<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

            __x__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002


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

                  For the transition period from _____ to _____

                         Commission file number 0-13153


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

            Georgia                                          58-1563165
--------------------------------------------------------------------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)

Highway 441 N.            P.O. Box 1980,        Cornelia, Georgia       30531
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip code)


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



--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
                                    report)

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

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

2,707,996 shares, common stock, $1.00 par value, as of April 30, 2002
<PAGE>
Item. 1 Financial Statements

HABERSHAM BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(dollars in thousands)


<TABLE>
<CAPTION>
ASSETS                                                 MARCH 31, 2002       DECEMBER 31, 2001
<S>                                                    <C>                  <C>
Cash and due from banks                                  $  15,747             $  16,550
Investment securities available for sale
 (cost of $47,370 at March 31, 2002 and
  $46,855 at December 31, 2001)                             47,178                47,620
Investment securities held to maturity
 (estimated fair values of $9,380 at
  March 31, 2002 and $9,767 at
  December 31, 2001)                                         9,295                 9,646
Other investments                                            8,042                 9,604

Loans held for sale                                         90,490               115,464

Loans                                                      316,993               325,064
  Less allowance for loan losses                            (3,972)               (3,836)
                                                         ---------             ---------
    Loans, net                                             313,021               321,228
                                                         ---------             ---------
Intangible assets                                            2,499                 2,508
Other assets                                                25,040                23,883
                                                         ---------             ---------
    TOTAL ASSETS                                         $ 511,312             $ 546,503
                                                         =========             =========

LIABILITIES
Noninterest bearing deposits                             $  35,030             $  31,136
Interest bearing deposits                                  310,790               305,224
Short-term borrowings                                          819                   269
Federal funds purchased and securities
  sold under repurchase agreements                          12,601                30,451
Other borrowings                                             3,735                 5,773
Federal Home Loan Bank Advances                             71,209               100,416
Other liabilities                                           32,051                29,252
                                                         ---------             ---------
    TOTAL LIABILITIES                                      466,235               502,521
                                                         ---------             ---------
SHAREHOLDERS' EQUITY
Common Stock, $1.00 par value,
 10,000,000 shares authorized;
 2,698,746 shares issued at March 31, 2002
 and December 31, 2001                                       2,699                 2,699
Additional paid-in capital                                  12,417                12,417
Retained earnings                                           30,087                28,361
Accumulated other comprehensive (loss) income                 (126)                  505
                                                         ---------             ---------
    TOTAL SHAREHOLDERS' EQUITY                              45,077                43,982
                                                         ---------             ---------
    TOTAL LIABILITIES AND SHAREHOLDERS'
      EQUITY                                             $ 511,312             $ 546,503
                                                         =========             =========
</TABLE>



See notes to condensed consolidated financial statements.
<PAGE>
HABERSHAM BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) For the Three-Month Periods Ended March 31, 2002 and 2001 (dollars
in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                  2002            2001
<S>                                                           <C>             <C>
INTEREST INCOME
Loans                                                         $    7,533      $   10,057
Investment securities                                                732             755
Federal funds sold                                                     7               4
Other                                                                156             183
                                                              ----------      ----------
  TOTAL INTEREST INCOME                                            8,428          10,999

INTEREST EXPENSE
Time deposits, $100,000 and over                                     933           1,492
Other deposits                                                     1,877           3,441
Short-term and other borrowings, primarily
  FHLB advances                                                      988           1,754
                                                              ----------      ----------
  TOTAL INTEREST EXPENSE                                           3,798           6,687

NET INTEREST INCOME                                                4,630           4,312
Provision for loan losses                                            423             284
                                                              ----------      ----------

NET INTEREST INCOME AFTER
 PROVISION FOR LOAN LOSSES                                         4,207           4,028

NONINTEREST INCOME
  Gain on sale of loans                                            5,834           3,553
  Loan fee income                                                    845             818
  Brokerage fee income                                                67             213
  Service charges on deposits                                        167             169
  Other service charges and commissions                               66              73
  Securities gains, net                                              839              54
  Gain on change in fair value of forward commitments                407             416
  Other income                                                       640             524
                                                              ----------      ----------
    Total other income                                             8,865           5,820

NONINTEREST EXPENSE
  Salary and employee benefits                                     7,595           5,336
  Occupancy                                                          780             835
  Computer services                                                  198             164
  General and administrative expense                               1,755           1,640
                                                              ----------      ----------
    Total other expense                                           10,328           7,975

INCOME BEFORE INCOME TAXES                                         2,744           1,873
Income tax expense                                                   856             605
                                                              ----------      ----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
  IN ACCOUNTING PRINCIPLE, NET OF TAX                              1,888           1,268
Cumulative effect of change in accounting
   principle, net of tax                                              --            (162)
                                                              ----------      ----------
NET INCOME                                                         1,888           1,106
                                                              ==========      ==========
Income before cumulative effect of change
  in accounting principle per common share- basic             $      .70      $      .47
Cumulative effect of change in accounting
  principle per common share - basic                          $      .00      $      .06
                                                              ----------      ----------
NET INCOME PER COMMON SHARE - BASIC                           $      .70      $      .41
                                                              ==========      ==========

