SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1999

                                       Or

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

                  For the transition period from _____ to _____

                        Commission file number 001-14417

                              BANKFIRST CORPORATION
             (Exact name of registrant as specified in its charter)

               Tennessee                                  58-1790903
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                   Identification No.)

           625 Market Street
         Knoxville, Tennessee                               37902
 (address of principal executive offices)                 (Zip Code)

         Registrant's telephone number, including area code 423.595.1100

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                                Yes X       No __

The number of shares  outstanding of each of the registrant's  classes of common
stock as of July 31, 1999:

       Title of Class                                  Shares Outstanding
Common Stock, $2.50 par value                              11,375,600


<PAGE>


                              BANKFIRST CORPORATION
                                      INDEX

PART I - FINANCIAL INFORMATION

         Item 1. Financial Statements .....................................3

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

         Item 3. Quantitative and Qualitative Disclosures about
         Market Risk .....................................................17

PART II - OTHER INFORMATION

         Item 4. Submission of Matters to a Vote of Security Holders......18

         Item 6. Exhibits and Reports on Form 8-K ........................19

         SIGNATURES.......................................................19


Note: The  accompanying  information has not been audited by independent  public
accountants; however, in the opinion of management such information reflects all
adjustments  necessary  for a fair  presentation  of the results for the interim
period. All such adjustments are of a normal and recurring nature.

The  accompanying  financial  statements  are presented in  accordance  with the
requirements of Form 10-Q and consequently do not include all of the disclosures
normally required by generally accepted accounting principles.

                                       2
<PAGE>

Part I - Financial Information

Item 1. Financial Statements
                              BANKFIRST CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------

                                                            June 30,   Dec. 31,
                                                              1999       1998
                                                            --------   --------
                                                          (unaudited)
ASSETS
  Cash and due from banks                                   $ 31,024   $ 36,136
  Federal Funds Sold                                           1,300      8,850
  Securities available for sale                              134,145    127,862
  Mortgage loans held for sale                                13,363     25,642
  Loans, net                                                 544,843    501,950
  Premises and equipment, net                                 25,694     24,927
  Mortgage servicing rights                                    8,304      7,484
  Federal Home Loan Bank Stock, at cost                        3,301      3,189
  Intangible assets                                            1,923      2,002
  Accrued interest receivable and other asset                 10,922     10,259
                                                            --------   --------

     Total assets                                           $774,819   $748,301
                                                            ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Noninterest-bearing deposits                              $113,921   $117,823
  Interest-bearing deposits                                  503,186    500,143
                                                            --------   --------
     Total deposits                                          617,107    617,966

  Securities sold under agreements to repurchase              21,317     22,208
  Federal funds purchased and other borrowings                15,100      4,166
  Advances from the Federal Home Loan Bank                    29,223     11,884
  Accrued interest payable and other liabilities               7,804      9,236
                                                            --------   --------
     Total liabilities                                       690,551    665,460

Stockholders' equity
  Common stock:  $2.50 par value, 30,000,000 shares
    authorized, 11,375,600 shares
    outstanding                                               28,439     28,439
  Noncumulative convertible preferred stock:  $5 par
    value, 1,000,000 shares authorized, 181,050
    shares outstanding                                           905        905
  Additional paid-in capital                                  34,093     34,093
  Retained earnings                                           21,366     17,160
  Unrealized gain on securities available for sale              (535)     2,244
                                                            --------   --------
     Total stockholders' equity                               84,268     82,841
                                                            --------   --------

     Total liabilities and stockholders' equity             $774,819   $748,301
                                                            ========   ========


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

   See accompanying notes to the condensed consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------------------------

                                    Three months ended June 30,   Six months ended June 30,
                                            (Unaudited)                 (Unaudited)
                                          1999       1998              1999       1998
                                        --------   --------          --------    --------
<S>                                     <C>        <C>               <C>         <C>
Interest income
    Interest and fees on loans          $ 12,498   $ 12,004          $ 24,394    $ 23,579
    Taxable securities                     1,513      1,425             2,892       2,854
    Nontaxable securities                    410        463               823         917
    Other                                    140        211               359         303
                                        --------   --------          --------    --------
                                          14,561     14,103            28,468      27,653
Interest expense
    Deposits                               5,378      5,765            10,691      11,104
    Short-term borrowings                    444        481             1,009         936
    Long-term borrowings                     386        208               463         416
                                        --------   --------          --------    --------
                                           6,208      6,454            12,163      12,456
                                        --------   --------          --------    --------
Net interest income                        8,353      7,649            16,305      15,197

Provision for credit losses                  461        540               880       1,064
                                        --------   --------          --------    --------
Net interest income after provision
for credit losses                          7,892      7,109            15,425      14,133

