |  |     |  

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Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(9) |  | Commitment and Contingencies                                                                                                                                                                                                                                                                                                                      
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Legends Financial plans to open two branches in 2003 at a cost of
approximately $1,500,000. One branch will be in Clarksville, Montgomery
County, Tennessee and one in Dover, Stewart County, Tennessee.                                                                                                                                          
|   
|    |  | Legends Financial currently has two leases related to the operation of
two branches. One lease entered into in 1998 is for a period of five
years and can be renewed for two consecutive five year terms. The other
lease was entered into during 2001 and is for a period of three years and
can be renewed for two consecutive three year terms.
|   
|    |  | Minimum future rental payments required under the terms of the leases are
as follows:                                                                                                                                                                                                                                                             

|             |  |                |    | 
|------------ |  | -------------- | -- | 
|Year Ending  |  |                |    | 
|December 31, |  | (In Thousands)
|             |  |               
|2003         |  | $              | 52 | 



|     |  | Total rent expense under the leases amounted to $58,008, $55,258 and
$35,552 during the years ended December 31, 2002, 2001 and 2000,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(10) |  | Financial Instruments with Off-Balance-Sheet Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|     |  | Legends Financial is party to financial instruments with
off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments consist
primarily of commitments to extend credit. These instruments involve, to
varying degrees, elements of credit risk in excess of the amount
recognized in the consolidated balance sheets. The contract or notional
amounts of those instruments reflect the extent of involvement Legends
Financial has in particular classes of financial instruments.
|    
|     |  | Legends Financials exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit is represented by the contractual notional
amount of those instruments. Legends Financial uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.                                                                                                                                                                        

|                                                                    |                             |       |   |              |        | 
|------------------------------------------------------------------- | --------------------------- | ----- | - | ------------ | ------ | 
|                                                                    |                             |       |   | In Thousands
|                                                                    |                             |       |   |             
|Financial instruments whose contract
amounts represent credit risk: |                             |       |   |             
|                                                                    | Commercial loan commitments |       | $ | 12,322       |       
|                                                                    | Unfunded lines-of-credit    |       |   | 2,889        |       
|                                                                    | Letters of credit           |       |   | 751          |       
|                                                                    |                             |       |   |             
|                                                                    |                             | Total |   | $            | 15,962 | 
|                                                                    |                             |       |   |             

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Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(10) |  | Financial Instruments with Off-Balance-Sheet Risk, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments
are expected to be drawn upon, the total commitment amounts generally
represent future cash requirements. Legends Financial evaluates each
customers credit-worthiness on a case-by-case basis. The amount of
collateral, if deemed necessary by Legends Financial upon extension of
credit, is based on managements credit evaluation of the counterparty.
Collateral normally consists of real property.
|    
|(11) |  | Legends Financial Holdings, Inc.  Parent Company Financial Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

LEGENDS FINANCIAL HOLDINGS, INC.
(Parent Company Only)

Balance Sheet

December 31, 2002

|                                         |                                                                                                            |              |                                            |        |              |        | 
|---------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------ | ------------------------------------------ | ------ | ------------ | ------ | 
|                                         |                                                                                                            |              |                                            |        | In Thousands
|                                         |                                                                                                            |              |                                            |        |             
|ASSETS                                   |                                                                                                            |              |                                            |       
|Cash                                     |                                                                                                            | $            | 32                                         | *     
|Deferred tax asset                       |                                                                                                            |              | 6                                          |       
|Investment in commercial bank subsidiary |                                                                                                            |              | 13,802                                     | *     
|Due from commercial bank subsidiary      |                                                                                                            |              | 7                                          | *     
|                                         |                                                                                                            | Total assets |                                            | $      | 13,847       |       
|LIABILITIES AND STOCKHOLDERS EQUITY     |                                                                                                            |              |                                            |       
|Stockholders equity:                    |                                                                                                            |              |                                            |       
|                                         | Preferred stock, no par value, authorized 1,000,000 shares,
no shares issued                               |              | $                                          |       |             
|                                         | Common stock, par value $1 per share, authorized 2,000,000
shares, 1,379,083 shares issued and outstanding |              |                                            | 1,379  |             
|                                         | Additional paid-in capital                                                                                 |              |                                            | 12,267 |             
|                                         | Retained earnings                                                                                          |              |                                            | 43     |             
|                                         | Net unrealized gains on available-for-sale securities, net of
income taxes of $97,000                      |              |                                            | 158    |             
|                                         |                                                                                                            |              |                                            |       
|                                         |                                                                                                            |              | Total stockholders equity                 |        |              | 13,847 | 
|                                         |                                                                                                            |              |                                            |       
|                                         |                                                                                                            |              | Total liabilities and stockholders equity |        | $            | 13,847 | 
|                                         |                                                                                                            |              |                                            |       

* Eliminated in consolidation.

