SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C 20549

                                    FORM 10-K


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

                  For the fiscal year ended December 31, 1999

                         Commission File Number 0-22608


                               FFLC BANCORP, INC.
                               ------------------
             (Exact name of registrant as specified in its charter)

        Delaware                                             59-3204891
--------------------------------------------------------------------------------
(State or other jurisdiction of incorporation            (I.R.S. Employer
or organization)                                         Identification No.)

800 North Boulevard West,
Post Office Box 490420, Leesburg, Florida                   34749-0420
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code:           (352) 787-3311
                                                              --------------

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

                                      None

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

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of  registrant's  knowledge,  in  definitive  proxy  or  other  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. (X)

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
registrant was  $41,922,223  and is based upon the last sales price as quoted on
the NASDAQ Stock Market for March 8, 2000.

The Registrant had 3,593,498 shares outstanding as of March 8, 2000.
<PAGE>
                       DOCUMENTS INCORPORATED BY REFERENCE

1.       Portions of the Annual Report to Stockholders for the Fiscal Year Ended
         December 31, 1999. (Part II and IV)
2.       Portions  of  Proxy   Statement   for  the  2000   Annual   Meeting  of
         Stockholders. (Part III)
<PAGE>
                                      INDEX

PART I
                                                                            Page
Item I.           Description of Business

                           Business                                            3
                           Market Area and Competition                         3
                           Market Risk                                         4
                           Lending Activities                                4-9
                           Asset Quality                                    9-14
                           Investment Activities                              15
                           Mortgage-Backed Securities                      15-16
                           Investment Securities                           16-17
                           Sources of Funds                                18-20
                           Borrowings                                         21
                           Subsidiary Activities                              21
                           Personnel                                          22
                           Regulation and Supervision                      22-28
                           Year 2000                                          28
                           Federal and State Taxation                      29-30

Item 2.  Properties                                                           31

Item 3.  Legal Proceedings                                                    32

Item 4.  Submission of Matters to a Vote of Security Holders                  32

PART II

Item 5.  Market for Registrant's Common Equity and Related
                           Stockholder Matters                                32

Item 6.  Selected Financial Data                                              32

Item 7.  Management's Discussion and Analysis of Financial Condition
                           and Results of Operations                          32

Item 8.  Financial Statements and Supplementary Data                          32

Item 9.  Change In and Disagreements with Accountants on
                           Accounting and Financial Disclosure                32

PART III

Item 10. Directors and Executive Officers of the Registrant                   33

Item 11. Executive Compensation                                               33

Item 12. Security Ownership of Certain Beneficial Owners and Management       33

Item 13. Certain Relationships and Related Transactions                       33

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K      34

SIGNATURES                                                                    35
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Business

FFLC Bancorp,  Inc.,  ("FFLC" or the "Company") was  incorporated in Delaware on
September 16, 1993, and acquired First Federal  Savings Bank of Lake County (the
"Bank") in  connection  with the Bank's  conversion  to stock form on January 4,
1994. The Company is a savings and loan holding company subject to regulation by
the Office of Thrift  Supervision  ("OTS") which transacts its business  through
its subsidiary,  the Bank. At December 31, 1999, the Company had total assets of
$590.4 million and stockholders' equity of $55.6 million.

The Bank was  established  in 1934 as a  federally-chartered  mutual savings and
loan  association.  The Bank is a member of the Federal Home Loan Bank  ("FHLB")
System and its deposit  accounts are insured to the maximum  allowable amount by
the Federal Deposit Insurance  Corporation  ("FDIC").  At December 31, 1999, the
Bank had total  assets  of  $590.4  million  and  stockholders'  equity of $52.4
million.

The  principal  business  of the Bank is  attracting  retail  deposits  from the
general  public  and  investing  those  deposits,  together  with  payments  and
repayments  on loans  and  investments  and  funds  generated  from  operations,
primarily in mortgage loans secured by one-to-four-family  owner-occupied homes,
commercial  real  estate  loans  and  securities,   and,  to  a  lesser  extent,
construction, consumer, commercial and other loans, and multi-family residential
mortgage loans.  In addition,  the Bank holds  investments  permitted by federal
laws and  regulations  including  securities  issued by the U.S.  Government and
agencies thereof.  The Bank's revenues are derived  principally from interest on
its mortgage loan and  mortgage-backed  securities  portfolios  and interest and
dividends on its investment securities.

Market Area and Competition

The Bank is a  community-oriented  savings  institution  offering  a variety  of
financial  services to meet the needs of the  communities it serves.  The Bank's
deposit  gathering  and  lending  markets  are  primarily  concentrated  in  the
communities  surrounding its full service  offices  located in Lake,  Sumter and
Citrus  counties  in central  Florida.  The Bank's  competition  for loans comes
principally from commercial banks,  savings  institutions,  and mortgage banking
companies.  The Bank's most direct competition for savings has historically come
from commercial banks,  savings  institutions and credit unions.  The Bank faces
additional  competition  for savings  from  money-market  mutual funds and other
corporate  and  government  securities  funds.  The Bank  also  faces  increased
competition for deposits from other financial  intermediaries such as securities
brokerage firms and insurance companies.