Noninterest income
    Service charges and fees               1,184      1,022             2,286       1,979
    Net securities gains(losses)             (26)         1                10          11
    Net gain (loss) on loan sales          1,019        591             1,909         980
    Loan servicing income, net of
      amortization                            33        247               153         479
    Trust department income                  261        162               525         346
    Other                                    474        260               662         501
                                        --------   --------          --------    --------
                                           2,945      2,283             5,545       4,296
Noninterest expenses
    Salaries and employee benefits         4,092      3,694             8,077       7,153
    Occupancy expense                        537        678             1,052       1,357
    Equipment expense                        707        542             1,366       1,038
    Office expense                           479        384               935         693
    Data processing fee                      441        336               834         620
    Advertising                              210         79               342         168
    Other                                  1,017      1,337             1,894       2,474
                                        --------   --------          --------    --------
                                           7,483      7,050            14,500      13,503
                                        --------   --------          --------    --------
Income before income taxes                 3,354      2,342             6,470       4,926
Provision for income taxes                 1,152        866             2,199       1,746
                                        --------   --------          --------    --------
Net Income                              $  2,202   $  1,476             4,271       3,180
                                        ========   ========          ========    ========

Earnings per share:
    Basic                               $   0.19   $   0.14           $   0.37   $   0.31
    Diluted                             $   0.17   $   0.13           $   0.34   $   0.29

--------------------------------------------------------------------------------------------------
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.


                                       4
<PAGE>

<TABLE>
<CAPTION>
                              BANKFIRST CORPORATION
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                         Six Months ended June 30, 1999
                                   (Unaudited)
         (Dollar amounts in thousands, except share and per share data)

-----------------------------------------------------------------------------------------
                                                                                   Net
                                                                   Unrealized     Total
                                               Additional             Gains       Stock-
                              Common  Preferred Paid-in  Retained    (Losses)    holders'
                               Stock    Stock   Capital  Earnings  on Securities  Equity
                             -------- --------- -------- --------- ------------   -------
<S>                           <C>      <C>       <C>       <C>         <C>        <C>
Balance, January 1, 1998      $24,989  $ 1,093   $23,777   $10,612    $  961      $61,432

Sale of common stock, 118
 shares                            --       --         9        --        --            9

Conversion of 2,703 shares of
 Preferred stock into 1,669
 Shares of common stock             4      (14)       10        --        --            0

Stock options exercised,
 857 shares                         2       --        26        --        --           28

Cash dividend on preferred stock   --       --        --       (78)       --          (78)

Cash dividend on common stock      --       --        --      (114)       --         (114)

Comprehensive income:
  Net income                       --       --        --     3,180        --        3,180

  Change in unrealized gains
   (losses), net of
   reclassification                --       --        --        --       220          220
                                                                                  -------
     Total comprehensive income                                                     3,400

                              -------  -------   -------   -------    ---------   -------
Balance, June 30, 1998        $24,995   $1,079   $23,822   $13,600    $1,181      $64,677
                              =======  =======   =======   =======    =========   =======


                                                                       Net
                                                                   Unrealized     Total
                                               Additional             Gains       Stock-
                              Common  Preferred Paid-in  Retained    (Losses)    holders'
                               Stock    Stock   Capital  Earnings  on Securities  Equity
                              -------  ------   -------  --------   ----------    -------
<S>                           <C>      <C>      <C>       <C>          <C>        <C>
Balance, January 1, 1999      $28,439  $  905   $34,093   $17,160      $2,244     $82,841

Cash dividend on preferred stock   --      --        --       (65)         --         (65)

Comprehensive income:
  Net income                       --      --        --     4,271          --       4,271

  Change in unrealized gains
   (losses), net of
   reclassification                --      --        --        --      (2,779)     (2,779)
                                                                                  -------
     Total comprehensive income                                                     1,492

                             --------  ------   -------  --------    --------     -------
Balance, June 30, 1999        $28,439   $ 905   $34,093   $21,366      $ (535)    $84,268
                             ========  ======   =======  ========    ========     =======

------------------------------------------------------------------------------------------
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.


                                             5
<PAGE>

                              BANKFIRST CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------
                                                       Six months ended June 30,
                                                             (Unaudited)
                                                            1999        1998
                                                         --------    --------
Cash flows from operating activities
   Net income                                            $  4,271    $  3,180
   Adjustments to reconcile net income to net cash from
     operating activities
     Provision for credit losses                              880       1,067
     Depreciation                                             909       1,042
     Amortization of mortgage servicing rights                870         435
     Amortization and accretion, net                           56          16
     Net (gains) losses on securities sales                   (10)        (11)
     Net (gains) losses on sales of mortgage loans         (1,909)       (980)
     Proceeds from sales of mortgage loans held for sale  111,004      56,767
     Purchases of mortgage loans held for sale            (19,286)    (20,482)
     Originations of mortgage loans held for sale         (79,439)    (69,778)
     Changes in assets and liabilities
       Accrued interest receivable and other assets          (580)     (3,018)
       Accrued interest payable and other liabilities      (1,432)        (59)
                                                         --------    --------
         Net cash flows from operating activities          15,334     (31,821)

