<PAGE>

                 UNITED STATES SECURITY AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

(Mark One)

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

For the quarterly period ended March 31, 2001

                                       OR

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

For the transition period from _____________ to ______________.

                         Commission File Number 0-20251

                            Crescent Banking Company
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

             Georgia                                   58-1968323
--------------------------------------------------------------------------------
    (State of Incorporation)               (I.R.S. Employer Identification No.)


        251 Highway 515, Jasper, GA                       30143
--------------------------------------------------------------------------------
  (Address of principal executive offices)              (Zip code)

                                 (706) 692-2424
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not applicable
--------------------------------------------------------------------------------
                     (Former name, former address and former
                   fiscal year, if changed since last report)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes   X   No _____
                                              -----

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

     Common stock, $1 par value per share, 1,824,461 shares issued and
outstanding as of May 11, 2001. 6,668 shares are held as treasury stock.

<PAGE>

                            CRESCENT BANKING COMPANY

                                      INDEX

<TABLE>
<CAPTION>
Part I.  Financial Information                                                       Page No.
<S>                                                                                  <C>
Item 1.  Consolidated Financial Statements

           Consolidated Balance Sheets                                                   3

           Consolidated Statements of Operations and
              Comprehensive Income (Loss)                                                4

           Consolidated Statements of Cash Flows                                         6

           Notes to Consolidated Financial Statements                                    7

Item 2.  Management's Discussion and Analysis
          of Financial Condition and Results of Operations                              10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                     20


Part II. Other Information

Item 1.  Legal Proceedings                                                              21

Item 2.  Changes in Securities                                                          21

Item 3.  Defaults Upon Senior Securities                                                21

Item 4.  Submission of Matters to a Vote of Security Holders                            21

Item 5.  Other Information                                                              21

Item 6.  Exhibits and Reports on Form 8-K                                               21
</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION

                    CRESCENT BANKING COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                            (Restated)
                                                                                             March 31,           December 31,
                                                                                                2001                 2000
                                                                                                ----                 ----
<S>                                                                                        <C>                   <C>
Assets
Cash and due from banks                                                                    $  5,557,177          $  5,120,426
Interest bearing deposits in other banks                                                      5,888,466             1,399,075
Federal fund sold                                                                            11,623,000               800,000
Securities available-for-sale                                                                11,103,625            12,177,326
Securities held-to-maturity, at cost (fair value of
   $1,985,063 and $2,501,340, respectively)                                                   2,071,418             2,559,848
Mortgage loans held for sale                                                                166,030,122           108,847,638

Loans                                                                                        96,550,240            92,911,487
Less allowance for loan losses                                                               (1,371,632)           (1,350,774)
                                                                                           ------------          ------------
   Loans, net                                                                                95,178,608            91,560,713
Premises and equipment, net                                                                   6,234,512             6,263,251
Other real estate owned                                                                         112,644                21,940
Mortgage servicing rights                                                                     3,394,583             3,781,355
Cash surrender value of life insurance                                                        3,506,099             3,444,326
Premium on deposits purchased                                                                   611,551               630,083
Accounts receivable-brokers and escrow agents                                                 5,597,101             3,753,749
Derivative asset                                                                                 67,863                    --
                                                                                                 ------
Other assets                                                                                  1,923,725             1,729,274
                                                                                           ------------          ------------

   Total Assets                                                                            $318,900,494          $242,089,004
                                                                                           ============          ============

Liabilities
Deposits
      Noninterest-bearing                                                                  $ 46,808,936          $ 30,194,956
      Interest-bearing                                                                      154,759,031           131,973,487
                                                                                           ------------          ------------
         Total deposits                                                                     201,567,967           162,168,443

Drafts payable                                                                               12,392,781             6,261,741
Accrued interest and other liabilities                                                        4,332,926             2,911,142
Derivative liability                                                                             14,530                    --
Other borrowings                                                                             83,206,311            54,946,856
                                                                                           ------------          ------------
      Total liabilities                                                                     301,514,515           226,288,182

Shareholders' equity
Common stock, par value $1.00; 10,000,000 shares authorized;                                  1,823,708             1,820,301
   1,823,708 and 1,820,301 issued, respectively
Surplus                                                                                       9,153,791             9,121,344
Retained earnings                                                                             6,470,461             5,772,774
Less cost of 6,668 shares acquired for the treasury                                             (36,091)              (36,091)
Accumulated other comprehensive income (loss)                                                   (25,890)             (877,506)
                                                                                           ------------          ------------

      Total stockholders' equity                                                             17,385,979            15,800,822
                                                                                           ------------          ------------

      Total liabilities and stockholders' equity                                           $318,900,494          $242,089,004
                                                                                           ============          ============
</TABLE>

See notes to Consolidated Financial Statements.

                                        3

<PAGE>

                    CRESCENT BANKING COMPANY AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                           COMPREHENSIVE INCOME (LOSS)
                                   (Restated)
<TABLE>
<CAPTION>
                                                                                             For the three months ended
                                                                                                      March 31,
                                                                                                2001              2000
                                                                                                ----              ----
<S>                                                                                         <C>                <C>
Interest income
Interest and fees on loans                                                                  $2,217,892         $1,348,761
Interest and fees on mortgage loans held for sale                                            2,089,940            894,074
Interest on securities:
     Taxable                                                                                   290,720            253,355
     Nontaxable                                                                                  3,838              3,838
Interest on deposits in other banks                                                             64,156             30,460
Interest on Federal funds sold                                                                  40,276             27,721
                                                                                           -----------        -----------
                                                                                             4,706,822          2,558,209
                                                                                           -----------        -----------

Interest expense
Interest on deposits                                                                         2,197,372          1,118,141
interest on other borrowings                                                                 1,144,364            548,650
                                                                                           -----------        -----------
                                                                                             3,341,736          1,666,791
                                                                                           -----------        -----------

Net interest income                                                                          1,365,086            891,418
Provision for loan losses                                                                      115,000             95,000
                                                                                           -----------        -----------
Net interest income after provision for loan losses                                          1,250,086            796,418

Other income
Service charges on deposit accounts                                                            186,954             94,946
Mortgage servicing fee income                                                                  168,046            270,309
Gestation fee income                                                                           191,886            345,596
Gains on sale of mortgage servicing rights                                                   2,506,440            887,494
Gains on sale of mortgage loans held for sale                                                  285,568             58,651
Other                                                                                          125,727            146,923
                                                                                           -----------        -----------
                                                                                             3,464,621          1,803,919
Other expenses
Salaries and employee benefits                                                               1,121,269          1,019,119
Occupancy and equipment expense                                                                303,718            238,880
Supplies, postage, and telephone                                                               371,691            252,505
Advertising                                                                                     96,036            149,194
Insurance expense                                                                               53,686             41,775
Depreciation and amortization                                                                  421,561            420,812
Legal and professional                                                                         300,382            243,520
Director fees                                                                                   43,525             35,325
Mortgage subservicing expense                                                                   51,499             84,791
Other                                                                                          561,560            308,757
                                                                                           -----------        -----------
                                                                                             3,324,927          2,794,678

Income (loss) before income taxes (benefits) and cumulative effect of a change in           $1,389,780         $ (194,341)
accounting principal

Applicable income taxes (benefits)                                                             481,766            (69,965)
                                                                                           -----------        -----------
Income (loss) before cumulative effect of a change in accounting principal                  $  908,014         $ (124,376)

Cumulative effect of a change in accounting principal                                          (69,770)                --
                                                                                           -----------        -----------

Net income (loss)                                                                           $  838,244         $ (124,376)
                                                                                           -----------        -----------

Other comprehensive income (loss), net of tax
Unrealized gains (losses) on securities available for sale arising during period               851,616            (58,075)
                                                                                           -----------        -----------
</TABLE>

                                       4

<PAGE>

<TABLE>
<S>                                                                                               <C>               <C>
Comprehensive income (loss)                                                                       $1,689,860         $ (182,451)

Basic earnings (loss) per common share before cumulative effect of a change in                    $     0.50         $    (0.07)
accounting principal

Cumulative effect of a change in accounting principal                                                  (0.04)                --
                                                                                                ------------       ------------
Basic earnings (loss) per common share                                                            $     0.46         $    (0.07)

Diluted earnings (loss) per common share before cumulative effect of a change                     $     0.49         $    (0.07)
in accounting principal

Cumulative effect of a change in accounting principal                                                  (0.04)                --
                                                                                                ------------       ------------
Diluted earnings (loss) per common share                                                          $     0.45         $    (0.07)