                                       3
<PAGE>
Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates.
The Company"s market risk arises primarily from  interest-rate  risk inherent in
its lending and deposit  taking  activities.  To that end,  management  actively
monitors and manages its interest-rate risk exposure.  The measurement of market
risk associated  with financial  instruments is meaningful only when all related
and offsetting on- and  off-balance-sheet  transactions are aggregated,  and the
resulting  net  positions are  identified.  Disclosures  about the fair value of
financial instruments,  which reflect changes in market prices and rates, can be
found in Note 9 of Notes to Consolidated Financial Statements.

The Company"s  primary objective in managing  interest-rate  risk is to minimize
the  adverse  impact of changes  in  interest  rates on the Bank"s net  interest
income and capital,  and to adjust the  Company"s  asset-liability  structure to
obtain the maximum  yield-cost  spread on that  structure.  The  Company  relies
primarily  on its  asset-liability  management  to control  interest-rate  risk.
However,  a sudden and  substantial  increase  in interest  rates may  adversely
impact the Company"s  earnings,  to the extent that the interest  rates borne by
assets and liabilities do not change at the same speed,  to the same extent,  or
on the same basis. The Company does not engage in trading activities.

Lending Activities

Loan  Portfolio.  The Bank's loan portfolio  consists  primarily of conventional
first mortgage loans secured by one-to-four-family  residences.  At December 31,
1999, the Bank's total gross loans  outstanding  were $519.0  million,  of which
$354.3   million  or  68.28%  of  the   Bank's   total   loan   portfolio   were
one-to-four-family  residential first mortgage loans. Of the  one-to-four-family
residential  mortgage  loans  outstanding  at that date,  37.44% were fixed rate
loans  and  62.56%  were  adjustable-rate  ("ARM")  loans.  At  the  same  date,
commercial  real estate  loans and other loans on improved  real estate  totaled
$61.1  million,  or 11.76% of the  Bank's  total  loan  portfolio;  construction
(excluding construction/permanent loans) and land loans totaled $11.9 million or
2.29% of the Bank's  total  loan  portfolio;  and  multi-family  mortgage  loans
totaled  $13.4  million or 2.58% of the Bank's total loan  portfolio.  Consumer,
commercial and other loans held by the Bank, which  principally  consist of home
equity  loans,  deposit,  consumer,  commercial  and other loans,  totaled $78.3
million or 15.09% of the Bank's total loan portfolio at December 31, 1999.



                                       4
<PAGE>
The following  table sets forth the  composition of the Bank's loan portfolio in
dollar amounts and percentages at the dates indicated:
<TABLE>
<CAPTION>

                                          1995                       1996                      1997
                                     --------------------       -------------------     --------------------
                                                    % of                      % of                      % of
                                      Amount        Total       Amount        Total       Amount        Total
                                     -------     --------       -------     -------      -------      ------
                                                                           (Dollars in thousands)
<S>                                <C>              <C>       <C>             <C>      <C>             <C>
Mortgage loans:
     One-to-four-family            $ 159,170        84.32%    $ 191,788       80.95%   $ 245,524       74.64%
     Construction and land             5,343         2.83%        5,489        2.32%       3,528        1.07%
     Multi-family                      3,098         1.64%        4,180        1.76%       4,464        1.36%
     Commercial real estate
          and other                    6,654         3.53%       13,565        5.73%      37,975       11.54%
                                     -------     --------       -------     -------      -------      ------

               Total mortgage
                     loans           174,265        92.32%      215,022       90.76%     291,491       88.61%

Consumer loans                        14,493         7.68%      21,899          9.24%     32,834        9.98%
Commercial loans                        -            -             -          -            4,632        1.41%
                                  ----------     ---------  -----------   ---------    ---------     -------

               Total loans
                     receivable      188,758       100.00%      236,921      100.0%      328,957      100.0%
                                                   ======                    =====                    =====

Less:
     Loans in process                (4,267)                    (8,007)                 (12,253)
     Unearned discounts,
          premiums and
          deferred loan fees,
          net                           (66)                         97                      333
     Allowance for loan losses         (977)                    (1,063)                   (1,684)
                                    -------                    -------                  --------

               Loans receivable,
                     net           $ 183,448                  $ 227,948                $ 315,353
                                   =========                  =========                =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                             1998                      1999
                                      ---------------------       ---------------------
                                                      % of                         % of
                                        Amount        Total       Amount          Total
                                       -------       -----        -------         ------
<S>                                   <C>             <C>        <C>              <C>
Mortgage loans:
     One-to-four-family               $ 283,372       70.59%     $ 354,317        68.28%
     Construction and land               11,683        2.91         11,861         2.29%
     Multi-family                         8,165        2.04         13,394         2.58%
     Commercial real estate
          and other                      44,211       11.01         61,052        11.76%
                                        -------       -----        -------       ------

