<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[X]               Annual Report Under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934 for the fiscal year ended December 31,
                  2001 or

[ ]               Transition Report Under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934 for the transition period from _______ to
                  _______

                             HIGH STREET CORPORATION
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

<TABLE>
<S>                                                             <C>
              North Carolina                                                    56-1983291
----------------------------------------------------            ---------------------------------------------
(State or other jurisdiction of incorporation -                           (I.R.S. Employer
                or organization)                                        Identification No.)

         1310 Hendersonville Road
        Asheville, North Carolina                                                 28803
----------------------------------------------------            ---------------------------------------------
          (Address of principal                                                 (Zip Code)
            executive offices)

</TABLE>

Issuer's telephone number:          (828) 277-5001

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the
Exchange Act: Common Stock, no par value
              --------------------------
                    Title of class

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                              Yes   [X]                No   [ ]
                                  -------                 -------

The number of issued and outstanding shares of the issuer's no par value Common
Stock, its only outstanding class of Common Stock, as of March 19, 2002 was
1,748,421. The aggregate market value of shares of the issuer's Common Stock
held by non-affiliates as of March 19, 2002 is $10,557,999. This value is based
on an average high and low bid price of such Common Stock of $9.00 on March 14,
2002.

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

<TABLE>
<CAPTION>
Items incorporated by reference:           Incorporated Document                 Parts into which Incorporated
                                           ---------------------                 -----------------------------
<S>                                        <C>                                   <C>
                                           Proxy Statement for Annual                        Part III
                                           of Shareholders to be held
                                           May 7, 2002

</TABLE>


Transitional Small Business Disclosure Format (Check one):  Yes [ ]    No  [X]
                                                               -----      -----

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.


GENERAL

            High Street Corporation, a North Carolina corporation (the
"Company", which may be referred to as "we", "us" or "our"), was incorporated in
March 2001 for the purpose of forming a holding company for High Street Banking
Company, a North Carolina banking corporation (the "Bank"). On October 31, 2001,
the Company completed a share exchange with the Bank pursuant to which each
share of the common stock, $5.00 par value, of the Bank (the "Bank Common
Stock") was automatically exchanged for one share of the common stock, no par
value, of the Company (the "Company Common Stock") and the Bank became a wholly
owned subsidiary of the Company. Prior to the Share Exchange, the Bank Common
Stock was registered under Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). As a result of the Share Exchange, pursuant to
Rule 12g-3(a) under the Exchange Act, the Company Common Stock is deemed
registered under Section 12(g) of the Exchange Act. Prior to the completion of
the share exchange, the Company had no assets and conducted no business. All
disclosures in this Form 10-KSB with respect to the Company and its operations
include the operations of the Bank prior to the completion of the share
exchange.

            We provide a broad range of banking and financial services to
individuals, professionals and privately-owned businesses in our primary service
areas of Asheville and Hickory, North Carolina, and the surrounding areas. We
serve the banking needs of the entire community while focusing on the complex
needs of select individuals, households, professionals and privately-owned
businesses.

            We opened for business in August 1997 and as of December 31, 2001,
had grown to $136 million in deposits, $122 million in loans, and $162 million
in total assets.

PRODUCTS AND SERVICES

            We offer a comprehensive line of commercial and personal financial
products, including deposit, credit, investment, insurance, information, and
transaction services designed to meet the financial needs of individuals,
professionals, and privately owned businesses. We provide these services through
the development of senior management and customer service teams, fully
integrated technology platforms and applications systems, and strategic
partnerships with organizations that have special capabilities and expertise in
particular products or services that customers desire.

            We offer a broad range of deposit services that are typically
available in most banks, including checking accounts, savings accounts and time
deposits of various types, ranging from daily money market accounts to
longer-term certificates of deposit. The transaction accounts and time
certificates are tailored to the principal market area at rates competitive with
those offered in the area. In addition, we also offer retirement accounts such
as IRAs (Individual Retirement Accounts). All deposit accounts are insured by
the Federal Deposit Insurance Corporation (the "FDIC") up to the maximum amount
permitted by law. We solicit these accounts from individuals, professionals, and
privately-owned businesses within our service areas.


                                       1
<PAGE>

            We also offer a range of short- to intermediate-term commercial and
personal loans. These loans are secured and unsecured and are available for a
variety of purposes, including (1) residential first mortgage loans, home equity
loans, installment loans, personal credit lines and overdraft protection for
individuals, and (2) commercial lines of credit, term loans, installment loans
and real estate construction and permanent loans for businesses. Although we
take a progressive and competitive approach to lending, we stress high quality
in our loans. To promote such quality lending, we have established lending
policies to be followed by our officers. In addition, there is a Loan and
Investment Committee of the Board of Directors that provides oversight of the
loan portfolio and reviews all loan transactions.

            We offer a variety of other financial products and services,
including credit and debit cards and related services (including merchant credit
card services); automated teller machines; safe deposit boxes; travelers checks;
foreign currency; international trade services; cash management services;
courier service for customers; and overnight investment accounts. We also offer
investment services through, High Street Investment Services, Inc., a
wholly-owned subsidiary of the Bank, including brokerage services, retirement
plans, insurance services, annuities, and investment counseling.

            We provide most of our products and services directly. However,
certain products and services such as international trade services and
investment services are offered through strategic affiliations with third
parties. We also rely upon third parties for check clearing and other backroom
operational support. We select third-party service providers based upon our
assessment of the qualifications, resources, experience and reputation of
candidates for each engagement, as well as consideration of the costs of such
services; however, there are a number of potential providers of the services we
use, and we believe that we could obtain needed services elsewhere in the event
of the loss of any of our current third-party service providers.

MARKET AREAS

            We have two branch offices (including our headquarters) in
Asheville, North Carolina and one branch office in Hickory, North Carolina. Our
primary service areas consist of eight counties surrounding Asheville (Buncombe,
Madison, Yancey, McDowell, Henderson, Transylvania, Haywood and Rutherford) and
five counties surrounding Hickory (Catawba, Burke, Caldwell, Alexander and
Lincoln). We have chosen our service areas based on the strong corporate and
commercial presence and high concentration of personal income in these areas. We
believe that the bank markets in these areas present an attractive opportunity
for a locally owned and managed bank offering services comparable to a larger,
national bank.

COMPETITION

            North Carolina law has long permitted state-wide branching by banks
and savings institutions. Consequently, many financial institutions, including
some of the largest in the United States, have branches located in our service
areas. There are also five locally managed community banks with offices in our
service areas. As of June 1, 2001, there were 65 branches operated by 15 banks
and savings institutions in the Buncombe County (Asheville) market area and 54
branches operated by 12 banks and savings institutions in the Catawba County
(Hickory) market area. Approximately $2.6 billion in deposits are maintained in
bank and savings institution branches located in the Buncombe County market
area.


                                       2
<PAGE>

Approximately $2.0 billion in deposits are maintained in bank and savings
institution branches located in the Catawba County market area.

            The principal areas and methods of competition in the banking
industry are the services that are offered, pricing of services, the convenience
and availability of services and the degree of expertise and personal manner
with which services are offered. We have encountered strong competition from
most of the banking and savings institutions in our market areas. In conducting
certain areas of our business, we also compete with insurance companies, money
market mutual funds and other financial institutions, some of which are not
subject to the same degree of regulation and restrictions as we are. Many of
these competitors have substantially greater resources and lending abilities
than we have and offer certain services that we do not provide.

            We believe that, with increased demand for banking services arising
from steady growth in population, personal income and employment, the banking
market will continue to grow in our current and proposed market areas.

MARKETING

            Our strategy is to advance growth through well-targeted, aggressive,
and sound marketing programs, including a combination of advertising, public
relations, promotions, support materials, and personal contacts. Building
awareness of the Bank within each of our target markets and customer segments,
generating customer relationship opportunities, and meeting the individual
financial needs of customers have comprised our marketing goals and activities.
We also have emphasized, and plan to continue, market research as part of our
marketing strategy.

SUPERVISION AND REGULATION

            As a bank holding company, the Company, and as a state-chartered
bank, the Bank, are extensively regulated under both federal and state law, and
are also subject to laws and regulations that apply to businesses generally. Any
changes in applicable laws or regulations could have a material effect on our
business.

            As a bank holding company, the Company is subject to examination,
regulation and periodic reporting under the Bank Holding Company Act, as
administered by the Federal Reserve Board (the "FRB"). The FRB has adopted
capital adequacy guidelines for bank holding companies on a consolidated basis.
Under the Bank Holding Company Act, the Company would need the approval of the
FRB to acquire substantially all of the assets of or more than 5% of the voting
stock of another bank holding company or a bank. In addition, a bank holding
company is prohibited generally from engaging in, or acquiring five percent or
more of any class of voting securities of any company engaged in, non-banking
activities.

            Unless the Company is well capitalized under applicable FRB
regulations, the FRB is empowered to disapprove any purchase or redemption of
the Company's outstanding equity securities if the gross consideration for the
purchase or redemption, when combined with the net consideration paid for all
such purchases or redemptions during the preceding 12 months, is equal to 10% or
more of the Company's consolidated net worth.


                                       3
<PAGE>

            As a state-chartered bank, the Bank is subject to extensive
supervision and regulation by the North Carolina Banking Commission (along with
the Commissioner of Banks in the performance of his statutory functions under
North Carolina banking laws, the "NCBC"). The NCBC administers and oversees
state laws that set specific requirements for bank capital and regulate deposits
in, and loans and investments by, state-chartered banks, including the amounts,
types, and in some cases, rates. The NCBC supervises and performs periodic
examinations of state-chartered banks to assure compliance with state banking
statutes and regulations, and the Bank is required to make regular reports to
the NCBC describing in detail the resources, assets, liabilities and financial
condition of the Bank. Among other things, the NCBC regulates the merger and
consolidation of state-chartered banks, the payment of dividends, loans to
officers and directors, recordkeeping, types and amounts of loans and
investments, and the establishment of branches and subsidiaries. As a North
Carolina-registered bank holding company, any change in control of the Company
will be subject to the prior approval of the NCBC.

            Because it has obtained deposit insurance from the FDIC, the Bank is
also subject to extensive supervision by the FDIC under applicable federal
banking laws. The Bank is subject to examination by the FDIC and the FDIC also
monitors the Bank's compliance with several federal statutes such as the
Community Reinvestment Act of 1977 and the Interlocks Act. The FDIC has the
authority to prevent the continuance or development of unsound and unsafe
banking practices. The FDIC also is authorized to approve conversions, mergers,
consolidations and assumption of deposit liabilities between insured banks and
uninsured banks or institutions, and to prevent capital or surplus diminution in
such transactions where the deposit accounts of the resulting, continuing or
assumed bank are insured by the FDIC.

            Under regulations issued by the FDIC, the Bank generally is required
to maintain a Tier I risk-based capital ratio of 4.0%, a total risk-based
capital ratio of 8.0%, and a leverage ratio of 4.0%.

            The Bank is subject to certain quantitative and qualitative
restrictions imposed by the Federal Reserve Act on any extension of credit to,
or purchase of assets from, or letters of credit on behalf of, the Company or
its subsidiaries, and on the investment in or acceptance of stocks or securities
of the Company or its subsidiaries as collateral for loans. In addition,
provisions of the Federal Reserve Act and FRB regulations place restrictions on
loans and other extensions of credit to officers, directors and principal
shareholders of the Bank, the Company, any subsidiary of the Company and related
interests of such persons. Moreover, the Bank is prohibited from engaging in
certain tie-in arrangements (with the Company or any of its subsidiaries) in
connection with any extension of credit, lease or sale of property or furnishing
of services.

            The dividends that may be paid by the Company to shareholders are
indirectly regulated through legal limitations placed on the Bank's ability to
pay dividends. Dividends may not be paid by the Bank unless the Bank's capital
surplus is at least 50% of its paid-in capital.

            The shares of the Bank's Common Stock are subject to assessment
under North Carolina banking laws if the Bank's capital becomes impaired from
losses or any other causes and the NCBC orders such assessment. Failure to pay
such an assessment could result in a forced sale of the Bank's Common Stock by
the Company.