Cash dividends per share of common stock                                                          $   0.0775         $   0.0700
</TABLE>

See Notes to Consolidated Financial Statements

                                        5

<PAGE>

                    CRESCENT BANKING COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Restated)

<TABLE>
<CAPTION>
                                                                                                    For the three months ended
                                                                                                            March 31,
                                                                                                      2001              2000
                                                                                                      ----              ----
<S>                                                                                              <C>                <C>
Operating Activities
Net Income (loss)                                                                                $     838,244      $   (124,376)
Adjustments to reconcile net income (loss) to net cash provided by
   (used in) operating activities:
      Accretion of discount on securities                                                              (89,596)         (220,174)
      Amortization of deposit intangible                                                                18,532            18,532
      Amortization of Mortgage servicing rights                                                        182,950           163,400
      Provision for loan loss                                                                          115,000            95,000
      Depreciation                                                                                     300,382           238,880
      Stock compensation expense                                                                            --            47,867
      Gains on sales of mortgage servicing rights                                                   (2,506,440)         (887,494)
      (Increase) decrease in mortgage loans held for sale                                          (57,182,484)       19,972,943
      Acquisition of mortgage servicing rights                                                      (7,251,718)       (3,527,758)
      Proceeds from sales of mortgage servicing rights                                               9,961,980         3,561,091
      Increase in interest receivable                                                                  (12,284)         (188,509)
      Increase in accounts receivable                                                               (1,843,352)         (397,144)
      Increase in drafts payable                                                                     6,131,040           897,235
      Increase (decrease) in interest payable                                                           52,982          (104,470)
      (Increase) decrease in other assets and liabilities, net                                       1,923,145          (173,168)
                                                                                                 -------------      ------------
Net cash provided by (used in) operating activities                                                (49,361,619)       19,371,855

Investing Activities
Net (increase) decrease in interest-bearing deposits in other banks                                 (4,489,391)           71,394
Acquisition of securities held-to-maturity                                                                  --        (1,467,580)
Proceeds from maturities of securities available-for-sale                                            1,131,234                --
Proceeds from maturities of securities held-to-maturity                                                520,493                --
Purchase of life insurance policies                                                                         --        (1,021,903)
Net increase in Federal funds sold                                                                 (10,823,000)               --
Net increase in loans                                                                               (3,823,599)      (10,244,162)
Purchase of premises and equipment                                                                    (271,643)          (61,813)
                                                                                                 -------------      ------------
Net cash used in investing activities                                                              (17,755,906)      (12,724,064)

Financing Activities
Net increase in deposits                                                                            39,399,524         4,810,561
Net increase (decrease) in other borrowings                                                         28,259,455       (12,991,359)
Proceeds from the issuance of common stock                                                              35,854            19,800
Dividends paid                                                                                        (140,557)         (123,220)
                                                                                                 -------------      ------------
Net cash provided (used in) by financing activities                                                 67,554,276        (8,284,218)

Net increase (decrease) in cash and due from banks                                                     436,751        (1,636,427)
Cash and due from banks at beginning of year                                                         5,120,426         5,553,931
                                                                                                 -------------      ------------
Cash and due from banks at end of period                                                         $   5,557,177      $  3,917,504
                                                                                                 =============      ============

Supplemental Disclosure of Cash Flow Information
        Cash paid during period for interest                                                     $   3,288,754      $  1,771,261
</TABLE>

                                        6

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2001

NOTE 1  GENERAL

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments necessary
for a fair presentation of the financial position and results of operations of
the interim periods have been made. All such adjustments are of a normal
recurring nature. Results of operations for the three months ended March 31,
2001 are not necessarily indicative of the results of operations for the full
year or any interim periods.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH FLOW INFORMATION

For purpose of the statements of cash flows, cash equivalents include amounts
due from banks.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

On January 1, 2001, the Company adopted Financial Accounting Standards Board
(FASB) No. 133, "Accounting For Certain Derivative Instruments And Hedging
Activities, " and FASB No. 138, "Accounting For Certain Derivative Instruments
And Certain Hedging Activities- An Amendment of FASB No. 133" (collectively,
"FAS 133"). Under FAS 133, all derivative financial instruments are to be
recognized on a company's balance sheet at fair value. On the date the Company
enters into a derivative contract, the Company designates the derivative
instrument as either (i) a hedge of the fair value of a recognized asset,
liability or an unrecognized firm commitment (a "fair value" hedge), (ii) a
hedge of a forecasted transaction or of the variability of cash flows to be
received or paid related to a recognized asset or liability (a "cash flow"
hedge) or (iii) a free-standing derivative instrument. For a fair value hedge,
changes in the fair value of the derivative instrument and changes in the fair
value of the hedged asset or liability attributable to the hedged risk are
recorded in the net income of the current period. For a cash flow hedge, changes
in the fair value of the derivative to the extent that it is effective are
recorded in other comprehensive income within the stockholders' equity section
of the balance sheet and subsequently reclassified as income in the same period
that the hedged transaction impacts net income. For free-standing derivatives
instruments, changes in the fair values are reported in the net income of the
current period. The Company has three types of derivative financial instruments
that meet the criteria of a derivative as outlined in FAS 133: (i) interest rate
lock commitments, (ii) mandatory sales commitments, and (iii) options to deliver
mortgage-backed securities. All of these derivative financial instruments are
considered to be free-standing derivative instruments.

The Company formally documents the relationship between hedging instruments and
hedged items, as well as the risk management objective and strategy for
undertaking various hedging transactions.

The primary market risk facing the Company is interest rate risk related to its
locked pipeline. The locked pipeline is comprised of interest rate lock
commitments issued on residential mortgage loans to be held for sale. In order
to mitigate the risk that a change in interest rates will result in a decline in
the value of the Company's locked pipeline, the Company enters into hedging
transactions. The locked pipeline is hedged with mandatory sales commitments or
options to deliver mortgage-backed securities that generally correspond with the
composition of the locked pipeline. Due to the variability of closings in the
locked pipeline, which is driven primarily by interest rates, the Company's
hedging policies require that a percentage of the locked pipeline be hedged with
these types of derivative instruments. The Company is generally not exposed to
significant losses, nor will it realize significant gains, related to it locked
pipeline, due to changes in interest rates, net of gains or losses on associated
hedge positions. However, the Company is exposed to the risk that the actual
closings in the locked pipeline may deviate from the estimated closings for a
given change in interest rates. Although interest rates are the primary
determinant, the actual loan closings from the locked pipeline are influenced by
many factors, including the composition of the locked pipeline and remaining
commitment periods. The Company's estimated closings are based on historical
data of loan closings as influenced by recent developments. The locked pipeline
is considered a portfolio of derivative instruments. The locked pipeline, and
the associated free-standing derivative instruments used to hedge the locked
pipeline, are marked to fair value and recorded as a component of gain on sale
of loans in the income statement.

At the date of adoption, the Company recorded certain transition adjustments as
required by FAS 133. The impact on net income, net of tax, was approximately
$(69,770). Through March 31, 2001 the impact on net income, net of tax, was
$103,937. The

                                       7

<PAGE>

$69,770 FAS 133 transition adjustment reflects the January 1, 2001 fair value of
the Company's free standing derivative instruments of $112,533, net of the
related tax effect of $42,763. The $103,937 FAS 133 effect on net income during
the three month period ended March 31, 2001 reflects the change in the fair
value of the Company's free standing derivatives of $165,866, net of the related
tax effect of $61,929.

NOTE 3   RESTATEMENT OF FINANCIAL STATEMENTS

The Company's statements of income have been restated to properly report loan
origination fees as being netted against loan origination costs as required by
SFAS No. 91. The effect of the restatement for periods ended March 31, 2001 and
2000 is as follows:

<TABLE>
<CAPTION>
                                     For the Three Months       For the Three Months
                                     --------------------       --------------------
                                     Ended March 31, 2001       Ended March 31, 2000
                                     --------------------       --------------------
                                        As                         As
                                    Previously       As        Previously        As
                                     Reported     Restated      Reported      Restated
                                     --------                   --------
<S>                                <C>          <C>           <C>           <C>
    Net interest income            $3,190,279   $1,365,086    $1,610,787    $  891,418

    Total other operating
         expenses                  $5,150,120   $3,324,927    $3,514,047    $2,794,678
</TABLE>

This restatement had no effect on the Company's income before extraordinary
items, net income or earnings per common share.