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Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(11) |  | Legends Financial Holdings, Inc.  Parent Company Financial Information, Continued
|---- |  | ----------------------------------------------------------------------------------

LEGENDS FINANCIAL HOLDINGS, INC.
(Parent Company Only)

Statement of Earnings and Comprehensive Earnings

For the Period July 1, 2002 (Inception) through December 31, 2002

|                                                               |                                                                                                            |                                                                                                            |     |              |     |  
|-------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | --- | ------------ | --- | -
|                                                               |                                                                                                            |                                                                                                            |     | In Thousands
|                                                               |                                                                                                            |                                                                                                            |     |             
|Operating expenses                                             |                                                                                                            | $                                                                                                          | 18  |             
|                                                               |                                                                                                            | Loss before Federal income tax benefits and
equity in undistributed earnings of commercial
bank subsidiary |     |              | (18 | )
|Federal income tax benefits                                    |                                                                                                            |                                                                                                            | 7   |             
|                                                               |                                                                                                            |                                                                                                            |     |             
|                                                               |                                                                                                            |                                                                                                            | (11 | )           
|Equity in undistributed earnings of commercial bank
subsidiary |                                                                                                            |                                                                                                            | 395 | *           
|                                                               |                                                                                                            |                                                                                                            |     |             
|                                                               |                                                                                                            | Net earnings                                                                                               |     |              | 384 |  
|Other comprehensive earnings, net of tax:                      |                                                                                                            |                                                                                                            |     |             
|                                                               | Unrealized gains on available-for-sale securities arising
during the year, net of taxes of $24,000 in 2002 |                                                                                                            |     | 38           |    
|                                                               | Less: reclassification adjustment for losses included in
net earnings, net of taxes of $3,000              |                                                                                                            |     | 5            |    
|                                                               |                                                                                                            |                                                                                                            |     |             
|                                                               |                                                                                                            | Other comprehensive earnings                                                                               |     |              | 43  |  
|                                                               |                                                                                                            |                                                                                                            |     |             
|                                                               |                                                                                                            | Comprehensive earnings                                                                                     |     | $            | 427 |  
|                                                               |                                                                                                            |                                                                                                            |     |             

*Eliminated in consolidation.

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Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(11) |  | Legends Financial Holdings, Inc.  Parent Company Financial Information, Continued
|---- |  | ----------------------------------------------------------------------------------

LEGENDS FINANCIAL HOLDINGS, INC.
(Parent Company Only)

Statement of Stockholders Equity

For the Period July 1, 2002 (Inception) through December 31, 2002

|                                                                                                         |  |              |       |         |  |            |        |            |  |            |      |   |  |                |     |  |  |  |        | 
|-------------------------------------------------------------------------------------------------------- |  | ------------ | ----- | ------- |  | ---------- | ------ | ---------- |  | ---------- | ---- | - |  | -------------- | --- |  |  |  | ------ | 
|                                                                                                         |  | In Thousands
|                                                                                                         |  |             
|                                                                                                         |  |              |       |         |  |            |        |            |  |            |      |   |  | Net Unrealized |     |  |  | 
|                                                                                                         |  |              |       |         |  |            |        |            |  |            |      |   |  | Gains On       |     |  |  | 
|                                                                                                         |  |              |       |         |  | Additional |        | Retained   |  | Available- |      |   |  |               
|                                                                                                         |  | Common       |       | Paid-In |  | Earnings   |        | For-Sale   |  |            |      |  
|                                                                                                         |  | Stock        |       | Capital |  | (Deficit)  |        | Securities |  | Total     
|                                                                                                         |  |              |       |         |  |            |        |            |  |           
|Acquisition by share exchange with
Legends Bank, July 1, 2002                                            |  | $            | 1,143 |         |  |            | 12,446 |            |  |            | (341 | ) |  |                | 115 |  |  |  | 13,363 | 
|Issuance of 6,720 shares of $1 par value
common stock                                                    |  |              | 7     |         |  |            | 50     |            |  |            |     |   |  |                |    |  |  |  | 57     | 
|Stock-split effected in the form of a stock
dividend declared at 1 share for every 5
outstanding         |  |              | 229   |         |  |            | (229   | )          |  |            |     |   |  |                |    |  |  |  |       | 
|Net change in unrealized gains
on available-for-sale securities during the year, net of
taxes of $97,000 |  |              |      |         |  |            |       |            |  |            |     |   |  |                | 43  |  |  |  | 43     | 
|Net earnings for the period July 1, 2002
(inception) through December 31, 2002                           |  |              |      |         |  |            |       |            |  |            | 384  |   |  |                |    |  |  |  | 384    | 
|                                                                                                         |  |              |       |         |  |            |        |            |  |            |      |   |  |                |     |  |  |  |        | 
|Balance December 31, 2002                                                                                |  | $            | 1,379 |         |  |            | 12,267 |            |  |            | 43   |   |  |                | 158 |  |  |  | 13,847 | 
|                                                                                                         |  |              |       |         |  |            |        |            |  |            |      |   |  |                |     |  |  |  |        | 

