##### Table of Contents



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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB/A



|x |  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
|- |  | -----------------------------------------------------------------------------



For the fiscal year ended December 31, 2002.



| ̈ |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934(No fee required)
|- |  | ---------------------------------------------------------------------------------------------------



Commission File Number: 0-28394



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MOUNTAIN BANK HOLDING COMPANY

(exact name of
registrant as specified in its charter)



|WASHINGTON                                                     |  | 91-1602736                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer identification Number)



|501 Roosevelt Avenue, PO Box 98, Enumclaw, WA |  | 98022     
|--------------------------------------------- |  | ----------
|(address of principal executive offices)      |  | (zip code)



(360)
825-0100

Registrants telephone number:



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



None



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



Common Stock, no par value

(title of class)



---



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



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



State the issuers revenues for its most recent fiscal year: $9,520,000



State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days: at January 31, 2003$25,111,058



Number of shares of common stock outstanding as of January 31,
2003:2,149,813



DOCUMENTS INCORPORATED
BY REFERENCE



The Proxy Statement for the
2003 Annual Meeting of Shareholders is incorporated by reference into Part I of this Annual Report on Form 10-KSB.



Transitional Small Business Disclosure Format:  Yes   x  No ̈



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##### Table of Contents

TABLE OF CONTENTS

Part II



This Amendment No. 1 is being filed by Mountain Bank Holding Company (Company) to amend its Form 10KSB filed with
the Securities and Exchange Commission on March 3, 2003 to correct the Independent Auditors Report by including the name and conformed signature of the Companys Independent Auditors who performed the Annual Audit for the fiscal year
ended December 31, 2002.



|Part F/S FINANCIAL STATEMENTS |  |                     
|----------------------------- |  | --------------------
|                             
|                              |  |                     
|                              |  | FINANCIAL STATEMENTS
|                             
|                              |  | SIGNATURES          
|                             
|                              |  |                     
|                              |  | SIGNATURES          
|                             
|                              |  | CERTIFICATIONS      
|                             
|                              |  |                     
|                              |  | CERTIFICATIONS      



i



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##### Table of Contents





Independent Auditors Report



Board of Directors

Mountain Bank Holding Company

Enumclaw, Washington



We have audited the accompanying consolidated balance sheets of Mountain Bank Holding Company and Subsidiary as of December 31, 2002 and 2001, and
the related consolidated statements of income, shareholders equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.



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
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Mountain Bank Holding Company and Subsidiary as of December 31, 2002 and 2001, and the results of their operations and their cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.



/s/    MCGLADREY & PULLEN, LLP



Tacoma, Washington

January 10, 2003



F-1



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##### Table of Contents



Consolidated



Financial



Statements



F-2



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##### Table of Contents



Consolidated Balance Sheets

(Dollars in Thousands)



|Mountain Bank Holding Company and Subsidiary                                                                                        |  |      |         |      |   |        
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|December 31, 2002 and 2001                                                                                                          |  |      |         |      |   |        
|                                                                                                                                    |  | 2002 |         | 2001
|Assets                                                                                                                              |  |      |         |      |   |        
|Cash and due from banks                                                                                                             |  | $    | 1,522   |      | $ | 3,620  
|Interest bearing deposits at other financial institutions                                                                           |  |      | 17,886  |      |   | 13,455 
|Securities available for sale                                                                                                       |  |      | 29,562  |      |   | 31,612 
|Federal Home Loan Bank and Federal Reserve Bank stock, at cost                                                                      |  |      | 671     |      |   | 634    
|Loans held for sale                                                                                                                 |  |      | 2,871   |      |   | 1,093  
|                                                                                                                                   
|Loans                                                                                                                               |  |      | 82,261  |      |   | 68,887 
|Allowance for credit losses                                                                                                         |  |      | 852     |      |   | 753    
|Net loans                                                                                                                           |  |      | 81,409  |      |   | 68,134 
|                                                                                                                                   
|Premises and equipment                                                                                                              |  |      | 4,890   |      |   | 3,545  
|Foreclosed real estate                                                                                                              |  |      | 151     |      |   |       
|Accrued interest receivable                                                                                                         |  |      | 601     |      |   | 650    
|Bank owned life insurance                                                                                                           |  |      | 3,205   |      |   | 3,031  
|Other assets                                                                                                                        |  |      | 406     |      |   | 107    
|Total assets                                                                                                                        |  | $    | 143,174 |      | $ | 125,881
|Liabilities                                                                                                                         |  |      |         |      |   |        
|Deposits:                                                                                                                           |  |      |         |      |   |        
|Demand                                                                                                                              |  | $    | 19,819  |      | $ | 17,009 
|Savings and interest-bearing demand                                                                                                 |  |      | 60,361  |      |   | 46,983 
|Time                                                                                                                                |  |      | 46,831  |      |   | 48,119 
|Total deposits                                                                                                                      |  |      | 127,011 |      |   | 112,111
|Accrued interest payable                                                                                                            |  |      | 205     |      |   | 292    
|Note payable                                                                                                                        |  |      | 36      |      |   | 38     
|Other liabilities                                                                                                                   |  |      | 381     |      |   | 137    
|Total liabilities                                                                                                                   |  |      | 127,633 |      |   | 112,578
|                                                                                                                                   
|Commitments and Contingencies                                                                                                       |  |      |        |      |   |       
|                                                                                                                                   
|Shareholders Equity                                                                                                                |  |      |         |      |   |        
|Common stock (no par value); authorized 10,000,000 shares; issued and outstanding: 2002
 2,146,813 shares; 2001  2,067,401 shares |  |      | 1,073   |      |   | 1,034  
|Additional paid-in capital                                                                                                          |  |      | 9,472   |      |   | 8,698  
|Retained earnings                                                                                                                   |  |      | 4,626   |      |   | 3,474  
|Accumulated other comprehensive income                                                                                              |  |      | 370     |      |   | 97     
|Total shareholders equity                                                                                                          |  |      | 15,541  |      |   | 13,303 
|Total liabilities and shareholders equity                                                                                          |  | $    | 143,174 |      | $ | 125,881



See
notes to consolidated financial statements.



F-3



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##### Table of Contents



Consolidated Statements of
Income

(Dollars in Thousands, Except Per Share Amounts)



Mountain Bank Holding Company and Subsidiary

Years Ended December 31, 2002 and 2001



|                                                      |  | 2002 |       | 2001
|----------------------------------------------------- |  | ---- | ----- | ----
|Interest Income                                       |  |      |       |     
|Loans                                                 |  | $    | 6,590 |     
|Deposits in banks                                     |  |      | 230   |     
|Investment income:                                    |  |      |       |     
|Taxable                                               |  |      | 1,331 |     
|Tax-exempt                                            |  |      | 18    |     
|Total interest income                                 |  |      | 8,169 |     
|                                                     
|Interest Expense                                      |  |      |       |     
|Deposits                                              |  |      | 2,560 |     
|Note payable                                          |  |      | 3     |     
|Total interest expense                                |  |      | 2,563 |     
|                                                     
|Net interest income                                   |  |      | 5,606 |     
|Provision for Credit Losses                           |  |      | 360   |     
|                                                     
|Net interest income after provision for credit losses |  |      | 5,246 |     
|                                                     
|Non-Interest Income                                   |  |      |       |     
|Service charges on deposit accounts                   |  |      | 552   |     
|Gains on mortgage loans sold                          |  |      | 340   |     
|Gains on sale of securities available for salenet    |  |      | 29    |     
|Bank owned life insurance income                      |  |      | 174   |     
|Other                                                 |  |      | 255   |     
|Total non-interest income                             |  |      | 1,351 |     
|                                                     
|Non-Interest Expenses                                 |  |      |       |     
|Salaries and employee benefits                        |  |      | 2,869 |     
|Occupancy                                             |  |      | 256   |     
|Equipment                                             |  |      | 434   |     
|Other                                                 |  |      | 1,390 |     
|Total non-interest expenses                           |  |      | 4,949 |     
|                                                     
|Income before income taxes                            |  |      | 1,648 |     
|                                                     
|Income Taxes                                          |  |      | 496   |     
|                                                     
|Net income                                            |  | $    | 1,152 |     
|                                                     
|Earnings Per Share                                    |  |      |       |     
|Basic                                                 |  | $    | .55   |     
|Diluted                                               |  |      | .52   |     



See
notes to consolidated financial statements.