The Company's statements of cash flows have been restated to properly report the
acquisition and proceeds from sales of mortgage servicing rights as an operating
activity rather than as an investing activity. The effect of the restatement for
periods ended March 31, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>
                                     For the Three Months            For the Three Months
                                     --------------------            --------------------
                                     Ended March 31, 2001            Ended March 31, 2000
                                     --------------------            --------------------
                                        As                           As
                                    Previously         As          Previously          As
                                     Reported       Restated        Reported        Restated
                                     --------                       --------
<S>                                <C>            <C>             <C>            <C>
    Net cash provided by
    (used) in operating
    activities                     $(52,071,881)  $(49,361,619)   $ 19,338,522   $ 19,371,855

    Net cash used in
    investing activities           $(15,045,644)  $(17,755,906)   $(12,690,731)  $(12,724,064)
</TABLE>

The Company also has restated its statements of income and balance sheet to
properly account for derivatives in accordance with FAS 133. Refer to the
section above entitled "Note 2- Summary of Significant Accounting Policies-
Derivative Instruments and Hedging Activities" for a discussion of the Company's
accounting under FAS 133. The correction had the effect of increasing
(decreasing) income before extraordinary items, net income and related earnings
per share amounts as follows:

                                             Three Months Ended
                                               March 31, 2001
                                               --------------

Income before extraordinary items
   and net income                                $34,167

Basic earnings per share                             .02

Diluted earnings per share                           .01

NOTE 4   SERVICING PORTFOLIO

The Company services residential loans for various investors under contract for
a fee. As of March 31, 2001, the Company had purchased loans for which it
provides servicing with principal balances totaling $351.6 million.

                                        8

<PAGE>

NOTE 5   EARNINGS (LOSS) PER SHARE

The following is a reconciliation of net income (loss) (the numerator) and
weighted average shares outstanding (the denominator) used in determining basic
and diluted earnings (loss) per common share (EPS):

<TABLE>
<CAPTION>
                                            Three Months Ended March 31, 2001

                                            Net                        Weighted-Average
                                            Income                     Shares                    Per-Share
                                            (Numerator)                (Denominator)             Amount
                                            -----------------------------------------------------------
<S>                                         <C>                        <C>                       <C>
Basic earnings per share before
   cumulative effect of a change
   in accounting principle                  $ 908,014                  1,815,106                 $ 0.50

Cumulative effect of a change
   in accounting principle                  $ (69,770)                 1,815,106                 $(0.04)

Basic earnings per share                      838,244                  1,815,106                 $ 0.46

Effect of dilutive securities
   stock options                                                          31,501

Diluted earnings per share before
   cumulative effect of a change
   in accounting principle                  $ 908,014                  1,846,607                 $ 0.49

Cumulative effect of a change
   in accounting principle                  $ (69,770)                 1,846,607                 $(0.04)

Diluted earnings per share                  $ 838,244                  1,846,607                 $ 0.45

<CAPTION>
                                            Three Months Ended March 31, 2000

                                            Net                        Weighted-Average
                                            Income                     Shares                    Per-Share
                                            (Numerator)                (Denominator)             Amount
                                            -----------------------------------------------------------
<S>                                         <C>                        <C>                       <C>
Basic earnings per share                    $(124,376)                 1,764,018                 $(0.07)

Effect of Dilutive securities
  stock options                                                           93,962

Diluted earnings per share                  $(124,376)                 1,857,980                 $(0.07)
</TABLE>

                                        9

<PAGE>

Item 2) MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

Special Cautionary Notice Regarding Forward-Looking Statements

         The following discussion and analysis of the consolidated financial
condition and results of operations of Crescent Banking Company and its
subsidiaries (the "Company") should be read in conjunction with the Company's
financial statements and related notes included elsewhere herein. Certain of the
statements made or incorporated by reference herein constitute forward-looking
statements for purposes of Section 27A the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and as such
may involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. Such forward looking statements
include statements using the words such as "may," "will," "anticipate,"
"should," "would," "believe," "contemplate," "expect," "estimate," "consider,"
"continue," "intend," "possible" or other similar words and expressions.

         The Company's actual results may differ significantly from these
forward- looking statements because forward-looking statements involve risks and
uncertainties, including, without limitation, the following:

..  the effects of future economic conditions;

..  governmental monetary and fiscal policies, as well as legislative and
   regulatory changes;

..  the risks of changes in interest rates on the level and composition of
   deposits, loan demand, and the values of loan collateral, mortgages,
   securities, and other interest-sensitive assets and liabilities; interest
   rate risks;

..  the effects of competition from other commercial banks, thrifts, mortgage
   banking firms, consumer finance companies, credit unions, securities
   brokerage firms, insurance companies, money market and other mutual funds and
   other financial institutions operating in the Company's market area and
   elsewhere, including institutions operating, regionally, nationally and
   internationally, together with such competitors offering banking products and
   services by mail, telephone, computer and the Internet;

..  the effect of any mergers, acquisitions or other transactions to which the
   Company and/or its subsidiaries may from time to time be a party, including,
   without limitation, the Company's ability to successfully integrate and
   operate any businesses that it acquires; and

..  the failure of assumptions underlying the establishment of reserves for loan
   losses.

         All written or oral forward-looking statements attributable to the
Company are expressly qualified in their entirety by these Cautionary
Statements.

General

         The Company is a Georgia corporation that was incorporated on November
19, 1991, to facilitate the Company becoming the parent holding company of
Crescent Bank and Trust Company (the "Bank"). The Bank is a Georgia banking
corporation that has been engaged in the general commercial banking business
since it opened for business in August 1989. The Bank began wholesale mortgage
banking operations in February 1993. The Company provides a broad range of
banking and financial services in the areas surrounding Jasper, Georgia and has
recently expanded through branches and loan production offices in nearby areas
of Bartow, Cherokee and Forsyth Counties, Georgia. The Company also provides
wholesale residential mortgage banking services to correspondents located in the
Atlanta, Georgia metropolitan area and throughout the Southeast United States.
In March 1998, the Bank expanded a loan production office in Bartow County,
Georgia to a full service Bank branch. In February 1999, the Bank opened a loan
production office in Canton, Georgia, converting it to a full service branch in
September 1999. The Bank purchased a branch on Towne Lake Parkway, Woodstock,
Georgia in June 1999. In February 2000, the Bank opened a loan production office
in Cumming, Georgia, converting it to a full service branch in December 2000.

         The Company also owns 100% of Crescent Mortgage Services, Inc. ("CMS"),
which offers wholesale residential mortgage banking services in the Southeast,
Northeast, MidAtlantic and Midwest United States and provides servicing for
residential mortgage loans. CMS was incorporated on October 11, 1994 and is an
approved servicer of mortgage loans sold to the Federal Home Loan Mortgage
Corporation ("Freddie Mac"), the Federal National Mortgage Association ("Fannie
Mae") and private investors. CMS expanded it operations in November 1994 when it
opened an office in Manchester, New Hampshire to serve the Northeast. In
February 1998, the Company expanded its mortgage operations by engaging in
Federal Housing Administration and Veterans Administration mortgage lending. CMS
opened a wholesale mortgage banking office in Chicago, Illinois in December 1998
and a satellite office in Columbia, Maryland in August 2000.

                                       10

<PAGE>

         On September 30, 1998, the Company completed a two-for-one split of its
common stock, par value $1.00 per share (the "Common Stock"), and, on January
12, 1999, the Company's Common Stock began trading on the Nasdaq SmallCap Market
under the symbol "CSNT." At the end of December 2000, the Company introduced its
Dividend Reinvestment and Stock Purchase Plan (the "Plan"), and, as of March 31,
2001, participation in the Plan exceeded 33% of common shares outstanding. The
Plan is designed to promote long-term investment in the Company by providing
individuals with a convenient and inexpensive way to invest in the Company's
common stock. Under the Plan, shareholders may purchase additional shares by
reinvesting their cash dividends, and both shareholders and non-shareholders can
purchase shares by making optional cash investments through the Plan.

         The Company's net income for the three months ended March 31, 2001 was
$838,244 compared to a net loss of $124,376 for the three months ended March 31,
2000. The increase in net income from the first quarter of 2000 to the first
quarter of 2001 was primarily the result of an increase in earnings from the
Company's mortgage operation. The mortgage banking operation had net income of
$730,344 for the first quarter 2001 compared to a net loss of $220,160 in the
first quarter 2000. The increase in mortgage banking earnings was largely due to
rate decreases during the first quarter of 2001. The Federal Reserve Open Market
committee lowered rates three times during the first quarter of 2001 totaling
150 basis points. The Bank had earnings of $217,153 in the first quarter 2001,
13% greater than earnings of $191,462 in the first quarter 2000. The Bank
experienced loan growth of $3.7 million in the first quarter 2001. The Bank's
loan portfolio totaled $96.6 million at March 31, 2001.