                                       4
<PAGE>

            Our earnings will be affected significantly by the policies of the
FRB, which regulates the money supply in order to mitigate recessionary and
inflationary pressures. Among the techniques used to implement these objectives
are open market transactions in United States government securities, changes in
the rates paid by banks on bank borrowings, and changes in reserve requirements
against bank deposits. These techniques are used in varying combinations to
influence overall growth and distribution of bank loans, investments, and
deposits, and their use may also affect interest rates charged on loans or paid
for deposits. The monetary policies of the FRB have had a significant effect on
the operating results of commercial banks in the past and are expected to
continue to do so in the future. In view of changing conditions in the national
economy and money markets, as well as the effect of actions by monetary and
fiscal authorities, no prediction can be made as to possible future changes in
our interest rates, deposit levels, loan demand or business and earnings.

            The Gramm-Leach-Bliley Act of 1999 represents the most sweeping
reform of financial services regulation in over sixty years. The Act permits the
creation of new financial services holding companies that can offer a range of
financial products under a regulatory regime based on the principle of
functional regulation. The legislation eliminates legal barriers to affiliations
among banks and securities firms, insurance companies, and other financial
services companies. The Act provides financial organizations with flexibility in
structuring these new financial affiliations through a holding company structure
or a financial subsidiary, with appropriate safeguards. Final regulations
governing the financial services holding company structure were issued by the
Federal Reserve Bank and the Department of the Treasury effective February 15,
2001.

            We are also subject to other state and federal regulation of many of
the financial services we provide or plan to provide, including especially
consumer credit, but also including investment and brokerage services, personal
and institutional trust services, and other financial services. We must also
comply with applicable laws and regulations relating to employment practices,
occupational health and safety and other activities that are subject to
governmental regulation of businesses generally.

EMPLOYEES

             We currently have 52 total employees, of which 49 are full time
employees and two are part time employees. These employees include three
executive officers, 13 other managers, and 15 customer service personnel. None
of our employees is represented by any collective bargaining unit. We consider
relations with our employees to be good.

ITEM 2. DESCRIPTION OF PROPERTY.

            We have two branch offices in Asheville, North Carolina (including
our headquarters) and one branch office in Hickory, North Carolina.

            Our executive office and headquarters facility in south Asheville
was built in September 1998. This facility is located at 1310 Hendersonville
Road in Asheville. We lease this facility, comprising 9,000 square feet of
office space, at a current rate of $189,384 per year with a 2% increase per
year. The lease commenced September 16, 1997 and is for an initial term of 15
years, followed by three 10-year renewal options.


                                       5
<PAGE>

            On July 24, 2000, we opened a branch in the north Asheville area.
This facility is located at 918 Merrimon Avenue in Asheville. We lease this
facility, comprising 1,850 square feet of office space, at a current rate of
$55,335 per year (subject to annual adjustment for improvements to the facility)
with a 2% increase per year beginning in the sixth year of the lease term. The
lease commenced April 12, 2000 and is for an initial term of 15 years, followed
by three 10-year renewal options.

            Our Hickory office is in a modern, brick three-story building
located on a 1.5 acre lot in Hickory's central business district at 225 4th
Street, NW. The building was originally constructed in 1963 for use as the
Hickory office of another bank, and the land and building were acquired by us in
1997 for approximately $1.6 million, using a portion of the proceeds of the
Bank's initial subscription offering for its Common Stock. The building contains
approximately 15,000 square feet of office and customer service space, of which
we occupy approximately 10,000 square feet and lease the remaining space to a
tenant.

ITEM 3. LEGAL PROCEEDINGS.

            We are not currently party to any material legal proceedings.
However, we may from time to time in the future become a party to various legal
proceedings incidental to our business.

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

            Not applicable.

                                     PART II

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

            As of March 12, 2002, we had issued and outstanding 1,748,421 shares
of Common Stock held by approximately 772 holders of record.

            From April 8, 1998 through October 31, 2001, the Bank's Common Stock
was quoted on the OTC Bulletin Board under the symbol "HSTE." Since November 1,
2001 the Company's Common Stock has been quoted on the OTC Bulletin Board under
the symbol "HSTC." The following table sets forth the high and low closing bid
price for the Bank's Common Stock or the Company's Common Stock, as applicable,
as reported on the OTC Bulletin Board for each quarter during the fiscal years
ended December 31, 2000 and December 31, 2001 and during the first quarter of
2002:



                                       6
<PAGE>

<TABLE>
<CAPTION>

                                                  Fiscal Years Ended or Ending December 31,
                              --------------------------------------------------------------------------------------
                                       2000                            2001                             2002
                              ----------------------          ----------------------          ----------------------
                               High             Low            High             Low            High             Low
                              ------          ------          ------          ------          ------          ------
<S>                           <C>             <C>             <C>             <C>             <C>             <C>
First Quarter                 $ 8.18          $ 6.36          $ 9.00          $ 5.75          $10.25          $ 6.95
Second Quarter                $ 7.61          $ 6.36          $ 8.00          $ 7.00              --              --
Third Quarter                 $ 8.18          $ 6.25          $ 7.76          $ 6.50              --              --
Fourth Quarter                $ 7.16          $ 6.00          $ 7.05          $ 6.46              --              --

</TABLE>

The bid prices reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not represent actual transactions and are adjusted to give
retroactive effect to a 10% stock dividend effected November 20, 2000. The last
closing price per share of the Company's Common Stock on the OTC Bulletin Board
at March 29, 2002 was $9.00.

            Neither the Company nor the Bank has ever paid any cash dividends on
its Common Stock. The dividends that may be paid by the Company to shareholders
are indirectly regulated through legal limitations placed on the Bank's ability
to pay dividends. North Carolina law imposes restrictions on the ability of all
banks chartered under North Carolina law to pay dividends. The Bank may pay
dividends only out of undivided profits as determined pursuant to Section 53-87
of the North Carolina General Statutes and may not pay dividends unless the
Bank's capital surplus is at least 50% of its paid-in capital. In addition,
regulatory authorities may limit payment of dividends by any bank when it is
determined that such a limitation is in the public interest and is necessary to
ensure the financial soundness of the Bank.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

            The following discussion should be read in conjunction with the
Company's Financial Statements and the related notes thereto attached hereto
beginning at page F-1. Due to special SEC accounting rules applicable to bank
holding companies that did not apply to the Bank prior to the reorganization,
certain items for 2000 and 1999 reflected in the Company's Annual Reports on
Form 10-KSB for the years ended December 31, 2000 and December 31, 1999 have
been reclassified to comply with such rules and to conform to the financial
statement presentation for 2001.

FINANCIAL CONDITION AND REVENUE GROWTH

            Deposits have grown to $135,535,459 at December 31, 2001 as compared
with $129,127,587 at December 31, 2000 and $114,218,683 at December 31, 1999.
Loans outstanding were $124,061,201 at December 31, 2001 as compared to
$108,978,809 at December 31, 2000 and $100,008,616 at December 31, 1999.
Investment securities were $18,580,410 and federal funds sold were $5,457,000 at
December 31, 2001 as compared with $23,133,657 and $5,851,000, respectively, at
December 31, 2000, and $12,850,131 and $9,540,000, respectively, at December 31,
1999. Our total assets were $162,008,290 at December 31, 2001 as compared with
$146,693,069 at December 31, 2000 and $129,765,590 at December 31, 1999.


                                       7
<PAGE>

            Deposit rates were designed to attract checking, savings and money
market accounts, as well as certificates of deposit. Certificates of deposit
rates have been priced competitively in the markets we serve.

            Demand deposits (including both non-interest demand and money market
accounts) are the core of a reliable and cost effective base of deposits. Total
demand deposits grew from approximately $27.8 million at December 31, 2000 to
approximately $36.0 million at December 31, 2001. Certificates of deposit held
by customers in our market areas fell from approximately $49.0 million at
December 31, 2000 to approximately $36.4 million at December 31, 2001. Brokered
deposits consisting of certificates of deposit held by customers outside our
market areas and which we acquired in brokered transactions grew from
approximately $52.3 million at December 31, 2000 to approximately $63.1 million
at December 31, 2001. There is no concentration of deposits from one individual
or entity; we had 39.9% of our total deposits in the $100,000 or greater
certificate of deposit category at December 31, 2001, as compared to 31.1% at
December 31, 2000 and 21.5% at December 31, 1999.

            One of our primary goals for 2001 was to continue to build a base of
high quality earning assets in order to support sustained revenue growth. Our
loan portfolio, our primary earning asset, grew from $108,978,809 at December
31, 2000 to $124,061,201 by December 31, 2001. This growth was achieved while
maintaining a high quality loan mix of commercial, consumer and residential
mortgage loans. At December 31, 2001, commercial loans made up 83% of all loans;
consumer loans, 5%; and residential mortgages, 12%.

            Another major component of revenue growth is income earned as a
result of fee based services provided to individuals and businesses. It is
management's plan to support the development of fee based service revenues as a
major component of sustained revenue growth. Fee based service revenues grew 71%
to $807,048 in 2001 compared to $470,925 in 2000.

            Our ability to grow our earnings is driven primarily by our ability
to increase interest income. In turn, our ability to increase interest income is
driven primarily by our ability to grow our loan portfolio, which is our primary
earning asset. However, because it is important to us to remain "well
capitalized" under applicable banking regulations and because our current
capital ratios are near the limits required for us to be considered well
capitalized (see discussion below under LIQUIDITY AND CAPITAL RATIOS), our
ability to increase the size of our loan portfolio, and in turn our earnings,
will be constrained unless we are able to increase our capital.

LIQUIDITY AND CAPITAL RATIOS

            Our liquidity position is generally determined by the need to
respond to short-term demand for funds created by deposit withdrawals and the
need to provide resources to fund assets, typically in the form of loans. How we
respond to these needs is affected by our ability to attract deposits, the
maturity of the loans and securities, the flexibility of assets within the
securities portfolio, and the ability to borrow funds from other sources. Our
primary sources of liquidity are cash and cash equivalents, deposit growth,
available-for-sale securities, and the cash flows from principal and interest
payments on loans and other earning assets.


                                       8
<PAGE>

            Total demand deposits grew from approximately $27.8 million at
December 31, 2000 to approximately $36.0 million at December 31, 2001.
Certificates of deposit held by customers in our market areas fell from
approximately $49.0 million at December 31, 2000 to approximately $36.4 million
at December 31, 2001. Brokered deposits consisting of certificates of deposit
held by customers outside our market areas and which we acquired in brokered
transactions grew from approximately $52.3 million at December 31, 2000 to
approximately $63.1 million at December 31, 2001. As of December 31, 2001 demand
deposits, locally held certificates of deposit and brokered deposits accounted
for approximately 26%, 27% and 47%, respectively, of our total deposits. One of
our primary goals in 2002 is to reduce our reliance on brokered deposits as a
source of liquidity and to increase funding from deposits generated locally.

            In addition, we are able to borrow funds from the Federal Home Loan
Bank of Atlanta ("FHLB"), and to purchase federal funds, on a short term basis,
from other financial institutions, and have a borrowing capacity from the
Federal Reserve Discount Window. As of December 31, 2001 funds borrowed from the
FHLB were $11,000,000 compared to $2,000,000 as of December 31, 2000. We did not
have any federal funds purchased or borrowings from the Federal Reserve Discount
Window as of December 31, 2001.

            Our liquidity ratio, which is defined as net cash, interest-bearing
deposits with banks, federal funds sold and investment securities, as a
percentage of net deposits and short-term liabilities, was 20% at December 31,
2001, as compared to 21% at December 31, 2000. As a result of our management of
liquid assets and the ability to generate liquidity with increased deposits, we
believe that our overall liquidity is sufficient to satisfy our depositors'
requirements and meet our customers' credit needs.