F-4



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##### Table of Contents



Consolidated Statements of
Shareholders Equity

(Dollars in Thousands)



Mountain Bank Holding Company and Subsidiary

Years Ended December 31, 2002 and 2001



|                                                        |  |           |  |        |       |            |   |          |  |   | Accumulated   |   |       |  
|------------------------------------------------------- |  | --------- |  | ------ | ----- | ---------- | - | -------- |  | - | ------------- | - | ----- | -
|                                                        |  | Shares of |  |        |       | Additional |   |          |  |   | Other         |   |       |  
|                                                        |  | Common    |  | Common |       | Paid-in    |   | Retained |  |   | Comprehensive |   |       |  
|                                                        |  | Stock     |  | Stock  |       | Capital    |   | Earnings |  |   | Income        |   | Total |  
|Balance at December 31, 2000                            |  | 1,945,136 |  | $      | 973   |            | $ | 7,543    |  | $ | 3,616         |   |       | $
|                                                       
|Comprehensive income:                                   |  |           |  |        |       |            |   |          |  |   |               |   |       |  
|Net income                                              |  |          |  |        |      |            |   |         |  |   | 940           |   |       |  
|Other comprehensive income, net of tax:                 |  |           |  |        |       |            |   |          |  |   |               |   |       |  
|Change in fair value of securities available for sale   |  |          |  |        |      |            |   |         |  |   |              |   |       |  
|Comprehensive income                                    |  |           |  |        |       |            |   |          |  |   |               |   |       |  
|                                                       
|5% stock dividend                                       |  | 98,198    |  |        | 49    |            |   | 1,031    |  |   | (1,082        | ) |       |  
|Sale of common stock under employee stock purchase plan |  | 1,781     |  |        | 1     |            |   | 15       |  |   |              |   |       |  
|Exercise of stock options                               |  | 16,000    |  |        | 8     |            |   | 32       |  |   |              |   |       |  
|Sale of common stock                                    |  | 6,286     |  |        | 3     |            |   | 66       |  |   |              |   |       |  
|Tax benefit from exercise of stock options              |  |          |  |        |      |            |   | 11       |  |   |              |   |       |  
|Balance at December 31, 2001                            |  | 2,067,401 |  |        | 1,034 |            |   | 8,698    |  |   | 3,474         |   |       |  
|                                                       
|Comprehensive income:                                   |  |           |  |        |       |            |   |          |  |   |               |   |       |  
|Net income                                              |  |          |  |        |      |            |   |         |  |   | 1,152         |   |       |  
|Other comprehensive income, net of tax:                 |  |           |  |        |       |            |   |          |  |   |               |   |       |  
|Change in fair value of securities available for sale   |  |          |  |        |      |            |   |         |  |   |              |   |       |  
|Comprehensive income                                    |  |           |  |        |       |            |   |          |  |   |               |   |       |  
|                                                       
|Sale of common stock under employee stock purchase plan |  | 1,762     |  |        | 1     |            |   | 19       |  |   |              |   |       |  
|Exercise of stock options                               |  | 17,650    |  |        | 8     |            |   | 58       |  |   |              |   |       |  
|Sale of common stock                                    |  | 60,000    |  |        | 30    |            |   | 668      |  |   |              |   |       |  
|Tax benefit from exercise of stock options              |  |          |  |        |      |            |   | 29       |  |   |              |   |       |  
|Balance at December 31, 2002                            |  | 2,146,813 |  | $      | 1,073 |            | $ | 9,472    |  | $ | 4,626         |   |       | $



See
notes to consolidated financial statements.



F-5



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##### Table of Contents



Consolidated Statements of
Cash Flows

(Dollars in Thousands)



Mountain Bank Holding Company and Subsidiary

Years Ended December 31, 2002 and 2001



|                                                                                   |  | 2002 |         |   | 2001 |  
|---------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Cash Flows from Operating Activities                                               |  |      |         |   |      |  
|Net income                                                                         |  | $    | 1,152   |   |      | $
|Adjustments to reconcile net income to net cash provided by operating
activities:  |  |      |         |   |      |  
|Provision for credit losses                                                        |  |      | 360     |   |      |  
|Depreciation and amortization                                                      |  |      | 401     |   |      |  
|Deferred federal income tax expense (benefit)                                      |  |      | 22      |   |      |  
|Gain on sales of securities available for sale                                     |  |      | (29     | ) |      |  
|Stock dividends received                                                           |  |      | (16     | ) |      |  
|Gains on loans sold                                                                |  |      | (340    | ) |      |  
|Originations of loans held for sale                                                |  |      | (33,720 | ) |      |  
|Proceeds from sales of loans                                                       |  |      | 32,282  |   |      |  
|Bank owned life insurance income                                                   |  |      | (174    | ) |      |  
|(Increase) decrease in accrued interest receivable                                 |  |      | 49      |   |      |  
|Decrease in accrued interest payable                                               |  |      | (87     | ) |      |  
|Othernet                                                                          |  |      | 125     |   |      |  
|Net cash provided by operating activities                                          |  |      | 25      |   |      |  
|                                                                                  
|Cash Flows from Investing Activities                                               |  |      |         |   |      |  
|Net increase in interest-bearing deposits in banks                                 |  |      | (4,431  | ) |      |  
|Activity in securities available for sale and Federal Reserve Bank and FHLB
stock: |  |      |         |   |      |  
|Purchases                                                                          |  |      | (15,731 | ) |      |  
|Maturities, prepayments and calls                                                  |  |      | 15,489  |   |      |  
|Sales                                                                              |  |      | 2,400   |   |      |  
|Increase in loans made to customers, net of principal collections                  |  |      | (13,786 | ) |      |  
|Additions to premises and equipment                                                |  |      | (1,746  | ) |      |  
|Purchase of bank owned life insurance                                              |  |      |        |   |      |  
|Net cash used in investing activities                                              |  |      | (17,805 | ) |      |  
|                                                                                  
|Cash Flows from Financing Activities                                               |  |      |         |   |      |  
|Net increase in deposits                                                           |  |      | 14,900  |   |      |  
|Net proceeds from issuance of stock                                                |  |      | 784     |   |      |  
|Repayment of note payable                                                          |  |      | (2      | ) |      |  
|Payment for fractional shares in stock dividend                                    |  |      |        |   |      |  
|Net cash provided by financing activities                                          |  |      | 15,682  |   |      |  
|Net change in cash and due from banks                                              |  |      | (2,098  | ) |      |  
|                                                                                  
|Cash and Due from Banks                                                            |  |      |         |   |      |  
|Beginning of year                                                                  |  |      | 3,620   |   |      |  
|                                                                                  
|End of year                                                                        |  | $    | 1,522   |   |      | $
|                                                                                  
|Supplemental Disclosures of Cash Flow Information                                  |  |      |         |   |      |  
|Interest paid                                                                      |  | $    | 2,650   |   |      | $
|Income taxes paid                                                                  |  |      | 547     |   |      |  
|                                                                                  
|Supplemental Disclosures of Non-Cash Investing and Financing
Activities            |  |      |         |   |      |  
|Unrealized gain on securities available for sale, net of tax                       |  | $    | 273     |   |      | $
|Tax benefit from exercise of stock options                                         |  |      | 29      |   |      |  
|Stock dividend                                                                     |  |      |        |   |      |  
|Foreclosed real estate acquired in settlement of loans, net                        |  |      | (151    | ) |      |  



See
notes to consolidated financial statements.