Cash flows from investing activities
   Net cash paid for mortgage company                          --      (7,449)
   Purchase of securities                                 (39,150)    (12,098)
   Proceeds from maturities of securities                  17,338      13,555
   Proceeds from sale of securities                        12,760          14
   Net increase in loans                                  (43,394)      2,110
   Purchase of FHLB stock                                    (112)        (86)
   Premises and equipment expenditures, net                (1,896)     (1,868)
                                                         --------    --------
     Net cash from investing activities                   (54,454)     (5,822)

Cash flows from financing activities
   Net change in deposits                                    (859)     38,965
   Net change in securities sold
     under agreements to repurchase                          (891)     (6,252)
   Net change in federal funds purchased                   10,000       7,851
   Increase in other borrowed funds                           934         650
   Repayment of other borrowed funds                           --      (6,505)
   Advances from the FHLB                                  27,339      35,500
   Repayments to the FHLB                                 (10,000)    (20,000)
   Repayment of notes payable                                  --      (5,798)
   Cash dividends paid on preferred stock                     (65)        (78)
   Cash dividends paid on common stock                         --        (114)
   Sales of stock and stock options exercised                  --          37
                                                         --------    --------
     Net cash from financing activities                    26,458      44,256

Net change in cash and cash equivalents                   (12,662)      6,613

Cash and cash equivalents, beginning of period             44,986      31,290
                                                         --------    --------

Cash and cash equivalents, end of period                 $ 32,324    $ 37,903
                                                         ========    ========

Supplemental disclosures:
   Interest paid                                         $ 11,777    $ 12,232
   Income taxes paid                                        1,665       1,692

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

   See accompanying notes to the condensed consolidated financial statements.


                                       6
<PAGE>

                              BANKFIRST CORPORATION
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------

Principles of Consolidation:  The consolidated  financial statements include the
accounts of BankFirst Corporation and its wholly-owned subsidiaries,  BankFirst,
The First National Bank and Trust Company (together referred to as the "Banks"),
and BankFirst Trust Company,  and BankFirst's  wholly-owned  subsidiary,  Curtis
Mortgage  Company,  collectively  referred to as the "Company".  All significant
inter-company balances and transactions have been eliminated in consolidation.

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information,   and  accordingly  they  do  not  include  all  of  the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation  have been included.  Operating results for the three and six month
periods ended June 30, 1999 are not  necessarily  indicative of the results that
may be expected for the year ended December 31, 1999.

Borrowings:  Repurchase  agreements  and Federal  Funds  purchased are generally
overnight  borrowings.  Federal  Home Loan Bank  ("FHLB")  advances  consist  of
variable rate long-term advances, which exceed one year.

Reclassifications:  Certain  items in the 1998  financial  statements  have been
reclassified to conform with the 1999 presentation.


                                       7
<PAGE>

                              BANKFIRST CORPORATION
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar
             amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------

Earnings Per Share: Basic earnings per share is based on weighted average common
shares  outstanding.  Diluted earnings per share further assumes issuance of any
dilutive  potential  common  shares.  Earnings  per share are  restated  for all
subsequent stock dividends and splits.

A  reconciliation  of the numerators and denominators of the earnings per common
share and earnings per common share assuming dilution computations are presented
below:

                                  Three Months Ended      Six Months Ended
                                       June 30,               June 30,
                                      (Unaudited)            (Unaudited)
                                   1999         1998       1999         1998
                                  -------     -------     -------     -------
Earnings Per Share

Net income                       $  2,202     $ 1,476     $ 4,271     $ 3,180
Less:  Dividends declared
on preferred stock                    (33)        (39)        (65)        (78)
                                 --------     -------     -------     -------
Net income available to common
stockholders                     $  2,169     $ 1,437       4,206     $ 3,102
                                 ========     =======     =======     =======

Weighted average common shares
outstanding                    11,375,600   9,997,875  11,375,600   9,998,045
                               ==========   =========  ==========   =========

Earnings per share              $    0.19    $   0.14        0.37    $   0.31
                                =========    ========   =========    ========


                                       8
<PAGE>

                              BANKFIRST CORPORATION
                   NOTES TO CONDENSED  CONSOLIDATED FINANCIAL STATEMENTS (Dollar
         amounts in thousands, except share and per share data)
------------------------------------------------------------------------------


Earnings Per Share (Continued):


                                   Three Months Ended     Six Months Ended
                                        June 30,               June 30,
                                       (Unaudited)           (Unaudited)
                                    1999         1998      1999         1998
                                   -------     -------    -------     -------

Earnings Per Share Assuming
Dilution

Net income available to common
stockholders                       $ 2,169     $ 1,437   $  4,206     $ 3,102