Income before cumulative effect of change
  in accounting principle per common share - diluted          $      .68      $      .47
Cumulative effect of change in accounting
  principle per common share - diluted                        $      .00      $      .06
                                                              ----------      ----------
NET INCOME PER COMMON SHARE - DILUTED                         $      .68      $      .41
                                                              ==========      ==========

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                             2,698,746       2,698,746
                                                              ==========      ==========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING                       2,766,195       2,714,314
                                                              ==========      ==========
Dividends per share                                           $      .06      $      .06
                                                              ==========      ==========
</TABLE>


See notes to condensed consolidated financial statements.
<PAGE>
HABERSHAM BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) For the Three-Month Periods Ended March 31, 2002 and 2001
(dollars in thousands)


<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:                            2002           2001
<S>                                                         <C>             <C>
  Net income                                                $   1,888       $   1,106
  Cumulative effect of change in accounting principle              --             162
  Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
      Provision for loan losses                                   423             284
      Depreciation                                                309             352
      Gain on sale of investment securities                      (839)            (54)
      Increase in fair value of derivative instruments           (407)           (416)
      Unrealized holding loss on trading securities                --              --
      Gain on sale of premises & equipment                         --              (6)
      Loss on sale of other real estate                            45              --
      Write down of other real estate                              71              --
      Net gain on sale of loans                                (5,834)         (3,553)
      Amortization of intangible assets                             9              63
      Equity in earnings of investee                              (25)            (39)
      Deferred income tax (benefit) expense                        (6)             91
      Proceeds from sale of loans held for sale               290,836         186,456
      Net increase in loans held for sale                    (260,833)       (226,060)

  Changes in assets and liabilities:
      Decrease in interest receivable                             206             298
      Increase in other assets                                   (282)           (646)
      Decrease in interest payable                               (866)           (253)
      Increase in other liabilities                             3,665          10,774
                                                            ---------       ---------
  Net cash provided by (used in)operating activities           28,360         (31,441)
                                                            ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment securities available for sale:
      Proceeds from maturity                                    2,590           2,209
      Proceeds from sale and call                               2,348           4,705
      Purchases                                                (4,613)         (6,771)
  Investment securities held to maturity:
      Proceeds from maturity                                      351             971
  Other investments:
      Proceeds from sale                                        1,807           1,753
      Purchases                                                  (282)         (1,326)
  Loans:
      Proceeds from sale                                        9,216           4,676
      Net (increase) decrease in loans                         (1,950)         10,207
    Purchases of premises and equipment                          (259)           (189)
    Proceeds from sale of premises & equipment                     --               9
    Proceeds from sale of other real estate                       823              --
    Net additions of other real estate                             (9)             --
    Dividends received from other investment                       62              62
                                                            ---------       ---------
    Net cash provided by investing activities                  10,084          16,306
                                                            ---------       ---------
</TABLE>
<PAGE>
HABERSHAM BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (Unaudited) For the
Three-Month Periods Ended March 31, 2002 and 2001 (dollars in thousands)


<TABLE>
<CAPTION>
CASH FLOWS FROM FINANCING ACTIVITIES:                                 2002             2001
<S>                                                               <C>              <C>
  Net increase in deposits                                           9,460           28,666
  Net increase (decrease) in short-term borrowings                     550             (601)
  Net decrease in federal funds purchased and
    securities sold under repurchase agreements                    (17,850)         (29,112)
  Repayment of notes payable                                        (2,038)              --
 (Repayment of) proceeds from Federal Home Loan
    Bank advances, net                                             (29,207)          15,037
  Cash dividends paid                                                 (162)            (162)
                                                                  --------         --------
    Net cash (used by) provided by financing activities            (39,247)          13,828
                                                                  --------         --------

Decrease in cash and cash equivalents                                 (803)          (1,307)

CASH AND CASH EQUIVALENTS:  BEGINNING OF PERIOD                     16,550           13,566
                                                                  --------         --------
CASH AND CASH EQUIVALENTS:  END OF PERIOD                         $ 15,747         $ 12,259
                                                                  ========         ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
  Interest                                                        $  4,664         $  6,940
  Income taxes                                                         755              197

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

Other real estate acquired through loan foreclosures              $  1,323         $    517
Loans granted to facilitate the sale
  of other real estate                                                  --              195
Unrealized (loss) gain on investment securities
  available for sale, net of tax effect                               (191)             608
Transfer of held to maturity securities to
  available for sale securities upon adoption of
  SFAS No. 133                                                          --              999
</TABLE>


See notes to condensed consolidated financial statements.
<PAGE>
'
HABERSHAM BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements


1. Basis of Presentation

     The condensed consolidated financial statements contained in this report
are unaudited but reflect all adjustments, consisting only of normal recurring
accruals, which are, in the opinion of management, necessary for a fair
presentation of the results of the interim periods reflected. Certain
information and note disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to applicable
rules and regulations of the Securities and Exchange Commission. The results of
operations for the interim periods reported herein are not necessarily
indicative of results to be expected for the full year.

     The condensed consolidated financial statements included herein should be
read in conjunction with the Company's 2001 consolidated financial statements
and notes thereto, included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.


2.  Accounting Policies

     Reference is made to the accounting policies of the Company described in
the notes to the consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001. The
Company has consistently followed those policies in preparing this report.