            As of December 31, 2001, our total stockholder equity was
approximately $14,937,843. At December 31, 2001, our capital to asset ratio was
9.37%. All capital ratios place us in excess of the minimum required to be
deemed a well-capitalized bank by regulatory measures adopted by the FDIC and
set forth at 12 C.F.R. 325.103(b). A bank is considered to be "well-capitalized"
if it has Tier I capital ratio of 6.0% or greater, a total risk-based capital
ratio of 10.0% or greater, and a leverage ratio of 5.0% or greater. The Tier I
capital ratio is generally defined as the ratio of shareholders' equity less all
intangible assets and goodwill adjusted assets (i.e. net unrealized gains). The
total risk-based capital ratio is defined as the ratio of Tier I capital plus
allowance for loan losses to risk adjusted assets. The leverage ratio is defined
as the ratio of Tier I capital to total average assets. Our Tier I capital ratio
at December 31, 2001 was 9.73%. Our leverage ratio was 7.99% and our total
risk-based capital ratio was 10.93%.

<TABLE>
<CAPTION>

                                                                             Capital Ratios
                                                                     Regulatory         Well Capitalized
            Dec. 31, 2001                                              Minimum               Banks
            -------------                                            ----------         ----------------
<S>                                                <C>               <C>                <C>
Tier I risk-based capital                          9.73%                 4.0%                 6.0%
Total risk-based capital                          10.93%                 8.0%                10.0%
Leverage                                           7.99%                 4.0%                 5.0%

</TABLE>


                                       9
<PAGE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND DECEMBER 31,
2000

            The net result of operations for the year ended December 31, 2001
was net income of $48,180. In comparison, we recorded net income of $2,267,883
for the year ended December 31, 2000 including a deferred tax benefit of
$1,834,557 which related to net operating losses and reserves for loan losses
incurred by us from 1997 through 1999. Excluding the effect of this deferred tax
benefit and primarily as a result of a substantial decrease in net interest
margin, net income for the year ended December 31, 2001 was $48,180 compared to
net income for the year ended December 31, 2000 of $433,326. For the year ended
December 31, 2001, interest income was $11,468,943 and interest expense was
$6,875,763, as compared with $11,920,207 and $7,332,081, respectively, for the
year ended December 31, 2000.

            Net interest income, the major component of our income, is the
amount by which interest and fees generated by earning assets exceed the total
cost of funds used to carry them. Net interest income is affected by changes in
the volume and mix of earning assets and interest-bearing liabilities, as well
as changes in the yield earned and rates paid. Net interest margin is calculated
by dividing tax-equivalent net interest income by average earning assets, and
represents our net yield on our earning assets. Primarily as a result of the
steep decline in short term interest rates during 2001, our net interest margin
was 2.93% in 2001 compared to 3.23% in 2000. The sharp drop in short term rates
in 2001 hurt our net interest margin since reductions in short term rates
immediately reduced the interest we earned on our loan portfolio since
approximately 80% of our loan portfolio is priced at the prime rate, but did not
immediately reduce our interest expense since the majority of our deposits are
in the form of certificates of deposit which carry a fixed interest rate to
maturity. If short term interest rates were to rise in 2002, our 2002 net
interest margin should improve as the interest we earn on our loans will
increase with prime rate increases while our certificates of deposit will
reprice at higher rates only as the instruments mature and are replaced with new
ones.

            Net interest income remained relatively flat at $4,593,180 in 2001,
compared to $4,588,126 for the year ended December 31, 2000. Loans, our primary
earning asset, grew by over $15 million from $108,978,809 to $124,061,201 during
2001. Due to regulatory capital requirement which require us to maintain a
certain ratio of capital to earning assets (see discussion above under LIQUIDITY
AND CAPITAL RATIOS), we expect our pace of loan growth to slow in 2002, unless
we are able to increase our capital. In 2001, the loan portfolio included
commercial loans of $103.8 million (83% of total loans), retail loans of $5.6
million (5% of total loans) and residential mortgages of $15.4 million (12% of
total loans). In comparison, in 2000 commercial loans were $84.9 million (78% of
total loans), retail loans were $5.1 million (5% of total loans), and
residential mortgages were $18.9 million (17% of total loans).

            At December 31, 2001, we had one loan, with a balance of $15,000,
that was classified as non-performing. The allowance for loan losses at year-end
2001 was $1,625,943, approximately 1.31% of outstanding loans. At year-end 2000,
allowance for loan losses was $1,721,628, approximately 1.58% of outstanding
loans at that time. The purpose of the allowance account is to provide a reserve
against the possibility of the unforeseen uncollectability of a portion of loans
currently in the portfolio. To determine the allowance needed, management
evaluates the risk characteristics of the loan portfolio under current economic
conditions and considers such factors as the financial condition of the
borrower, fair market value of collateral and other items that, in management's
opinion, deserve recognition in estimating possible credit losses. Based on
management's analysis of the loan account and management's


                                       10
<PAGE>

experience with similar portfolios, it is management's belief that the allowance
serves as a sufficient reserve for unforeseen events in the loan portfolio.

            Non-interest income was $680,264 for the year ended December 31,
2001, as compared with $302,944 for the year ended December 31, 2000.
Non-interest income consisted primarily of fees from residential mortgage,
investment services and deposit service charges. Non-interest income is expected
to continue to increase as we add more accounts, and as our investment
subsidiary, High Street Investment Services, Inc., continues to grow.

            Primarily due to the general growth of our business, non-interest
expense was $4,980,986 for the year ended December 31, 2001, as compared with
$4,252,744 for the year ended December 31, 2000. Non-interest expense consist
primarily of salaries, benefits, payroll taxes, occupancy costs, advertising,
professional fees, and data processing fees. During 2001, salary and benefit
expense was approximately $2.1 million, up from approximately $1.9 million in
2000, with occupancy and equipment at approximately $913,000, up from
approximately $815,000 in 2000. Other non-interest expenses totaled
approximately $1.97 million, primarily consisting of advertising and promotion,
data processing and professional fees, compared to approximately $1.55 million
in 2000. Professional fees were up to $203,243 in 2001 compared to $108,629 in
2000 primarily as a result of costs incurred in connection with our 2001 bank
holding company reorganization.

            Our investments at year-end were comprised of U.S. agency and
corporate securities totaling approximately $18.6 million at December 31, 2001,
as compared with approximately $23.1 million at December 31, 2000. The remainder
of our investments is in the form of federal funds sold to correspondent banks,
which totaled approximately $11.2 million at year-end 2001, as compared with
approximately $7.2 million at year-end 2000. We have maintained a posture of
very high liquidity in the form of federal funds sold and investment securities
available for sale in order to fund loan demand and to ensure adequate
liquidity.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000 AND DECEMBER 31,
1999

            The net result of operations for the year ended December 31, 2000
was net income of $2,267,883. In comparison, we recorded a net loss of $733,391
for the year ended December 31, 1999. For the year ended December 31, 2000,
interest income was $11,920,207 and interest expense was $7,332,081, as compared
with $7,452,602 and $4,057,689, respectively, for the year ended December 31,
1999. Our net gain of $2,267,883 for the year ended December 31, 2000 included a
deferred tax benefit of $1,834,557 which we recognized during the third quarter.
This deferred tax benefit relates to net operating losses and reserves for loan
losses incurred by us from 1997 through 1999.

            Net interest income totaled $4,588,126 in 2000, up from $3,176,668
for the year ended December 31, 1999. The increase in net interest income in
2000 was primarily attributable to an increase in the volume of loans. Loans,
our primary earning asset, grew by over $9 million from $100,008,616 to
$108,978,809 during 2000. In 2000, our loan portfolio included commercial loans
of $84.9 million (78% of total loans), retail loans of $5.1 million (5% of total
loans) and residential mortgages of $18.9 million (17% of total loans). In
comparison, in 1999 commercial loans were $80.4 million (80% of total loans),
retail loans were $14.3 million (14% of total loans), and residential mortgages
were $5.4 million (6% of total loans).


                                       11
<PAGE>

            At December 31, 2000, we had two loans, with an aggregate balance of
$52,600, that were classified as non-performing. The allowance for loan losses
at year-end 2000 was $1,721,628, slightly more than 1.58% of outstanding loans.
At year-end 1999, allowance for loan losses was $1,518,500, slightly more than
1.5% of outstanding loans at that time.

            Non-interest income was $302,944 for the year ended December 31,
2000, as compared with $186,019 for the year ended December 31, 1999.
Non-interest income consisted primarily of fees from residential mortgage,
investment services and deposit service charges.

            Non-interest expense was $4,252,744 for the year ended December 31,
2000, as compared with $3,545,823 for the year ended December 31, 1999.
Non-interest expense consists primarily of salaries, benefits, payroll taxes,
occupancy costs, advertising, professional fees, and data processing fees.
During 2000, salary and benefit expense was approximately $1.88 million, up from
approximately $1.68 million in 1999, with occupancy and equipment at
approximately $815,000, up from approximately $673,000 in 1999. Other
non-interest expenses totaled approximately $1.55 million, primarily consisting
of advertising and promotion, data processing and professional fees, compared to
approximately $1.19 million in 1999.

            Our investments at year-end were comprised of U.S. agency and
corporate securities totaling approximately $23.1 million at December 31, 2000,
as compared with approximately $12.8 million at December 31, 1999. The remainder
of our investments, primarily federal funds sold to correspondent banks, totaled
approximately $7.2 million at year-end 2000, as compared with approximately
$11.9 million at year-end 1999.

ASSET / LIABILITY MANAGEMENT

            Our asset/liability management strategies are designed to minimize
interest rate risk between interest-earning assets and interest-bearing
liabilities at various maturities, while maintaining the objective of assuring
adequate liquidity and maximizing net interest income. The ability to control
these fluctuations has a direct impact on our profitability. Management monitors
this activity on a regular basis through analysis of our portfolio to determine
the impact changes in interest rates have on earnings and equity.

            Management uses a simulation model to assess the amount of earnings
at risk due to changes in interest rates. As of December 31, 2001, based on an
increase or decrease in interest rates of 200 basis points over a twelve month
period, the model indicated that our net interest margin, the primary factor in
our profitability, could be impacted by approximately +/- 15%.

EFFECTS OF INFLATION AND CHANGING PRICES

            A commercial bank has an asset and a liability structure that is
distinctly different from that of a company with substantial investments in
plant and inventory because the major portion of its assets are monetary in
nature. As a result, a bank's performance may be significantly influenced by
changes in interest rates. Although the banking industry is more affected by
changes in interest rates than by inflation in the prices of goods and services,
inflation is a factor that may influence interest rates. Yet, the


                                       12
<PAGE>

frequency and magnitude of interest rate fluctuations do not necessarily
coincide with changes in the general inflation rate. Inflation does affect
operating expenses in that personnel expense and the cost of supplies and
outside services tend to increase during periods of high inflation.

CAUTIONARY STATEMENT AS TO FORWARD LOOKING INFORMATION

            Statements in this report as to our budgeted loans, deposits,
earnings, capital expenditures and other amounts, other projections of future
financial or economic performance, and statements of our plans and objectives
for future operations are "forward looking" statements, and are being provided
in reliance upon the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Important factors that could cause actual results
or events to differ materially from those projected, estimated, assumed or
anticipated in any such forward looking statements include: general economic
conditions in our markets including inflation, recession, interest rates and
other economic factors; loan losses, including loan losses resulting from
adverse economic conditions; increased competition from existing competitors and
from any new entrants in our markets; any loss of our key management personnel;
the fact that we have only a limited operating history and are subject to the
risks inherent in the establishment of a new business and, specifically, of a
new financial institution; changes in governmental regulations applicable to our
business; and other factors that generally affect the business of locally owned
and managed community banks.

ITEM 7. FINANCIAL STATEMENTS.


The following financial statements are included herein:

<TABLE>
<CAPTION>

                                                                                      Page
                                                                                      ----
<S>                                                                                   <C>
                  Independent Auditor's Report                                         F-1

                  Consolidated Balance Sheets                                          F-2

                  Consolidated Statements of Operations                                F-3

                  Consolidated Statements of Changes in Stockholders' Equity           F-5

                  Consolidated Statements of Cash Flows                                F-6

                  Notes to Consolidated Financial Statements                           F-8

</TABLE>


                                       13


<PAGE>

                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
High Street Corporation and Subsidiaries
Asheville, North Carolina

We have audited the accompanying consolidated balance sheets of High Street
Corporation and Subsidiaries (the Bank) as of December 31, 2001 and 2000, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2001. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of High Street Corporation and
Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America.