Add back dividends upon assumed
Conversion of preferred stock           33          39         65          78
                                    ------      ------     ------      ------
Net income available to common
stockholders assuming conversion   $ 2,202     $ 1,476    $ 4,271     $ 3,180
                                   =======     =======    =======     =======
Weighted average common shares
outstanding                     11,375,600   9,997,875 11,375,600   9,998,045


Add:  Dilutive effects of assumed
Conversions and exercises:
   Convertible preferred stock     558,992     666,298    558,992     666,298
   Stock options                   372,422     380,898    389,380     380,898
                                   -------     -------    -------     -------

Weighted average common and
dilutive potential common
shares outstanding              12,307,014  11,045,071 12,323,972  11,045,241
                                ----------  ---------- ----------  ----------

Earnings per share
assuming dilution                $    0.17    $   0.13    $  0.34    $   0.29
                                 =========    ========  =========    ========


                                       9
<PAGE>

Part I - Financial Information
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

The  following   discussion   and  analysis  is  presented  to  facilitate   the
understanding of the consolidated  financial  position and results of operations
of BankFirst  Corporation.  The  consolidated  financial  information  discussed
herein primarily reflects the activities of the Company's wholly owned community
bank subsidiaries, BankFirst ("BankFirst") and The First National Bank and Trust
Company  ("FNB").  The discussion  identifies  trends and material  changes that
occurred during the reported  periods and should be read in conjunction with the
consolidated  financial  statements and accompanying  notes appearing  elsewhere
herein.  The periods  included within this document are the three months and six
months ending June 30, 1999 and 1998.

This discussion and analysis  includes various  forward-looking  statements with
respect to credit quality  (including  delinquency  trends and the allowance for
credit losses),  corporate  objectives and other financial and business matters.
When used in this  discussion the words  "anticipates,"  "projects,"  "expects,"
"believes,"   "plans",   and  similar   expressions  are  intended  to  identify
forward-looking  statements.  The Company  cautions  that these  forward-looking
statements are  necessarily  speculative and speak only as of the date made, and
are subject to numerous assumptions,  risks and uncertainties,  all of which may
change  over  time.   Actual   results   could  differ   materially   from  such
forward-looking statements.

In addition to factors disclosed by the Company elsewhere in this discussion and
analysis,  the following  factors,  among others,  could cause actual results to
differ  materially from such  forward-looking  statements:  pricing pressures on
loan  and  deposit  products;   competition;   changes  in  economic  conditions
nationally,  regionally and in the Company's  markets;  the extent and timing of
actions of the  Federal  Reserve  Board;  changes  in levels of market  interest
rates; clients' acceptance of the Company's products and services;  credit risks
of lending  activities  and  competitive  factors;  and the extent and timing of
legislative and regulatory actions and reforms.

Overview

BankFirst  Corporation,  a  Tennessee  corporation,  is a bank  holding  company
headquartered in Knoxville,  Tennessee that focuses on meeting the banking needs
of East  Tennessee  businesses and residents  through a  relationship  oriented,
community  bank business  strategy.  The Company  conducts its banking  business
through  BankFirst,  a Tennessee  banking  corporation,  which has 24 offices in
Knox, Sevier, Blount, Loudon and Jefferson Counties, and through FNB, a national
banking  association  acquired  on July 2, 1998,  with  eight  offices in McMinn
County. The Company's operations  principally involve commercial and residential
real estate lending,  commercial  business lending,  consumer lending,  mortgage
servicing,  construction  lending and other financial services,  including trust
operations, credit cards services and brokerage services.


                                       10
<PAGE>

Financial Condition

Total assets grew from $748.3 million at year-end 1998 to $774.8 million at June
30, 1999, a $26.5 million  increase.  The primary  changes in assets  included a
$42.9  million  increase  in net  loans,  offset  partially  by a $12.3  million
reduction in mortgage  loans held for sale. Of this net loan growth,  commercial
loans grew by $26.5 million and installment loans grew by $4.2 million.  For the
six months ended June 30, 1999,  the mortgage  banking  subsidiary  of BankFirst
purchased and originated $98.7 million of loans and sold $110.1 million of loans
purchased and originated.

Total liabilities grew from $665.5 million at year-end 1998 to $690.6 million at
June 30, 1999,  an increase of $25.1  million.  Deposits  declined $859 thousand
during this period,  with  approximately  $3.0 million in deposits shifting from
noninterest-bearing  to  interest-bearing.  To accommodate the Banks'  increased
loan demand, Federal Home Loan Bank advances were increased by $17.3 million and
federal funds purchased were increased by $10.0 million, which accounted for the
increase in total liabilities.

From  year-end  1998 to June 30,  1999,  equity  grew by a net of $1.4  million,
consisting of net earnings of $4.3 million,  a preferred  stock cash dividend of
$65 thousand,  and less a $2.8 million  reduction in the difference  between the
fair value and amortized cost of securities held for sale.