               Total mortgage
                     loans              347,431       86.55%       440,624        84.91%

Consumer loans                           43,490       10.83%        64,042        12.34%
Commercial loans                         10,532        2.62%        14,285         2.75%
                                        -------      ------        -------       ------

               Total loans
                     receivable         401,453      100.0%        518,951       100.0%
                                                     =====                       =====

Less:
     Loans in process                   (10,637)                   (15,907)
     Unearned discounts,
          premiums and
          deferred loan fees,
          net                               526                        898
     Allowance for loan losses           (2,283)                    (2,811)
                                      ---------                    -------

               Loans receivable,
                     net              $ 389,059                  $ 501,131
                                      =========                  =========
</TABLE>

                                       5
<PAGE>
Purchase of Mortgage Loans. From time to time, the Bank purchases mortgage loans
originated by other lenders.  At December 31, 1999, $2.0 million, or .38% of the
Bank's  total loan  portfolio  consisted  of  purchased  mortgage  loans or loan
participations. Purchased mortgage loans consist primarily of one-to-four-family
residential mortgage loans.

Secondary  Market  Activities.  The Bank  participates  in the secondary  market
through a  correspondent  relationship,  originating  loans  (primarily  30-year
fixed-rate loans) which are funded by the investor correspondent. Funding by the
correspondent eliminates the Bank's interest-rate risk on such loans. Such loans
are  closed  on the  Bank's  documents  with  funds  provided  by  the  investor
correspondent at closing with all credit conditions  established by the investor
correspondent  being satisfied prior to the issuance of a loan  commitment.  The
Bank  receives  a fee for  originating,  processing  and  closing  the loans and
reports  the loans to the OTS as loans  originated  and sold.  In the year ended
December 31, 1999, such loans amounted to $7.0 million or 4.5% of total mortgage
loans originated.

Loan  Originations,  Purchases,  Sales and Principal  Repayments.  The following
table sets forth the Bank's loan  originations,  purchases,  sales and principal
repayments for the periods indicated.
<PAGE>
<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                          ---------------------------------------------
                                                             1997              1998              1999
                                                          ---------         ---------         ---------
                                                                          (In thousands)
<S>                                                       <C>                 <C>               <C>
Mortgage loans (gross):
     At beginning of year                                 $ 215,022           291,491           347,431
     Mortgage loans originated:
          One-to-four-family (1)                             86,976           107,418           136,456
          Construction and land                               2,502             1,193             2,387
          Multi-family                                        2,759               634             1,037
          Commercial real estate                             25,142            10,230            14,345
                                                          ---------         ---------         ---------

               Total mortgage loans originated (1)          117,379           119,475           154,225

     Mortgage loans purchased                                   -                 -                 -
                                                          ---------         ---------         ---------
               Total mortgage loans originated and
                         purchased                          117,379           119,475           154,225

     Transfer of loans to real estate owned                    (444)             (193)             (425)
     Principal repayments                                   (37,997)          (54,959)          (53,619)
     Sales of loans (1)                                      (2,469)           (8,383)           (6,988)
                                                          ---------         ---------         ---------

               At end of year                             $ 291,491           347,431           440,624
                                                          =========         =========         =========
Consumer loans (gross):
     At beginning of year                                    21,899            32,834            43,490
     Loans originated                                        18,356            27,264            40,873
     Principal repayments                                    (7,421)          (16,608)          (20,321)
                                                          ---------         ---------         ---------

               At end of year                             $  32,834            43,490            64,042
                                                          =========         =========         =========
Commercial loans (gross):
     At beginning of year                                       -               4,632            10,532
     Loans originated                                         9,022            13,055             6,924
     Principal repayments                                    (4,390)           (7,155)           (3,171)
                                                          ---------         ---------         ---------

               At end of year                             $   4,632            10,532            14,285
                                                          =========         =========         =========
</TABLE>
(1)  Represents  loans  originated  for and  funded  by  correspondents  of $2.5
     million,   $8.4  million  and  $7.0  million  for  1997,   1998  and  1999,
     respectively.