F-6



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 1  Summary of Significant Accounting Policies



Basis of Consolidation and Operations



The consolidated financial statements include the accounts of Mountain Bank
Holding Company (the Company) and its wholly owned subsidiary, Mt. Rainier National Bank (the Bank). All significant intercompany transactions and balances have been eliminated. The Company is a holding company, which operates primarily through its
major subsidiary, the Bank.



The Bank operates five branches and
has a customer base centered in and around southeastern King County and northeastern Pierce County, Washington. The Bank provides loan and deposit services to customers, who are predominantly small- and middle-market businesses and middle-income
individuals in western Washington. Its primary funding source is deposits from businesses and individuals in its market area.



Consolidated Financial Statement Presentation



The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and
practices within the banking industry. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities,
as of the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant
change in the near term relate to the determination of the allowance for credit losses and the valuation of foreclosed real estate and deferred tax assets.



Certain prior year amounts have been reclassified, with no effect on net income or shareholders equity, to conform to the 2002 presentation. All
dollar amounts, except per share information, are stated in thousands.



Securities Available for Sale



Securities available for sale consist of debt securities that the Bank intends to hold for an indefinite period, but not necessarily to maturity, and certain equity securities. Such securities may be sold to implement the
Banks asset/liability management strategies and in response to changes in interest rates and similar factors, and certain equity securities. Securities available for sale are reported at fair value. Unrealized gains and losses, net of the
related deferred tax effect, are reported as a net amount in a separate component of shareholders equity entitled accumulated other comprehensive income. Realized gains and losses on securities available for sale, determined using
the specific identification method, are included in earnings. Amortization of premiums and accretion of discounts are recognized in interest income over the period to maturity.



Declines in the fair value of individual securities available for sale below their cost that are other than temporary result
in write-downs of the individual securities to their fair value. Such write-downs are included in earnings as realized losses.



(continued)



F-7



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 1  Summary of Significant Accounting Policies(continued)



Loans Held for Sale



Mortgage loans originated for sale in the foreseeable future
in the secondary market are carried at the lower of aggregate cost or estimated market value. Gains and losses on sales of loans are recognized at settlement date and are determined by the difference between the sales proceeds and the carrying value
of the loans. All sales are made without recourse.Net unrealized losses are recognized through a valuation allowance established by charges to income.



Loans



Loans are stated at the amount of unpaid principal, reduced by allowance for credit losses. Interest on loans is accrued daily based on the principal amount outstanding.



Generally the accrual of interest on loans is discontinued when, in
managements opinion, the borrower may be unable to meet payments as they become due or when they are past due 90 days as to either principal or interest, unless they are well secured and in the process of collection. When interest accrual is
discontinued, all unpaid accrued interest is reversed against current income. If management determines that the ultimate collectibility of principal is in doubt, cash receipts on nonaccrual loans are applied to reduce the principal balance on a
cash-basis method, until the loans qualify for return to accrual status. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.



Allowance for Credit Losses



The allowance for credit losses is maintained at a level considered adequate
to provide for probable losses on existing loans based on evaluating known and inherent risks in the loan portfolio. The allowance is reduced by loans charged off, and increased by provisions charged to earnings and recoveries on loans previously
charged off. The allowance is based on managements periodic, systematic evaluation of factors underlying the quality of the loan portfolio, including changes in the size and composition of the loan portfolio, the estimated value of any
underlying collateral, actual loan loss experience, current economic conditions, and detailed analysis of individual loans for which full collectibility may not be assured. This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available. While management uses the best information available to make its estimates, future adjustments to the allowance may be necessary if there is a significant change in economic
conditions.



When available information confirms that
specific loans or portions thereof are uncollectible, these amounts are charged off against the allowance for credit losses. The existence of some or all of the following criteria will generally confirm that a loss has been incurred: the loan is
significantly delinquent and the borrower has not evidenced the ability or intent to bring the loan current; the Bank has no recourse to the borrower, or if it does, the borrower has insufficient assets to pay the debt; the estimated fair value of
the loan collateral is significantly below the current loan balance, and there is little or no near-term prospect for improvement.



(continued)



F-8



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 1  Summary of Significant Accounting Policies(continued)



Allowance for Credit Losses(concluded)



When management determines that it
is probable that a borrower will be unable to repay all amounts due according to the terms of the loan agreement, including scheduled interest payments, the loan is considered impaired. Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls are generally not classified as impaired.
Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the
delay, the borrowers prior payment record, and the amount of shortfall in relation to the principal and interest owed. The amount of impairment is measured based on the present value of expected future cash flows discounted at the loans
effective interest rate or, when the primary source of repayment is provided by real estate collateral, at the fair value of the collateral less estimated selling costs. In addition, regulatory agencies, as an integral part of their examination
process, periodically review the Banks allowance for credit losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations.



The ultimate recovery of all loans is susceptible to future market factors
beyond the Banks control. These factors may result in losses or recoveries differing significantly from those provided for in the financial statements.



Premises and Equipment



Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation, which is computed on the straight-line method over the
estimated useful lives of the assets. Gains or losses on dispositions are reflected in earnings.



Foreclosed Real Estate



Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are initially recorded at the lower of cost or fair value of the properties less estimated costs of disposal. Any write-down to fair value at the
time of transfer to foreclosed real estate is charged to the allowance for credit losses. Properties are evaluated regularly to ensure that the recorded amounts are supported by their current fair values. Any subsequent reductions in carrying values
and revenue and expense from the operations of properties are charged to non-interest income.



Transfers of Financial Assets



Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank,
(2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an
agreement to repurchase them before their maturity.



(continued)



F-9



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 1  Summary of Significant Accounting Policies(continued)



Income Taxes



Deferred tax assets and liabilities result from differences between the
financial statement carrying amounts and the tax bases of assets and liabilities, and are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or
settled. The deferred tax provision represents the difference between the net deferred tax asset/liability at the beginning and end of the year. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.



The Bank provides for income
taxes on a separate return basis and remits to the Company amounts currently payable.



Cash and Cash Equivalents



For
purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption Cash and due from banks. The Bank maintains its cash in depository
institution accounts which, at times, may exceed federally insured limits. The Bank has not experienced any losses in such accounts.