The leverage  capital  ratio  decreased  from 10.7% at year-end 1998 to 9.81% at
June 30, 1999 due to the increase in assets. This ratio maintains the Company in
the "well capitalized" category.

Management  expects growth to continue  through  expansion of retail  locations,
expansion of products and services,  including mortgage servicing  opportunities
by Curtis  Mortgage and trust services  through  BankFirst  Trust  Company,  and
possible future mergers or acquisitions. At the present time, the Company has no
present  agreements,  arrangements  or  commitments  with  respect  to any other
acquisition.

Results of Operations

Net interest  income  increased $1.1 million,  or 7.3%, to $16.3 million for the
six months ended June 30, 1999, from $15.2 million for the six months ended June
30, 1998.  The increase in net interest  income was due primarily to an increase
in total average earning assets and a  proportionate  increase of earning assets
invested in loans, the Company's highest yielding assets.

The Company's net interest  spread and net interest margin were 3.94% and 4.85%,
respectively,  for the six months ended June 30, 1999,  as compared to 4.04% and
4.99% for the comparable  1998 period.  The decrease in the net interest  spread
and the net interest margin were primarily attributable to increased competitive
pressures on loan rates,  coupled with higher  borrowing  costs  associated with
longer-term  liabilities  such as fed  funds  borrowed  and  Federal  Home  Loan
Advances.


                                       11
<PAGE>

The  provision  for credit losses was $880,000 for the six months ended June 30,
1999,  compared to $1.1 million for the same period in 1998. The decrease in the
provision was  attributable to generally stable  delinquency  percentages on the
loan portfolio.  The Company experienced net charge-offs of $379,000 for the six
months ended June 30, 1999  resulting in a ratio of net  charge-offs  to average
loans of less than 0.1%.

Noninterest  income  increased  $1.2  million to $5.5 million for the six months
ended June 30, 1999 from $4.3  million for the six months  ended June 30,  1998,
primarily  attributable to mortgage banking  operations and increases in deposit
service charges/fees.  Trust fee income increased 52% from $346 thousand for the
first six months of 1998 to $525 thousand for the comparable 1999 period.

Mortgage banking  revenues include  origination  fees,  points,  gain or loss on
sales of loans,  loan  servicing  income,  and  recognition of the value of loan
servicing.   The   value  of   servicing   rights   on   mortgage   loans   sold
"servicing-retained"  is recognized  as an asset,  with a  corresponding  amount
recorded as income;  the asset is amortized  over the expected  life of the loan
since the amount of servicing  income earned on each loan declines in proportion
to the loan balance.  Net gains and losses on loans, coupled with loan servicing
income  and  related   amortization,   were  $1.9  million  and  $153   thousand
respectively  for the six months ended June 30, 1999  compared to $980  thousand
and $479 thousand, respectively, for the same period in 1998.

Noninterest  expense increased $1.0 million, to $14.5 million for the six months
ended June 30, 1999,  from $13.5  million for the  comparable  1998 period.  The
primary  component  of  noninterest  expense is  salaries  and  benefits,  which
increased $924 thousand, or 12.9%, to $8.1 million for the six months ended June
30, 1999,  from $7.2 million for the same period in 1998.  Salaries and benefits
as well as other  noninterest  expense  categories  increased  primarily  due to
increases in personnel.  "Other noninterest  expense" includes $893 thousand for
the six months ended June 30, 1998 that is attributable  to expenses  associated
with  the  merger  of  FNB  (which  was  finalized  in  July,  1998)  and  other
noncapitalized  expenses in  preparation  for the August,  1998  initial  public
offering of the Company's common stock.

Net income increased $1.1 million,  or 34.3%, to $4.3 million for the six months
ended June 30, 1999 from $3.2 million for the six months ended June 30, 1998.

Provision for Credit Losses and Asset Quality

The provision for credit losses represents  charges made to earnings to maintain
an adequate  allowance for loan losses. The allowance is maintained at an amount
believed  to be  sufficient  to  absorb  losses in the loan  portfolio.  Factors
considered in establishing an appropriate allowance include a careful assessment
of the financial  condition of the borrower;  a realistic  determination  of the
value and adequacy of underlying collateral;  the condition of the local economy
and the  condition of the specific  industry of the  borrower;  a  comprehensive
analysis of the levels and trends of loan categories; and a review of delinquent
and classified  loans. The Company applies a systematic  process for determining
the adequacy of the allowance for loan losses  including an internal loan review
function and a monthly  analysis of the adequacy of the  allowance.  The monthly
analysis includes determination of specific potential loss factors on individual
classified  loans,  historical  potential  loss factors  derived from actual net
charge-off  experience  and trends in  nonperforming  loans,  and potential loss
factors  for other  loan  portfolio  risks  such as loan  concentrations,  local
economy, and the nature and volume of loans.