/s/  WHISNANT & COMPANY, LLP



Hickory, North Carolina
January 25, 2002



                                      F-1


<PAGE>

                             HIGH STREET CORPORATION
                                AND SUBSIDIARIES

                                 Balance Sheets

                           December 31, 2001 and 2000


<TABLE>
<CAPTION>

                                     ASSETS

                                                                                    2001                     2000
                                                                                -------------           -------------
<S>                                                                             <C>                     <C>
Cash and due from banks                                                         $   2,758,218           $   2,618,968
Federal funds sold                                                                  5,457,000               5,851,000
Interest bearing deposits                                                           5,745,915               1,304,059
                                                                                -------------           -------------
                  Total cash and cash equivalents                               $  13,961,136           $   9,774,027
Securities available-for-sale                                                      18,580,410              23,133,657
Loans, net of unearned income                                                     124,061,201             108,978,809
Less allowance for loan losses                                                     (1,625,943)             (1,721,628)
                                                                                -------------           -------------
                  Net loans                                                     $ 122,435,258           $ 107,257,181

Premises and equipment, net                                                         3,013,541               3,256,182
Other assets                                                                        4,017,948               3,272,022
                                                                                -------------           -------------

                  Total assets                                                  $ 162,008,290           $ 146,693,069
                                                                                =============           =============



                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
      Non-interest-bearing demand                                               $   9,931,850           $   8,750,313
      Money market and interest-bearing demand                                     25,655,600              18,748,717
      Savings                                                                         455,913                 288,350
      Certificates of deposit                                                      99,492,096             101,340,207
                                                                                -------------           -------------
                   Total deposits                                               $ 135,535,459           $ 129,127,587
Borrowed funds                                                                     11,000,000               2,000,000
Other liabilities                                                                     534,988                 508,384
                                                                                -------------           -------------

                  Total liabilities                                             $ 147,070,447           $ 131,635,971
                                                                                -------------           -------------
Stockholders' equity
      Common stock; no par value in 2001 and $5 par value
           in 2000; 20,000,000 shares authorized; 1,748,421
           shares issued and outstanding in 2001 and 2000                       $  17,010,604           $   8,742,105
      Additional paid-in capital                                                           --               8,268,449
      Accumulated deficit                                                          (2,245,205)             (2,293,385)
      Accumulated other comprehensive income                                          172,444                 339,879
                                                                                -------------           -------------
                  Total stockholders' equity                                    $  14,937,843           $  15,057,098
                                                                                -------------           -------------

                  Total liabilities and stockholders' equity                    $ 162,008,290           $ 146,693,069
                                                                                =============           =============

</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F-2
<PAGE>


                             HIGH STREET CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations

                  Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                                          2001                 2000                1999
                                                                      ------------         ------------         -----------
<S>                                                                   <C>                  <C>                  <C>
Interest income
      Loans                                                           $  9,833,338         $  9,838,848         $ 6,519,993
      Investment securities
            Interest                                                     1,260,219            1,539,385             576,567
            Dividends                                                       36,411               20,910             133,079
      Federal funds sold                                                   338,975              521,064             222,963
                                                                      ------------         ------------         -----------
                        Total interest income                         $ 11,468,943         $ 11,920,207         $ 7,452,602
                                                                      ------------         ------------         -----------

Interest expense
      Money Market and interest-bearing demand                        $    710,323         $    825,724         $   637,999
      Certificates of deposit                                            5,651,805            6,364,277           3,266,911
      Interest on borrowed funds                                           513,635              142,080             152,779
                                                                      ------------         ------------         -----------
                        Total interest expense                        $  6,875,763         $  7,332,081         $ 4,057,689
                                                                      ------------         ------------         -----------
                        Net interest income                           $  4,593,180         $  4,588,126         $ 3,176,668
Provision for loan losses                                                  180,000              205,000             768,500
                                                                      ------------         ------------         -----------
                        Net interest income after
                           provision for loan losses                  $  4,413,180         $  4,383,126         $ 2,408,168
                                                                      ------------         ------------         -----------

Non-interest income
      Service charges and customer fees                               $    200,369         $    122,811         $    48,861
      Gain on sale of securities                                           233,754                   --                  --
      Other                                                                246,141              180,133             137,158
                                                                      ------------         ------------         -----------
                        Total non-interest income                     $    680,264         $    302,944         $   186,019
                                                                      ------------         ------------         -----------

Non-interest expense
      Salaries, wages and employee benefits                           $  2,099,379         $  1,885,665         $ 1,682,092
      Occupancy and equipment                                              913,007              814,718             672,624
      Advertising and business promotion                                   277,591              245,533             329,605
      Data processing                                                      325,994              259,686             230,611
      Commission and investment fees                                       262,843              194,740              98,973
      Office supplies and postage                                          211,174              168,126             125,283
      Professional fees                                                    203,243              108,629              20,376
      Other                                                                687,755              575,647             386,259
                                                                      ------------         ------------         -----------
                        Total non-interest expense                    $  4,980,986         $  4,252,744         $ 3,545,823
                                                                      ------------         ------------         -----------

Income (loss) before income taxes                                     $    112,458         $    433,326         $ ( 733,391)
                                                                      ------------         ------------         -----------

</TABLE>

                                   (Continued)


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      F- 3

<PAGE>


                             HIGH STREET CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations
                                   (Continued)

                  Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                                         2001                  2000                  1999
                                                                      -----------           -----------           -----------
<S>                                                                   <C>                   <C>                   <C>
Provision (benefit) for income taxes
            Current                                                   $     6,647           $   189,975           $        --
            Deferred                                                       57,631            (1,834,557)                   --
            Utilization of net operating loss carryforward                     --              (189,975)                   --
                                                                      -----------           -----------           -----------
                                                                      $    64,278           $(1,834,557)          $        --
                                                                      -----------           -----------           -----------

Net income (loss)                                                     $    48,180           $ 2,267,883           $  (733,391)
                                                                      ===========           ===========           ===========

Net income (loss) per common share - Basic                            $       .03           $      1.30           $      (.46)
                                                                      ===========           ===========           ===========

Net income (loss) per common share - Diluted                          $       .03           $      1.29           $      (.46)
                                                                      ===========           ===========           ===========

</TABLE>



                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F- 4

<PAGE>

                             HIGH STREET CORPORATION
                                AND SUBSIDIARIES

           Consolidated Statements of Changes in Stockholders' Equity

                  Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                          Common Stock              Additional
                                                   ---------------------------        Paid-in        Accumulated
                                                     Shares          Amount           Capital          Deficit
                                                   ---------      ------------      -----------      -----------
<S>                                                <C>               <C>            <C>               <C>
Balance,
   December 31, 1998                               1,200,000         6,000,000      $ 6,032,660       (3,827,877)

Comprehensive loss:
   Net loss                                                                                             (733,391)
  Change in net unrealized
      gain on securities
      available-for-sale, net
      of reclassification
      adjustment and tax effect

   Total comprehensive
      loss

Exercise of common
  stock options                                        1,253             6,265            9,327

Sale of common stock                                 388,264         1,941,320        3,021,306
                                                   ---------      ------------      -----------      -----------
Balance, December 31, 1999                         1,589,517      $  7,947,585      $ 9,063,293      $(4,561,268)

Comprehensive income:
   Net income                                                                                          2,267,883
  Change in net unrealized
   loss on securities
   available-for-sale, net of
   reclassification adjustment
   and tax effect

   Total comprehensive
      income


10% stock dividend                                   158,904           795,520         (794,794)
                                                   ---------      ------------      -----------      -----------
Balance,
  December 31, 2000                                1,748,421      $  8,742,105      $ 8,268,499      $(2,293,385)


Reclassification -
   formation of High Street
   Corporation (Note A)                                              8,268,499        (8,268,499)
Comprehensive loss:
   Net income                                                                                             48,180
  Change in net unrealized
     gain on securities
     available-for-sale, net of
     reclassification adjustment
                 and tax effect
   Total comprehensive
      loss
Balance,
      December 31, 2001                            1,748,421      $ 17,010,604      $        --      $(2,245,205)
                                                   =========      ============      ============     ===========


<CAPTION>

                                                       Accumulated
                                                          Other                   Total
                                                      Comprehensive           Stockholders'
                                                       Income (Loss)              Equity
                                                      --------------         ---------------
<S>                                                    <C>                   <C>
Balance,
      December 31, 1998                                $     1,632           $  8,206,415

Comprehensive loss:
   Net loss                                                                      (733,391)
  Change in net unrealized
      gain on securities
      available-for-sale, net
      of reclassification
      adjustment and tax effect                           (275,479)              (275,479)
                                                                             ------------
   Total comprehensive
      loss                                                                     (1,008,870)
                                                                             ------------
Exercise of common
  stock options                                                                    15,592

Sale of common stock                                                            4,962,626
                                                       -----------           ------------
Balance, December 31,
1999                                                   $  (273,847)          $ 12,175,763

Comprehensive income:
   Net income                                                                  2,267,883
  Change in net unrealized
   loss on securities
   available-for-sale, net of
   reclassification adjustment
   and tax effect                                          613,726                613,726
                                                                             ------------
   Total comprehensive
      income                                                                    2,881,609
                                                                             ------------
10% stock dividend                                                                   (274)
                                                       -----------           ------------
Balance,
  December 31, 2000                                    $   339,879           $ 15,057,098

Reclassification -
   formation of High Street
   Corporation (Note A)
Comprehensive loss:
   Net income                                                                      48,180
  Change in net unrealized
     gain on securities
     available-for-sale, net of
     reclassification adjustment
                 and tax effect                           (167,435)              (167,435)
   Total comprehensive
      loss                                                                       (119,255)
                                                       -----------           ------------
Balance,
      December 31, 2001                                $   172,444           $ 14,937,843
                                                       ===========           ============

</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      F- 5

<PAGE>

                             HIGH STREET CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                             2001              2000              1999
                                                         ------------      ------------      ------------
<S>                                                      <C>               <C>               <C>
CASH FLOWS FROM OPERATING
   ACTIVITIES

      Net income (loss)                                  $     48,180      $  2,267,883      $   (733,391)
                                                         ------------      ------------      ------------
      Adjustments to reconcile net income (loss)
         to net cash provided by (used in) operating
         activities:
            Depreciation and amortization                $    426,631      $    367,884      $    307,651
            Provision for loan losses                         180,000           205,000           768,500
            Provision for deferred income taxes                57,631        (1,834,558)               --
            Accretion and amortization of securities
               discounts and premiums, net                      3,739            (1,871)           12,399
            Loss on sale of equipment                           3,118             9,522                --
            Gain on sale of securities                       (233,754)               --
            Increase in other assets                         (237,799)         (256,379)         (494,172)
            Increase in other liabilities                      26,604           137,240            54,875
                                                         ------------      ------------      ------------

                  Total adjustments                      $    226,170      $ (1,373,162)     $    649,253
                                                         ------------      ------------      ------------

      Net cash provided by (used in)
        operating activities                             $    274,350      $    894,721      $    (84,138)

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

CASH FLOWS FROM INVESTING ACTIVITIES

      Purchases of available-for-sale
         securities                                      $(11,021,832)     $(12,279,920)     $ (9,686,046)
      Proceeds from sale of
         available-for-sale securities                     15,728,311         2,604,539         1,533,766
      Proceeds from sale of foreclosed assets                   8,452                --                --
      Net increase in loans                               (16,026,474)       (8,970,193)      (52,397,642)
      Purchases of premises and equipment                    (183,570)         (513,787)         (261,255)
                                                         ------------      ------------      ------------

      Net cash used in investing activities              $(11,495,113)     $(19,159,361)     $(60,811,177)
                                                         ------------      ------------      ------------