Stock-Based Compensation



At December 31, 2002, the Company has four stock-based employee and director compensation plans, which are described more fully in Note 11, and an
employee stock purchase plan, which is described in Note 14. The Company accounts for those plans under the recognition and measurement principles of APB No. 25, Accounting for Stock Issued to Employees, and related interpretations. Accordingly, no
stock-based compensation cost is reflected in net income as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation to stock-based compensation awards for the effects of all options granted on or after January 1,
1995 for the years ending December 31:



|                                                                                                         |  | 2002 |       |   | 2001 |  
|-------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | -
|Net income, as reported                                                                                  |  | $    | 1,152 |   |      | $
|                                                                                                         |  |      |       |   |      |  
|Less total stock-based compensation expense determined under fair value method for all
qualifying awards |  |      | (164  | ) |      |  
|Pro forma net income                                                                                     |  | $    | 988   |   |      | $
|Earnings Per Share                                                                                       |  |      |       |   |      |  
|Basic:                                                                                                   |  |      |       |   |      |  
|As reported                                                                                              |  | $    | .55   |   |      | $
|Pro forma                                                                                                |  |      |       |   |      |  
|Diluted:                                                                                                 |  |      | .47   |   |      |  
|As reported                                                                                              |  |      | .52   |   |      |  
|Pro forma                                                                                                |  |      | .46   |   |      |  



(continued)



F-10



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 1  Summary of Significant Accounting Policies(continued)



Fair Values of Financial
Instruments



The following methods and assumptions were used
by the Company in estimating the fair values of financial instruments disclosed in these financial statements:



Cash and Due from Banks and Interest Bearing Deposits at Other Financial Institutions

The carrying amounts of cash and due from banks and interest bearing deposits at other financial institutions approximate their fair
value.



Securities Available for Sale

Fair values for securities are based on quoted market prices.



Federal Home Loan Bank and Federal Reserve Bank Stock

The carrying value of Federal Home Loan Bank and Federal Reserve Bank stocks approximates their fair values.



Loans

For variable rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values.
Fair values for fixed rate loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values of loans held for sale are based on
their estimated market prices. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.



Deposit Liabilities

The fair value of deposits with no stated maturity date is included at the amount payable on demand. The fair value of fixed maturity certificates of deposit is estimated by discounting future cash
flows using the rates currently offered by the Bank for deposits of similar remaining maturities. Fair values of fixed rate certificates of deposit are estimated using a discounted cash flow calculation based on interest rates currently being
offered on similar certificates.



Note Payable

The fair value of the note payable is estimated using discounted cash flow analyses based on the Companys current
incremental borrowing rates for similar types of borrowing arrangements.



Accrued Interest

The carrying amounts of accrued interest approximate their fair values.



Off-Balance Sheet Instruments

The fair value of commitments to extend credit and standby letters of credit was estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the customers. Since the majority of the Banks off-balance sheet instruments consist of non-fee producing,
variable-rate commitments, the Bank has determined they do not have a distinguishable fair value.



(continued)



F-11



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 1  Summary of Significant Accounting Policies(concluded)



Earnings Per Share



Basic earnings per share exclude dilution and are computed
by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if common shares were issued pursuant to the exercise of options under the Companys
stock option plans.



Comprehensive Income



The Company applies Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income (SFAS No. 130), which requires that an entity report and display comprehensive income in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners
and distributions to owners. With regard to the Company, comprehensive income includes the net income reported in the statements of income and any changes in fair value of securities available for sale, reported as a component of shareholders
equity.



Recent Accounting Pronouncements



In June 2001, the Financial Accounting Standards Board issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement is
effective for all fiscal years beginning after June 15, 2002. The Company does not anticipate that the adoption of SFAS No. 143 will have a material effect on its financial position or results of operations.



In December 2002, the Financial Accounting Standards Board issued FASB
Statement No. 148, Accounting for Stock-Based CompensationTransition and Disclosure.This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation,and APB Opinion No. 28, Interim Financial
Reporting, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This Statement does not require any change from the method currently used by the
Company to account for stock-based compensation, but does require more prominent disclosure in the annual and interim financial statements about the method of accounting for such compensation and the effect of the method used on reported results.
This Statement was effective for years ending after December 15, 2002. The Company has adopted the disclosure provisions of SFAS No. 148 in the accompanying financial statements, and accordingly, the disclosure requirements are set forth in Note 1,
in the Stock Based Compensationsection.



The Financial
Accounting Standards Board has issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,an interpretation of FASB Statements Nos. 5, 57
and 107 and rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this
Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. Implementation of these provisions of the Interpretation is not expected to have a material impact on the Companys consolidated
financial statements. The disclosure requirements of the Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002, and have been adopted in the consolidated financial statements for December
31, 2002, with no additional disclosure required.



F-12



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 2  Restricted Assets



Federal Reserve Board regulations require maintenance of minimum reserve
balances either in cash or on deposit with the Federal Reserve Bank. The amounts of such balances for the years ended December 31, 2002 and 2001 were $951 and $930, respectively.



Note 3  Securities Available for Sale



Debt and equity securities have been classified according to managements intent.



The carrying amounts of securities and their approximate fair values are as
follows:



|                                                 |  | Amortized Cost |        | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Fair Value
|------------------------------------------------ |  | -------------- | ------ | ---------------------- | - | ----------------------- |  | ----------
|Securities Available for Sale                    |  |                |        |                        |   |                         |  |           
|December 31, 2002                                |  |                |        |                        |   |                         |  |           
|U.S. Treasury securities                         |  | $              | 3,075  |                        | $ | 66                      |  | $         
|U.S. Government and agency securities            |  |                | 7,318  |                        |   | 255                     |  |           
|Mortgage-backed securities                       |  |                | 12,162 |                        |   | 176                     |  |           
|Obligations of states and political subdivisions |  |                | 391    |                        |   | 9                       |  |           
|Corporate securities                             |  |                | 5,996  |                        |   | 97                      |  |           
|Equity securities                                |  |                | 60     |                        |   |                        |  |           
|                                                 |  | $              | 29,002 |                        | $ | 603                     |  | $         
|December 31, 2001                                |  |                |        |                        |   |                         |  |           
|U.S. Treasury securities                         |  | $              | 3,106  |                        | $ | 12                      |  | $         
|U.S. Government and agency securities            |  |                | 8,154  |                        |   | 116                     |  |           
|Mortgage-backed securities                       |  |                | 11,707 |                        |   | 86                      |  |           
|Obligations of states and political subdivisions |  |                | 495    |                        |   | 7                       |  |           
|Corporate securities                             |  |                | 8,003  |                        |   | 57                      |  |           
|                                                 |  | $              | 31,465 |                        | $ | 278                     |  | $         



Gross gains on the sales
of securities were $33 and $31 in 2002 and 2001, respectively. Gross losses on the sales of securities were $4 in 2002. There were no gross losses on the sale of securities in 2001.



(continued)



F-13



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 3  Securities Available for Sale(concluded)



The carrying amount and approximate market value of debt
securities at December 31, 2002 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.



|                          |  | Amortized Cost |        | Fair Value
|------------------------- |  | -------------- | ------ | ----------
|Due in one year or less   |  | $              | 4,453  |           
|Due in one to five years  |  |                | 19,872 |           
|Due in five years or more |  |                | 4,617  |           
|                          |  | $              | 28,942 |           



Securities with a
carrying value of $1,000 at December 31, 2002 and 2001 were assigned or pledged to secure public deposits, and for other purposes as required by law.