3. Other Comprehensive Income

     "Other comprehensive income" refers to revenues, expenses, gains, and
losses that are included in comprehensive income but excluded from earnings
under current accounting standards. Currently, other comprehensive income for
the Company consists of items previously recorded directly in equity under
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". Comprehensive income for the
three months ended March 31, 2002 and 2001 was $1,257,000 and $1,714,000,
respectively.

4. Derivative Instruments

     The Company adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", as amended, on January 1, 2001. In accordance with the
transition provisions of SFAS No. 133, the Company recorded a net-of-tax
cumulative effect loss of $162,000 on January 1, 2001 to reflect the fair value
of its forward commitments to sell mortgage-backed securities. The provisions of
SFAS No. 133 allow for a one-time transfer of investment securities previously
classified as held to maturity to available for sale upon adoption. As a result,
the Company transferred approximately $999,000 of investment securities
previously classified as held to maturity to its available for sale portfolio on
January 1, 2001.
<PAGE>
     In the normal course of business, the Company extends interest rate lock
commitments to borrowers who apply for loan funding and meet certain credit and
underwriting criteria. Such commitments are typically for short terms. With the
exception of commitments to originate fixed-rate mortgage loans for resale and
forward commitments to sell mortgage-backed securities, the Company does not
hold any derivative instruments.

     The Company's objective in entering into forward commitments to sell
mortgage-backed securities is to mitigate the interest rate risk associated with
commitments to originate fixed-rate mortgage loans and mortgage loans held for
sale. If the fair value of the Company's commitments to originate fixed-rate
mortgage loans for resale results in an asset, such asset is recorded only to
the extent of losses in the forward commitments to sell mortgage-backed
securities. Losses are recorded on the Company's commitments to originate
fixed-rate mortgage loans for resale when fair values are less than carrying
values. The Company records its forward commitments to sell mortgage-backed
securities at fair value and does not account for these as hedges. During the
quarters ended March 31, 2002 and 2001, gains relating to the change in fair
value of forward commitments to sell mortgage-backed securities in the amounts
of $407,000 and $416,000, respectively were recorded in income and in other
assets on the balance sheet.

5. Accounting Pronouncements

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

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which eliminated the amortization of goodwill and intangible assets
that have indefinite lives and requires annual tests of impairment of those
assets. Upon adoption of SFAS No. 142, the Company is required to reassess the
useful lives and residual values of all intangible assets and make any necessary
amortization period adjustment by the end of the first interim period after
adoption. In addition, to the extent an intangible asset is identified as having
an indefinite useful life, the Company is required to test the intangible asset
for impairment in accordance with the provisions of SFAS No. 142 within the
first interim period. Any impairment loss will be measured as of the date of
adoption and recognized as the cumulative effect of a change in accounting
principle in the first interim period.

     To accomplish this, the Company must identify its reporting units and
determine the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company will then have up to six
months from the date of adoption to determine the fair value of each reporting
unit and compare it to the reporting unit's carrying amount. To the extent a
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
the second step of the transitional impairment test. In the second step, the
Company must compare the implied fair value of the reporting unit's goodwill,
determined by allocating the reporting unit's fair value to all of its assets
(recognized and unrecognized) and liabilities in a manner similar to a purchase
price allocation in accordance with SFAS No. 141, to its
<PAGE>
carrying amount, both of which would be measured as of the date of adoption.
This second step is required to be completed as soon as possible, but no later
than the end of the year of adoption. Any transitional impairment loss will be
recognized as the cumulative effect of a change in accounting principle in the
Company's statement of earnings.

     The Company adopted the provisions of SFAS No. 142 on January 1, 2002. The
Company will perform the required tests under SFAS No. 142 during the second
quarter of 2002. The Company believes that no material impairment of goodwill
exists at March 31, 2002 or December 31, 2001.

     At March 31, 2002 and December 31, 2001, the Company had net unamortized
goodwill of approximately $2,499,000 and net unamortized equity-method goodwill
of approximately $1,058,000. The Company recorded amortization of approximately
$42,000, net of tax, related to these goodwill amounts for the quarter ended
March 31, 2001. Net income for the period ended March 31, 2001 excluding
amortization expense was $1,148,000, resulting in net income per common share
basic and diluted of $.43.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 requires that entities record the fair
value of a liability for an asset retirement obligation in the period in which
it is incurred. When the liability is initially recorded, the entity is to
capitalize the cost by increasing the carrying amount of the related long-lived
asset. SFAS No. 143 requires that the liability be accreted to its present value
at each subsequent reporting period-end, and the capitalized cost be depreciated
over the useful life of the related asset. Upon settlement of the liability, an
entity either settles the obligations for its recorded amount or incurs a gain
or loss upon settlement. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002, with earlier application encouraged. The adoption of SFAS
No. 143 is not expected to have a material impact on the consolidated financial
statements of the Company.

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


6. Segment Information

     The Company has two significant reportable segments: banking and mortgage
banking. The Company offers traditional banking services through Habersham Bank.
The Company originates and sells loans in the secondary market through its
mortgage banking segment, BancMortgage Financial Corp.