</TABLE>



                                   (Continued)


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      F- 6

<PAGE>

                             HIGH STREET CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (Continued)

                  Years Ended December 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>

                                                                          2001                   2000                    1999
                                                                      -------------          -------------          -------------
<S>                                                                   <C>                    <C>                    <C>
CASH FLOWS FROM FINANCING ACTIVITIES
      Net increase in deposits                                        $   6,407,872          $  14,908,904          $  66,234,447
      Net increase (decrease) in funds borrowed                           9,000,000             (1,000,000)              (920,000)
      Cash paid in lieu of fractional shares                                     --                   (274)                    --
      Proceeds from sale of common stock                                         --                     --              4,978,218
                                                                      -------------          -------------          -------------

      Net cash provided by financing activities                       $  15,407,872          $  13,908,630          $  70,292,665
                                                                      -------------          -------------          -------------

      Net increase (decrease) in cash and
         cash equivalents                                             $   4,187,109          $  (4,356,010)         $   9,397,350

Cash and cash equivalents, beginning of year                              9,774,027             14,130,037              4,732,687
                                                                      -------------          -------------          -------------

        Cash and cash equivalents, end of year                        $  13,961,136          $   9,774,027          $  14,130,037
                                                                      =============          =============          =============

SUPPLEMENTAL DISCLOSURE OF
   CASH FLOW INFORMATION
      Interest paid                                                   $   6,850,753          $   7,235,793          $   3,934,170
                                                                      =============          =============          =============

SUPPLEMENTAL SCHEDULE OF NONCASH
   INVESTING AND FINANCING ACTIVITIES
      Change in net unrealized holding gain (loss)
         on available-for-sale securities,
         net of tax                                                   $    (167,435)         $     613,726          $    (273,847)
                                                                      =============          =============          =============

      Declaration of 10% stock dividend                               $          --          $     794,520          $          --
                                                                      =============          =============          =============

</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      F- 7
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         ORGANIZATION. High Street Banking Company was incorporated on April 10,
1997, and began banking operations on August 25, 1997, in two locations,
Asheville and Hickory, North Carolina. On August 22, 2000, High Street opened a
third branch in North Asheville, North Carolina. High Street Banking Company is
engaged in general retail and commercial banking and operates under the banking
laws of North Carolina and the rules and regulations of the Federal Deposit
Insurance Corporation.

         High Street Financial Services, Inc., a wholly-owned subsidiary of High
Street Banking Company, was incorporated on June 30, 1998, to provide brokerage
services for various investment and insurance products.

         On October 30, 2001, High Street Corporation (the "Holding Company")
was formed as a holding company for High Street Banking Company. Upon formation,
one share of the Holding Company's no par value common stock was exchanged for
each of the then outstanding 1,748,421 shares of High Street Banking Company's
$5 par value common stock. The Holding Company currently has no operations and
conducts no business on its own other than owning High Street Banking Company.

         The accounting and reporting policies of the Bank conform with
generally accepted accounting principles (GAAP). A brief description of the
Bank's significant accounting policies is presented below.

         PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the financial statements of High Street Corporation and wholly-owned
subsidiaries, High Street Banking Company and High Street Financial Services,
Inc., herein referred to as the "Bank." Intercompany balances and transactions
have been eliminated.

         USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

         CASH AND CASH EQUIVALENTS. For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, amounts due from banks, overnight
federal funds sold and interest-bearing deposits with initial maturities of less
than three months.

         INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES. The Bank has
adopted the provisions of Statement of Financial Accounting Standards No. 115
("SFAS 115"), Accounting for Certain Investments in Debt and Equity Securities.
Under SFAS 115, the Bank classifies its debt and marketable equity securities as
either trading, held-to-maturity, or available-for-sale. Mortgage-backed
securities are accounted for in the same manner as debt and equity securities.

              Investments in debt securities classified as held-to-maturity are
stated at cost, adjusted for amortization of premiums and accretion of discounts
using the level yield method. Investments in debt and equity securities
classified as trading are stated at fair value. Unrealized holding gains and
losses for trading securities are included in earnings. The Bank currently has
no such securities.


                                      F-8
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Investments in debt and equity securities classified as
available-for-sale are stated at fair value, based on quoted market prices, with
unrealized holding gains and losses excluded from earnings and reported as a net
amount, net of related income taxes, as a separate component of stockholders'
equity until realized. A decline in the fair value of any available-for-sale or
held-to-maturity security below cost that is deemed other than temporary is
charged to earnings resulting in the establishment of a new cost basis for the
security.

              Transfers of securities between categories are recorded at fair
value at the date of transfer. Unrealized holding gains and losses are
recognized in earnings for transfers into trading securities. Unrealized holding
gains or losses associated with transfers of securities from held-to-maturity to
available-for-sale are recorded as a separate component of stockholders' equity.
The unrealized holding gains or losses included in a separate component of
equity for securities transferred from available-for-sale to held-to-maturity
are maintained and amortized into earnings over the remaining life of the
security as an adjustment to yield in a manner consistent with amortization or
accretion of premium or discount on the associated security.

              Dividend and interest income are recognized when earned. Realized
gains and losses for securities classified as available-for-sale and
held-to-maturity are included in earnings and are derived using the specific
identification method for determining the cost of securities sold. The
classification of securities as held-to-maturity, trading or available-for-sale
is determined at the date of purchase.

         As a member of the Federal Home Loan Bank of Atlanta (the "FHLB"), the
Bank is required to maintain an investment in the stock of the FHLB. Investment
in the stock, which is classified in the other asset category, was $600,000 and
$269,800 as of December 31, 2001 and 2000, respectively, and is pledged as
collateral for advances from the FHLB. No ready market exists for the stock,
which is carried at cost.

         ADVERTISING COSTS. Advertising and business promotion costs, included
in non-interest expense, are expensed as incurred and were $277,591, $245,533
and $329,605 for the years ended December 31, 2001, 2000 and 1999, respectively.

         LOANS. Loans are reported at their outstanding principal balances net
of unamortized deferred loan fees and costs on originated loans. Loan fees are
accounted for in accordance with the SFAS No. 91, "Accounting for Non-refundable
Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct
Costs of Leases." Under SFAS No. 91, loan origination and commitment fees and
certain direct loan origination costs are deferred. Upon the expiration of
unfunded commitments the related fees are recognized into income as loan fees.
Loan origination fees on funded commitments and related direct costs are
amortized into income on loans as yield adjustments over the contractual life of
related loans using the level yield method. As of December 31, 2001 and 2000,
the unamortized deferred loan fees and origination costs amounted to $34,235 and
$92,713, respectively.


                                      F-9
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         ALLOWANCE FOR LOAN LOSSES. The provision for loan losses charged to
operations is an amount that management believes is sufficient to bring the
allowance for loan losses to an estimated balance considered adequate to absorb
inherent losses in the portfolio. Management's determination of the adequacy of
the allowance is based on an evaluation of the portfolios, current economic
conditions, historical loan loss experience and other risk factors. This
evaluation is heavily dependent upon estimates and appraisals, which are
susceptible to rapid changes because of economic conditions and the economic
prospects of borrowers.

         In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize changes to the allowance based
on their judgments about information available at the time of examination.

         IMPAIRED LOANS. Impaired loans are measured based on the present value
of expected future cash flows, discounted at the loan's effective interest rate,
or at the loan's observable market price, or the fair value of the collateral if
the loan is collateral dependent. A loan is impaired when, based on current
information and events, it is probable that all amounts due according to the
contractual terms of the loan will not be collected.

         NONACCRUAL LOANS. Generally a loan (including a loan impaired under
SFAS No. 114) is classified as nonaccrual and the accrual of interest on such
loan is discontinued when the contractual payment of principal or interest has
become 120 days past due or management has doubts about further collectibility
of principal or interest even though the loan currently is performing. A loan
may remain on accrual status if it is in the process of collection and is either
guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid
interest credited to income in the current year is reversed and unpaid interest
accrued in prior years is charged against the allowance for credit losses.
Interest received on nonaccrual loans generally is either applied against
principal or reported as interest income according to management's judgment as
to the collectibility of principal. Generally, loans are restored to accrual
status when the obligation is brought current, has performed in accordance with
the contractual terms for a reasonable period of time and the ultimate
collectibility of the total contractual principal and interest is no longer in
doubt. At December 31, 2001 and 2000, the Bank had no nonaccrual loans.

         FORECLOSED REAL ESTATE. Foreclosed real estate includes both formally
foreclosed property and in-substance foreclosed property. In-substance
foreclosed properties are those properties for which the Bank has taken physical
possession, regardless of whether formal foreclosure proceedings have taken
place. As of December 31, 2001 and 2000, the Bank had no in-substance foreclosed
property. At the time of foreclosure, foreclosed real estate is recorded at the
lower of the carrying amount or fair value less cost to sell, which becomes the
property's new basis. Any write-downs based on the asset's fair value at the
date of acquisition are charged to the allowance for loan losses. Any cost
incurred to improve the property are capitalized and included in the carrying
amount. After foreclosure, these assets are carried at the lower of their new
cost basis or fair value less cost to sell. Costs incurred in maintaining
foreclosed real estate and subsequent adjustments to the carrying amount of the
property are included in income (loss) on foreclosed real estate.



                                      F-10
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         PREMISES AND EQUIPMENT. The various classes of property are stated at
cost, and are depreciated by the straight-line method over their estimated
useful lives of 40 years for buildings and improvements and 3 to 10 years for
furniture, fixtures, and equipment. Repairs are expensed as incurred. Leasehold
improvements are capitalized and amortized over the shorter of their useful
lives or the term of the lease. The cost and accumulated depreciation of
property are eliminated from the accounts upon disposal, and any resulting gain
or loss is included in the determination of net income.

         INCOME TAXES. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.

         EARNINGS PER SHARE. The Bank adopted the provisions for SFAS No. 128,
"Earnings Per Share." The statement establishes standards for computing and
presenting earnings per share (EPS). Those standards require earnings per share
to be calculated using the weighted number of shares outstanding. SFAS No. 128
simplifies the standards for computing EPS previously found in APB Opinion No.
15, "Earnings Per Share", and makes them comparable to international EPS
standards. It replaces the presentation of primary EPS with a basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.

         COMPREHENSIVE INCOME. Accounting principles generally require that
recognized revenue, expenses, gains and losses be included in net income.
Although certain changes in assets and liabilities, such as unrealized gains and
losses on available-for-sale securities, are reported as a separate component of
the equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.

         The components of other comprehensive income and related tax effects
are as follows:

<TABLE>
<CAPTION>
                                                                    Years Ended December 31
                                                              2001            2000            1999
                                                            --------         -------        --------
<S>                                                         <C>              <C>            <C>
Unrealized holding gains (losses) on
   available-for-sale securities                             174,518         613,726        (275,479)
Reclassification adjustment
   for gains realized
   in income                                                (233,754)             --              --
                                                            --------         -------        --------
Net unrealized holding gains (losses)                        (59,236)        613,726        (275,479)
Tax effect                                                  (108,199)             --              --
                                                            --------         -------        --------
Change in net unrealized
   gains (losses) on securities available-for-sale,
   net of reclassification adjustment and tax effect        (167,435)        613,726        (275,479)
                                                            ========         =======        ========
</TABLE>


                                      F-11
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         FINANCIAL STATEMENT PRESENTATION. Financial statements for 2000 and
1999 have been reclassified, where applicable, to conform to financial statement
presentation used in 2001.

         FINANCIAL INSTRUMENTS, DERIVATIVES, AND HEDGING ACTIVITIES. On January
1, 2000, the bank adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" as amended by SFAS No.138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities". This standard
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. It
requires that the Bank recognize all derivatives as either assets or liabilities
in the balance sheet and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and the resulting designation.


NOTE B - CORPORATE REORGANIZATION

         Effective October 30, 2001, High Street Banking Company completed the
process of converting to a holding company form of operation. High Street
Corporation has become the parent of High Street Banking Company. High Street
Corporation is a North Carolina, one-bank holding company, headquartered in
Asheville, North Carolina.