Note 4  Loans



Loans at December 31 consist of the following:



|                            |  | 2002 |        | 2001
|--------------------------- |  | ---- | ------ | ----
|Commercial and agricultural |  | $    | 20,510 |     
|Real estate:                |  |      |        |     
|Residential 1  4 family    |  |      | 13,516 |     
|Commercial                  |  |      | 36,875 |     
|Construction                |  |      | 5,602  |     
|Consumer                    |  |      | 5,758  |     
|Total loans                 |  | $    | 82,261 |     



Changes in the allowance
for credit losses for the years ended December 31 are as follows:



|                             |  | 2002 |      |   | 2001 |  
|---------------------------- |  | ---- | ---- | - | ---- | -
|Balance at beginning of year |  | $    | 753  |   |      | $
|Provision for credit losses  |  |      | 360  |   |      |  
|Charge-offs                  |  |      | (278 | ) |      |  
|Recoveries                   |  |      | 17   |   |      |  
|Net charge-offs              |  |      | (261 | ) |      |  
|Balance at end of year       |  | $    | 852  |   |      | $



(continued)



F-14



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 4  Loans(concluded)



Following is a summary of information pertaining to impaired loans:



|                                                             |  | 2002 |    | 2001
|------------------------------------------------------------ |  | ---- | -- | ----
|December 31                                                  |  |      |    |     
|Impaired loans without a valuation allowance                 |  | $    | 88 |     
|Impaired loans with a valuation allowance                    |  |      |   |     
|Total impaired loans                                         |  | $    |   |     
|Valuation allowance related to impaired loans                |  | $    |   |     
|Years Ended December 31                                      |  |      |    |     
|Average investment in impaired loans                         |  | $    | 89 |     
|Interest income recognized on a cash basis on impaired loans |  |      | 2  |     



At December 31, 2002,
there were no commitments to lend additional funds to borrowers whose loans have been modified. There were no loans 90 days and over past due still accruing interest at December 31, 2002 or 2001.



At December 31, 2002 and 2001, certain officers and directors, or companies in
which they have 10% or more beneficial interest, were indebted to the Bank in the aggregate amount of $2,598 and $2,817, respectively. During 2002 advances of $1,374 were made, and repayments totaled $1,593.



Note 5  Premises and Equipment



The components of premises and equipment at December 31 are as follows:



|                                  |  | 2002 |       | 2001
|--------------------------------- |  | ---- | ----- | ----
|Land                              |  | $    | 1,601 |     
|Buildings                         |  |      | 3,081 |     
|Equipment, furniture and fixtures |  |      | 2,512 |     
|Construction in process           |  |      | 311   |     
|                                  |  |      | 7,505 |     
|Less accumulated depreciation     |  |      | 2,615 |     
|Total premises and equipment      |  | $    | 4,890 |     



Construction in process
at December 31, 2002 includes construction costs to date related to a new branch. The estimated cost to finish the branch in 2003 is estimated to be $450.



F-15



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 6  Deposits



The composition of deposits at December 31 is as follows:



|                                      |  | 2002 |         | 2001
|------------------------------------- |  | ---- | ------- | ----
|Demand deposits, non-interest bearing |  | $    | 19,819  |     
|NOW and money market accounts         |  |      | 47,073  |     
|Savings deposits                      |  |      | 13,288  |     
|Time certificates, $100,000 or more   |  |      | 16,711  |     
|Other time certificates               |  |      | 30,120  |     
|Total                                 |  | $    | 127,011 |     



Scheduled maturities of
certificates of deposit for future years ending December 31 are as follows:



|2003 |  | $ | 39,485 
|---- |  | - | -------
|2004 |  |   | 4,042  
|2005 |  |   | 1,407  
|2006 |  |   | 389    
|2007 |  |   | 1,508  
|     |  |   | $46,831



Note 7  Note
Payable



The note payable is secured by land, and is payable
at $1 monthly, including interest of 8%. Future principal maturities are $2 annually through 2004, $3 annually 2005 through 2007 and $23 thereafter.



Note 8  Income Taxes



The components of the provision for income taxes are as follows at December 31:



|                           |  | 2002 |     | 2001 |  
|-------------------------- |  | ---- | --- | ---- | -
|Current                    |  | $    | 474 |      | $
|Deferred expense (benefit) |  |      | 22  |      |  
|Income taxes               |  | $    | 496 |      | $



(continued)



F-16



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 8  Income Taxes(concluded)



The effect of temporary differences that give rise to significant portions of
deferred tax assets and liabilities at December 31 follows:



|                                                 |  | 2002 |      |   | 2001
|------------------------------------------------ |  | ---- | ---- | - | ----
|Deferred Tax Assets                              |  |      |      |   |     
|Allowance for credit losses                      |  | $    | 265  |   |     
|Deferred compensation                            |  |      | 42   |   |     
|Accumulated depreciation                         |  |      |     |   |     
|Other                                            |  |      | 20   |   |     
|Total deferred tax assets                        |  |      | 327  |   |     
|Deferred Tax Liabilities                         |  |      |      |   |     
|Accumulated depreciation                         |  |      | 16   |   |     
|Cash basis tax accounting                        |  |      |     |   |     
|Deferred income                                  |  |      | 273  |   |     
|Unrealized gain on securities available for sale |  |      | 190  |   |     
|Total deferred tax liabilities                   |  |      | 479  |   |     
|Net deferred tax assets (liabilities)            |  | $    | (152 | ) |     



Deferred tax liabilities
are included with other liabilities and deferred tax assets are included with other assets in the accompanying consolidated balance sheets.



The following is a reconciliation between the statutory and effective federal income tax rates for the years ended December 31:



|                                    |  | 2002   |     |   | 2001                      |     
|----------------------------------- |  | ------ | --- | - | ------------------------- | ----
|                                    |  | Amount |     |   | Percent of Pre-tax Income |     
|Income tax at statutory rate        |  | $      | 577 |   |                           | 35.0
|Increase (decrease) resulting from: |  |        |     |   |                           |     
|Tax-exempt income                   |  |        | (6  | ) |                           | (.4 
|Bank-owned life insurance income    |  |        | (60 | ) |                           | (3.6
|Other                               |  |        | (15 | ) |                           | (.9 
|Total income tax expense            |  | $      | 496 |   |                           | 30.1



F-17



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 9  Commitments and Contingencies



The Bank is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. The financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of
the amount recognized in the consolidated balance sheets.



The
Banks exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Bank uses the
same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. A summary of the Banks commitments is as follows:



|                           |  | 2002 |        | 2001
|-------------------------- |  | ---- | ------ | ----
|Commercial and agriculture |  | $    | 7,973  |     
|Real estate                |  |      | 4,554  |     
|Credit cards               |  |      | 2,879  |     
|                           |  | $    | 15,406 |     



Outstanding commitments
under letters of credit totaled $566 and $519 at December 31, 2002 and 2001, respectively.



Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Banks experience has been that approximately 75% of loan commitments are drawn upon by customers. The Bank evaluates each
customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on managements credit evaluation of the party. Collateral held varies, but may
include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties.



Letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies as specified above, and is
required in instances where the Bank deems necessary.



The Bank
has agreements with commercial banks for lines of credit totaling approximately $5,200, and a credit line with the Federal Home Loan Bank totaling 10% of assets. The Bank has entered into a blanket pledge agreement with the Federal Home Loan Bank to
secure this credit line. These lines were not drawn upon at December 31, 2002 or 2001.



The Company has entered into contracts with certain of its executives and others, which provide for contingent payments subject to future events.



F-18



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 10  Concentration of Credit Risk



The Bank has credit risk exposure, including off-balance-sheet credit risk
exposure, as disclosed in Notes 4 and 9. The ultimate collectibility of a substantial portion of the loan portfolio is susceptible to changes in economic and market conditions in the region. The Bank generally requires collateral on all real estate
loans and typically maintains loan-to-value ratios of no greater than 75%80%. Loans are generally limited, by federal and state banking regulations, to 15% of the Banks shareholders equity, excluding accumulated other comprehensive
income. The Bank, as a matter of practice, generally does not extend credit to any single borrower or group of related borrowers in excess of $1,500.



The contractual amounts of credit related financial instruments such as commitments to extend credit, credit card arrangements, and letters of credit
represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless.



Investments in obligations of states and political subdivisions involve governmental entities within the Banks market
area. Letters of credit were granted primarily to commercial borrowers.