     The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on net income of the respective segments.
<PAGE>
At and for the three months ended March 31, 2002


<TABLE>
<CAPTION>
                                                 Mortgage
                                    Banking       Banking     Eliminations     Other      Eliminations   Consolidated
<S>                               <C>           <C>           <C>            <C>          <C>            <C>
Interest income                   $  7,022      $  1,492      $    (86)      $     --      $     --       $  8,428
Interest expense                     3,351           485           (86)            48            --          3,798
Provision for loan losses              362            61            --             --            --            423
Gain on sale of loans                   50         5,784            --             --            --          5,834
Other noninterest income               369         1,734            --          1,265          (337)         3,031
Depreciation on premises &
  equipment                            125           168            --             16            --            309
Other noninterest expense            2,867         6,852            --            637          (337)        10,019
Income tax expense                     205           458            --            193            --            856
Net income                             644           870            --            374            --          1,888

Total assets                      $439,218      $ 89,641      $(21,124)      $  4,421      $   (844)      $511,312
</TABLE>


At and for the three months ended March 31, 2001

<TABLE>
<CAPTION>
                                                 Mortgage
                                  Banking        Banking    Eliminations       Other       Eliminations   Consolidated
<S>                               <C>           <C>         <C>              <C>           <C>            <C>
Interest income                   $ 10,051      $  1,174      $   (241)      $     15       $     --       $ 10,999
Interest expense                     6,060           828          (241)            40             --          6,687
Provision for loan losses              214            70            --             --             --            284
Gain on sale of loans                   27         3,526            --             --             --          3,553
Other noninterest income               516         1,630            --            496           (375)         2,267
Depreciation on premises &
  equipment                            160           172            --             20             --            352
Other noninterest expense            2,814         4,473            --            611           (375)         7,623
Income tax expense (benefit)           435           210            --            (40)            --            605
Net income (loss)                      920           307            --           (121)            --          1,106

Total assets                      $485,945      $104,813      $(26,756)      $  5,486       $   (291)      $569,197
</TABLE>


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

HABERSHAM BANCORP AND SUBSIDIARIES

Organization

     Habersham Bancorp (the "Company") owns all of the outstanding stock of
Habersham Bank ("Habersham Bank") and The Advantage Group, Inc. Habersham Bank
owns all of the outstanding stock of BancMortgage Financial Corp
("BancMortgage"), and Advantage Insurers, Inc. ("Advantage Insurers"). The
Advantage Group, Inc., a non-bank subsidiary which engages in the business of
providing marketing and advertising services, ceased operation September 30,
2001. Advantage Insurers, which began operations on March 31, 1997, offers a
full line of property, casualty, and life insurance products.

     The Advantage Group, Inc. and Advantage Insurers do not comprise a
significant portion of the financial position, results of operations, or cash
flows of the Company. Management's discussion and analysis, which follows,
relates primarily to Habersham Bank and BancMortgage.
<PAGE>
     BancMortgage was organized in 1996 as a full service mortgage and
construction lending company located in the northern Atlanta metropolitan area.
During 1997, BancMortgage acquired for approximately $60,000 the assets and
certain liabilities of The Prestwick Mortgage Group, a national investment
banking and advisory firm specializing in the brokerage and evaluation of
mortgage-related assets. Concurrent with the acquisition of The Prestwick
Mortgage Group, BancMortgage also formed BancFinancial Services Corporation, a
full-service wholesale mortgage lender specializing in sub-prime mortgage loans.
The Prestwick Mortgage Group and BancFinancial Services Corporation are based in
Virginia.

     Since forming BancMortgage Financial Corp. in December of 1995, loan volume
has consistently grown to approximately $312 million for the quarter ended March
31, 2002. This increase in volume has required corresponding increases in
capital and funding from the Bank that could be difficult to sustain. As a
result, management has determined that it is in the Company's best interests to
sell BancMortgage to certain members of its management team under the terms of
the Mortgage Banking Agreement dated January 2, 1996 by and among the Company,
the Bank, BancMortgage, Robert S. Cannon and Anthony L. Watts (the "Agreement").
The Agreement provides that Messrs. Cannon and Watts, who currently serve as
BancMortgage's co-chief executive officers, have a right of first refusal to
purchase BancMortgage at a price equal to its current book value, which was
equal to $7.951 million at March 31, 2002. Messrs. Cannon and Watts have
exercised this right, and we anticipate that the sale will occur during the
current fiscal year. Although BancMortgage represents a significant portion of
our consolidated revenues, we believe that its sale will ultimately be accretive
to earnings in view of the anticipated accompanying decrease in capital funding
requirements and compensation and other expenses relating to the operation of
the subsidiary.

     During 1999, BancMortgage formed a wholly owned subsidiary, BancMortgage
Reinsurance LTD., a reinsurance company incorporated in Turks and Caicos. The
subsidiary provides insurance to companies offering private mortgage insurance.

Forward Looking Statements

     Certain statements contained in this Quarterly Report on Form 10-Q and the
exhibits hereto which are not statements of historical fact constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act (the "Act"). In addition, certain statements in future
filings by the Company with the Securities and Exchange Commission, in press
releases, and in oral and written statements made by or with the approval of the
Company which are not statements of historical fact constitute forward-looking
statements within the meaning of the Act. Examples of forward-looking statements
include, but are not limited to: (1) projections of revenues, income or loss,
earnings or loss per share, the payment or non-payment of dividends, capital
structure and other financial items; (2) statements of plans and objectives of
the Company or its management or Board of Directors, including those relating to
products or services; (3) statements of future economic performance; and (4)
statements of assumptions underlying such statements. Words such as "believes,"
"anticipates," "expects," "intends," "targeted," and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying such statements.