         High Street Banking Company's shareholders approved the holding company
reorganization at the Bank's annual meeting held in May, 2001. Regulatory
approval was received on October 24, 2001. The holding company conversion was
completed successfully on October 24, 2001. As a result of the conversion, each
share of the Bank's $5 par value common stock was converted into one share of
High Street Corporation's no par value stock, and the Bank's common stock and
additional paid-in capital accounts were combined into High Street Corporation's
common stock account. High Street Corporation is now the sole shareholder of the
Bank.


NOTE C - RESTRICTION ON CASH AND DUE FROM BANKS

         The Bank is required by the Federal Reserve Bank to maintain reserve
funds in cash on hand or on deposit with the Federal Reserve Bank. The required
reserve at December 31, 2001 and 2000, was $213,720 and $388,320 respectively.


                                      F-12
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE D - SECURITIES

         The amortized cost and market values of securities available-for-sale
at December 31, 2001 and 2000, are as follows:

<TABLE>
<CAPTION>
                                                                      2001
                                                           Gross                Gross
                                     Amortized          Unrealized            Unrealized               Market
                                       Cost                Gains                Losses                 Value
                                    -----------          ---------           ------------           -----------
<S>                                 <C>                  <C>                 <C>                    <C>
Mortgage-backed securities          $ 9,598,690          $ 270,517           $    (43,078)          $ 9,826,129
Federal agencies                      7,701,077             74,298                (21,094)            7,754,281
Other                                 1,000,000                 --                     --             1,000,000
                                    -----------          ---------           ------------           -----------
                                    $18,299,767          $ 344,815           $    (64,172)          $18,580,410
                                    ===========          =========           ============           ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                      2000
                                   ----------------------------------------------------------------------------
                                                            Gross               Gross
                                      Amortized          Unrealized          Unrealized               Market
                                        Cost                Gains              Losses                  Value
                                    -----------          ---------           -------------          -----------
<S>                                 <C>                  <C>                 <C>                    <C>
Mortgage-backed securities          $13,590,950          $ 225,363           $    (11,847)          $13,804,466
Federal agencies                      9,202,828            126,678                   (315)            9,329,191
                                    -----------          ---------           -------------          -----------
                                    $22,793,778          $ 352,041           $    (12,162)          $23,133,657
                                    ===========          =========           ============           ===========
</TABLE>


         The amortized cost and market values of securities at December 31, 2001
and 2000, by contractual maturities are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.


<TABLE>
<CAPTION>
                                                           2001                                      2000
                                          --------------------------------------    -------------------------------------
                                                        Securities                                Securities
                                                    Available-for Sale                        Available-for Sale
                                          --------------------------------------    -------------------------------------
                                               Amortized            Market               Amortized           Market
                                                 Cost                Value                 Cost               Value
                                          ------------------  ------------------    -----------------   -----------------
<S>                                       <C>                 <C>                   <C>                 <C>

Due in one year or less                       $   998,887          $ 1,022,813          $   997,381          $ 1,000,782
Due after one year
   through five years                           6,025,542            5,995,498            8,327,042            8,449,615
Due after five years
   through ten years                            8,578,890            8,785,057            8,948,167            9,092,270
Due after ten years                             2,696,448            2,777,042            4,521,188            4,590,990
                                              -----------          -----------          -----------          -----------
                                              $18,299,767          $18,580,410          $22,793,778          $23,133,657
                                              ===========          ===========          ===========          ===========
</TABLE>

         During 2001, the Bank sold available-for-sale securities for total
proceeds of $15,728,311 resulting in realized gains of $233,754. There were no
securities sold during the years ended December 31, 2000 and 1999.


                                      F-13
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE E - LOANS AND ALLOWANCE FOR LOAN LOSSES

         Loans at December 31, 2001 and 2000, are summarized as follows:

<TABLE>
<CAPTION>
                                                       2001                  2000
                                                   ------------          ------------
<S>                                                <C>                   <C>
         Commerical loans                          $ 21,545,376          $ 17,636,548
         Real estate construction loans              39,998,520            35,602,089
         Real estate mortgage loans                  59,300,611            53,403,132
         Installment loans to Individuals             2,313,377             1,619,132
         Other loans                                    937,552               810,621
                                                   ------------          ------------
                          Total loans              $124,095,436          $109,071,522
         Less unearned fees                              34,235                92,713
                                                   ------------          ------------

                          Net loans                $124,061,201          $108,978,809
                                                   ============          ============
</TABLE>

         An analysis of the allowance for loan losses follows:

<TABLE>
<CAPTION>
                                                       2001                  2000                 1999
                                                  -----------           -----------           ----------
<S>                                               <C>                   <C>                   <C>
         Balance at beginning of year             $ 1,721,628           $ 1,518,500           $  750,000
         Provision charged to operations              180,000               205,000              768,500
         Charge-offs                                 (277,860)               (1,872)                  --
         Recoveries                                     2,175                    --                   --
                                                  -----------           -----------           ----------

         Balance at end of year                   $ 1,625,943           $ 1,721,628           $1,518,500
                                                  ===========           ===========           ==========
</TABLE>


         The following is a summary of information pertaining to impaired loans
in accordance with SFAS No. 114 and No. 118:

<TABLE>
<CAPTION>
                                                                  2001             2000
                                                                -------          -------
<S>                                                             <C>              <C>
         Impaired loans without a valuation allowance           $    --          $    --
         Impaired loans with a valuation allowance               15,000           52,600
                                                                -------          -------
         Total impaired loans                                   $15,000          $52,600
                                                                =======          =======
         Valuation allowance related to impaired loans          $15,000          $10,520
                                                                =======          =======
</TABLE>


         The Bank has entered into transactions with certain directors and
executive officers. Such transactions were made in the ordinary course of
business on substantially the same terms and conditions, including interest
rates and collateral, as those prevailing at the same time for comparable
transactions with other customers, and did not, in the opinion of management,
involve more than normal credit risk or present other unfavorable features.
Indebtedness to the Bank, in the aggregate, amounted to $6,943,416 and
$6,362,886 at December 31, 2001 and 2000, respectively. During 2001, additions
to such loans were $1,177,107 and repayments totaled $596,578.

         Financial instruments involving potential credit risk are predominately
with commercial loans. Of the $124,095,436 of total loans noted above,
$80,498,000 are related to commercial loans secured by real estate. A downturn
in the local or national economy could have a significant impact on real estate
values which in turn could have a material adverse effect on the Company's
consolidated financial position and results of operations.


                                      F-14
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE E - LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

         At December 31, 2001 and 2000, the Bank had pre-approved but unused
lines of credit and commitments totaling $984,333 and $1,015,787, respectively,
to executive officers, directors and their affiliates.


NOTE F - PREMISES AND EQUIPMENT

         Premises and equipment at December 31, 2001 and 2000, are summarized as
follows:

<TABLE>
<CAPTION>
                                                                  2001                2000
                                                              ----------          ----------
<S>                                                           <C>                 <C>
         Land and improvements                                $  677,852          $  677,852
         Building and improvements                             1,503,006           1,480,353
         Furniture, fixtures and equipment                     2,125,445           1,977,683
         Automobiles                                              53,375              53,375
                                                              ----------          ----------
                          Total cost                          $4,359,678          $4,189,263
         Less accumulated depreciation                         1,346,137             933,081
                                                              ----------          ----------

                          Net premises and equipment          $3,013,541          $3,256,182
                                                              ==========          ==========
</TABLE>


NOTE G - FORECLOSED REAL ESTATE

         During 2001, the Bank acquired foreclosed real estate with a carrying
value of $536,900 and such property is expected to be disposed of in the near
term. No foreclosures occurred in 2000 or 1999. No gains or losses on foreclosed
real estate were incurred in 2001.


NOTE H - DEPOSITS

         Certificates of deposit maturing in years subsequent to December 31,
2001, are as follows:

<TABLE>
<CAPTION>
                Year ending
<S>                   <C>                                            <C>
                      2002                                           $ 81,110,303
                      2003                                             14,230,522
                      2004                                              3,952,239
                      2005                                                      -
                 Thereafter                                               199,032
                                                                     -------------

                               Total certificates of deposit         $ 99,492,096
                                                                     =============
</TABLE>



                                      F-15
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE H - DEPOSITS (Continued)

         The aggregate of time deposits in excess of $100,000 amounted to
$54,948,487 and $44,837,566 as of December 31, 2001 and 2000, respectively.

         Deposit overdrafts, classified as loans for financial reporting
purposes, amounted to $51,825 and $98,881 at December 31, 2001 and 2000,
respectively.


NOTE I - BORROWED FUNDS

         At December 31, 2001 and 2000, borrowed funds consist of FHLB advances
of $11,000,000 and $2,000,000, respectively. FHLB advances mature beginning in
November of 2002 through March of 2011 and have rates ranging from 4.91% to 5.5%
as of December 31, 2001. Residential 1 - 4 family mortgage loans pledged as
collateral for the FHLB advances amounted to $4,213,461 as of December 31, 2000.
During 2001, the FHLB started accepting real estate, commercial and multi-family
residential loans as collateral for the FHLB advances. As of December 31, 2001,
loans and securities pledged as collateral amounted to $16,305,641 and
$2,770,415, respectively.


NOTE J - INCOME TAXES

         The Bank has available at December 31, 2001, $3,284,954 of unused net
operating loss carryforwards that may be applied to offset federal tax
liabilities of future years and expire in varying amounts through December 31,
2016.

         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of deferred tax assets and liabilities at December 31, 2001 and 2000,
are as follows:

<TABLE>
<CAPTION>
                                                             2001                2000
                                                         ----------          ----------
<S>                                                      <C>                 <C>
         Deferred tax assets:
             Allowance for loan losses                   $  626,866          $  663,757
             Pre-opening costs                               38,339              95,847
             Net operating losses                         1,266,029           1,195,442
             Other assets                                    28,673              17,553
                                                         ----------          ----------
                 Net deferred tax assets                 $1,959,907          $1,972,599
                                                         ----------          ----------

         Deferred tax liabilities:
             Unrealized gain on securities               $  108,199          $       --
             Depreciation                                   182,940             138,001
                                                         ----------          ----------
                 Total deferred tax liabilities          $  291,139          $  138,001
                                                                             ----------

                 Net deferred tax assets                 $1,668,768          $1,834,598
                                                         ==========          ==========
</TABLE>


                                      F-16
<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE J - INCOME TAXES (Continued)

     The difference between the provision for income taxes and the amounts
computed by applying the statutory federal income tax rate of 34% to income
before income taxes is summarized below:

<TABLE>
<CAPTION>
                                                    2001                 2000              1999
                                                  -------          -----------           -------
<S>                                               <C>              <C>                   <C>
Tax at the statutory federal rate                 $38,236          $   147,331           $    --

Increase (decrease) resulting from:
         State income taxes, net of
             federal benefit                        3,649               14,121                --
         Nondeductible expenses and
             other permanent differences           22,393               28,523                --
         Recognized net operating loss                 --             (189,975)               --
         Adjustment to deferred tax
             asset valuation allowance                 --           (1,834,598)               --
                                                  -------          -----------           -------

              Provision for income taxes
                 included in operations           $64,278          $(1,834,598)          $    --
                                                  =======          ===========           =======
</TABLE>


NOTE K - STOCKHOLDERS' EQUITY

     On November 20, 2000, the Bank distributed 158,904 shares of common stock
in connection with a 10% stock dividend. As a result of the stock dividend,
common stock was increased by $794,520 and additional paid-in capital was
decreased by $794,794. All references in the accompanying financial statements
to the number of common shares and per-share amounts for 1999 have restated to
reflect the stock dividend.