Financial Condition

         The Company's assets increased 31.7% during the first quarter 2001 from
$242.1 million as of December 31, 2000 to $318.9 million as of March 31, 2001.
The increase in total assets in the first quarter 2001 was primarily the result
of a $57.2 million, or 52.6%, increase in residential mortgage loans held for
sale. The increase in assets corresponded with a $28.3 million, or 51.5%,
increase in other borrowings. All mortgage production generated by CMS is funded
through warehouse lines of credit from Colonial Bank ("Colonial Bank"), and UBS
Warburg, LLC ("UBS"), and therefore the increase in mortgage loans held for sale
resulted in a higher average balance of other borrowings. The increase in
mortgage loans held for sale from the first quarter 2000 to the first quarter
2001 was the result of a decrease in market interest rates, which increased
mortgage loan originations.

         Interest-earning assets (comprised of commercial banking loans,
mortgage loans held for sale, investment securities, interest-bearing balances
in other banks and temporary investments) totaled $293.3 million, or 92.0%, of
total assets at March 31, 2001. This represents a 34% increase from December 31,
2000 when earning assets totaled $218.7 million, or 90.3%, of total assets. The
increase in earning assets resulted primarily from the $57.2 million increase of
residential mortgage loans held for sale. Average mortgage loans held for sale
during the first quarter 2001 of $158.6 million constituted 57.8% of average
earning assets and 52.7% of average total assets. Average mortgage loans held
for sale during 2000 of $82.9 million constituted 47.7% of average interest-
earning assets and 41.6% of average total assets.

         During the first quarter 2001, average commercial banking loans were
$94.8 million. Such loans constituted 34.5% of average earning assets and 31.5%
of average total assets. For 2000, average commercial banking loans were $75.2
million, or 43.3%, of average earning assets and 37.8% of average total assets.
The 26% increase in average commercial banking loans was the result of higher
loan demand in the Bank's service area as well as the expansion of the Bank's
operations in Bartow, Cherokee, and Forsyth Counties, Georgia.

         Commercial banking loans are expected to produce higher yields than
securities and other interest-earning assets. In addition, residential mortgage
loans held for sale generally generate net interest income due to the greater
rates of interest paid to the Bank on the longer term mortgage loans over the
rates of interest paid by the Bank on its shorter term warehouse line of credit,
brokered deposits and core deposits. Therefore, the absolute volume of
commercial banking loans and residential mortgage loans held for sale and the
volume as a percentage of total interest-earning assets are an important
determinant of the net interest margin thereof.

                                       11

<PAGE>

         The allowance for loan losses represents management's assessment of the
risk associated with extending credit and its evaluation of the quality of the
loan portfolio. Crescent Bank maintains its allowance for loan losses at a level
that it believes is adequate to absorb the risk of loan losses in the loan
portfolio. In determining the appropriate level of the allowance for loan
losses, management applies a methodology that has both a specific component and
a general component. Under the specific component of the methodology, each loan
is graded:

         (1)   at the time of the loan's origination;

         (2)   at each of Crescent Bank's loan review meetings; and

         (3)   at any point in time when payments due under the loan are
               delinquent.

         Crescent Bank's grading system is similar to the grading systems used
by bank regulators in analyzing loans. To grade a loan, Crescent Bank considers:

         (1)   the value of collateral;

         (2)   the relative risk of the loan, based upon the financial strength
               and creditworthiness of the borrower;

         (3)   prevailing and forecasted economic conditions; and

         (4)   Crescent Bank's historical experience with similar loans.

         The actual grading is performed by loan officers and reviewed and
approved by the loan committee. After grading each of the loans, management
reviews the overall grades assigned to the portfolio as a whole and attempts to
identify, and determine the effect of, potential problem loans.

         The general component of the methodology involves an analysis of actual
loan loss experience, a comparison of the actual loss experience of banks in
Crescent Bank's peer group, and assumptions about the economy generally.
Management also considers the regulatory guidance provided by the Federal
Financial Institution Examination Council's Interagency Policy Statement on
Allowance for Loan Losses Methodologies, as well as other widely accepted
guidance for banks and savings institutions generally.

         Crescent Bank's management applies both the specific and general
components of the methodology, together with regulatory guidance, to determine
an appropriate level for the allowance for loan losses. Crescent Bank also hires
independent loan review consultants on a semi-annual basis to review the quality
of the loan portfolio and the adequacy of the allowance for loan losses. The
provision for loan losses during a particular period is a charge to earnings in
that period in order to maintain the allowance for loan losses at a level that
is estimated to be adequate to cover the risk of loss in the loan portfolio
based upon the methodology.

         The Bank's allowance for loan losses is also subject to regulatory
examinations and determinations as to adequacy, which may take into account such
factors as the methodology used to calculate the allowance for loan losses and
the size of the allowance for loan losses in comparison to a group of peer banks
identified by the regulators. During their routine examinations of banks, the
Federal Deposit Insurance Corporation and the Georgia Department may require a
bank to make additional provisions to its allowance for loan losses when, in the
opinion of the regulators, credit evaluations and allowance for loan loss
methodology differ materially from those of management.

         While it is the Bank's policy to charge off in the current period loans
for which a loss is considered probable, there are additional risks of future
losses which cannot be quantified precisely or attributed to particular loans or
classes of loans. Because these risks include the state of the economy,
management's judgment as to the adequacy of the allowance is necessarily
approximate and imprecise.

         The allowance for loan losses totaled $1,371,632, or 1.42%, of total
commercial banking loans at March 31, 2001, and $1,350,774, or 1.45%, of total
loans at December 31, 2000. The increase in the allowance for loan losses during
the first quarter 2001 was primarily the result of the provision for loan loss
of $115,000. The increase in the allowance for loan loss corresponds to the 4%
increase in the commercial banking loans in the first quarter 2001. The
determination of the reserve level rests upon management's judgment about
factors affecting loan quality, assumptions about the economy, and historical
experience. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with a particular
emphasis on past due and other loans that management believes require attention.
Management believes that, based solely upon current projections, the allowance
at March 31, 2001 was adequate to cover the risk of loss in the loan portfolio;
however,

                                       12

<PAGE>

management's judgment is based upon a number of assumptions about future events
which are believed to be reasonable, but which may or may not be realized. Thus,
there is no assurance that charge-offs in future periods will not exceed the
allowance for loan losses or that additional increases in the allowance for loan
losses will not be required.

         The Company's mortgage loans held for sale are carried at the lower of
cost or market price and, therefore, the Company is not required to maintain a
reserve for their behalf. The Company does have default and foreclosure risk
during the short-term holding period of the mortgages held for sale, which is
inherent to the residential mortgage industry. However, the Company has not
incurred a loss as a result of this risk and therefore does not maintain a
reserve for this purpose.

         The Bank's policy is to discontinue the accrual of interest on loans
which are 90 days past due unless they are well secured and in the process of
collection. Interest on these non-accrual loans is recognized only when
received. As of March 31, 2001, the Bank had $337,427 of loans contractually
past due more than 90 days, $14,142 of loans accounted for on a non-accrual
basis, and no loans considered to be troubled debt restructurings. As of
December 31, 2000, the Bank had $286,393 contractually past due more than 90
days, $21,863 of loans accounted for on a non-accrual basis, and no loans
considered to be troubled debt restructurings.

         Non-performing loans are defined as non-accrual and renegotiated loans.
Adding real estate acquired by foreclosure and held for sale of $112,644 with
non-performing loans results in non-performing assets of $126,786 at March 31,
2001. This compares to non-performing assets of $43,803 at December 31, 2000.
The Bank is currently holding the foreclosed properties for sale.

         The chart below summarizes those of the Bank's assets that management
believes warrant special attention due to the potential for loss, in addition to
the non-performing loans and foreclosed properties. Potential problem loans
represent loans that are presently performing, but where management has doubts
concerning the ability of the respective borrowers to meet contractual repayment
terms.