                                       12
<PAGE>

The recorded  values of loans  actually  removed from the  consolidated  balance
sheets are referred to as  charge-offs  and,  after  netting out  recoveries  on
previously  charged-off assets, become net charge-offs.  The Company's policy is
to  charge  off  loans,  when,  in  management's  opinion,  the  loan is  deemed
uncollectible, although concerted efforts are made to maximize recovery.

Liquidity and Capital Adequacy

Liquidity management is both a daily and long-term responsibility of management.
The Company  adjusts its  investments  in liquid  assets and long and short term
borrowings,  based upon  management's  consideration  of expected  loan  demand,
expected  deposit flows and securities  sold under  repurchase  agreements.  The
Company  believes it has the ability to raise deposits quickly within its market
area by slightly  raising interest rates, but has typically been able to achieve
deposit growth without paying above market interest rates.  The current strategy
calls for the  subsidiary  banks to be no higher  than  second  highest in their
pricing as compared to their primary competitors. Deposit growth has funded most
of the  significant  asset growth in the past several  years,  but has decreased
modestly as a percent of total funding.

The Company actively solicits customer cash management relationships which often
includes a securities  repurchase  agreement  feature.  Under these  agreements,
commercial  customers are able to generate  earnings on otherwise  idle funds on
deposits with the subsidiary banks. These accounts are considered volatile under
regulatory  requirements,  although  the  Company  has found them to be a steady
source of funding. The Company has been able to maintain customer  relationships
because of its strong business lending  program.  While more costly than deposit
funding,  these deposit-related  accounts are typically the lowest cost borrowed
funds available to the Company.

The primary source of capital for the Company is retained earnings.  The Company
paid  cash  dividends  of  $65  thousand  with  respect  to  its   noncumulative
convertible  preferred  stock,  for the first six  months of 1999.  The  Company
retained $4.3 million of earnings for the first six months of 1999.  The Company
announced  on June 17,  1999 that its Board of  Directors  had  approved a stock
repurchase  plan,  whereby the Company was  authorized  to acquire up to 100,000
shares of its Common Stock,  representing  approximately  0.9% of the 11,375,600
currently outstanding total common shares.

The  Company  and its  bank  subsidiaries  are  subject  to  regulatory  capital
requirements  administered  by  federal  and  state  banking  agencies.  Capital
adequacy   guidelines  and  prompt   corrective   action   regulations   involve
quantitative  measures of assets,  liabilities,  and certain  off-balance  sheet
items calculated under regulatory  accounting  practices.  The prompt corrective
action  regulations  provide five  classifications,  including well capitalized,
adequately capitalized, under capitalized,  significantly under capitalized, and
critically  under  capitalized,  although  these terms are not used to represent
overall financial  condition.  If under capitalized,  capital  distributions are
limited, as is asset growth and expansion, and plans for capital restoration are
required.


                                       13
<PAGE>

Under  guidelines  issued  by  banking  regulators,  the  Company  and its  bank
subsidiaries are required to maintain a minimum Tier 1 risk-based  capital ratio
of 4% and a minimum total  risk-based  ratio of 8%.  Risk-based  capital  ratios
weight the relative risk factors of all assets and consider the risk  associated
with off-balance sheet items.

The  Company's  Tier 1 risk-based  and total  risk-based  ratios were 12.76% and
13.98%  respectively,   as  of  June  30,  1999.  Both  bank  subsidiaries  also
individually met the definition of "well capitalized" as of June 30, 1999.

Market Risk

The Company uses an earnings  simulation model (summarized below) to analyze the
net interest income sensitivity.  Potential changes in market interest rates and
their subsequent effect on interest income is then evaluated. The model projects
the  effect of  instantaneous  movements  in  interest  rates of 100 and 200 bp.
Assumptions based on the historical  behavior of the Company's deposit rates and
balances in relation to  interest  rates are also  incorporated  into the model.
These  assumptions are inherently  uncertain and, as a result,  the model cannot
precisely  measure  net  interest  income or  precisely  predict  the  impact of
fluctuations  in market  interest rates on net interest  income.  Actual results
will differ  from the model's  simulated  results due to timing,  magnitude  and
frequency of interest rate changes,  as well as changes in market conditions and
the application of various management strategies.

Even though the Company's  cumulative gap at one year is negative,  the earnings
simulation  model indicates that an increase in interest rates of 100 bp and 200
bp would result in increased net interest income. This occurs because management
believes that if overall market  interest rates  increase  modestly,  the market
would not require an  immediate,  corresponding  repricing  of non-term  deposit
liabilities.

As shown in the tables below,  there was a change on the impact of interest rate
changes on net interest  income at June 30, 1999  compared to December 31, 1998.
The Company continues to remain asset sensitive, causing a projected decrease in
net interest  income from a decrease in interest  rates,  and having an opposite
affect from an increase in interest rates.