     Basic net income (loss) per share is computed by dividing net income (loss)
by the weighted average number of common shares outstanding for the period.
Diluted net income (loss) per share would normally reflect the potential
dilution that could occur if the Bank's management and director stock options
were exercised. At December 31, 2001, the incremental shares from assumed option
conversions to purchase 55,575 shares of common stock at a price of $6.36/$6.95
are included in computing the diluted per share amounts. Options to purchase
123,250 shares of common stock at prices ranging from $12.50 to $7.61 were
outstanding at the end of the year but were not included in the computation of
diluted earnings per share because the options' exercise prices were greater
than the average market price of $7.11 per share.

     At December 31, 2000, the incremental shares from assumed option
conversions to purchase 35,130 shares of common stock at a price of $6.25/$6.59
are included in computing the diluted per share amounts. Options to purchase
127,650 shares of common stock at prices ranging from $12.27 to $7.61 were
outstanding at the end of the year but were not included in the computation of
diluted earnings per share because the options' exercise prices were greater
than the average market price of $7.29 per share.


                                      F-17
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE K - STOCKHOLDERS' EQUITY (Continued)

     In accordance with SFAS 138, "Earnings Per Share", the disclosure of basic
and diluted earnings per share for 1999 have been adjusted to reflect the change
in capital structure. At December 31, 1999, assumption of the exercise of the
stock options would have an antidilutive effect on net loss per share and, as a
result, the common shares related to the potential exercise of the stock options
are not included in the weighted average number of common shares outstanding for
the calculation of diluted net loss per share.

     The following data shows the amounts used in computing earnings per share
(EPS) and the effect on income and the weighted average number of shares of
dilutive potential common stock. The number of shares used in the calculations
for 1999 reflect a ten percent stock dividend paid in 2000.


<TABLE>
<CAPTION>
                                                    2001                2000                 1999
                                                ----------          ----------          -----------
<S>                                             <C>                 <C>                 <C>
         Income (loss) available to common
            stockholders used in basic EPS      $   48,180          $2,267,883          $  (733,391)
                                                ==========          ==========          ===========

         Weighted average number of common
            shares used in basic EPS             1,748,421           1,748,421            1,595,864

         Effect of dilutive securities:
            Stock options                            4,394               4,422                   --
                                                ----------          ----------          -----------

         Weighted average number of common
           shares and dilutive potential common
           stock used in diluted EPS             1,752,815           1,752,843            1,595,864
                                                ==========          ==========          ===========
</TABLE>


NOTE L - BUILDING LEASES

     The Bank leases the building for one of its branches from a stockholder,
who is also a member on the Board of Directors, under an operating lease with a
term extending through 2013. The lease contains three renewal options for three
consecutive periods of ten years each. Rent paid to the above-mentioned related
party amounted to $189,384, $184,384 and $181,884 for the years ended December
31, 2001, 2000 and 1999, respectively.

     During 2000, the Bank began leasing the building for its new branch from a
company whose stockholders include a member on the Bank's Board of Directors.
The lease has a term extending through 2015 and contains three renewal options
for three consecutive periods of ten years each. Beginning with the first month
of the sixth year of the initial lease term and beginning with the first month
of each year thereafter during the initial lease term, annual rent shall
increase by two percent of the prior lease years' annual rent. Rent paid to the
above-mentioned related party amounted to $55,335and $23,056 for the years ended
December 31, 2001 and 2000, respectively


                                      F-18
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE L - BUILDING LEASES (Continued)

     Future minimum lease payments due under the above leases are as follows:

<TABLE>
<CAPTION>
             Year ending
<S>                                                <C>
              2002                                 $   247,220
              2003                                     253,532
              2004                                     257,497
              2005                                     262,646
              2006                                     267,899
         Thereafter                                  2,057,458
                                                   -----------

         Total minimum lease payments              $ 3,346,252
                                                   ===========
</TABLE>

     Total rental expense relating to the operating leases was $244,719,
$207,440 and $181,884 for the years ended December 31, 2001, 2000 and 1999,
respectively.


NOTE M - EMPLOYEE BENEFIT PLANS

     EMPLOYMENT AGREEMENT. To ensure a stable and competent management base, the
Bank has entered into employment contracts with its president and executive vice
president through August 24, 2002, that provide for a minimum annual salary, as
well as certain other benefits. The Board of Directors cannot terminate the
agreements, except for just cause, without prejudicing the officers' rights to
receive certain vested rights, including compensation. In the event of a change
in control of the Bank, as outlined in the agreements, the acquirer will be
bound to the terms of the contracts.

     RETIREMENT PLAN. Effective January 1, 1998, the Bank implemented a defined
contribution profit-sharing plan for the benefit of substantially all of its
employees upon their retirement, death or disability. The plan covers employees
who have at least six months of service prior to the two effective dates for
plan entrance. Under the terms of the plan, participants may contribute up to
15% of their compensation to the plan through a salary reduction arrangement.
For each plan year, the Bank may contribute to the plan an amount of matching
contributions determined by the Bank at its discretion. The Bank, at the option
of the Board of Directors, may contribute additional discretionary amounts.
Contributions to the plan for the years ended December 31, 2001, 2000 and 1999,
were $82,027, $67,380 and $62,680, respectively.


                                      F-19
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE N - STOCK BASED COMPENSATION

     STOCK OPTION PLANS.

     EMPLOYEE. During 1997, the Bank established the High Street Banking Company
Management Stock Option Plan to provide incentive compensation. The Plan permits
the grant of nonqualified stock options and incentive stock options for up to
120,000 shares of common stock. The exercise price of each option is equal to
the market price of the Bank's stock on the date of grant. All options vest 20%
a year over a five-year period. All unexercised options expire ten years after
the date of grant.

     DIRECTOR. During 1998, the Bank established the High Street Banking Company
Non-Employee Director Stock Option Plan to provide compensation for attendance
at Board and Committee meetings. The Plan permits the grant of nonqualified
stock options for up to 120,000 shares of common stock. The exercise price of
each option is equal to the market price of the Bank's stock on the date of
grant. All options are fully vested and immediately exercisable.

     ADJUSTMENTS TO STOCK OPTIONS. Both the Corporation's Management Stock
Option Plan and Non-Employee Director Stock Option Plan (collectively, the
"Option Plans") provide that, in the event the Bank shall pay a share dividend,
then (i) the number of shares of Common Stock then subject to options under the
Options Plans, (ii) the number of shares of Common Stock reserved for issuance
pursuant to the Option Plans but not yet covered by options, and (iii) the price
of shares subject to options under the Option Plan shall be adjusted as
determined to be appropriate and equitable by the Board of Directors to prevent
dilution or enlargement of rights.

     A summary of the Bank's option plans as of and for the years ended December
31, 2001 and 2000, is as follows:

<TABLE>
<CAPTION>
                                              MANAGEMENT STOCK OPTION PLAN
                          ------------------------------------------------------------------------
                                       Options                                            Weighted
                          -----------------------------             Exercise              Average
                           Available                                  Price               Exercise
                           for Grant         Outstanding             Per Share              Price
                          ---------          -----------          --------------         ----------
<S>                       <C>                <C>                  <C>                    <C>
December 31, 1998            38,775              93,225           $ 10.00/$12.27         $   10.15
     Granted                 (4,400)              4,400           $        12.50         $   12.50
     Exercised                   --                (110)          $        10.00         $   10.00
                           --------           ---------           --------------         ---------

December 31, 1999            34,375              97,515           $ 10.00/$12.50         $   10.25
     Granted                (20,075)             20,075           $   6.59/$8.18         $    7.10
     Forfeited                3,190              (3,190)          $ 10.00/$11.36         $   10.94
                           --------           ---------           --------------         ---------

December 31, 2000            17,490             114,400           $  6.59/$12.50         $    9.68
     Granted                 (2,100)              2,100           $    6.36/6.50         $    6.43
     Forfeited                4,400              (4,400)          $   8.18/12.18         $   10.52
                           --------           ---------           --------------         ---------

December 31, 2001          $ 19,790           $ 112,100           $   6.36/12.50         $    9.59
                           ========           =========           ==============         =========
</TABLE>


                                      F-20
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE N - STOCK BASED COMPENSATION (Continued)


<TABLE>
<CAPTION>
                                           NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                      ---------------------------------------------------------------------------
                                      Options                                           Weighted
                           -----------------------------           Exercise             Average
                           Available                                 Price              Exercise
                           for Grant         Outstanding          Per Share              Price
                           --------          -----------        -------------          ---------
<S>                        <C>               <C>                <C>                    <C>
December 31, 1998           125,453             6,547           $11.36/$11.48          $   11.45
     Granted                (20,621)           20,621           $        7.61          $    7.61
     Exercised                   --            (1,268)          $11.36/$11.50          $   11.44
                             ------            ------           -------------          ---------

December 31, 1999           104,832            25,900           $ 7.61/$11.50          $    8.40
     Granted                (22,480)           22,480           $        6.25          $    6.25
                             ------            ------           -------------          ---------

December 31, 2000            82,352            48,380           $ 6.25/$11.50          $    7.40
     Granted                (18,345)           18,345           $        6.95          $    6.95
                             ------            ------           -------------          ---------

December 31, 2001            64,007            66,725           $ 6.25/$11.50          $    7.28
                             ======            ======           =============          =========
</TABLE>

     The Bank has elected to follow APB Opinion 25, "Accounting for Stock Issued
to Employees" ("APB 25"), and related interpretations in accounting for its
stock options as permitted under SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). In accordance with APB 25, no compensation cost is
recognized by the Bank when stock options are granted because the exercise price
equals the market price of the underlying common stock on the date of grant. Had
the Bank determined compensation cost based on the fair value at the grant date
for its stock options under SFAS 123, the Bank's net income would have been
decreased to the pro forma amounts indicated below.

     The weighted-average fair value per share of options granted in 2001, 2000
and 1999 amounted to $2.27, $2.19 and $2.71, respectively. Fair values were
estimated on the date of grant using the Black-Scholes Option-Pricing Model with
the following weighted-average assumptions:


<TABLE>
<CAPTION>
                                       2001             2000             1999
                                  -------------      -------------   -------------
<S>                               <C>                <C>             <C>
Risk-free interest rate           6.25% - 3.94%      4.98% - 6.74%   4.96% - 6.36%
Dividend yield                               0%                 0%              0%
Volatility                        28.2% - 24.0%     20.7% - 25.02%    9.4% - 18.2%
Expected life                          5 years             5 years        5 years
</TABLE>



<TABLE>
<CAPTION>
                                       2001             2000             1999
                                  -------------      -------------   -------------
<S>                               <C>                <C>             <C>
Net income
     As reported                  $      48,180       $ 2,267,883     $  (733,391)
     Pro forma                            1,678         2,174,528        (795,096)

Net income per share
     As reported                  $         .03       $      1.30     $      (.46)
     Pro forma                    $         .00       $      1.24            (.50)
</TABLE>


                                      F-21
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE O - OFF-BALANCE SHEET RISK

     The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
Those financial instruments include lines of credit and loan commitments and
involve elements of credit risk in excess of amounts recognized in the
accompanying financial statements. The Bank's risk of loss with the lines of
credit and loan commitments is represented by the contractual amount of these
instruments. The Bank uses the same credit policies in making commitments under
such instruments as it does for on-balance sheet instruments. The amount of
collateral obtained, if any, is based on management's credit evaluation of the
borrower. Collateral held varies, but may include accounts receivable,
inventory, real estate, stocks, bonds and time deposits with financial
institutions. The Bank's lending is concentrated primarily in Catawba and
Buncombe Counties of North Carolina and the surrounding communities. Credit has
been extended to certain of the Bank's customers through multiple lending
transactions.

    Financial instruments whose contract amounts represent potential credit
risk at December 31, 2001 and 2000, are as follows:

<TABLE>
<CAPTION>
                                         2001                 2000
                                     -----------          -----------
<S>                                  <C>                  <C>
Loan commitments                     $23,807,615          $16,017,040
Undisbursed lines of credit            3,989,711            2,542,003
Letters of credit                         74,006              274,066
</TABLE>

     The Bank maintains its cash accounts in commercial banks. Accounts at the
banks are guaranteed by the Federal Deposit Insurance Corporation ("FDIC") up to
$100,000 each. At December 31, 2001 and 2000, the Bank had cash balances that
exceeded the FDIC insured limit.