<TABLE>
<CAPTION>
                                                                            March 31, 2001     December 31, 2000
                                                                            --------------     -----------------
<S>                                                                         <C>                <C>
Non-performing loans (1)                                                     $    14,142           $    21,863
Foreclosed properties                                                            112,644                21,940
                                                                             -----------           -----------
Total non-performing assets                                                      126,786                43,803
                                                                             ===========           ===========

Loans 90 days or more past due on accrual status                             $   337,427           $   286,393
Potential problem loans (2)                                                  $ 1,739,654           $ 2,231,684
Potential problem loans/total loans                                                 1.80%                 2.40%
Non-performing assets/total loans
    And foreclosed properties                                                       0.13%                 0.05%
Non-performing assets and loans 90 days
    or more past due on accrual status/
    total loans and foreclosed properties                                           0.49%                 0.36%
</TABLE>

----------
(1)  Defined as non-accrual loans and renegotiated loans.
(2)  Loans identified by management as potential problem loans (classified and
     criticized loans) but still accounted for on an accrual basis.

         The Bank invests its excess funds in U.S. Government agency
obligations, corporate securities, federal funds sold, and interest-bearing
deposits with other banks. The Bank's investments are managed in relation to
loan demand and deposit growth, and are generally used to provide for the
investment of funds not needed to make loans, while providing liquidity to fund
increases in loan demand or to offset fluctuations in deposits. Investment
securities and interest-bearing deposits with other banks totaled $19.1 million
at March 31, 2001 compared to $16.1 million at December 31, 2000. Unrealized
gains (losses) on securities amounted to $43,149 and ($1.5) million at March 31,
2001 and December 31, 2000, respectively. Management has not specifically
identified any securities for sale in future periods which, if so designated,
would require a charge to operations if the market value would not be reasonably
expected to recover prior to the time of sale. The Bank had federal funds sold
at March 31, 2001 of $11.6 million compared to $800,000 at December 31, 2000.
The increase in federal funds sold at March 31, 2001 was the result of the $39.4
million or 24.3% increase in the Bank's deposits.

         The Company's Mortgage Division (the "Mortgage Division") acquires
residential mortgage loans from small retail-oriented originators through its
operations of CMS and the mortgage division of the Bank. The Bank acquires
conventional loans in the Southeast United States while CMS acquires
conventional loans in the Northeast, Midatlantic and Midwest United States and
FHA/VA loans in the Southeast United States.

                                       13

<PAGE>

         The Bank acquires residential mortgage loans from small retail-oriented
originators in the Southeast United States through various funding sources,
including the Bank's regular funding sources, a $36 million warehouse line of
credit from the FHLB-Atlanta and a $45 million repurchase agreement with UBS.
CMS acquires residential mortgage loans from small retail-oriented originators
in the Southeast, Northeast, Midatlantic and Midwest United States through
various funding sources, including a $75.0 million line of credit from UBS, a
$35 million line of credit from Colonial Bank, and a $75 million repurchase
agreement from UBS. Under the repurchase agreements, the Mortgage Division sells
its mortgage loans and simultaneously assigns the related forward sale
commitments to UBS. Substantially all of the Mortgage Division loans are
currently being resold in the secondary market to Freddie Mac, Fannie Mae and
private investors after being "warehoused" for 10 to 30 days. The Mortgage
Division purchases loans that it believes will meet secondary market criteria,
such as amount limitations and loan-to-value ratios to qualify for resales to
Freddie Mac, Fannie Mae and Ginnie Mae. To the extent that the Mortgage Division
retains the servicing rights on mortgage loans that it resells, it collects
annual servicing fees while the loan is outstanding. The Mortgage Division sells
a portion of its retained servicing rights in bulk form or on a monthly flow
basis. The annual servicing fees and gains on the sale of servicing rights is an
integral part of the Company's mortgage banking operation and its contribution
to net income. The Company currently pays a third party subcontractor to perform
servicing functions with respect to its loans sold with retained servicing.

         During the first quarter 2001, the Mortgage Division acquired $672.1
million of mortgage loans. The Mortgage Division sold in the secondary market
$614.9 million of mortgage loans. At March 31, 2001, $166 million of mortgage
loans were carried as mortgage loans held for sale on the balance sheet pending
sale of such loans. During the first quarter 2000, the Mortgage Division
acquired $226.9 million of mortgage loans. The Mortgage Division sold in the
secondary market $246.9 million of mortgage loans. At March 31, 2000, $67.3
million of mortgage loans were carried as mortgage loans held for sale on the
balance sheet pending sale of such loans.

         At March 31, 2001, $3.4 million of mortgage servicing rights were
carried on the balance sheet. At December 31, 2000, the Company carried $3.8
million of mortgage servicing rights on its balance sheet. The Company is
amortizing the mortgage servicing rights over an accelerated period. At March
31, 2001, the Company held servicing rights with respect to loans with unpaid
principal balances totaling $351.6 million compared to $324.7 at December 31,
2000. During the first quarter 2001, the Company sold servicing rights with
respect to $610.9 million of mortgage loans carried on its balance sheet at
costs of $7.7 million for a gain of $2.5 million. During 2000, the Company sold
servicing rights with respect to $1.3 billion of mortgage loans carried on its
balance sheet at costs of $15.9 million for a gain of $6.2 million The market
value of the servicing portfolio is contingent upon many factors, including,
without limitation, the interest rate environment and changes in such rates, the
estimated life of the servicing portfolio, the loan quality of the servicing
portfolio and the coupon rate of the loan portfolio. There can be no assurance
that the Company will continue to experience a market value of the servicing
portfolio in excess of the cost to acquire the servicing rights, nor can there
be any assurance as to the expected life of the servicing portfolio.

         The Bank's other borrowings consist of borrowings from the Federal Home
Loan Bank of Atlanta (the "FHLB-Atlanta"), which is priced at the FHLB-Atlanta
daily rate plus 25 basis points (5.88% as of March 31, 2001). All mortgage
production generated by CMS is funded through warehouse lines of credit from
Colonial Bank, priced at priced at LIBOR plus 100 basis points (6.38% at March
31, 2001) and UBS, priced at LIBOR plus 1.50 basis points (6.58% at March 31,
2001).

         The Company had fixed assets, consisting of land, building and
improvements, and furniture and equipment of $6.2 million at March 31, 2001
compared to fixed assets of $6.3 million at December 31, 2000. In 1999, the Bank
provided a supplemental retirement plan to its Banking officers funded with life
insurance. In the first quarter 2000, the Company added the Directors to the
supplemental retirement plan, resulting in $3.5 million of cash value of life
insurance at March 31, 2001.

         The Bank's deposits totaled $201.6 million and $162.2 million at March
31, 2001 and December 31, 2000, respectively, an increase of 24.3% over such
period. Deposits averaged $181.5 million and $125.6 million during the periods
ended March 31, 2001 and December 31, 2000, respectively. Interest-bearing
deposits represented 77% of total deposits at March 31, 2001 compared to 82% at
December 31, 2000. Certificates of deposit composed 75% of total
interest-bearing deposits for March 31, 2001 compared to 72% at December 31,
2000. The composition of these deposits is indicative of the interest
rate-conscious market in which the Bank operates and increases in interest
rates, generally. There is no assurance that the Bank can maintain or increase
its market share of deposits in its highly competitive service area.

                                       14

<PAGE>

Capital

         Capital adequacy is measured by risk-based capital guidelines as well
as against leverage ratios. The risk-based capital guidelines developed by
regulatory authorities assign weighted levels of risk to asset categories to
establish capital requirements. The guidelines currently require a minimum of
8.0% of total capital to risk-adjusted assets. One half of the required capital
must consist of Tier 1 Capital, which includes tangible common shareholders'
equity and qualifying perpetual preferred stock. The leverage guidelines specify
a ratio of Tier 1 Capital to total assets of 3.0% if certain requirements are
met, including having the highest regulatory rating, and 4.0% to 5.0% otherwise.
The guidelines also provide that bank holding companies experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without significant
reliance on intangible assets. Furthermore, the guidelines indicate that the
Board of Governors of the Federal Reserve System (the "Federal Reserve") will
continue to consider a "Tangible Tier 1 Leverage Ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activity. The Federal
Reserve has not advised the Company, and the FDIC has not advised the Bank, of
any specific minimum leverage ratio or Tangible Tier 1 Leverage Ratio applicable
to either of them. The Bank had agreed with the Georgia Department of Banking
and Finance (the "Banking Department") to maintain a leverage ratio of 8.0%. At
March 31, 2001 the Bank's leverage ratio was 6.98%. To address the leverage
ratio shortcoming, the Company and the Bank have begun to consider alternative
means of raising capital.