                                       14
<PAGE>

                              Market Risk Analysis
                               At June 30, 1999

                               Decrease in Rates             Increase in Rates
                               200          100               100         200
                              Basis        Basis    Level    Basis      Basis
                              Points       Points   Rates    Points     Points
Projected Interest Income

Loans                         44,114       48,045   52,503   56,523     61,315
Investments                    6,730        7,575    8,297    9,074      9,864
Federal Funds Sold                51           74       86       99        124

Total Interest Income         50,895       55,694   60,886   65,696     71,303

Projected Interest Expense

Deposits                      17,319       19,593   21,316   23,330     25,313
FHLB Term Advances               870        1,147    1,424    1,701      1,955
Fed Funds Purchased                3            3        3        3          3
  & Other Borrowings           1,118        1,332    1,485    2,000      2,167
Total Interest Expense        19,310       22,075   24,228   27,034     29,438

Net Interest Income           31,585       33,619   36,658   38,662     41,865
Change from Level Rates       (5,073)      (3,039)      --    2,004      5,207
% Change From Level Rates    (13.84%)      (8.29%)      --    5.47%     14.20%



                         Summarized Market Risk Analysis
                              At December 31, 1998

                               Decrease in Rates             Increase in Rates
                               200          100               100         200
                              Basis        Basis    Level    Basis      Basis
                              Points       Points   Rates    Points     Points

Projected Total
Interest Income              $49,667      $51,888  $54,105   $56,333   $58,546

Projected Total
Interest Expense              20,824       22,594   23,524    25,032    26,394

Net Interest Income           28,843       29,294   30,581    31,301    32,152

Change from Level Rates       (1,738)      (1,287)      --       720     1,571

% Change From Level Rates     (5.68%)      (4.21%)      --     2.35%     5.14%


                                       15
<PAGE>

Year 2000

The Company has  implemented  plans to address Year 2000  compliance.  The issue
arises from the fact that many existing  computer  programs use only a two digit
field to identify the year. These programs were designed without considering the
impact once the calendar  year rolls over to "00".  If not  corrected,  computer
applications could fail or create inaccurate results by or at the Year 2000.

The Company initiated a comprehensive  Year 2000 compliance program in mid-1997.
This included an Awareness and  Assessment  phase and a Remediation  phase,  and
began a  comprehensive  Testing  phase during 1998.  BankFirst  affiliated  data
processing  service  bureau  implemented  new  software,  which  has  been  Year
2000-certified,  and BankFirst  completed its conversion to this new software in
April  1998.  Conversion  to the new host  system  necessitated  an  upgrade  of
BankFirst's  personal  computers and their  operating  systems,  which have been
tested for Year 2000  compliance.  FNB's data processing  service bureau is also
Year 2000 ready. Curtis Mortgage Company converted its existing servicing system
to a Year  2000-compliant  new servicing  system during July,  1999.  Management
believes the Company's Year 2000 program is on target with the goals established
by its regulators,  in that it has 100% of its mission-critical testing complete
in   out-sourced,   host-based   services,   as   well  as  its   internal   and
third-party-supported,  mission-critical systems. Facilities,  office equipment,
supplies,  security equipment,  HVAC and elevator systems have all been assessed
and, where possible,  tested.  All testing of both internal and external systems
was completed by June 30, 1999.

The  Company  has  evaluated  its Year 2000  compliance-related  credit risk and
Management  believes that the overall risk is low due to the high  concentration
of hotel/motel  and real estate credit  relationships.  Larger  Commercial  Loan
customers  maintaining  total credit  relationships of $500,000 or more with the
Company have been aggressively evaluated by their Relationship Manager regarding
their  possible  Y2K credit risk.  Year 2000 credit risk  analysis is an ongoing
monitoring and evaluation effort within the Banks.

Management  believes that the total costs of becoming Year 2000  compliant  have
not and will not be material.  During  1998,  BankFirst  incurred  approximately
$163,750  in both  hard and soft  costs  regarding  its Year 2000  efforts.  The
Company has attempted to calculate internal salary hours applied to this effort,
and this value is included in the 1998 and 1999 expense,  as  appropriate.  Year
2000 project costs for 1999 are anticipated to be approximately $250,000, and to
date, over half of this expense has been incurred.