                                       6
<PAGE>
Maturities of Loans. The following table shows the contractual maturities of the
Bank's loan portfolio at December 31, 1999. Loans that have adjustable rates are
shown as amortizing to final  maturity  rather than when the interest  rates are
next  subject to change.  The table does not include  prepayments  or  scheduled
principal  repayments.  Prepayments  and scheduled  principal  repayments on the
Bank's loans  totaled  $49.8  million,  $77.8  million and $77.1 million for the
years ended December 31, 1997, 1998 and 1999, respectively.
<TABLE>
<CAPTION>
                                                Mortgage Loans
                                           --------------------
                                            One-to-                                              Total
                                              Four-                 Commercial     Consumer      Loans
                                            Family        Other        Loans         Loans    Receivable
                                          ---------      ------      ------        ------     -------
                                                                  (In thousands)
<S>                                        <C>             <C>         <C>           <C>        <C>
 Amounts due:
     Within 1 year                         $   1,737       4,866       3,181         3,637      13,421
                                           ---------      ------      ------        ------     -------

     1 to 3 years                              3,177      25,252       7,731        20,254      56,414
     3 to 5 years                              2,947       7,651       3,118        14,332      28,048
     5 to 10 years                            11,595       8,146         255        11,491      31,487
     10 to 20 years                           55,722      29,941           -        14,328      99,991
     Over 20 years                           279,139      10,451           -            -      289,590
                                           ---------      ------      ------        ------     -------

     Total due after 1 year                  352,580      81,441      11,104        60,405     505,530
                                           ---------      ------      ------        ------     -------

     Total amounts due                       354,317      86,307      14,285        64,042      518,951

     Loans in process                       (15,744)          -            -         (163)     (15,907)
     Net deferred loan fees and costs           668           -          230            -          898
     Allowance for loan losses                 (528)     (1,459)        (377)        (447)      (2,811)
                                           ---------      ------      ------        ------     -------

Loans receivable, net                      $ 338,713      84,848      14,138        63,432     501,131
                                           =========      ======      ======        ======     =======
</TABLE>

Loans Due After  December 31, 2000.  The following  table sets forth at December
31,  1999,  the dollar  amount of all loans due or  scheduled  to reprice  after
December  31,  2000,  classified  according  to whether such loans have fixed or
adjustable interest rates.
<PAGE>
<TABLE>
<CAPTION>
                                                Due after December 31, 2000
                                          -------------------------------------
                                          Fixed         Adjustable        Total
                                          -----         ----------        -----
                                                      (In thousands)
<S>                                       <C>             <C>            <C>
Mortgage loans:
     One-to-four-family                   $132,004        220,576        352,580
     Construction and land                   3,174          6,113          9,287
     Multi-family                            2,452         10,333         12,785
     Commercial real estate                 20,721         38,648         59,369

Consumer loans                              53,670          6,735         60,405
Commercial loans                             5,083          6,021         11,104
                                          --------       --------       --------

          Total                          $ 217,104        288,426        505,530
                                          ========       ========       ========
</TABLE>
                                       7


<PAGE>
One-to-Four-Family  Mortgage Lending.  The Bank's primary lending emphasis is on
the origination of first mortgage loans secured by one-to-four-family residences
within its primary  lending area.  Such  residences are primarily  single family
homes, including condominium and townhouses, that serve as the primary residence
of the owner.  To a lesser  degree,  the Bank makes loans on residences  used as
second homes or as investments. The Bank also offers second mortgage loans which
are underwritten applying the same standards as for first mortgage loans.

In the years ended  December 31, 1997,  1998 and 1999, the Bank's total mortgage
loan originations amounted to $117.4 million, $119.5 million and $154.2 million,
respectively,  of which  $87.0  million,  $107.4  million  and  $136.5  million,
respectively, were secured by one-to-four-family properties.

At  December  31,  1999,   68.28%  of  total  loans   receivable   consisted  of
one-to-four-family residential loans, of which 62.56% were ARM loans. The Bank's
ARM  loans  may  carry an  initial  interest  rate  which is less than the fully
indexed rate for the loan. The initial discounted rate is determined by the Bank
in accordance with market and competitive  factors. The Bank offers one-, three-
and five-year ARM loans which adjust by a maximum of 2% per  adjustment  period,
with lifetime caps on increases of 5% to 6%, depending upon the program chosen.

The Bank's policy on one-to-four-family  residential mortgage loans generally is
to lend up to 80% of the appraised value of property securing the loan, or up to
95% if private  mortgage  insurance  is obtained on the amount of the loan which
exceeds 80%.

Commercial and Multi-Family Real Estate Lending.  As of December 31, 1999, $61.1
million,  or 11.76% of the Bank's total loan  portfolio  consisted of commercial
real  estate  loans  and  $13.4  million,  or 2.58%  of the  Bank's  total  loan
portfolio, consisted of multi-family residential loans.

The commercial real estate loans in the Bank's  portfolio  consist of fixed-rate
and ARM loans which were  originated  at  prevailing  market  rates.  The Bank's
policy  has been to  originate  commercial  or  multi-family  loans  only in its
primary market area. Commercial and multi-family residential loans are generally
made in amounts up to 80% of the appraised value of the property. In making such
loans,  the Bank primarily  considers the net operating  income generated by the
real estate to support the debt  service,  the  financial  resources  and income
level  and  managerial  expertise  of the  borrower,  the  marketability  of the
property and the Bank's lending experience with the borrower.