         At March 31, 2001 the Company's total shareholders' equity was $17.4
million or 5.45% of total assets, compared to $15.8 million or 6.53% of total
assets at December 31, 2000. The decrease in shareholders' equity to total asset
ratio in first quarter 2001 was the result of a 31.7% increase in total assets.
At March 31, 2001, total capital to risk-adjusted assets was 8.84%, with 8.17%
consisting of tangible common shareholders' equity. The Company paid $140,557 of
dividends during the first quarter 2001 or $.0775 per share. A quarterly
dividend of $.0775 was declared in April 2001 for payment in May 2001.

         In February 1999, the Company entered into a promissory note (the
"Note") with The Bankers Bank for $1.5 million at a rate of "prime" minus 50
basis points (7.00%) for a 10 year term. The Company pledged 100% of the Bank's
common stock as collateral for the Note. The Company transferred the $1.5
million to CMS to increase its capital and liquidity. In July 1999, the Company
increased the amount of the promissory note to $4.5 million to facilitate the
purchase of the Towne Lake branch. The Company was not required to provide
additional collateral for the increased borrowings. The Company contributed the
additional $3.0 million borrowings to the Bank as capital. In August 2000, the
Company made a principal reduction of $450,000 to the promissory note.

         During the first quarter 2001, 3,407 shares of Common Stock were issued
pursuant to the Dividend Reinvestment and Stock Purchase Plan (the "Plan") for
an aggregate of $35,854. On March 11, 1998, the Company completed a stock
offering for 270,000 shares of common stock at an issue price of $8.125 per
share. The Company effectuated a two for one stock split on September 30, 1998.
On January 12, 1999, the Company's Common Stock began trading on the Nasdaq
SmallCap Market under the symbol "CSNT".

Liquidity and Interest Rate Sensitivity

         Liquidity involves the ability to raise funds to support asset growth,
meet deposit withdrawals and other borrowing needs, maintain reserve
requirements, and otherwise sustain operations. This is accomplished through
maturities and repayments of loans and investments, deposit growth, and access
to sources of funds other than deposits, such as the federal funds market, and
borrowings from the Federal Home Loan Bank and other lenders.

         Average liquid assets (cash and amounts due from banks,
interest-bearing deposits in other banks, federal funds sold, mortgage loans
held for sale net of borrowings, investment securities and securities held for
sale) totaled $76.7 million and $54.7 million during the periods ending March
31, 2001 and December 31, 2000, representing 42% and 44% of average deposits for
those periods, respectively. Average net non-mortgage loans were 52% and 60% of
average deposits for during the periods ending March 31, 2001 and December 31,
2000, respectively. Average deposits were 66% and 72% of average
interest-earning assets for during the periods ending March 31, 2001 and
December 31, 2000, respectively.

         The Bank actively manages the levels, types and maturities of interest-
earning assets in relation to the sources available to fund current and future
needs to ensure that adequate funding will be available at all times. In
addition to the borrowing sources related to the mortgage operations, the Bank
also maintains federal funds lines of credit totaling $6.1 million. The Bank's
liquidity position has also been enhanced by the operations of the Mortgage
Division due to the investment of funds in short-term assets in the form of
mortgages held for sale. Once funded, mortgages will generally be held by the
Bank for a period of 10 to 30 days. Management believes its liquidity sources
are adequate to meet its operating needs.

         Interest rate sensitivity refers to the responsiveness of
interest-bearing assets and liabilities to changes in market interest rates. The
rate-sensitive position, or gap, is the difference in the volume of
rate-sensitive assets and liabilities, at a given time

                                       15

<PAGE>

interval. The general objective of gap management is to actively manage
rate-sensitive assets and liabilities to reduce the effects of interest rate
fluctuations on the net interest margin. Management generally attempts to
maintain a balance between rate-sensitive assets and liabilities as the exposure
period is lengthened to minimize the overall interest rate risk to the Bank.

         Interest rate sensitivity varies with different types of
interest-earning assets and interest-bearing liabilities. Overnight federal
funds, on which rates are susceptible to change daily, and loans, which are tied
to the prime rate, differ considerably from long-term investment securities and
fixed-rate loans. Similarly, time deposits over $100,000 and certain
interest-bearing demand deposits are much more interest-sensitive than savings
deposits. In addition, brokered deposits, institutional deposits placed by
independent brokers, are more interest sensitive. The Bank had brokered deposits
of $6.8 million and $6.7 million at March 31, 2001 and at December 31, 2000,
respectively. The Bank utilizes the brokered deposits to fund its mortgage loans
held for sale and manages the use of those funds in relation with the Bank's
liquidity position.

         The following table shows the interest sensitivity gaps for four
different time intervals as of March 31, 2001.

<TABLE>
<CAPTION>
                                       Interest Rate Sensitivity Gaps
                                            As of March 31, 2001

                                            Amounts Repricing In
                                            --------------------

                             0-90 Days    91-365 Days     1-5 Years    Over 5 Years
                             ---------    -----------     ---------    ------------
                                            (Millions of dollars)
<S>                           <C>           <C>            <C>            <C>
Interest-earning
  Assets                      $224.3         $  22.9       $33.8          $12.3
Interest-bearing
  Liabilities                  134.2            70.9        31.5            1.4
                              ------         -------       -----          -----

Interest sensitivity
  Gap                         $ 90.1         $ (48.0)      $ 2.3          $10.9
                              ======         =======       =====          =====
</TABLE>

         The Company was in an asset-sensitive position for the cumulative
three- month, one-to-five year and over five-year intervals. This means that
during the five-year period, if interest rates decline, the net interest margin
will decline. During the 0-91 day period, which has the greatest sensitivity to
interest rate changes, if rates rise, the net interest margin will improve.
Conversely, if interest rates decrease over this period, the net interest margin
will decline. At March 31, 2001, the Company was within its policy guidelines of
rate-sensitive assets to rate-sensitive liabilities of 80 - 140% at the one-
year interval. Since all interest rates and yields do not adjust at the same
time or rate, this is only a general indicator of rate sensitivity.
Additionally, as described in the following paragraphs, the Company utilizes
mandatory commitments to deliver mortgage loans held for sale, therefore
reducing the interest rate risk. The total excess of interest-bearing assets
over interest-bearing liabilities, based on a five-year time period, was $44.4
million, or 14% of total assets.

         At March 31, 2001, the Company's commitments to purchase mortgage loans
(the "Pipeline") totaled approximately $656 million, up 128.7% from the $286
million at December 31, 2000. Of the Pipeline, the Company had, as of March 31,
2001, approximately $280.5 million for which the Company had interest rate risk.
The remaining $375.5 million of mortgage loans are not subject to interest rate
risk. The mortgages not subject to interest rate risk are comprised of (i) loans
under contract to be placed with a private investor through a "best efforts"
agreement, whereby the investor purchases the loans from the Company at the
contractual loan rate, (ii) loans with floating interest rates which close at
the current market rate, and (iii) loans where the original fixed interest rate
commitment has expired and will be reprice at the current market rate.

         The Mortgage Division has adopted a policy intended to reduce interest
rate risk incurred as a result of market movements between the time commitments
to purchase mortgage loans are made and the time the loans are closed.
Accordingly, commitments to purchase loans will be covered either by a mandatory
sale of such loans into the secondary market or by the purchase of an option to
deliver to the secondary market a mortgage-backed security. The mandatory sale
commitment is fulfilled with loans closed by the Company, through "pairing off"
the commitment, or purchasing loans through the secondary market. Under certain
condition the Company seeks best execution by pairing off the commitment to sell
closed loans and fulfilling that commitment with loans purchased by the Company
through the secondary market. The Company covers mortgage loans held for sale
either by a mandatory sale of such loans or by the purchase of an option to
deliver the loans to the secondary market.