     Forward-looking statements involve risks and uncertainties which may cause
actual results to differ materially from those in such statements. Facts that
could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to: (1) the strength of the U.S. economy
in general and the strength of the local economies in which operations are
conducted; (2) the effects of and changes in trade, monetary and fiscal policies
and laws, including
<PAGE>
interest rate policies of the Board of Governors of the Federal Reserve System;
(3) inflation, interest rate, market and monetary fluctuations; (4) the timely
development of and acceptance of new products and services and perceived overall
value of these products and services by users; (5) changes in consumer spending,
borrowing and saving habits; (6) acquisitions; (7) the ability to increase
market share and control expenses; (8) the effect of changes in laws and
regulations (including laws and regulations concerning taxes, banking,
securities and insurance) with which the Company and its subsidiaries must
comply; (9) the effect of changes in accounting policies and practices, as may
be adopted by the regulatory agencies as well as the Financial Accounting
Standards Board; (10) changes in the Company's organization, compensation and
benefit plans; (11) the costs and effects of litigation and of unexpected or
adverse outcomes in such litigation; and (12) the success of the Company at
managing the risks involved in the foregoing.

     Such forward-looking statements speak only as of the date on which such
statements are made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events.

Critical Accounting Policies

     In reviewing and understanding financial information for the Company, you
are encouraged to read and understand the significant accounting policies which
are used in preparing the consolidated financial statements of the Company.

     These policies are described in note 1 to the consolidated financial
statements which were presented in the Company's 2001 annual report on Form
10-K. Of these policies, management believes that the accounting for the
allowance for loan losses is the most critical. Please see "Asset Quality" for a
further discussion of the Company's methodology in determining the allowance.

     Losses on loans result from a broad range of causes, from borrower-specific
problems to industry issues to the impact of the economic environment. The
identification of the factors that lead to default or non-performance under a
loan agreement and the estimation of loss in these situations is very
subjective. In addition, a dramatic change in the performance of one or a small
number of borrowers can have a significant impact in the estimate of losses. As
described further below, management has implemented a process that has been
applied consistently to systematically consider the many variables that impact
the estimation of the allowance for loan losses.


Material Changes in Financial Condition

     The Company's total assets decreased $35.2 million, to $511.3 million at
March 31, 2002 from $546.5 million at December 31, 2001. The decrease was
primarily due to a decrease in loans held for sale of approximately $24.9
million as a result of a decrease in production at BancMortgage due to a slow
down in refinancing activity.

     Total loans at Habersham Bank decreased $8.2 million, to $313.0 million at
March 31, 2002 from $321.2 million at December 31, 2001. The decrease was due to
the Company selling its credit card portfolio totaling approximately $2 million
as well as the reduction of commercial loans by approximately $4.4 million.

     Investment securities available for sale and held to maturity remained
relatively stable during the quarter. Other investments decreased $1.6 million
from $9.6
<PAGE>
million at December 31, 2001 to $8.0 million at March 31, 2002 due to the
redemption of FHLB stock during the first quarter of 2002.

     Total liabilities decreased $36.3 million, to $466.2 million at March 31,
2002 from $502.5 million at December 31, 2001. With the decrease in loans and
loans held for sale and an increase in deposits of $9.4 million, funds were
available to reduce total borrowings from $137.0 million at December 31, 2001 to
$88.3 million at March 31, 2002. The Company repaid $29.2 million in FHLB
advances during the quarter and with the proceeds from the sale of the FLAG
Financial Corp. common stock, reduced other borrowings by $2.0 million.


Material Changes in Results of Operations

     Total interest income for the first quarter of 2002 decreased $2,571,000 or
23.37%, when compared to the first quarter of 2001 primarily due to a decrease
in interest income on loans of $2,524,000 or 25.10%. The decrease was due to
decreases in the loan portfolios of Habersham Bank and BancMortgage Financial
Corp. as well as a decreasing interest rate environment during 2002. As a
result, loan yields decreased by 1.67% to 7.36% for the first quarter of 2002
compared to 9.03% for the first quarter of 2001. Average yield on investment
securities remained relatively stable as the yield only decreased by .31% to
5.15% for the first quarter of 2002 compared to 5.45% for the first quarter of
2001.

     Total interest expense for the first quarter of 2002 decreased $2,889,000
or 43.20%, when compared to the first quarter of 2001 primarily due to a
decrease in interest expense on deposits which decreased $2,123,000 or 43.04%,
during the first quarter of 2002 when compared to the first quarter of 2001. The
decrease was due to changes in the mix of the deposit portfolio as well as a
declining interest rate environment during 2002. Total average deposits for the
first quarter of 2002 increased approximately $1.4 million or .40% when compared
to the first quarter of 2001. Average certificates of deposit increased
approximately $9.8 million which was offset by a decrease in average NOW and
other deposit accounts of approximately $8.4 million.

     Average rates on total deposits decreased by 2.36% to 3.51% during the
first quarter of 2002 compared to 5.87% for the first quarter of 2001. Average
rates for NOW and other deposit accounts and certificates of deposit decreased
to .91% and 4.22%, respectively, during the first quarter of 2002 compared to
2.55% and 6.50%, respectively, during the first quarter of 2001.