Management  understands  the  broad  scope of the Year  2000  issue and thus has
developed a Year 2000 program which includes  monitoring of those other entities
with which it routinely interacts,  including suppliers,  creditors,  borrowers,
customers and other financial service  organizations.  While monitoring of these
entities allows the Company to assess its possible Year 2000-related  risks, the
Company  also  has  been  developing  a   broad-spectrum   business   resumption
contingency  plan  designed  to  minimize  adverse  impact to  mission  critical
systems.  The plan includes  analysis of customer  demand for currency and funds
availability. The plan also consists of developing and


                                       16
<PAGE>

testing  alternative  methods  and  locations  for  core  service  delivery  and
operations  support.  The Company is currently in an aggressive testing schedule
for this business resumption  contingency plan, and indications to date are that
no major modifications to the plan will be required.  Additionally,  each Bank's
service bureau  maintains a contingency  plan for data  processing.  The service
bureaus each house a second,  tested, Year 2000 compliant system in the event of
system  failure.  The service  bureaus also maintain an off-site data processing
system with a third-party data processor in the event of critical power failure.
Both  contingency  systems have been certified Year 2000 compliant and have been
tested by the banks using post-January 2000 dates.

Management  believes  that the  Company  and its  affiliates  are  currently  in
compliance with each applicable directive issued by bank regulation authorities.


New Accounting and Reporting Requirements

SFAS No. 133,  "Accounting  for  Derivative  Financial  Instruments  and Hedging
Activities".  SFAS No.  133  requires  companies  to record  derivatives  on the
balance sheet as assets or  liabilities  at fair value.  Depending on the use of
the derivatives and whether they qualify for hedge  accounting,  gains or losses
from  changes in the value of such  derivatives  would  either be  recorded as a
component of net income or as a change in stockholders'  equity. Until recently,
BankFirst was required to adopt the new standard  January 1, 2000.  However,  in
July,  1999 the Financial  Accounting  Standards Board issued SFAS 137 to extend
the  implementation  date of SFAS 133 until January 1, 2001.  Management has not
yet determined the impact of this standard.

FDIC   Improvement  Act  of  1991   ("FDICIA").   The  FDICIA   stipulates  many
responsibilities  of  financial  institutions,  their boards of  directors,  and
accountants. Many of the provisions have already been effective for the Company;
however,  there are certain  filing  requirements  which are only  applicable to
banks with assets over $500 million. This threshold is measured on an individual
bank basis,  not on  consolidated  assets.  BankFirst,  taken alone,  is already
subject to this act. As a result,  BankFirst will be required to comply with the
FDICIA reporting requirements during 1999. FNB had total year-end 1998 assets of
$196  million,  and is not  anticipated  to be subject  to the FDICIA  reporting
requirements for the foreseeable future.


Part I - Financial Information

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information is disclosed in Item 2, Management's  Discussion and Analysis of
Financial Condition and Results of Operations.


                                       17
<PAGE>

PART II. - OTHER INFORMATION


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

On April 19, 1999 the Company held its Annual  Meeting of  Shareholders.  At the
meeting, there were two matters submitted to the shareholders for voting:

1)       To elect eight  Directors to hold office until the next Annual  Meeting
         of Shareholders or until their successors are elected and qualified.

2)       To consider and vote upon a proposed amendment to the Company's Charter
         increasing  the  number of  shares  of  authorized  common  stock  from
         15,000,000 to 30,000,000.

The following  table  represents  the names and voting  results of each Director
referred to above in Item 4. 1):

<TABLE>
<CAPTION>
                         Votes          Votes          Votes            Number of
Name of Director        in Favor       Against       Withheld        Broker Non-votes
-------------------------------------------------------------------------------------
<S>                     <C>             <C>            <C>              <C>
James L. Clayton        9,442,591       1,780          1,285            Not Applicable
Fred R. Lawson          9,441,421       2,950          1,285            Not Applicable
C. Scott Mayfield, Jr.  9,444,371           0          1,285            Not Applicable
C. Warren Neel          9,441,421       2,950          1,285            Not Applicable
Charles Earl Ogle, Jr.  9,445,656           0              0            Not Applicable
W. David Sullins, Jr.   9,430,911      13,460          1,285            Not Applicable
L. A. Walker, Jr.       9,434,121      10,250          1,285            Not Applicable
Geoffrey A. Wolpert     9,445,656           0              0            Not Applicable
</TABLE>

The following table represents the voting results of Item 4.2) above, concerning
the proposed  amendment to increase  the number of shares of  authorized  common
stock:

                  Votes        Votes          Votes         Number of
                 in Favor     Against       Abstained    Broker Non-votes
--------------------------------------------------------------------------------
                9,412,751      50,050           9,515           0


                                       18
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

      a.    Exhibits

            Exhibit 27 - Financial Data Schedule (filed electronically with
            the SEC)


      b.    Reports on Form 8-K
            The Company  filed one report on Form 8-K dated June 17, 1999 during
            the   reporting   period,   reporting   the   Board  of   Directors'
            authorization of a stock repurchase program for the Company's Common
            Stock; this Form 8-K is hereby  specifically  incorporated herein by
            reference.


                                   SIGNATURES

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


                                        BANKFIRST CORPORATION



Date:  August 13, 1999                  by:/s/ C. David Allen
                                           -----------------------------
                                           C. David Allen
                                           Chief Financial Officer


                                       19