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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(11) |  | Legends Financial Holdings, Inc.  Parent Company Financial Information, Continued
|---- |  | ----------------------------------------------------------------------------------

LEGENDS FINANCIAL HOLDINGS, INC.
(Parent Company Only)

Statement of Cash Flows

For the Period July 1, 2002 (Inception) through December 31, 2002

Increase (Decrease) in Cash and Cash Equivalents

|                                                 |                         |                                           |    |              |     |  
|------------------------------------------------ | ----------------------- | ----------------------------------------- | -- | ------------ | --- | -
|                                                 |                         |                                           |    | In Thousands
|                                                 |                         |                                           |    |             
|Cash flows from operating activities:            |                         |                                           |    |             
|                                                 | Cash paid to suppliers  |                                           | $  | (18          | )  
|                                                 |                         |                                           |    |             
|                                                 |                         | Net cash used in operating activities     |    |              | (18 | )
|                                                 |                         |                                           |    |             
|Cash flows from financing activities:            |                         |                                           |    |             
|                                                 | Advance from subsidiary |                                           |    | 50           |    
|                                                 |                         |                                           |    |             
|                                                 |                         | Net cash provided by financing activities |    |              | 50  |  
|                                                 |                         |                                           |    |             
|                                                 |                         | Net increase in cash and cash equivalents |    |              | 32  |  
|Cash and cash equivalents at beginning of period |                         |                                           |   |             
|                                                 |                         |                                           |    |             
|Cash and cash equivalents at end of year         |                         | $                                         | 32 |             
|                                                 |                         |                                           |    |             

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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(11) |  | Legends Financial Holdings, Inc.  Parent Company Financial Information, Continued
|---- |  | ----------------------------------------------------------------------------------

LEGENDS FINANCIAL HOLDINGS, INC.
(Parent Company Only)

Statement of Cash Flows, Continued

For the Period July 1, 2002 (Inception) through December 31, 2002

Increase (Decrease) in Cash and Cash Equivalents

|                                                                                |                                                  |                                       |   |              |      |  
|------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------- | - | ------------ | ---- | -
|                                                                                |                                                  |                                       |   | In Thousands
|                                                                                |                                                  |                                       |   |             
|Reconciliation of net earnings to net cash used in
operating
activities:        |                                                  |                                       |   |             
|                                                                                | Net earnings                                     |                                       | $ | 384          |     
|Adjustments to reconcile net earnings to net cash
used in operating activities: |                                                  |                                       |   |             
|                                                                                | Equity in earnings of commercial bank subsidiary |                                       |   | (395         | )   
|                                                                                | Increase in deferred taxes                       |                                       |   | (7           | )   
|                                                                                |                                                  |                                       |   |             
|                                                                                |                                                  | Total adjustments                     |   |              | (402 | )
|                                                                                |                                                  |                                       |   |             
|                                                                                |                                                  | Net cash used in operating activities |   | $            | (18  | )
|                                                                                |                                                  |                                       |   |             

27



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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(12) |  | Concentration of Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Practically all of Legends Financials loans, commitments, and commercial
and standby letters of credit have been granted to customers in Legends
Financials market area. Practically all such customers are depositors
of Legends Financial. The concentrations of credit by type of loan are
set forth in note 2 to the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(13) |  | Employee Benefit Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     |  | Legends Financial maintains a 401(K) plan which covers eligible
employees. All full time employees are eligible to participate. The
plan provides for both employee and employer contributions. For the
years ended December 31, 2002, 2001, and 2000 Legends Financial
contributed $45,000, $26,000 and $9,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|(14) |  | Regulatory Matters and Restrictions on Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | Legends Financial is subject to regulatory capital requirements
administered by the Federal Deposit Insurance Corporation and the
Tennessee Department of Financial Institutions. Failure to meet capital
requirements can initiate certain mandatory-and possibly additional
discretionary-actions by regulators that could, in that event, have a
direct material effect on the institutions financial statements. The
relevant regulations require Legends Financial to meet specific capital
adequacy guidelines that involve quantitative measures of Legends
Financials assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting principles. Legends Financials
capital classifications are also subject to qualitative judgments by the
Regulators about components, risk weightings and other factors. Those
qualitative judgments could also affect Legends Financials capital
status and the amount of dividends Legends Financial may distribute.
|    
|     |  | Legends Financial is required to maintain minimum amounts of capital to
total risk weighted assets, as defined by Legends Banking regulators.
Legends Financial is required to have a minimum Tier I and Total Capital
ratios of 4.0% and 8.0%, respectively. The actual ratios were 15.6% and
16.6% at December 31, 2002 and 18.0% and 19.1% at December 31, 2001. The
leverage ratios at December 31, 2002 and 2001 were 12.1% and 15.2%,
respectively, and the minimum requirement was 4.0%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|     |  | As of December 31, 2002, Legends Financial is categorized as well
capitalized under the regulatory framework for prompt corrective action.
There are no conditions or events since the notification that management
believes have changed Legends Financials category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(15) |  | Stock Option Arrangement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|     |  | In December, 1998, the Board of Directors of Legends Bank approved the
Legends Bank 1998 Stock Option Arrangement (the 1998 Arrangement). The
1998 Arrangement provides for the granting of stock options, and authorizes
the issuance of common stock upon the exercise of such options, for up to
74,400 shares of common stock, to officers of Legends Bank and up to
33,600 shares of common stock to the Directors of Legends Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