Commercial  Loans. As of December 31, 1999, $14.3 million or 2.75% of the Bank"s
total loan portfolio, consisted of commercial loans.

Construction   and  Land  Loans.  The  Bank  originates  loans  to  finance  the
construction  of  one-to-four-family   homes  and,  to  a  much  lesser  extent,
originates loans for the acquisition and development of land (either  unimproved
land or improved  lots) on which the purchaser  can then build.  At December 31,
1999,  construction  (excluding  construction/permanent  loans)  and land  loans
totaled $11.9 million or 2.29% of the Bank's total loan portfolio.

At December 31, 1999, the Bank had loans in process  (undisbursed  loan proceeds
of construction  loans) of $15.9 million which was mainly secured by residential
mortgages.  The Bank makes  residential  construction  loans to  homeowners on a
long-term basis with  amortization  beginning at the conclusion of construction,
usually  a  period  of  about  six  months.   Such  loans  are  carried  in  the
one-to-four-family  category and are not separately  classified as  construction
loans.   Residential   construction   loans  to  builders  are  carried  in  the
construction and land category.
<PAGE>
Construction   and   land   loans   also   include    construction   loans   for
one-to-four-family  residential  property  for which the  borrower  will  obtain
permanent  financing  from  another  lender.  Such  loans  bear a fixed  rate of
interest that equals prime plus 1.0% during the  construction  period.  The Bank
obtains a commitment for the permanent  financing from the other lender prior to
originating the construction loan.


                                       8
<PAGE>
Consumer  Lending.  At December 31, 1999,  $64.0 million or 12.34% of the Bank's
total loan portfolio  consisted of consumer loans,  including home equity loans,
lines of credit  and  direct  and  indirect  auto and truck  loans for  consumer
purposes  and,  to a lesser  extent,  home  improvement  loans and  secured  and
unsecured personal loans.

The Bank's home equity loans are  originated on  one-to-four-family  residences,
either on a  fixed-rate  basis with terms of up to 15 years or as balloon  loans
with terms up to five years with fifteen year amortization periods.  Those loans
are  generally  limited to aggregate  outstanding  indebtedness  on the property
securing the loan of 90% of the loan to value  ratio.  The Bank also offers home
equity lines of credit,  which bear prime-based  adjustable  interest rates with
terms up to fifteen years.  Such loans  generally  require  monthly  payments of
interest plus 1.5% of the balance outstanding.

Consumer loans are offered primarily on a fixed-rate,  short-term basis.  Except
for second  mortgage  loans which are  underwritten  pursuant  to the  standards
applicable to one-to-four-family  residential loans, the underwriting  standards
employed  by  the  Bank  for  consumer  loans  include  a  determination  of the
applicant's  payment  history on other debts and an assessment of the borrower's
ability to make payments on the proposed loan and other indebtedness.

Loan  Approval  and  Authority.  Mortgage  loan  approval  authority  for  loans
exceeding  $1,000,000  is vested in the  Executive  Committee of the Board which
meets weekly to consider loan  recommendations  of the Loan Committee.  The Loan
Committee is comprised of three outside directors,  the President and the Senior
Lending  Officers  of the Bank  and has  been  delegated  authority  to  approve
mortgage  loans,  home equity  loans,  home  equity  lines of credit and secured
consumer loans up to $1,000,000.

The Bank's  policy is to require  title and hazard  insurance on all real estate
loans, except home equity loans for which a title search is conducted in lieu of
obtaining title  insurance.  Borrowers may be permitted to pay real estate taxes
and hazard insurance premiums  applicable to the secured property for a mortgage
loan. In some  instances,  borrowers  may be required to advance funds  together
with each payment of principal  and interest to a mortgage  escrow  account from
which the Bank makes  disbursements for items such as real estate taxes,  hazard
insurance premiums and private mortgage insurance premiums.

Asset Quality

Delinquent  Loans  and  Nonperforming  Assets.  Loans  are  generally  placed on
nonaccrual  status when the  collection  of  principal or interest is 90 days or
more past due, or earlier if collection is deemed  uncertain.  The Bank provides
an  allowance  for  accrued  interest  deemed  uncollectible.  Accrued  interest
receivable is reported net of the allowance for uncollected interest.  Loans may
be  reinstated to accrual  status when all payments are brought  current and, in
the opinion of management, collection of the remaining balance can be reasonably
expected.