     Interest expense on short-term and other borrowings decreased $766,000 or
43.67% when compared to the first quarter of 2001 primarily due to a decrease in
average borrowings of approximately $22 million or 18.25% when compared to the
first quarter of 2001. Average rates on borrowings decreased by 1.94% to 4.03%
for the first quarter of 2002 compared to 5.97% for the first quarter of 2001.

     Net interest income increased approximately $179,000 or 4.44%, for the
first quarter of 2002 as a result of the items discussed above.

     The net interest margin of the Company, net interest income divided by
average earning-assets, was 3.85% for the first quarter of 2002 compared to
3.30% for the first quarter of 2001.

     Noninterest income increased $3,045,000 or 52.32% for the first quarter of
2002 over the same period in 2001. This increase is primarily due to increased
production at BancMortgage during the first quarter of 2002 compared to the
first quarter of
<PAGE>
2001 resulting in increases in gain on sale of loans, and loan fee income of
$2,308,000. In addition, during the quarter ended March 31, 2002, the Company
recognized a gain of $839,000 from the sale of its holdings of FLAG Financial
Corp. common stock.

     Noninterest expense increased $2,353,000 or 29.50% for the first quarter of
2002 over the same period in 2001. This increase was due to increased salary and
employee benefits of $2,259,000. Salary and employee benefits increased
primarily due to the production volume generated by BancMortgage, which
compensates staff by commissions that are directly related to production volume,
as well as annual salary adjustments. General and administrative expenses
increased approximately $115,000 for the first quarter of 2002 over the same
period in 2001 primarily due to increases in advertising and public relations
expense.

     Income tax expense for the three months ended March 31, 2002 and 2001 was
$856,000 and $605,000, respectively. The effective tax rate for the three months
ended March 31, 2002 and 2001 was 31.20% and 32.30%, respectively.


Asset Quality

     The allowance for loan losses represents a reserve for probable losses in
the loan portfolio. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with particular
emphasis on impaired, non-accruing, past due, and other loans that management
believes require special attention. The determination of the allowance for loan
losses is subjective and based on consideration of a number of factors and
assumptions. As such, the accounting policy followed in the determination of the
allowance is considered a critical accounting policy.

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

     The allowance for loan losses methodology is based on a loan classification
system. For purposes of determining the required allowance for loan losses and
resulting periodic provisions, the Company identifies the problem loans in its
portfolio and segregates the remainder of the loan portfolio into broad
segments, such as commercial, commercial real estate, residential mortgage, and
consumer. The Company provides for a general allowance for losses inherent in
the portfolio for each of the above categories. The general allowance is
calculated based on estimates of inherent losses which probably exist as of the
evaluation date. Loss percentages used for non-problem loans in the portfolio
are based on historical loss factors. The general allowance for losses on
problem loans is based on a review and evaluation of these loans, taking into
consideration financial condition and strengths of the borrower, related
collateral, cash flows available for debt repayment, and known and expected
economic conditions. General loss percentages for the problem loans are
determined based upon historical loss experience and regulatory requirements.
For loans considered impaired, specific allowances are provided in the event
that the specific collateral analysis on each problem loan indicates that the
liquidation of the collateral would not result in repayment of these loans if
the loan is collateral dependent or if the present value of expected future cash
flows on the loan are less than the balance. In addition to these allocated
reserves, the Company has established an unallocated reserve of approximately
$276,000 at March 31, 2002 and
<PAGE>
$175,000 at December 31, 2001. The basis for the unallocated reserve is due to a
number of qualitative factors, such as concentrations of credit and changes in
the outlook for local and regional economic conditions. Management believes its
allowance for loan losses is adequate to absorb losses on loans outstanding at
March 31, 2002.

     A provision for loan losses in the amount of $423,000 was charged to
expense for the quarter ended March 31, 2002 compared to $243,000 for the
quarter ended March 31, 2001 due to an increase in net charge-offs. Net
charge-offs for the first quarter totaled approximately $326,000. At March 31,
2002 and December 31, 2001, the ratio of allowance for loan losses to total
loans, including loans held for sale, was .97% and .87%, respectively.

     Nonperforming assets consist of nonaccrual loans, accruing loans 90 days
past due, restructured loans and other real estate owned. Nonperforming assets
decreased approximately $635,000 or 5.26% from December 31, 2001 to March 31,
2002. The decrease for the first quarter of 2002 was primarily due to fewer past
due loans over 90 days. These loans decreased by nearly $1.1 million. This
reduction in 90 day past due loans was offset by an increase in non-accrual
loans of close to $221,000 and an increase in other real estate of approximately
$341,000. Restructured loans decreased by more than $100,000 during this same
time period.

     The Company had impaired loans of $3,333,375 and $3,112,413 at March 31,
2002 and December 31, 2001, respectively. Impaired loans consist of loans on
nonaccrual status. The interest income recognized on such loans for the
three-month periods ended March 31, 2002 and 2001 was not material.

     The Company's other real estate totaled $5,595,859 and $5,255,058 at March
31, 2002 and December 31, 2001, respectively. The increase was due primarily to
the foreclosure of a commercial real estate loan of approximately $574,000. This
increase was offset by the sale of commercial real estate in other real estate
at a value of over $283,000. However, in April 2002, the Company sold a
commercial real estate property reducing its other real estate owned by $2.1
million.