28



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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(15) |  | Stock Option Arrangement, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Under the 1998 Arrangement, stock option awards may be granted in
the form of incentive stock options or nonstatutory stock options, and
are generally exercisable for up to five years following the date such
option awards are granted. Exercise prices of incentive stock options
must be equal to or greater than 100% of the fair market value of the
common stock on the grant date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|     |  | In April of 2001 the Board of Directors of Legends Bank approved the 2001
Stock Option Plan (the 2001 Plan). The 2001 Plan provides for the
granting of 215,998 shares of stock available for options. Under the
2001 Plan, stock option awards may be granted in the form of incentive
stock options or nonstatutory stock options and are exercisable over
three to six years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|     |  | Legends Financials stockholders approved Legends Bank 1998 Stock Option
Arrangement and 2001 Stock Option Plan. Legends Financial agreed with
Legends Bank that it would exchange its options to the holders of stock
options under the 1998 Arrangement and the 2001 Plan on an
option-for-option basis. Thus options that were outstanding under the
1998 Arrangement and the 2001 Plan have been exchanged for options under
Legends Financials Stock Option Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|     |  | On September 17, 2002, the Board of Directors of Legends Financial
approved a stock-split effected in the form of a one-for-five stock
dividend. The stock dividend also applied to all option arrangements and
as such the number of options, exercise prices and related earnings per
share disclosures have been retroactively adjusted to reflect the
stock-split effected in the form of a dividend.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|     |  | Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock Based Compensation as amended by SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure sets forth the
methods for recognition of cost of arrangements similar to those of
Legends Financial. As is permitted, management has elected to continue
accounting for the arrangement under APB Opinion 25 and related
Interpretations in accounting for its arrangement. However, under SFAS
No. 123, Legends Financial is required to make proforma disclosures as if
cost had been recognized in accordance with the pronouncement. Had
compensation cost for Legends Financials stock option arrangement been
determined based on the fair value at the grant dates for awards under
the arrangement consistent with the method of SFAS No. 123, Legends
Financials net earnings and basic earnings per common share and diluted
earnings per common share would have been reduced to the proforma amounts
indicated below.

|                 |  |             |  |                                        |     |      |  |      |     |  |  |   |     | 
|---------------- |  | ----------- |  | -------------------------------------- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|                 |  |             |  | In Thousands, Except Per Share Amounts
|                 |  |             |  |                                       
|                 |  |             |  | 2002                                   |     | 2001 |  | 2000
|                 |  |             |  |                                        |     |      |  |     
|Net earnings     |  | As Reported |  | $                                      | 594 |      |  | $    | 499 |  |  | $ | 88  | 
|                 |  | Proforma    |  | $                                      | 518 |      |  | $    | 310 |  |  | $ | 58  | 
|Basic earnings   |  | As Reported |  | $                                      | .43 |      |  | $    | .36 |  |  | $ | .06 | 
|per common share |  | Proforma    |  | $                                      | .39 |      |  | $    | .23 |  |  | $ | .04 | 
|Diluted earnings |  | As Reported |  | $                                      | .43 |      |  | $    | .36 |  |  | $ | .06 | 
|per common share |  | Proforma    |  | $                                      | .39 |      |  | $    | .23 |  |  | $ | .04 | 

29



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Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(15) |  | Stock Option Arrangement, Continued                  
|---- |  | -----------------------------------------------------
|    
|     |  | A summary of the stock option activity is as follows:

|                                 |  |        |         |       |  |          |       |       |  |        |         |          |  |   |       |  |  |          |         |   |  |   |      | 
|-------------------------------- |  | ------ | ------- | ----- |  | -------- | ----- | ----- |  | ------ | ------- | -------- |  | - | ----- |  |  | -------- | ------- | - |  | - | ---- | 
|                                 |  | 2002   |         | 2001  |  | 2000    
|                                 |  |        |         |       |  |         
|                                 |  |        |         |       |  | Weighted |       |       |  |        |         | Weighted |  |   |       |  |  | Weighted
|                                 |  |        |         |       |  | Average  |       |       |  |        |         | Average  |  |   |       |  |  | Average 
|                                 |  |        |         |       |  | Exercise |       |       |  |        |         | Exercise |  |   |       |  |  | Exercise
|                                 |  | Shares |         | Price |  | Shares   |       | Price |  | Shares |         | Price   
|                                 |  |        |         |       |  |          |       |       |  |        |         |         
|Outstanding at
beginning of year |  |        | 265,740 |       |  | $        | 15.13 |       |  |        | 93,600  |          |  | $ | 8.33  |  |  |          | 107,760 |   |  | $ | 8.33 | 
|Granted                          |  |        | 4,200   |       |  |          | 18.75 |       |  |        | 173,160 |          |  |   | 18.75 |  |  |          |        |   |  |   |     | 
|Exercised                        |  |        | (8,400  | )     |  |          | 8.33  |       |  |        | (1,020  | )        |  |   | 8.33  |  |  |          | (13,920 | ) |  |   | 8.33 | 
|Forfeited                        |  |        | (1,680  | )     |  |          | 18.75 |       |  |        |        |          |  |   |      |  |  |          | (240    | ) |  |   | 8.33 | 
|                                 |  |        |         |       |  |          |       |       |  |        |         |          |  |   |       |  |  |          |         |   |  |   |      | 
|Outstanding at end
of year       |  |        | 259,860 |       |  | $        | 15.38 |       |  |        | 265,740 |          |  | $ | 15.13 |  |  |          | 93,600  |   |  | $ | 8.33 | 
|                                 |  |        |         |       |  |          |       |       |  |        |         |          |  |   |       |  |  |          |         |   |  |   |      | 
|Options exercisable
at year end  |  |        | 141,952 |       |  |          |       |       |  |        | 89,606  |          |  |   |       |  |  |          | 29,681  |   |  |   |      | 
|                                 |  |        |         |       |  |          |       |       |  |        |         |          |  |   |       |  |  |          |         |   |  |   |      | 



| |  | The following table summarizes information about fixed stock options
outstanding at December 31, 2002:
| |  | ------------------------------------------------------------------------------------------------------

|         |  |             |                     |          |                     |             |          |             |         |           |          |  |        |  |          |   |       |  |  |  | 
|-------- |  | ----------- | ------------------- | -------- | ------------------- | ----------- | -------- | ----------- | ------- | --------- | -------- |  | ------ |  | -------- | - | ----- |  |  |  | 
|         |  |             | Options Outstanding |          | Options Exercisable
|         |  |             |                     |          |                    
|         |  |             |                     |          |                     |             |          |             |         |           | Weighted |  |        |  |          |   |       |  | 
|         |  |             |                     |          |                     |             | Weighted |             | Average |           |          |  |        |  | Weighted
|Range of |  | Number      |                     | Average  |                     | Remaining   |          | Number      |         | Average  
|Exercise |  | Outstanding |                     | Exercise |                     | Contractual |          | Exercisable |         | Exercise 
|Prices   |  | at 12/31/02 |                     | Price    |                     | Life        |          | at 12/31/02 |         | Price    
|         |  |             |                     |          |                     |             |          |             |         |          
|$  8.33  |  |             | 84,180              |          |                     | $           | 8.33     |             |         | 6 years   |          |  | 63,060 |  |          | $ | 8.33  | 
|$18.75   |  |             | 175,680             |          |                     | $           | 18.75    |             |         | 8.3 years |          |  | 78,892 |  |          | $ | 18.75 | 
|         |  |             |                     |          |                     |             |          |             |         |           |          |  |        |  |          |   |       |  |  | 
|         |  |             | 259,860             |          |                     |             |          |             |         |           |          |  |        |  | 141,952  |   |       |  |  | 
|         |  |             |                     |          |                     |             |          |             |         |           |          |  |        |  |          |   |       |  |  | 