                                       9
<PAGE>
At December 31, 1997, 1998 and 1999,  delinquencies in the Bank's loan portfolio
were as follows:
<TABLE>
<CAPTION>

                                                  At December 31, 1997                        At December 31, 1998
                                   ---------------------------------------------- --------------------------------------------------
                                          60-89 Days           90 Days or More                60-89 Days            90 Days or More
                                     --------------------     -----------------      --------------------       -------------------
                                   Number       Principal    Number    Principal     Number      Principal      Number   Principal
                                     of         Balance       of       Balance        of         Balance          of       Balance
                                    Loans       of Loans     Loans     of Loans      Loans       of Loans        Loans    of Loans
                                    -----       --------     -----     --------      -----       --------        -----    --------
                                                                       (Dollars in thousands)
<S>                                  <C>         <C>           <C>         <C>         <C>           <C>
One-to-four-family                       7           341           8         240         -             -             3           87
Construction and land                  -             -             1           2         -             -             6          343
Multi-family                           -             -           -           -           -             -           -            -
Commercial real estate                 -             -           -           -           -             -           -            -
                                     -----         -----       -----       -----       -----         -----       -----        -----

         Total mortgage loans            7           341           9         242         -             -             9          430

Consumer loans                           4            24         -           -             4            40           3           14
                                     -----         -----       -----       -----       -----         -----       -----        -----

         Total loans                    11           365           9         242           4            40          12          444
                                     =====         =====       =====       =====       =====         =====       =====        =====

Delinquent loans to total loans                      .11%                    .07%                      .01%                     .11%
                                                   =====                   =====                     =====                    =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                      At December 31, 1999
                                         ----------------------------------------------
                                              60-89 Days             90 Days or More
                                         --------------------       -------------------
                                         Number     Principal        Number   Principal
                                           of        Balance          of       Balance
                                          Loans     of Loans         Loans     of Loans
                                          -----     --------         -----     --------
<S>                                       <C>        <C>            <C>        <C>
One-to-four-family                            3          107            5          561
Construction and land                         1           36            1          172
Multi-family                                -            -              1          119
Commercial real estate                      -            -              1        1,348
                                          -----        -----        -----        -----

         Total mortgage loans                 4          143            8        2,200

Consumer loans                                7           75           13          162
                                          -----        -----        -----        -----

         Total loans                         11          218           21        2,362
                                          =====        =====        =====        =====

Delinquent loans to total loans                          .04%                      .46%
                                                       =====                     =====

</TABLE>
                                       10

<PAGE>
Nonperforming Assets. The following table sets forth information with respect to
the Bank's nonperforming assets at the dates indicated.

<TABLE>
<CAPTION>
                                                                                  At December 31,
                                                             --------------------------------------------------------
                                                               1995        1996         1997         1998        1999
                                                               ----        ----         ----         ----        ----
                                                                           (Dollars in thousands)
<S>                                                         <C>          <C>         <C>          <C>         <C>
Nonaccrual mortgage loans                                       70           613         242          434         853

Nonaccrual commercial and consumer loans                       104            53         -             10       1,509
                                                             -----         -----         ---          ---       -----

Total nonperforming loans                                      174           666         242          444       2,362

Real estate owned                                              165           361         507         366          400
                                                             -----         -----         ---          ---       -----

          Total nonperforming assets                         $ 339         1,027         749          810       2,762
                                                             =====         =====         ===          ===       =====

Nonperforming loans to total loans                            .09%           .28%        .07%         .11%        .46%
                                                             =====         =====         ===          ===       =====

Total nonperforming assets to total assets                    .10%           .30%        .19%         .17%        .47%
                                                             =====         =====         ===          ===       =====

</TABLE>

At December 31, 1999,  the Bank had no accruing  loans which were  contractually
past due 90 days or more as to  principal  and  interest  and no  troubled  debt
restructurings as defined by Statement of Financial Accounting Standards No. 15.
Nonaccrual loans for which interest has been reduced totaled  approximately $2.4
million,   $444,000  and   $242,000  at  December  31,  1999,   1998  and  1997,
respectively.  For the year ended December 31, 1999,  interest income that would
have been recorded under the original terms of nonaccrual  loans at December 31,
1999 and interest income actually recognized is summarized below:


     Interest income that would have been recorded                    $ 214
     Interest income recognized                                        (115)
                                                                        ---

     Interest income foregone                                         $  99
                                                                      =====

Classified  Assets.  Federal  regulations  and the  Bank's  policy  require  the
classification  of loans and other assets,  such as debt and equity  securities,
considered  to be of  lesser  quality  as  "substandard",  "doubtful"  or "loss"
assets. An asset is considered  "substandard" if it is inadequately protected by
the  current net worth and paying  capacity of the obligor or of the  collateral
pledged,  if  any.  "Substandard"  assets  include  those  characterized  by the
"distinct  possibility"  that the  institution  will sustain  "some loss" if the
deficiencies are not corrected.  Assets classified as "doubtful" have all of the

<PAGE>

weaknesses   inherent  in  those  classified   "substandard,"   with  the  added
characteristic  that the weaknesses  present make  "collection or liquidation in
full", on the basis of currently existing facts, conditions, and values, "highly
questionable and improbable."  Assets  classified as "loss" are those considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without  the  establishment  of a specific  loss  reserve is not  warranted.  In
addition,  the Bank's policies require that assets which do not currently expose
the  insured  institution  to  sufficient  risk  to  warrant  classification  as
substandard  but possess other  weaknesses are designated  "special  mention" by
management.