         In hedging the Pipeline, the Company must use a best estimation of the
percentage of the Pipeline that will not close (i.e. loans that "fallout").
Loans generally fallout of the Pipeline for various reasons including, without
limitation, borrowers' failures to qualify for the loan, construction delays,
inadequate appraisal values and changes in interest rates which are substantial
enough for the borrower to seek another financing source. An increasing interest
rate environment provides greater motivation for the

                                       16

<PAGE>

consumer to lock and close loans. Conversely, in a decreasing interest rate
environment, the consumer has a tendency to delay locking and closing loans in
order to obtain the lowest rate. As a result, an increasing interest rate
environment generally results in the Company's fallout ratio to be less than in
an average market. Conversely, in a decreasing rate environment, the Company's
fallout ratio tends to be greater than in an average market. If the Company's
fallout ratio is greater than anticipated, the Company will have more mandatory
commitments to deliver loans than it has loans for which it has closed. In this
circumstance, the Company must purchase the loans to meet the mandatory
commitment on the secondary market and therefore will have interest rate risk in
these loans. Conversely, if the Company's fallout ratio is less than
anticipated, the Company will have fewer mandatory commitments to deliver loans
than it has loans for which it has closed. In this circumstance, the Company
must sell the loans on the secondary market without a mandatory commitment and
therefore will have interest rate risk in these loans.

         The Company's success in reducing its interest rate risk is directly
related to its ability to monitor and estimate its fallout. While other hedging
techniques other than mandatory and optional delivery may be used, speculation
is not allowed under the Mortgage Division's secondary marketing policy. As of
March 31, 2001, the Company had in place purchase commitment agreements
terminating between April and June of 2001 with respect to an aggregate of
approximately $168.8 million to hedge the mortgage pipeline of $280.5 million
for which the Bank had an interest rate risk. Additionally, at March 31, 2001,
the Company had purchaser commitments of $55.5 million to hedge the mortgage
loans held for sale of $166.0 million, compared to $52.6 million and $108.8
million, respectively, at December 31, 2000.

         On January 1, 2001, the Company adopted Financial Accounting Standards
Board (FASB) No. 133, "Accounting For Certain Derivative Instruments And Hedging
Activities, " and FASB No. 138, "Accounting For Certain Derivative Instruments
And Certain Hedging Activities- An Amendment of FASB No. 133" (collectively,
"FAS 133"). Under FAS 133, all derivative financial instruments are to be
recognized on a company's balance sheet at fair value. On the date the Company
enters into a derivative contract, the Company designates the derivative
instrument as either (i) a hedge of the fair value of a recognized asset,
liability or an unrecognized firm commitment (a "fair value" hedge), (ii) a
hedge of a forecasted transaction or of the variability of cash flows to be
received or paid related to a recognized asset or liability (a "cash flow"
hedge) or (iii) a free-standing derivative instrument. For a fair value hedge,
changes in the fair value of the derivative instrument and changes in the fair
value of the hedged asset or liability attributable to the hedged risk are
recorded in the net income of the current period. For a cash flow hedge, changes
in the fair value of the derivative to the extent that it is effective are
recorded in other comprehensive income within the stockholders' equity section
of the balance sheet and subsequently reclassified as income in the same period
that the hedged transaction impacts net income. For free-standing derivatives
instruments, changes in the fair values are reported in the net income of the
current period. The Company has three types of derivative financial instruments
that meet the criteria of a derivative as outlined in FAS 133: (i) interest rate
lock commitments, (ii) mandatory sales commitments, and (iii) options to deliver
mortgage-backed securities. All of these derivative financial instruments are
considered to be free-standing derivative instruments.

         The Company formally documents the relationship between hedging
instruments and hedged items, as well as the risk management objective and
strategy for undertaking various hedging transactions.

         The primary market risk facing the Company is interest rate risk
related to its locked pipeline. The locked pipeline is comprised of interest
rate lock commitments issued on residential mortgage loans to be held for sale.
In order to mitigate the risk that a change in interest rates will result in a
decline in the value of the Company's locked pipeline, the Company enters into
hedging transactions. The locked pipeline is hedged with mandatory sales
commitments or options to deliver mortgage-backed securities that generally
correspond with the composition of the locked pipeline. Due to the variability
of closings in the locked pipeline, which is driven primarily by interest rates,
the Company's hedging policies require that a percentage of the locked pipeline
be hedged with these types of derivative instruments. The Company is generally
not exposed to significant losses, nor will it realize significant gains,
related to it locked pipeline, due to changes in interest rates, net of gains or
losses on associated hedge positions. However, the Company is exposed to the
risk that the actual closings in the locked pipeline may deviate from the
estimated closings for a given change in interest rates. Although interest rates
are the primary determinant, the actual loan closings from the locked pipeline
are influenced by many factors, including the composition of the locked pipeline
and remaining commitment periods. The Company's estimated closings are based on
historical data of loan closings as influenced by recent developments. The
locked pipeline is considered a portfolio of derivative instruments. The locked
pipeline, and the associated free-standing derivative instruments used to hedge
the locked pipeline, are marked to fair value and recorded as a component of
gain on sale of loans in the income statement.

         At the date of adoption, the Company recorded certain transition
adjustments as required by FAS 133. The impact on net income, net of tax, was
approximately $(69,770). Through March 31, 2001 the impact on net income, net of
tax, was $103,937. The $69,770 FAS 133 transition adjustment reflects the fair
value of the Company's free standing derivative instruments as of January 1,
2001, of $112,533 net of the related tax effect of $42,763. The $103,937 FAS 133
effect on net income during the three month period ended March 31, 2001 reflects
the change in the fair value of the Company's free standing derivatives of
$165,866, net of the related tax effect of $61,929.

                                       17

<PAGE>

         Management continually tries to manage the interest rate sensitivity
gap. Attempting to minimize the gap is a continual challenge in a changing
interest rate environment and one of the objectives of the Bank's
asset/liability management strategy.

Results of Operations

         A principal source of revenue for the Bank is net interest income,
which is the difference between income received on interest-earning assets, such
as investment securities and loans, and interest-bearing sources of funds, such
as deposits and borrowings. The level of net interest income is determined
primarily by the average balances ("volume") of interest-earning assets and the
various rate spreads between the interest-earning assets and the Bank's funding
sources. Changes in net interest income from period to period result from
increases or decreases in volume of interest-earning assets and interest-bearing
liabilities, increases or decreases in the average rates earned and paid on such
assets and liabilities, the ability to manage the interest-earning asset
portfolio (which includes loans) and the availability of particular sources of
funds, such as non-interest bearing deposits.

         The Company experienced significant changes in interest rates and
mortgage production during 2000 and 1999. The Company achieved record mortgage
production with interest rates at historical low levels in the first six months
of 1999. The Company recognized an increase in average interest-earning assets
and interest-bearing liabilities for the year as a result of the record mortgage
production in the first six months. The Federal Reserve Open Market Committee
increased interest rates on three occasions in 1999 for a total of 75 basis
points. Rates began increasing on a 30-year mortgage in mid-second quarter 1999
resulting in a decline in production. In the fourth quarter of 2000, rates began
declining, resulting in an increase in mortgage production. During the first
quarter 2001, the Federal Reserve Open Market Committee reduced interest rates
on three occasions for a total of 150 basis points. The Company closed $226.9
million of mortgage loans during the first quarter 2000 compared to $672.1
million during the first quarter 2001.

         The Company had interest income of $4.7 million for the three months
ended March 31, 2001 compared to $2.6 million three months ended March 31, 2000.
The increase in interest income is attributable to the increase in
interest-earning assets which is the result of growth in the commercial bank
loan portfolio as well as a higher volume of mortgage production.

         The Company had interest expense of $3.3 million for the three months
ended March 31, 2001 and $1.7 million for the three months ended March 31, 2000.
The increase resulted from the growth of the banks deposits as well as a higher
level of other borrowings. All mortgage production through CMS is funded with a
warehouse line of credit; therefore the higher volume in the Northeast and
Midwest mortgage operation resulted in a higher average balance of other
borrowings. In the first quarters 2001 and 2000, interest expense accounted for
39% and 32% of total expenses, respectively.

         Net interest income for the first quarter 2001 was $1.4 million. The
key performance measure for net interest income is the "net interest margin," or
net interest income divided by average interest-earning assets. The Company's
net interest margin during first quarter 2001 was 3.12%. Interest spread, which
represents the difference between average yields on interest-earning assets and
average rates paid on interest-bearing liabilities, was 2.64%. Net interest
income, interest margin and net interest spread for the first quarter 2000 were
$891,418 million, 3.79%, and 3.13%, respectively. The increase in net interest
income is related the higher volume of mortgage loans closed and the growth in
the commercial bank loan portfolio. The commercial bank loan portfolio averaged
$94.8 million for the first three months of 2001, compared to $58.6 million for
the first three months of 2000. The decrease in net interest margin and net
interest spread is indicative of the declining rate environment in the first
quarter of 2001 when the Company's balance sheet was asset sensitive.