| |  | The fair value of options granted in 2002 and 2001 was $1.41 and $3.05,
respectively, for each option. The 2002 and 2001 respective weighted
average assumptions used to calculate the minimum value were as follows:
risk free rate at 4.70% and 5.22%; expected life of five and seven years;
volatility of .01%; and dividend yield of 2.88% and 2.67%. The dividend
yield was computed assuming an 18% return on equity with a 30% dividend
to earnings payout ratio. There were no options granted in 2000.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(16) |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Statement of Financial Accounting Standards (SFAS) No. 128 Earnings Per
Share establishes uniform standards for computing and presenting
earnings per share. The computation of basic earnings per share is based
on the weighted average number of common shares outstanding during the
period. For Legends Financial, the computation of diluted earnings per
share begins with the basic earnings per share plus the effect of common
shares contingently issuable from stock options and warrants. The
weighted average number of shares used in the computation of earnings per
share have been retroactively adjusted to reflect the effects of a
stock-split effected in the form of a one for five stock dividend
declared on September 17, 2002.
|    
|     |  | The following is a summary of the components comprising basic and diluted
earnings per share (EPS):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |           |           |     | 
|------------------------ | ------------------------------------------------------------------ | ---------------------------------------------------- | --------------------------------- | --------- | ---------------------------------- | --- | --------- | --------- | --------- | --- | --------- | --------- | --------- | --- | 
|                         |                                                                    |                                                      |                                   |           | In Thousands,                     
|                         |                                                                    |                                                      |                                   |           | Except Share and Per Share Amounts
|                         |                                                                    |                                                      |                                   |           |                                   
|                         |                                                                    |                                                      |                                   |           | 2002                               |     | 2001      |           | 2000     
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |          
|Basic EPS Computation:   |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |          
|                         | Numerator  Net earnings for the year                              |                                                      | $                                 | 594       |                                    |     | $         | 499       |           |     | $         | 88        |          
|                         | Denominator  Weighted average number
of common shares outstanding |                                                      |                                   | 1,374,200 |                                    |     |           | 1,369,968 |           |     |           | 1,355,899 |          
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |          
|                         |                                                                    |                                                      | Basic earnings per common share   |           | $                                  | .43 |           |           | $         | .36 |           |           | $         | .06 | 
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |           |          
|Diluted EPS Computation: |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |          
|                         | Numerator  Net earnings for the year                              |                                                      | $                                 | 594       |                                    |     | $         | 499       |           |     | $         | 88        |          
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |           |          
|                         | Denominator:                                                       |                                                      |                                   |           |                                    |     |           |           |           |     |           |           |          
|                         |                                                                    | Weighted average number of common
shares outstanding |                                   |           | 1,374,200                          |     |           |           | 1,369,968 |     |           |           | 1,355,899 |    
|                         |                                                                    | Effect of stock options                              |                                   |           | 15,376                             |     |           |           | 16,930    |     |           |           | 8,159     |    
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |          
|                         |                                                                    |                                                      | 1,389,576                         |           |                                    |     | 1,386,898 |           |           |     | 1,364,058 |          
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |          
|                         |                                                                    |                                                      | Diluted earnings per common share |           | $                                  | .43 |           |           | $         | .36 |           |           | $         | .06 | 
|                         |                                                                    |                                                      |                                   |           |                                    |     |           |           |           |     |           |           |          



|(17) |  | Disclosures About Fair Value of Financial Instruments                                                                                                                                                                                                                                                                              
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures
about Fair Value of Financial Instruments requires that Legends
Financial disclose estimated fair values for its financial instruments.
Fair value estimates, methods, and assumptions are set forth below for
Legends Financials financial instruments.
|    
|     |  | Cash and short-term investments                                                                                                                                                                                                                                                                                                    



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | For those short-term instruments, the carrying amount is a
reasonable estimate of fair value.

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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(17) |  | Disclosures About Fair Value of Financial Instruments, Continued
|---- |  | ----------------------------------------------------------------
|    
|     |  | Investments and Mortgage-Backed Securities                      



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The carrying amounts for short-term securities approximate fair value
because they mature in 90 days or less and do not present
unanticipated credit concerns. The fair value of longer-term
securities and mortgage-backed securities, except certain state and
municipal securities, is estimated based on bid prices published in
financial newspapers or bid quotations received from securities
dealers. The fair value of certain state and municipal securities is
not readily available through market sources other than dealer
quotations, so fair value estimates are based on quoted market prices
of similar instruments, adjusted for differences between the quoted
instruments and the instruments being valued.
|
| | SFAS No. 107 specifies that fair values should be calculated based on
the value of one unit without regard to any premium or discount that
may result from concentrations of ownership of a financial instrument,
possible tax ramifications, or estimated transaction costs.
Accordingly, these considerations have not been incorporated into the
fair value estimates.                                                                                                                                                                                                                                                                                                                                                       



| |  | Loans
| |  | -----



| |                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fair values are estimated for portfolios of loans with similar
financial characteristics. Loans are segregated by type such as
commercial, mortgage, credit card and other consumer. Each loan
category is further segmented into fixed and adjustable rate interest
terms.



| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of the various categories of loans is estimated by
discounting the future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit ratings
and for the same remaining average estimated maturities.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The estimated maturity for mortgages is modified from the contractual
terms to give consideration to managements experience with
prepayments. Management has made estimates of fair value discount
rates that it believes to be reasonable. However, because there is no
market for many of these financial instruments, management has no
basis to determine whether the fair value presented below would be
indicative of the value negotiated in an actual sale.



| |                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The value of the loan portfolio is also discounted in consideration of
the credit quality of the loan portfolio as would be the case between
willing buyers and sellers. Particular emphasis has been given to
loans on the subsidiary banks internal watch list. Valuation of
these loans is based upon borrower performance, collateral values
(including external appraisals), etc.



| |  | Deposit Liabilities
| |  | -------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of demand deposits, savings accounts and certain money
market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining
maturities. Under the provision of SFAS No. 107 the fair value
estimates for deposits does not include the benefit that results from
the low cost funding provided by the deposit liabilities compared to
the cost of borrowing funds in the market.