                                       11
<PAGE>
If an asset is  classified,  the estimated fair value of the asset is determined
and if that  value is less  than  the then  carrying  value  of the  asset,  the
difference is  established as a specific  reserve.  If an asset is classified as
loss, the amount of the asset  classified as loss is reserved.  General reserves
or  general  valuation  allowances  represent  loss  allowances  which have been
established to recognize the inherent risk  associated  with lending  activities
but, unlike specific reserves, are not allocated to particular assets.

The  following  table sets forth  information  concerning  the number and dollar
amount of loans  and real  estate  owned  classified  as  "special  mention"  or
"substandard"  at the  dates  indicated.  No loans  or real  estate  owned  were
classified "doubtful" or "loss" at those dates.

<TABLE>
<CAPTION>
                                          Special Mention          Substandard
                                         ------------------     ----------------
                                         Number      Amount     Number    Amount
                                         ------      ------     ------    ------
                                                  (Dollars in thousands)
<S>                                      <C>       <C>         <C>      <C>
At December 31, 1999:
Loans                                        10     $1,090         25    $ 3,014

Real estate owned:
     One-to-four-family properties          -          -            8        389

     Other                                  -          -            1         11
                                         ------     ------     ------     ------

          Total                              10     $1,090         34     $3,414
                                         ======     ======     ======     ======

At December 31, 1998:
Loans                                        14     $2,718          7     $  275

Real estate owned:
     One-to-four-family properties          -          -            2         92

     Other                                  -          -            5        274
                                         ------     ------     ------     ------

          Total                              14     $2,718         14     $  641
                                         ======     ======     ======     ======
</TABLE>

Allowance for Loan Losses.  The Bank's  allowance for loan losses is established
and  maintained  through  a  provision  for loan  losses  based on  management's
evaluation of the risk  inherent in its loan  portfolio and the condition of the
local  economy in the Bank's  market area.  Such  evaluation,  which  includes a
review of all loans on which full  collectibility may not be reasonably assured,
considers,  among other  matters,  the  estimated  fair value of the  underlying
collateral,  economic and regulatory conditions,  and other factors that warrant
recognition  in  providing  for  an  adequate  loan  loss  allowance.   Although
management   believes   it  uses  the  best   information   available   to  make
determinations  with respect to the Bank's  allowance  for loan  losses,  future
adjustments may be necessary if economic  conditions vary substantially from the
economic conditions in the assumptions used in making the initial determinations
or if other circumstances change.


                                       12
<PAGE>
The following table sets forth the Bank's allowance for loan losses at the dates
indicated,  the provisions  made and the  charge-offs  and  recoveries  effected
during the years indicated.
<TABLE>
<CAPTION>
                                                         At or For the Year Ended December 31,
                                                  --------------------------------------------
                                                  1995        1996      1997        1998       1999
                                                 -----       -----      -----      -----      -----
                                                          (Dollars in thousands)

<S>                                              <C>           <C>      <C>        <C>        <C>
     Balance at beginning of year                $ 869         977      1,063      1,684      2,283
     Provision for loan losses                     124         107        649        682        719
     Charge-offs:
          One-to-four-family                        -          (9)        (12)       (80)      -
          Construction and land                   (16)         -           -         -          (44)
          Multi-family                              -          -           -         -         -
          Commercial real estate                    -          -           -         -         -
          Commercial and consumer loans             -         (12)        (16)        (6)      (166)
                                                  -----       -----      -----      -----      -----

          Total charge-offs by category            (16)        (21)       (28)       (86)      (210)

     Recoveries                                     -          -           -           3         19
                                                 -----       -----      -----      -----      -----

     Balance at end of year                      $ 977       1,063      1,684      2,283      2,811
                                                 =====       =====      =====      =====      =====
 </TABLE>

The  following  table  sets  forth the  ratios  of the  Bank's  charge-offs  and
allowances for losses for the years indicated.
<TABLE>
<CAPTION>
                                                         1995          1996         1997          1998            1999
                                                         ----          ----         ----          ----            ----
<S>                                                     <C>           <C>          <C>          <C>             <C>
     Net charge-offs during the year
          as a percentage of average loans
          outstanding during the year                      .01%          .01%         .01%         .03%            .04%

     Allowance for loan losses as a
          percentage of gross loans receivable
          at end of year                                   .52%          .45%         .51%         .57%            .54%

     Allowance for loan losses as a
          percentage of total nonperforming
          assets at end of year                         288.48%       103.51%      224.83%      281.85%         101.77%