Note 11  Stock Option Plans



Director Plans



The 1990 Director Stock
Option Plan grants a director an option to purchase 12,600 shares of common stock upon initial election to the Board of Directors at an exercise price equal to the fair market value of the common stock at the date of grant. Options are exercisable
on a cumulative basis in annual installments of one-third each on the third, fourth and fifth anniversary of the date of grant. A total of 126,000 shares of the Companys common stock were reserved for option under this plan, of which options
for 113,400 shares at $2.38 per share were granted on June 13, 1990, to expire on June 13, 2005 and options for 3,150 shares at $10.48 per share were granted April 24, 2001, to expire April 24, 2016. Options granted in 1990 were fully vested at
December 31, 2001. Options granted in 2001 are not vested at December 31, 2002. Options for 8,550 and 4,200 shares were exercised in 2002 and 2001, respectively, under this director plan. Options for 9,450 shares remain available under this plan.



The 1999 Director Stock Option Plan grants a director an option
to purchase shares of common stock at an exercise price which must be no less than the greater of the fair market value of the common stock or the net book value of the common stock at the time of grant. A total of 42,000 shares of the
Companys common stock were reserved for option under this plan, of which options for 33,600 shares at $10.48 per share (fair market value) were granted November 21, 2000, expiring on November 21, 2015; none of these options granted are vested
at December 31, 2002.



(continued)



F-19



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 11  Stock Option Plans(continued)



Employee Plans



In 1990 and 1999, the Company adopted plans providing for granting certain key
employees options to purchase common stock. Under the terms of the plans, options are incentive stock options (as defined in the Internal Revenue Code). The option price will be fair market value at the date of grant or a price determined by the
Board of Directors, but not less than fair value. Options are exercisable on a cumulative basis in annual installments of one-third each on the third, fourth and fifth anniversary of the date of grant. Pursuant to these plans, 84,000 shares are
reserved for option as of December 31, 2002, of which 43,125 shares (after forfeitures) have been granted. A total of 40,875 shares remain available for future grant under the 1999 plan at December 31, 2002. No shares remain available for grant
under the 1990 plan. In 2002 and 2001, options for 9,100 shares and 12,600 shares, respectively, were exercised under the employee plans.



The fair value of each option granted in 2001 was estimated on the date of grant, based on the Black-Scholes option pricing model and using the following
weighted-average assumptions:



|Dividend yield                  |  |               | %
|------------------------------- |  | -------------- | -
|Expected life                   |  | 10 to 15 years |  
|Average risk-free interest rate |  | 4.88           | %
|Expected volatility             |  | 44.31          | %



The weighted average
fair value of options granted in 2001 was $6.46. There were no options granted during 2002.



A summary of the status of the Companys stock option plans as of December 31, 2002 and 2001, and changes during the years ending on those dates, is presented below:



|                                 |  | 2002    |   | 2001
|-------------------------------- |  | ------- | - | ----
|                                 |  | Shares  |   |     
|Outstanding at beginning of year |  | 232,550 |   |     
|Granted                          |  |        |   |     
|Exercised                        |  | (17,650 | ) |     
|Forfeited                        |  | (7,075  | ) |     
|Outstanding at end of year       |  | 207,825 |   |     
|Options exercisable at year-end  |  | 129,275 |   |     



(continued)



F-20



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##### Table of Contents



Notes to Consolidated
Financial Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 11  Stock Option Plans(concluded)



The following information summarizes information about stock
options outstanding and exercisable at December 31, 2002:



|Range of Exercise Prices |  | Number Outstanding |  | Weighted Average Remaining Contractual Life (Years) |  | Weighted Average Exercise Price |  | Number Exercisable |  | Weighted Average Exercise Price
|------------------------ |  | ------------------ |  | --------------------------------------------------- |  | ------------------------------- |  | ------------------ |  | -------------------------------
|$2.38$2.97              |  | 75,450             |  | 2.5                                                 |  | $2.38                           |  | 75,450             |  | $2.38                          
|$5.24$6.19              |  | 45,150             |  | 4.6                                                 |  | $5.90                           |  | 44,100             |  | $5.90                          
|$8.33$11.00             |  | 87,225             |  | 9.4                                                 |  | $9.63                           |  | 9,725              |  | $8.37                          



Note 12  Profit
Sharing Plan



The Banks defined contribution profit
sharing plan covers substantially all employees who have completed one year or more of service. Employees are eligible to defer up to 25% of their gross salary, with employer contributions to the Plan made at the discretion of the Board of
Directors. The Banks contributions for the years ended December 31, 2002 and 2001 totaled $42 and $40, respectively.



Note 13  Deferred Compensation Agreements



In 1993 the Bank established a deferred compensation agreement with a director under which the director will defer his director fees. At retirement he
will receive a benefit of $1 per month for 120 months. The accrued liability related to this agreement totaled $47 and $42 at December 31, 2002 and 2001, respectively. Expenses associated with this plan were $5 annually in 2002 and 2001. The Bank
has also purchased a whole-life insurance policy on the director, with values of $36 and $31 at December 31 2002 and 2001, respectively, which may be used to fund benefits under the deferred compensation agreement.



In 2002, the Board of Directors approved a supplemental retirement plan
covering certain management personnel. The post-retirement benefit provided by the plan is designed to supplement a participating officers retirement benefits from social security, in order to provide the officer with a certain percentage of
final average income at retirement age. Expenses associated with this plan were $77 for the year ended December 31, 2002.



Benefits to employees are funded by life insurance policies purchased by the Company, which had cash surrender values of $3,169 and $3,000 at December 31,
2002 and 2001, respectively. Liabilities to employees, which are being accrued over their expected time to retirement, were $77 at December 31, 2002.



Also in 2002, the Company purchased long-term care insurance on certain board members and management personnel. Benefits under this plan vest over five
years from the date of the plan. Expense related to this plan in 2002 was $21.



F-21



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##### Table of Contents



Notes to Financial
Statements



Mountain Bank
Holding Company and Subsidiary

December 31, 2002 and 2001



Note 14  Employee Stock Purchase Plan



Effective July 1, 1995, the Company adopted an employee stock purchase plan
whereby eligible employees can purchase common stock at the lesser of the stocks fair market value at the beginning or the end of the plan year. The aggregate number of shares reserved under this plan is 42,000. At December 31, 2002, 25,323
shares remain available for purchase under this plan. No employee can purchase more than 420 shares of common stock in any plan year; 1,762 and 1,870 shares were purchased at a price of $11.00 and $8.57 per share for the years ended December 31,
2002 and 2001, respectively.



Note 15  Regulatory
Matters



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



Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of Tier 1 and total capital (as defined) to risk-weighted assets (as defined).



As of December 31, 2002, the most recent notification from the Banks
regulator categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as
set forth in the table. There are no conditions or events since that notification that management believes have changed the institutions category.