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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(17) |  | Disclosures About Fair Value of Financial Instruments, Continued
|---- |  | ----------------------------------------------------------------
|    
|     |  | Securities Sold Under Repurchase Agreements                     



| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | The securities sold under repurchase agreements are payable upon
demand. For this reason the carrying amount is a reasonable estimate
of fair value.



| |  | Commitments to Extend Credit, Standby Letters of Credit and Financial
Guarantees Written
| |  | ----------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Loan commitments are made to customers generally for a period not to
exceed one year and at the prevailing interest rates in effect at the
time the loan is closed. Commitments to extend credit related to
construction loans are made for a period not to exceed six months with
interest rates at the current market rate at the date of closing. In
addition, standby letters of credit are issued for periods up to three
years with rates to be determined at the date the letter of credit is
funded. Fees are only charged for the construction loans and the
standby letters of credit and the amounts unearned at December 31,
2002 and 2001 are insignificant. Accordingly, these commitments have
no carrying value and management estimates the commitments to have no
significant fair value.



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | The carrying value and estimated fair values of Legends Financials
financial instruments at December 31, 2002:

|                                    |                                 |  |              |        |            |  |        |        |            |  |     |        |   |  |     |        | 
|----------------------------------- | ------------------------------- |  | ------------ | ------ | ---------- |  | ------ | ------ | ---------- |  | --- | ------ | - |  | --- | ------ | 
|                                    |                                 |  | In Thousands
|                                    |                                 |  |             
|                                    |                                 |  | 2002         |        | 2001      
|                                    |                                 |  |              |        |           
|                                    |                                 |  | Carrying     |        |            |  |        |        | Carrying   |  |     |        |  
|                                    |                                 |  | Amount       |        | Fair Value |  | Amount |        | Fair Value
|                                    |                                 |  |              |        |            |  |        |        |           
|Financial assets:                   |                                 |  |              |        |            |  |        |        |            |  |     |        |   |  |     |       
|                                    | Cash and short-term investments |  | $            | 6,512  |            |  |        | 6,512  |            |  |     | 3,826  |   |  |     | 3,826  | 
|                                    | Securities                      |  |              | 24,593 |            |  |        | 24,593 |            |  |     | 19,740 |   |  |     | 19,740 | 
|                                    | Loans                           |  |              | 77,780 |            |  |        |        |            |  |     | 62,811 |   |  |     |        | 
|                                    | Less: allowance for loan losses |  |              | (879   | )          |  |        |        |            |  |     | (755   | ) |  |     |        | 
|                                    |                                 |  |              |        |            |  |        |        |            |  |     |        |   |  |     |        | 
|                                    | Loans, net of allowance         |  |              | 76,901 |            |  |        | 77,045 |            |  |     | 62,056 |   |  |     | 62,596 | 
|                                    |                                 |  |              |        |            |  |        |        |            |  |     |        |   |  |     |       
|Loans held for sale                 |                                 |  | 1,687        |        |            |  | 1,687  |        |            |  | 239 |        |   |  | 239 |       
|Financial liabilities:              |                                 |  |              |        |            |  |        |        |            |  |     |        |   |  |     |       
|                                    | Deposits                        |  |              | 94,971 |            |  |        | 95,427 |            |  |     | 73,438 |   |  |     | 74,011 | 
|                                    | Advances from FHLB              |  |              | 1,500  |            |  |        | 1,500  |            |  |     | 2,500  |   |  |     | 2,500  | 
|Unrecognized financial
instruments: |                                 |  |              |        |            |  |        |        |            |  |     |        |   |  |     |       
|                                    | Commitments to extend credit    |  |              |       |            |  |        |       |            |  |     |       |   |  |     |       | 
|                                    | Standby letters of credit       |  |              |       |            |  |        |       |            |  |     |       |   |  |     |       | 

33



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##### Table of Contents



Legends Financial Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000



|(17) |  | Disclosures About Fair Value of Financial Instruments, Continued
|---- |  | ----------------------------------------------------------------
|    
|     |  | Limitations                                                     



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instruments. These estimates do not reflect any premium or discount
that could result from offering for sale at one time Legends
Financials entire holdings of a particular financial instrument.
Because no market exists for a significant portion of Legends
Financials financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and
other factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot
be determined with precision. Changes in assumptions could
significantly affect the estimates.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fair value estimates are based on estimating on-and-off-balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities
that are not considered financial instruments. For example, Legends
Financial has a mortgage department that contributes net fee income
annually. The mortgage department is not considered a financial
instrument, and its value has not been incorporated into the fair
value estimates. Other significant assets and liabilities that are
not considered financial assets or liabilities include deferred tax
assets and liabilities and property, plant and equipment. In
addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair
value estimates and have not been considered in the estimates.