Liquidity and Capital Resources

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

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

     The Company's liquidity position depends primarily upon the liquidity of
its assets relative to its need to respond to short-term demand for funds caused
by withdrawals from deposit accounts and loan funding commitments. Primary
sources of liquidity are scheduled repayments on the Company's loans and
interest on and maturities of its investment securities. Sales of investment
securities available for sale represent another source of liquidity to the
Company. The Company may also utilize its cash and due from banks and federal
funds sold to meet liquidity requirements as needed.
<PAGE>
     The Company also has the ability, on a short-term basis, to purchase
federal funds from other financial institutions up to $25,000,000. At March 31,
2002, the Company had purchased approximately $5,000,000 of the available
federal funds. Presently, the Company has made arrangements with commercial
banks for short-term advances up to $9,000,000 under a repurchase agreement line
of credit of which none was advanced at March 31, 2002, in addition to a total
available line of $260,833,000 which is available to the Company, subject to
available collateral, from the Federal Home Loan Bank of which approximately
$71,000,000 was advanced at March 31, 2002.

     Habersham Bank's liquidity policy requires that the ratio of cash and
certain short-term investments to net withdrawable deposit accounts be at least
20%. The Bank's liquidity ratios at March 31, 2002 and 2001 were 18.99% and
20.00%, respectively. Since the liquidity ratio at March 31, 2002 was below the
policy's requirement of 20%, management took immediate steps that increased the
liquidity ratio to meet the policy requirements.

     At March 31, 2002, Habersham Bancorp and Habersham Bank were required to
have minimum Tier 1 and total capital ratios of 4% and 8%, respectively.
Additionally, the Company and the Bank are required to maintain a leverage ratio
(Tier 1 capital to average assets) of at least 4%. The Company and the Bank's
ratios at March 31, 2002 follow:

<TABLE>
<CAPTION>
                             Habersham              Habersham
                                Bank                 Bancorp
<S>                          <C>                    <C>
          Tier 1               10.53%                  10.11%
          Total Capital        11.56%                  11.12%
          Leverage              7.83%                   7.67%
</TABLE>


Commitments and Contractual Obligations

     The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of its lending activities to meet the financing needs of
its customers. These financial instruments include commitments to extend credit
and standby letters of credit. The Company's exposure to credit losses in the
event of nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is represented by the
contractual amounts of those instruments. The Company uses the same credit
policies in making theses commitments as it does for on-balance-sheet
instruments and evaluates each customer's creditworthiness on a case by case
basis. At March 31, 2002, the Company had outstanding loan commitments exclusive
of mortgage loan commitments of BancMortgage approximating $92,252,000 and
standby letters of credit approximating $4,649,000. The amount of collateral
obtained, if deemed necessary, for these financial instruments by the Company,
upon extension of credit, is based on management's credit evaluation of the
customer. Collateral held, if any, varies but may include inventory, equipment,
real estate, or other property. The accounting loss the Company would incur if
any party of the financial instrument failed completely to perform according to
the term of the contract and the collateral proved to be of no value is equal to
the face amount of the financial instrument.

     At March 31, 2002, the Company has commitments, primarily at a fixed rate,
to originate mortgage loans in the amount of approximately $51,914,000.

     The Company's commitments are funded through internal funding sources of
scheduled repayments of loans and sales and maturities of investment securities
available for sale or external funding sources through acceptance of deposits
from customers or borrowing from other financial institutions.
<PAGE>
     The following table is a summary of the Company's commitments to extend
credit, commitments under contractual leases, as well as the Company's
contractual obligations, consisting of deposits, FHLB advances and borrowed
funds by contractual maturity date.


<TABLE>
<CAPTION>
                                                      Due In         Due In          Due In          Due In          Due In
                                                     One Year      Two Years      Three Years      Four Years      Five Years
<S>                                               <C>             <C>            <C>              <C>             <C>
Commitments to originate mortgage loans           $ 51,914,310
  Commitments on lines of credit                    92,252,957
  Standby letters of credit                          4,649,245
  Commitments under lease agreements                 1,021,508    $   956,826     $   713,364     $   463,122     $  147,631
  Deposits                                         290,787,133     30,534,539      12,449,112      10,903,526      1,145,643
  FHLB advances                                     41,209,126                                     10,000,000
  Other borrowings                                     372,900        400,800         430,500         462,300        496,500
  Short-term borrowings                                819,347
  Federal funds purchased                            5,029,000
  Securities sold under repurchase agreements        7,571,608
                                                  ------------    -----------     -----------     -----------     ----------
   Total commitments and
     contractual obligations                      $495,627,132    $31,892,165     $13,592,975     $21,828,948     $1,789,774
</TABLE>


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


Interest Rate Sensitivity

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

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

     The relative interest rate sensitivity of the Company's assets and
liabilities indicates the extent to which the Company's net interest income may
be affected by interest rate movements. The Company's ability to reprice assets
and liabilities in the same dollar amounts and at the same time minimizes
interest rate risks. One method of measuring the impact of interest rate changes
on net interest income is to measure, in a number of time frames, the interest
sensitivity gap, by subtracting interest sensitive liabilities from interest
sensitive assets, as reflected in the following table. Such interest sensitivity
gap represents the risk, or opportunity, in repricing. If more assets than
liabilities are repriced at a given time in a rising rate environment, net
interest income improves; in a declining rate environment, net interest income
deteriorates. Conversely, if more liabilities than assets are repriced while
interest rates are rising, net interest income deteriorates; if interest rates
are falling, net interest income improves.
<PAGE>
    The interest rate sensitivity analysis, calculated as of March 31, 2002,
below has a three month positive gap of approximately $10 million
(interest-bearing assets exceeding interest-bearing liabilities repricing within
three months).