         The Company made a provision to the allowance for loan losses of
$115,000 in the first quarter 2001. The Company made provisions to the allowance
for loan losses in the amount of $95,000 in first quarter 2000. During the first
quarter of 2001, the Bank charged-off, net of recoveries, $94,142 of loans to
the allowance for loan losses. During the first quarter of 2000, the Bank
charged- off, net of recoveries, $12,406 of loans to the allowance for loan
losses. The Bank's determination of the allowance for loan losses is affected by
various factors, including changes in loan concentrations, trends in non
performing loans, the comparison of the allowance to the historical net charge
off experience and economic conditions and risks that affect the Bank. The
amount of the provision for loan losses decreased, in part, between the
provisions for the three month period ended March 31, 2001 and the provisions
for the three month period ended March 31, 2000 because loan growth in the first
three months of 2001 was 3.91% versus stronger growth in the loan portfolio in
the first three months of 2000 of 18.92%. As a result of the growth, the Company
adjusted its allowance for loan losses to account for its historical experience
with various borrowers. The allowance for loan losses as a percentage of total
non-mortgage loans was 1.42% at March 31,, 2001 and 1.40% at December 31, 2000.
This slightly increasing trend influences and corresponds with the slight
increase in net charge offs to average non mortgage loans outstanding of 0.10%
at March 31, 2001 and 0.08%. at December 31, 2000. The trend in the ratios of
the number of potential problem loans to total non-mortgage loans, however,
declined in the first three months of 2001 and represented 1.80% as of March 31,
2001 and 2.40% as of December 31, 2000.

                                       18

<PAGE>

         Other income was $3.3 million in the first quarter 2001 compared to
$1.8 million in the first quarter 2000. The increase in other income was related
to the increase of gains on the sale of mortgage servicing rights. During the
first three months of 2001, the Company sold servicing rights with respect to
$610.9 million of mortgage loans for a gain of $2.5 million or a spread on the
sale of servicing of 0.41%. During the first three months of 2000, the Company
sold servicing rights with respect to $172.6 million of mortgage loans for a
gain of $887,494 or a spread on the sale of servicing of 0.51%. The increase in
the sale of mortgage servicing rights resulted primarily from the increase in
mortgage production. The Company currently plans to sell a portion of the
servicing rights retained during 2001, although there can be no assurance as to
the volume of the Bank's loan acquisition or that a premium will be recognized
on the sales. Gestation fee income is generated from the sale of mortgage loans
to securities brokers who are gestation lenders through a gestation repurchase
agreement. Under the agreement, the Company sells mortgage loans and
simultaneously assigns the related forward sale commitments to a securities
broker. The Company continues to receive fee income from the securities broker
until the loan is delivered into the forward commitment. Alternatively, the
Company sells loans on an individual basis in the cash market and subsequently
pairs off the forward sale commitment. In this case, the Company does not
receive any gestation fee income, which is income derived from the spread
between the fee the Company received on the mortgage loan and the fee charged by
the security broker during the holding or "gestation" period, prior to the
Company's sale of the loan.

         Other operating expenses increased to $3.3 million in the first quarter
2001 from $2.8 million in the first quarter 2000. The increase in other
operating expenses was related to the increase in volume of the mortgage
operation which included increases in salaries and benefits and other operating
expenses. Salary and benefits increased from $1.0 million for the first three
months of 2000 to $1.1 million for the first three months of 2001. Supplies,
postage and telephone expenses increased from $252,505 for the first three
months of 2000 to $371,691 for the first three months of 2001.

         Loan origination fees and certain direct costs of loans are accounted
for in accordance with SFAS No. 91, "Accounting for Nonrefundable Fees and Costs
Associated with Originating or Acquiring Loans and Indirect Costs of Leases."
The costs are netted against the fees and recognized in income over the life of
the loans or when the loans are sold. The costs that are netted against the fees
are reported as a reduction of other operating expenses in the statement of
income. At March 31, 2001, the amount of commercial banking costs netted against
commercial banking loan origination fees totaled $329,671, as compared to
$171,182 at March 31, 2000. This increase in loan fees was the result of the
growth in the Bank's loan portfolio. At March 31, 2001, the amount of mortgage
banking costs netted against mortgage banking loan origination fees totaled
$1,495,522, as compared to $548,187 at March 31, 2000. This increase in loan
fees was the result of the growth in CMS' mortgage loan origination.

         The Company had net income of $804,077 in the first quarter 2001,
compared to net loss of $124,376 in the first quarter 2000. Net income was
effected primarily by the increase in mortgage production and the reduced gain
on the sale of mortgage servicing rights. Income tax (benefits) as a percentage
of pretax net income (loss) was 34% and 36% for the first quarter 2001 and 2000,
respectively.

Effects of Inflation

         Inflation generally increases the cost of funds and operating overhead,
and to the extent loans and other assets bear variable rates, the yields on such
assets. Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates generally have a more significant impact on the performance of a
financial institution than the effects of general levels of inflation. Although
interest rates do not necessarily move in the same direction, or to the same
extent, as the prices of goods and services, increases in inflation generally
have resulted in increased interest rates, and the Federal Reserve has increased
interest rates twice since 1999 in an attempt to prevent inflation. In addition,
inflation results in financial institutions' increased cost of goods and
services purchased, the cost of salaries and benefits, occupancy expense, and
similar items. Inflation and related increases in interest rates generally
decrease the market value of investments and loans held and may adversely affect
liquidity, earnings, and shareholders' equity. Mortgage originations and
refinancings tend to slow as interest rates increase, and likely will reduce the
Company's earnings from such activities and the income from the sale of
residential mortgage loans in the secondary market.

                                       19

<PAGE>

Item 3) Quantitative and Qualitative Disclosures about Market Risk

         The Company's primary market risk exposure is interest rate risk and,
to a lesser extent, credit risk and liquidity risk. Interest rate risk is the
exposure of a banking organization's financial condition and earnings ability to
movements in interest rates. Interest rate risk is discussed under "liquidity
and Interest Rate Sensitivity" in Item 2, "Management's Discussion and Analysis
of Financial Condition and Results of Operations", of this report, and in the
same sections of the Company's 2000 Annual Report to Shareholders (the "Annual
Report"), as well as under "Effects of Inflation" in the 2000 Annual Report.
Interest rate risk especially affects the Company's mortgage banking operations.

                                       20

<PAGE>

                           Part II - OTHER INFORMATION

Item 1.  Legal Proceedings - Not Applicable

Item 2.  Changes in Securities and Use of Proceeds - None

Item 3.  Defaults Upon Senior Securities - Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders

         The annual meeting of Shareholders of the Company was held on April 19,
2001 at which time the following matters were brought before and voted upon by
the shareholders:

          1)  The election of the following persons to the Board of Directors to
              serve for a term expiring on the date indicated below of the
              Annual Meeting of Shareholders:

<TABLE>
<CAPTION>
                                                                                 Withhold
              Name                               Term expiring        For       Authority
              ----                               -------------        ---       ---------
<S>                                              <C>               <C>          <C>
              A. James Elliott                        2004         1,287,536       300
              John S. Dean, Sr.                       2004         1,287,536       300
              Charles B. Wynne                        2002         1,287,236       600
</TABLE>

         There were no broker non-votes with respect to the election of
directors.

          2)  The approval of the Crescent Banking Company 2001 Non-Employee
              Director Stock Option Plan:

              For                      Against           Abstained
              ---                      -------           ---------
              1,037,071                 15,621             8,471

          3)  The approval of the Crescent Banking Company 2001 Long-Term
              Incentive Plan:

              For                      Against           Abstained
              ---                      -------           ---------
              1,040,310                 12,382             8,471

Item 5.  Other Information - None

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     3.1  Articles of Incorporation of the Company (incorporated by reference
          from Exhibit 3.1 to the Company's Registration Statement on Form S-4
          dated January 27, 1992, File No. 33-45254 (the "Form S-4")).

     3.2  Bylaws of the Company (incorporated by reference from Exhibit 3.2 to
          the Form S-4).

(b)  Reports on Form 8-K - None

                                       21

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          CRESCENT BANKING COMPANY
                                          --------------------------------------
                                          (Registrant)

Date: April 18, 2002                      /s/ J. Donald Boggus, Jr.
      --------------                      --------------------------------------
                                          J. Donald Boggus, Jr.
                                          President and Chief Executive Officer

Date: April 18, 2002                      /s/ Bonnie Boling
      --------------                      --------------------------------------
                                          Bonnie Boling
                                          Chief Financial Officer

                                       22