34



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##### Table of Contents






SIGNATURES

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

| |  |                                               |  |                                                      
| |  | --------------------------------------------- |  | -----------------------------------------------------
| |  | LEGENDS FINANCIAL HOLDINGS, INC.
(Registrant)
| |  |                                               |  |                                                      
| |  | By:                                           |  | /s/ Billy P. Atkins                                  
| |  |                                               |  |                                                      
| |  |                                               |  | Billy P. Atkins, President andChief
Executive Officer
| |  |                                               |  |                                                      
| |  | Date:                                         |  | 5/6/03                                               
| |  |                                               |  |                                                      





---



##### Table of Contents



POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Billy P. Atkins and Thomas E. Bates, Jr.,
and each of them severally, his true and lawful attorney-in-fact and agent,
with full power of substitution and re-substitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendment to
this Report, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming that all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

| |  |       |  |                                                                                                         
| |  | ----- |  | --------------------------------------------------------------------------------------------------------
| |  | By:   |  | /s/ Billy P. Atkins                                                                                     
| |  |       |  |                                                                                                         
| |  |       |  | Billy P. Atkins, President and Chief
Executive Officer                                                  
| |  |       |  |                                                                                                         
| |  | Date: |  | 5/6/03                                                                                                  
| |  |       |  |                                                                                                         
| |  |       |  |                                                                                                         
| |  | By:   |  | /s/ Thomas E. Bates,
Jr.                                                                                
| |  |       |  |                                                                                                         
| |  |       |  | Thomas E. Bates, Jr., Executive Vice
President, Chief Financial Officer and
Principal Accounting Officer
| |  |       |  |                                                                                                         
| |  | Date: |  | 5/6/03                                                                                                  
| |  |       |  |                                                                                                         
| |  |       |  |                                                                                                         
| |  | By:   |  | /s/ James D. Amos                                                                                       
| |  |       |  |                                                                                                         
| |  |       |  | James D. Amos                                                                                           
| |  |       |  |                                                                                                         
| |  | Date: |  | 5/6/03                                                                                                  
| |  |       |  |                                                                                                         
| |  |       |  |                                                                                                         
| |  | By:   |  | /s/ Billy P. Atkins                                                                                     
| |  |       |  |                                                                                                         
| |  |       |  | Billy P. Atkins                                                                                         
| |  |       |  |                                                                                                         
| |  | Date: |  | 5/6/03                                                                                                  
| |  |       |  |                                                                                                         
| |  |       |  |                                                                                                         
| |  | By:   |  | /s/ Mark Ray Barnett                                                                                    
| |  |       |  |                                                                                                         
| |  |       |  | Mark Ray Barnett                                                                                        
| |  |       |  |                                                                                                         
| |  | Date: |  |                                                                                                         
| |  |       |  |                                                                                                         





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##### Table of Contents



| |  |       |  |                            
| |  | ----- |  | ---------------------------
| |  | By:   |  | /s/ Thomas E. Bates,
Jr.   
| |  |       |  |                            
| |  |       |  | Thomas E. Bates, Jr.       
| |  |       |  |                            
| |  | Date: |  | 5/6/03                     
| |  |       |  |                            
| |  |       |  |                            
| |  | By:   |  | /s/ William D.
Dickson, Sr.
| |  |       |  |                            
| |  |       |  | William D. Dickson, Sr.    
| |  |       |  |                            
| |  | Date: |  | 5/6/03                     
| |  |       |  |                            
| |  |       |  |                            
| |  | By:   |  | /s/ Ronald Alan Goad       
| |  |       |  |                            
| |  |       |  | Ronald Alan Goad           
| |  |       |  |                            
| |  | Date: |  | 5/6/03                     
| |  |       |  |                            
| |  | By:   |  | /s/ Dick Wright
Littleton  
| |  |       |  |                            
| |  |       |  | Dick Wright Littleton      
| |  |       |  |                            
| |  | Date: |  | 5/16/03                    
| |  |       |  |                            
| |  |       |  |                            
| |  | By:   |  | /s/ David P.
Nussbaumer    
| |  |       |  |                            
| |  |       |  | David P. Nussbaumer        
| |  |       |  |                            
| |  | Date: |  | 05/06/03                   
| |  |       |  |                            
| |  |       |  |                            
| |  | By:   |  | /s/ Pravin Chhagan Patel   
| |  |       |  |                            
| |  |       |  | Pravin Chhagan Patel       
| |  |       |  |                            
| |  | Date: |  | 5/6/03                     
| |  |       |  |                            





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##### Table of Contents



| |  |       |  |                        
| |  | ----- |  | -----------------------
| |  | By:   |  | /s/ Jimmy Terry, Sr.   
| |  |       |  |                        
| |  |       |  | Jimmy Terry, Sr.       
| |  |       |  |                        
| |  | Date: |  | 5/14/2003              
| |  |       |  |                        
| |  |       |  |                        
| |  | By:   |  | /s/ Francis Gene Washer
| |  |       |  |                        
| |  |       |  | Francis Gene Washer    
| |  |       |  |                        
| |  | Date: |  |                        
| |  |       |  |                        
| |  |       |  |                        
| |  | By:   |  | /s/ Ralph D. Weiland   
| |  |       |  |                        
| |  |       |  | Ralph D. Weiland       
| |  |       |  |                        
| |  | Date: |  | 5/6/03                 
| |  |       |  |