NOTE P - REGULATORY MATTERS

     The Bank, as a North Carolina banking corporation, may pay cash dividends
only out of undivided profits as determined pursuant to North Carolina General
Statutes. However, regulatory authorities may limit payment of dividends by any
bank when it is determined that such limitation is in the public interest and is
necessary to ensure the financial soundness of the Bank.

     The Bank is subject to various regulatory capital requirements administered
by federal and state banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory (and possibly additional
discretionary) actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.


                                      F-22
<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE P - REGULATORY MATTERS (Continued)

     Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios, as prescribed by
regulations, of Total and Tier 1 Risk-Based Capital and of Leveraged Capital.
Management believes, as of December 31, 2001, that the Bank meets all capital
adequacy requirements to which it is subject, as set forth below:

<TABLE>
<CAPTION>
                                                                                                      To be Well
                                                                       For Capital             Capitalized Under Prompt
                                          Actual                    Adequacy Purposes        Corrective Action Provisions
As of December 31, 2001            Amount          Ratio          Amount          Ratio         Amount           Ratio
                                   ------          -----          ------          -----         ------           -----
<S>                            <C>                <C>          <C>               <C>          <C>               <C>

Total Risk-Based Capital       $  14,897,000      10.93%       >$ 10,905,840      >8.00%        >$13,632,300    >10.00 %
                                                               -                  -             -               -

Tier 1 Risk-Based Capital      $  13,271,000       9.73%       >$  5,452,920      >4.00%        >$ 8,179,380    > 6.00 %
                                                               -                  -             -               -

Leveraged Capital              $  13,271,000       7.99 %      >$  6,645,560     >4.00%         >$ 8,306,950    > 5.00 %
                                                               -                 -              -               -
</TABLE>


<TABLE>
<CAPTION>
                                                                                                      To be Well
                                                                       For Capital             Capitalized Under Prompt
                                          Actual                    Adequacy Purposes        Corrective Action Provisions
As of December 31, 2000            Amount          Ratio          Amount          Ratio         Amount           Ratio
                                   ------          -----          ------          -----         ------           -----
<S>                            <C>                <C>          <C>               <C>        <C>                <C>

Total Risk-Based Capital       $  14,622,000       13.01%       >$ 8,850,000      >8.00%     >$11,063,000      >10.00%
                                                                -                 -          -                 -

Tier 1 Risk-Based Capital      $  13,213,000       11.76%       >$ 4,425,000      >4.00%     >$ 6,638,000      > 6.00%
                                                                -                 -          -                 -

Leveraged Capital              $  13,213,000        8.85%       >$ 3,609,000      >3.00%     >$ 6,014,000      > 5.00%
                                                                -                 -          -                 -
</TABLE>


NOTE Q - FAIR VALUE OF FINANCIAL INSTRUMENTS

     Financial instruments include cash and due from banks, federal funds sold,
interest bearing deposits, investment securities, loans, and deposit accounts.
Fair value estimates are made at a specific moment in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Bank's entire holdings of a particular financial
instrument. Because no active market readily exists for a portion of the Bank's
financial instruments, fair value estimates are based on judgments regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

     The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

         CASH AND CASH EQUIVALENTS. The carrying amounts reported in the balance
sheet for cash and cash equivalents approximate fair value because of the
short-term maturities of those instruments.


                                      F-23
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE Q - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

         INVESTMENT SECURITIES. Fair values for investment securities are based
on quoted market prices, if available. If quoted market prices are not
available, fair values are based on quoted market prices for similar securities.

         LOANS. The fair values for loans are estimated using discounted cash
flow analyses using interest rates currently being offered for loans with
similar terms.

         DEPOSITS. The fair value of demand deposits is the amount payable on
demand at the reporting date. The fair value of time deposits is estimated using
the rates currently offered for deposits of similar remaining maturities.

         OFF-BALANCE SHEET INSTRUMENTS. Fair values for the Bank's off-balance
sheet instruments, primarily loan commitments, are based on fees currently
charged to enter into similar agreements taking into account the remaining terms
of the agreements and the counter parties' credit standing.

         The carrying amounts and estimated fair values of the Bank's financial
instruments, none of which are held for trading purposes, are as follows at
December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                         2001                                    2000
                                            ---------------------------------       -------------------------------
                                               Carrying            Estimated          Carrying           Estimated
                                                Amount            Fair Value           Amount           Fair Value
                                            ------------         ------------       ------------       ------------
<S>                                         <C>                  <C>                <C>                <C>
Assets:
     Cash and cash equivalents              $ 13,961,133         $ 13,961,133       $  9,744,027       $  9,774,027
     Securities available-for-sale            18,580,410           18,580,410         23,403,457         23,403,457
     Loans                                   124,061,201          128,887,185        108,978,809        107,901,071
Liabilities:
     Deposits                                135,535,459          136,826,077        129,127,587        129,551,797
    Federal Home Loan Bank loan               11,000,000           12,412,834          2,000,000          1,452,380
</TABLE>



                                      F-24


<PAGE>
                                    PART III

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         Not applicable.

ITEMS 9-12.

         Items 9 through 12 are incorporated by reference to the sections
captioned "Principal Shareholders and Holdings of Management," "Election of
Directors," "Executive Officers," "Executive and Director Compensation,"
"Certain Transactions," and "Section 16(a) Beneficial Ownership Reporting
Compliance" included in our definitive Proxy Statement for the Annual Meeting of
Shareholders to be held May 7, 2002, which we intend to mail to shareholders and
file with the SEC on or before April 30, 2002.

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

         (A) EXHIBITS

Exhibit No.                           Document Description

3.1                 Articles of Incorporation (1)

3.2                 Bylaws (1)

4.1                 Article 7 of the Company's Articles of Incorporation (1)

4.2                 Article II, Article VII, Section 8.3, Section 8.4 and
                    Section 9.1 of the Company's Bylaws (1)

10.1                High Street Corporation Non-Employee Director Stock Option
                    Plan, dated October 31, 2001 (2) (3)

10.2                High Street Corporation Management Stock Option Plan, dated
                    October 31, 2001 (2) (3)

10.3                Employment Agreement of J. Edgar McFarland (3) (filed
                    herewith)

10.4                Employment Agreement of Anne D. Martin (3) (filed herewith)

10.5                Salary Continuation Agreement of A.C. Honeycutt, Jr. (3)
                    (filed herewith)

10.6                Lease Agreement - Asheville, North Carolina Real Estate
                    (filed herewith)

                                       14
<PAGE>

10.7                Services Agreement with BISYS, Inc. (filed herewith)

10.8                Agreement with AAG Securities, Inc. (filed herewith)

10.9                Lease Agreement - North Asheville, North Carolina Real
                    Estate (filed herewith)

21                  Subsidiaries (filed herewith)

23                  Consent of Whisnant & Company, LLP (filed herewith)


(1) This exhibit is incorporated by reference into this Annual Report on Form
10-KSB from the Company's Form 8-K dated November 1, 2001.

(2) This exhibit is incorporated by reference into this Annual Report on Form
10-KSB from the Company's Form S-8 dated November 6, 2001.

(3) Management contract or compensatory plan or arrangement required to be filed
as an exhibit.

         (B) REPORTS ON FORM 8-K

         On November 1, 2001 the Company filed a Report on Form 8-K disclosing
the completion of a share exchange with the Bank pursuant to which each share of
the Bank Common Stock was automatically exchanged for one share of Company
Common Stock and the Bank became a wholly owned subsidiary of the Company.


                                       15
<PAGE>

                                   SIGNATURES

         In accordance with Sections 13 or 15(d) of the Securities Exchange Act
of 1934, the Company has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          HIGH STREET CORPORATION


Dated: March 26, 2002             By: /s/ J. Edgar McFarland
                                      -----------------------------------------
                                          J. Edgar McFarland
                                          President and Chief Executive Officer

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

       Signature                         Capacity                    Date
       ---------                         --------                    ----

/s/ J. Edgar McFarland        President, Chief Executive          March 26, 2002
----------------------------  Officer and Director (Principal
J. Edgar McFarland            Executive Officer)

/s/ Anne D. Martin            Chief Financial Officer             March 26, 2002
----------------------------  (Principal Financial Officer and
Anne D. Martin                Principal Accounting Officer)

/s/ Wilbur F. Boswell, III    Director                            March 26, 2002
----------------------------
Wilbur F. Boswell, III

/s/ M. Hunt Broyhill          Director                            March 26, 2002
----------------------------
M. Hunt Broyhill

/s/ Lynda Lea DeHart          Director                            March 26, 2002
----------------------------
Lynda Lea DeHart

/s/ James R. Hodges           Director                            March 26, 2002
----------------------------
James R. Hodges

/s/ Jimmy R. Jacumin          Director                            March 26, 2002
----------------------------
Jimmy R. Jacumin

/s/ Hurshell H. Keener        Director                            March 26, 2002
----------------------------
Hurshell H. Keener




<PAGE>

     Signature                            Capacity                Date
     ---------                            --------                ----


/s/ Christine M. McGuire                  Director                March 26, 2002
-----------------------------
Christine M. McGuire

/s/ Marvin M. Pearlman                    Director                March 26, 2002
-----------------------------
Marvin M. Pearlman

/s/ Robert B. Peterson                    Director                March 26, 2002
-----------------------------
Robert B. Peterson

/s/ Robert A. Richie                      Director                March 26, 2002
-----------------------------
Robert A. Richie

/s/ Carl H. Ricker, Jr.                   Director                March 26, 2002
-----------------------------
Carl H. Ricker, Jr.

/s/ Victor C. Shealy, Jr.                 Director                March 26, 2002
-----------------------------
Victor C. Shealy, Jr.

/s/ A. Alex Shuford                       Director                March 26, 2002
-----------------------------
A. Alex Shuford

/s/ John T. South                         Director                March 26, 2002
-----------------------------
John T. South

/s/ John S. Stevens                       Director                March 26, 2002
-----------------------------
John S. Stevens

/s/ William F. Stokes, Jr.                Director                March 26, 2002
-----------------------------
William F. Stokes, Jr.

/s/ Karl H. Straus                        Director                March 26, 2002
-----------------------------
Karl H. Straus

/s/ Pamela Mills Turner                   Director                March 26, 2002
-----------------------------
Pamela Mills Turner


                                       16

<PAGE>

                             HIGH STREET CORPORATION


                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
Exhibit No.     Document Description                                                    Page Number
-----------     --------------------                                                    -----------
<S>             <C>                                                                     <C>

3.1             Articles of Incorporation                                                  (1)

3.2             Bylaws                                                                     (1)

4.1             Article 7 of the Company's Articles of Incorporation                       (1)

4.2             Article II, Article VII, Section 8.3, Section 8.4 and Section 9.1 of the   (1)
                Company's Bylaws

10.1            High Street Corporation Non-Employee Director Stock Option Plan, dated     (2)
                October 31, 2001(3)

10.2            High Street Corporation Management Stock Option Plan, dated October 31,    (2)
                2001 (3)

10.3            Employment Agreement of J. Edgar McFarland (3)                             19

10.4            Employment Agreement of Anne D. Martin (3)                                 27

10.5            Salary Continuation Agreement of A.C. Honeycutt, Jr. (3)                   34

10.6            Lease Agreement - Asheville, North Carolina Real Estate                    36

10.7            Services Agreement with BISYS, Inc.                                        52

10.8            Agreement with AAG Securities, Inc.                                        69

10.9            Lease Agreement - North Asheville, North Carolina Real Estate              84

21              Subsidiaries                                                              105

23              Consent of Whisnant & Company, LLP                                        106
</TABLE>


(1) This exhibit is incorporated by reference into this Annual Report on Form
10-KSB from the Company's Form 8-K dated November 1, 2001.

(2) This exhibit is incorporated by reference into this Annual Report on Form
10-KSB from the Company's Form S-8 dated November 6, 2001.

(3) Management contract or compensatory plan or arrangement required to be filed
as an exhibit.


                                       18