The Companys and the Banks actual capital amounts and ratios are also presented in the table.



|                                          |  | Actual Amount |        | Ratio |       |   | Capital Adequacy Purposes Amount |   | Ratio |  |      | To be Well Capitalized Under Prompt Corrective Action Provisions Amount |  | Ratio |       
|----------------------------------------- |  | ------------- | ------ | ----- | ----- | - | -------------------------------- | - | ----- |  | ---- | ----------------------------------------------------------------------- |  | ----- | ------
|December 31, 2002                         |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |       
|Tier 1 capital (to average assets):       |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |       
|Consolidated                              |  | $             | 15,171 |       | 10.78 | % |                                  | $ | 5,631 |  | 4.00 | %                                                                       |  |       | N/A   
|Bank                                      |  |               | 15,074 |       | 10.71 |   |                                  |   | 5,631 |  | 4.00 |                                                                         |  | $     | 7,039 
|Tier 1 capital (to risk-weighted assets): |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |       
|Consolidated                              |  |               | 15,171 |       | 13.00 |   |                                  |   | 4,667 |  | 4.00 |                                                                         |  |       | N/A   
|Bank                                      |  |               | 15,074 |       | 12.92 |   |                                  |   | 4,667 |  | 4.00 |                                                                         |  |       | 7,001 
|Total capital:                            |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |       
|Consolidated                              |  |               | 16,023 |       | 13.73 |   |                                  |   | 9,334 |  | 8.00 |                                                                         |  |       | N/A   
|Bank                                      |  |               | 15,926 |       | 13.65 |   |                                  |   | 9,334 |  | 8.00 |                                                                         |  |       | 11,668



(continued)



F-22



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##### Table of Contents



Notes to Financial
Statements



Mountain Bank Holding Company and Subsidiary

December 31, 2002 and 2001



Note 15  Regulatory Matters(concluded)



|                                          |  | Actual Amount |        | Ratio |       |   | Capital Adequacy Purposes Amount |   | Ratio |  |      | To be Well Capitalized Under Prompt Corrective Action Provisions Amount |  | Ratio |      
|----------------------------------------- |  | ------------- | ------ | ----- | ----- | - | -------------------------------- | - | ----- |  | ---- | ----------------------------------------------------------------------- |  | ----- | -----
|December 31, 2001                         |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |      
|Tier 1 capital (to average assets):       |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |      
|Consolidated                              |  | $             | 13,206 |       | 10.72 | % |                                  | $ | 4,927 |  | 4.00 | %                                                                       |  |       | N/A  
|Bank                                      |  |               | 13,111 |       | 10.64 |   |                                  |   | 4,927 |  | 4.00 |                                                                         |  | $     | 6,159
|Tier 1 capital (to risk-weighted assets): |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |      
|Consolidated                              |  |               | 13,206 |       | 13.39 |   |                                  |   | 3,946 |  | 4.00 |                                                                         |  |       | N/A  
|Bank                                      |  |               | 13,111 |       | 13.29 |   |                                  |   | 3,946 |  | 4.00 |                                                                         |  |       | 5,915
|Total capital:                            |  |               |        |       |       |   |                                  |   |       |  |      |                                                                         |  |       |      
|Consolidated                              |  |               | 13,959 |       | 14.15 |   |                                  |   | 7,892 |  | 8.00 |                                                                         |  |       | N/A  
|Bank                                      |  |               | 13,864 |       | 14.05 |   |                                  |   | 7,892 |  | 8.00 |                                                                         |  |       | 9,864



Management believes, as
of December 31, 2002, that the Company and the Bank meet all capital requirements to which they are subject.



Restrictions on Retained Earnings



National banks can initiate dividend payments in a given year, without prior regulatory approval, equal to net profits, as defined, for that year plus retained net profits for the preceding two years. The Bank can distribute
as dividends to the parent company approximately $3,234 as of December 31, 2002 without regulatory approval.



Note 16  Condensed Financial Information  Parent Company Only



Condensed Balance Sheets  December 31



|                       |  | 2002 |        | 2001
|---------------------- |  | ---- | ------ | ----
|Assets                 |  |      |        |     
|Cash                   |  | $    | 97     |     
|Investment in the Bank |  |      | 15,444 |     
|Other assets           |  |      |       |     
|Total assets           |  | $    | 15,541 |     
|Shareholders Equity   |  | $    | 15,541 |     



(continued)





F-23



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##### Table of Contents



Notes to Financial
Statements



Mountain Bank
Holding Company and Subsidiary

December 31, 2002 and 2001



Note 16  Condensed Financial Information  Parent Company Only(concluded)



Condensed Statements of Income
 Years Ended December 31



|                                                                              |  | 2002 |        |   | 2001 |  
|----------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | -
|Operating Expenses                                                            |  | $    | (184   | ) |      | $
|                                                                             
|Loss before income taxes and equity in undistributed income of the
Bank       |  |      | (184   | ) |      |  
|                                                                             
|Income Tax Benefit                                                            |  |      | 63     |   |      |  
|                                                                             
|Loss before equity in undistributed income of the Bank                        |  |      | (121   | ) |      |  
|                                                                             
|Equity in Undistributed Income of the Bank                                    |  |      | 1,273  |   |      |  
|                                                                             
|Net income                                                                    |  | $    | 1,152  |   |      | $
|                                                                             
|Condensed Statements of Cash FlowsYears Ended December 31                    |  |      |        |   |      |  
|                                                                             
|Cash Flows from Operating Activities                                          |  |      |        |   |      |  
|Net income                                                                    |  | $    | 1,152  |   |      | $
|Adjustments to reconcile net income to net cash used in operating
activities: |  |      |        |   |      |  
|Equity in undistributed income of subsidiary                                  |  |      | (1,273 | ) |      |  
|Decrease in other assets                                                      |  |      | 12     |   |      |  
|Other                                                                         |  |      |       |   |      |  
|Net cash used in operating activities                                         |  |      | (109   | ) |      |  
|                                                                             
|Cash Flows from Investing Activities                                          |  |      |        |   |      |  
|Investment in subsidiary                                                      |  |      | (661   | ) |      |  
|                                                                             
|Cash Flows from Financing Activities                                          |  |      |        |   |      |  
|Proceeds from issuance of common stock                                        |  |      | 784    |   |      |  
|Payment for fractional shares in stock dividend                               |  |      |       |   |      |  
|Net cash provided by financing activities                                     |  |      | 784    |   |      |  
|                                                                             
|Net change in cash                                                            |  |      | 14     |   |      |  
|                                                                             
|Cash                                                                          |  |      |        |   |      |  
|Beginning of year                                                             |  |      | 83     |   |      |  
|                                                                             
|End of year                                                                   |  | $    | 97     |   |      | $



F-24



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##### Table of Contents



Notes to Financial
Statements



Mountain Bank
Holding Company and Subsidiary

December 31, 2002 and 2001



Note 17  Other Expenses



Other expenses include the following amounts which are in excess of 1% of the
total of interest income and non-interest income for the years ended December 31:



|                             |  | 2002 |     | 2001
|---------------------------- |  | ---- | --- | ----
|Professional fees            |  | $    | 118 |     
|Data processing              |  |      | 365 |     
|Office supplies and expenses |  |      | 102 |     
|State taxes                  |  |      | 110 |     



Note 18 
Earnings Per Share Disclosures



Following is information
regarding the calculation of basic and diluted earnings per share for the years indicated:



|                               |  | Net Income (Numerator) |       | Shares (Denominator) |           | Per Share Amount |  
|------------------------------ |  | ---------------------- | ----- | -------------------- | --------- | ---------------- | -
|Year Ended December 31, 2002   |  |                        |       |                      |           |                  |  
|Basic earnings per share:      |  |                        |       |                      |           |                  |  
|Net income                     |  | $                      | 1,152 |                      | 2,111,819 |                  | $
|Effect of dilutive securities: |  |                        |       |                      |           |                  |  
|Options                        |  |                        |      |                      | 83,239    |                  |  
|Diluted earnings per share:    |  |                        |       |                      |           |                  |  
|Net income                     |  | $                      | 1,152 |                      | 2,195,058 |                  | $
|                              
|Year Ended December 31, 2001   |  |                        |       |                      |           |                  |  
|Basic earnings per share:      |  |                        |       |                      |           |                  |  
|Net income                     |  | $                      | 940   |                      | 2,061,662 |                  | $
|Effect of dilutive securities: |  |                        |       |                      |           |                  |  
|Options                        |  |                        |      |                      | 75,818    |                  |  
|Diluted earnings per share:    |  |                        |       |                      |           |                  |  
|Net income                     |  | $                      | 940   |                      | 2,137,480 |                  | $



The number of shares
shown for options is the number of incremental shares that would result from exercise of options and use of the proceeds to repurchase shares at the average market price during the year.