<TABLE>
<CAPTION>
                                                  DUE IN      DUE AFTER       DUE AFTER       DUE AFTER     DUE AFTER     TOTAL
                                                  THREE     THREE THROUGH    SIX THROUGH     ONE THROUGH      FIVE
                                                  MONTHS     SIX MONTHS     TWELVE MONTHS    FIVE YEARS       YEARS
<S>                                              <C>        <C>             <C>              <C>            <C>          <C>
INTEREST-EARNING ASSETS:

 Investment securities                           $  2,480      $    744       $  2,630        $ 19,706      $ 30,914     $ 56,474
 Loans                                            204,781        22,440         35,524          75,503        69,234      407,482
                                                 --------      --------       --------        --------      --------     --------
  Total interest-earning assets                   207,261        23,184         38,154          95,209       100,148      463,956

INTEREST-BEARING LIABILITIES:
 Deposits
  Money Market and NOW                             58,062            --             --              --            --       58,062
  Savings                                           7,519            --             --              --            --        7,519
  Certificates of deposit                          76,841        49,196         64,140          55,033            --      245,210
 Borrowings                                        54,718            95            190          11,790        21,571       88,364
                                                 --------      --------       --------        --------      --------     --------
  Total interest-bearing
   liabilities                                    197,140        49,291         64,330          66,823        21,571      399,155

Excess(deficiency) of interest-earning
 assets over(to) interest-bearing
 liabilities                                     $ 10,121      $(26,107)      $(26,176)       $ 28,386      $ 78,577     $ 64,801
                                                 ========      ========       ========        ========      ========     ========


Cumulative gap                                   $ 10,121      $(15,986)      $(42,162)       $(13,776)     $ 64,801

Ratio of cumulative gap to total
 cumulative interest-earning assets                  4.88%        (6.94%)       (15.70%)         (3.79%)       13.97%
Ratio of cumulative interest-earning assets
  to cumulative interest-bearing
  liabilities                                      105.13%        93.51%         86.43%          96.35%       116.23%
</TABLE>


     Management strives to maintain the ratio of cumulative interest-earning
assets to cumulative interest-bearing liabilities within a range of 60% to 140%.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     As of March 31, 2002, there were no substantial changes in the
composition of the Company's market-sensitive assets and liabilities or their
related market values from that reported as of December 31, 2001. The foregoing
disclosures related to the market risk of the Company should be read in
conjunction with the Company's audited consolidated financial statements,
related notes and management's discussion and analysis of financial condition
and results of operations for the year ended December 31, 2001 included in the
Company's 2001 Annual Report on Form 10K.
<PAGE>
PART II
OTHER INFORMATION


Item 1. Legal proceedings.

            None


Item 2. Changes in securities.

            None

Item 3. Defaults upon senior securities.

            None

Item 4. Submission of matters to a vote of security holders.

            None

Item 5. Other information.

            None

Item 6. Exhibits list and reports on Form 8-K

         (a) The registrant submits herewith as exhibits to this report on Form
10-Q the exhibits required by Item 601 of Regulation S-K, subject to Rule 12b-32
under the Securities Exchange Act of 1934.

<TABLE>
<CAPTION>
Exhibit No.    Document
<S>            <C>
3.1            Amended and restated Articles of Incorporation of Habersham
               Bancorp, as amended by amendments executed as of April 16, 1988
               and April 17, 1995 (1) and as further amended by amendment
               executed as of April 15, 2000. (2)

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

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

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

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

10.4*          Habersham Bancorp 1996 Incentive Stock Option Plan (7), as
               amended by the First Amendment thereto dated January 29, 2000.
               (8)

10.5*          Mortgage Banking Agreement Dated as of January 2, 1996 among
               Habersham Bancorp, Habersham Bank, BancMortgage Financial Corp.
               and Robert S. Cannon and Anthony L. Watts. (9)

10.6           Option Agreement dated as of March 11, 1998 by and among
               Habersham Bancorp and certain shareholders of Empire Bank Corp.
               (10)

11.1           Computation of Earnings Per Share.
</TABLE>
<PAGE>
(1) Incorporated herein by reference to exhibit 3(a) in Amendment No. 1 to
Registrant's Registration Statement on Form S-4 (Regis. No. 33-57915).

(2) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 2000
(File No. 0-13153).

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

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

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

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

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

(8) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1999
(File No. 0-13153).

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

(10) Incorporated herein by reference to exhibit of same number in the
Registrant's Annual Report on Form 10-Q for the quarter ended June 30, 1998
(File No. 0-13153).


* Indicates the Registrant's plans, management contracts and compensatory
arrangements.
<PAGE>
                                   SIGNATURES


    In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                HABERSHAM BANCORP
                                  (Registrant)


Date May 15 , 2002                   /S/ Annette Banks
                                     -----------------
                                     Chief Financial Officer
                                     (for the Registrant and as the
                                     Registrant's principal financial and
                                     accounting officer)