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##### Table of Contents



Notes to Financial
Statements



Mountain Bank
Holding Company and Subsidiary

December 31, 2002 and 2001



Note 20  Comprehensive Income



Net unrealized gains and losses include, net of tax, $100 of unrealized gains
arising during 2002 and $267 of unrealized gains arising during 2001, less reclassification adjustments of $29 and $31 for gains included in net income in 2002 and 2001, respectively, as follows:



|                                                              |  | Before- Tax Amount |     |   | Tax Benefit (Expense) |   |      | Net-of-Tax Amount | 
|------------------------------------------------------------- |  | ------------------ | --- | - | --------------------- | - | ---- | ----------------- | 
|2002                                                          |  |                    |     |   |                       |   |      |                   | 
|Unrealized holding gains arising during the year              |  | $                  | 442 |   |                       | $ | (150 | )                 | 
|Reclassification adjustments for gains realized in net income |  |                    | (29 | ) |                       |   | 10   |                   | 
|                                                             
|Net unrealized gains                                          |  | $                  | 413 |   |                       | $ | (140 | )                 | 
|                                                             
|2001                                                          |  |                    |     |   |                       |   |      |                   | 
|Unrealized holding gains arising during the year              |  | $                  | 151 |   |                       | $ | (51  | )                 | 
|Reclassification adjustments for gains realized in net income |  |                    | (31 | ) |                       |   | 10   |                   | 
|                                                             
|Net unrealized gains                                          |  | $                  | 120 |   |                       | $ | (41  | )                 | 



Note 21  Fair
Values of Financial Instruments



The estimated fair values of
the Banks financial instruments at December 31 were as follows:



|                                                                |  | 2002Carrying Amount |         | Fair Value |   | 2001Carrying Amount |  | Fair Value
|--------------------------------------------------------------- |  | ------------------- | ------- | ---------- | - | ------------------- |  | ----------
|Financial Assets                                                |  |                     |         |            |   |                     |  |           
|Cash and due from banks, and interest bearing deposits in banks |  | $                   | 19,408  |            | $ | 19,408              |  | $         
|Securities available for sale                                   |  |                     | 29,502  |            |   | 29,502              |  |           
|Federal Home Loan Bank and Federal Reserve Bank stocks          |  |                     | 731     |            |   | 731                 |  |           
|Loans held for sale                                             |  |                     | 2,871   |            |   | 2,871               |  |           
|Loans                                                           |  |                     | 81,409  |            |   | 81,440              |  |           
|Accrued interest receivable                                     |  |                     | 601     |            |   | 601                 |  |           
|                                                               
|Financial Liabilities                                           |  |                     |         |            |   |                     |  |           
|Deposits                                                        |  | $                   | 127,011 |            | $ | 127,259             |  | $         
|Note payable                                                    |  |                     | 36      |            |   | 36                  |  |           
|Accrued interest payable                                        |  |                     | 205     |            |   | 205                 |  |           



(continued)



F-26



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##### Table of Contents



Notes to Financial
Statements



Mountain Bank
Holding Company and Subsidiary

December 31, 2002 and 2001



Note 21  Fair Values of Financial Instruments(concluded)



The Bank assumes interest rate
risk (the risk that general interest rate levels will change) as a result of its normal operations.

As a result, the fair values of the
Banks financial instruments will change when interest rate levels change and that change may either be favorable or unfavorable to the Bank. Management attempts to match maturities of assets and liabilities to the extent believed necessary to
minimize interest rate risk. However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more
likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities, and attempts to minimize interest rate risk by
adjusting terms of new loans, and deposits and by investing in securities with terms that mitigate the Banks overall interest rate risk.



Note 22  Quarterly Data (Unaudited)



|                             |  | First Quarter |       | Second Quarter |   | Third Quarter |  | Fourth Quarter
|---------------------------- |  | ------------- | ----- | -------------- | - | ------------- |  | --------------
|Year Ended December 31, 2002 |  |               |       |                |   |               |  |               
|Interest income              |  | $             | 1,991 |                | $ | 1,972         |  | $             
|Interest expense             |  |               | 690   |                |   | 650           |  |               
|Net interest income          |  |               | 1,301 |                |   | 1,322         |  |               
|Provision for credit losses  |  |               | 41    |                |   | 47            |  |               
|Non-interest income          |  |               | 321   |                |   | 303           |  |               
|Non-interest expenses        |  |               | 1,170 |                |   | 1,188         |  |               
|Income before income taxes   |  |               | 411   |                |   | 390           |  |               
|Income taxes                 |  |               | 137   |                |   | 128           |  |               
|Net income                   |  | $             | 274   |                | $ | 262           |  | $             
|Earnings per common share:   |  |               |       |                |   |               |  |               
|Basic                        |  | $             | .13   |                | $ | .13           |  | $             
|Diluted                      |  |               | .13   |                |   | .12           |  |               



(continued)



F-27



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##### Table of Contents



Notes to Financial
Statements



Mountain Bank
Holding Company and Subsidiary

December 31, 2002 and 2001



Note 22  Quarterly Data (Unaudited)(concluded)



|                             |  | First Quarter |       | Second Quarter |   | Third Quarter |  | Fourth Quarter
|---------------------------- |  | ------------- | ----- | -------------- | - | ------------- |  | --------------
|Year Ended December 31, 2001 |  |               |       |                |   |               |  |               
|Interest income              |  | $             | 2,022 |                | $ | 2,058         |  | $             
|Interest expense             |  |               | 918   |                |   | 903           |  |               
|Net interest income          |  |               | 1,104 |                |   | 1,155         |  |               
|Provision for credit losses  |  |               | 9     |                |   | 27            |  |               
|Non-interest income          |  |               | 269   |                |   | 287           |  |               
|Non-interest expenses        |  |               | 1,113 |                |   | 1,055         |  |               
|Income before income taxes   |  |               | 251   |                |   | 360           |  |               
|Income taxes                 |  |               | 85    |                |   | 120           |  |               
|Net income                   |  | $             | 166   |                | $ | 240           |  | $             
|Earnings per common share:   |  |               |       |                |   |               |  |               
|Basic                        |  | $             | .09   |                | $ | .12           |  | $             
|Diluted                      |  |               | .08   |                |   | .11           |  |               



F-28



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##### Table of Contents



Signatures



In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this Amendment No. 1 to this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 17, 2003.



Mountain Bank Holding Company



|   
|---
|By:
|   



S-1



---

##### Table of Contents



CERTIFICATION



I, Roy T. Brooks,
President and CEO, certify that:

|1. |  | I have reviewed this annual report on Form 10-KSB of Mountain Bank Holding Company;
|-- |  | -----------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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



Date:  February 21, 2003



/s/ Roy T. BrooksRoy T. Brooks, President & CEO




C-1



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##### Table of Contents



CERTIFICATION



I, Sheila M. Brumley, SVP
& CFO, certify that:

|1. |  | I have reviewed this annual report on Form 10-KSB of Mountain Bank Holding Company;
|-- |  | -----------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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



Date:  February 21, 2003



/s/ Sheila M. BrumleySheila M. Brumley, SVP & Chief Financial
Officer




C-2