     Allowance for loan losses as a
          percentage of nonperforming loans
          at end of year                                561.49%       159.61%      695.87%      514.19%         119.01%

</TABLE>
                                       13
<PAGE>
The  following  table sets forth the Bank's  specific and general  allowance for
possible loan losses by type of loan for the years indicated.
<TABLE>
<CAPTION>
                                                                         At December 31,
                                --------------------------------------------------------------------------------------------------
                                    1995                 1996                   1997                 1998               1999
                                ------------------   -----------------    -----------------   ------------------   ---------------
                                           % of                 % of                 % of                 % of               % of
                                         Loans to             Loans to             Loans to             Loans to           Loans to
                                          Total                Total                Total                Total              Total
                                Amount    Loans       Amount   Loans      Amount    Loans      Amount    Loans      Amount  Loans
                                ------    -----       ------   -----      ------    -----      ------    -----      ------  -----
                                                                    (Dollars in thousands)
<S>                              <C>       <C>       <C>        <C>      <C>         <C>      <C>         <C>     <C>        <C>
At end of year allocated to:
     One-to-four-family          $ 275     84.32%    $   302    80.95%   $  507      74.64%   $   575     70.59%  $   528    68.28%
     Construction and land         146      2.83         152     2.32       240       1.07        338      2.91       408     2.29
     Multi-family                  183      1.64         169     1.76       268       1.36        295      2.04       301     2.58
     Commercial real estate        150      3.53         165     5.73       383      11.54        565     11.01       750    11.76
     Consumer loans                223      7.68         275     9.24       229       9.98        304     10.83       447    12.34
     Commercial loans                -         -           -        -        57       1.41        206      2.62       377     2.75
                                 -----    ------     -------   ------   -------     ------    -------    ------   -------   ------
          Total                  $ 977    100.00%    $ 1,063   100.00%  $ 1,684     100.00%   $ 2,283    100.00%  $ 2,811   100.00%
                                 =====    ======     =======   ======   =======     ======    =======    ======   =======   ======
 </TABLE>


                                       14

<PAGE>
Investment Activities

The  investment  policy  of the  Bank,  which  is  established  by the  Board of
Directors and  implemented by the Chief  Executive  Officer who is designated as
the Investment Officer, is designed primarily to provide and maintain liquidity,
to generate a favorable return on investments  without  incurring undue interest
rate and credit  risk,  and to  complement  the Bank's  lending  activities.  In
establishing  its  investment  strategies,  the Bank  considers its business and
growth plans, the economic  environment,  the types of securities to be held and
other factors.  Federally  chartered savings  institutions have the authority to
invest  in  various  types  of  assets,  including  U.S.  Treasury  obligations,
securities  of various  federal  agencies,  certain  certificates  of deposit of
insured banks and savings institutions, certain bankers acceptances,  repurchase
agreements,  loans on federal funds, and, subject to certain limits,  commercial
paper and mutual funds.

On January 1, 1994,  the  Company  adopted  Statement  of  Financial  Accounting
Standards  No. 115.  That  statement  requires  investment  and  mortgage-backed
securities  that the  Company  has the  positive  intent and  ability to hold to
maturity  to be  classified  as  held-to-maturity  securities  and  reported  at
amortized  cost.  Securities  that are held  principally for selling in the near
term are to be classified as trading securities and reported at fair value, with
unrealized  gains and losses included in earnings.  Securities not classified as
either held-to-maturity securities or trading securities are to be classified as
available-for-sale  securities and reported at fair value, with unrealized gains
and losses  excluded  from  earnings  and  reported in a separate  component  of
stockholders' equity.

The Company adopted FAS 133 effective July 1, 1999. As allowed by this standard,
the Company  reclassified  all securities  held to maturity with a book value of
$14,784,000  and a market value of  $14,969,000 to available for sale on July 1,
1999.

Mortgage-Backed Securities

The  Bank  invests  in   collateralized   mortgage   obligations   ("CMOs")  and
mortgage-backed  securities  such as government  pass-through  certificates.  At
December 31, 1999, the Bank's mortgage-backed securities portfolio totaled $17.4
million, or 2.96% of total assets. The mortgage-backed securities are not due at
a single maturity date, and accordingly, contractual maturity information is not
presented  herein.  CMOs, net of related  premiums and  discounts,  totaled $2.3
million or 13.10% of total mortgage-backed securities.

CMOs are typically issued by a special purpose entity, which may be organized in
any  of  a  variety  of  legal  forms,  such  as a  trust,  a  corporation  or a
partnership.  The entity  combines pools of pass-through  securities,  which are
used to collateralize the mortgage related securities.  Once combined,  the cash
flows can be divided into  different  "tranches"  or  "classes"  of  securities,
thereby creating more predictable average lives for each tranch or class than is
provided  by the  underlying  pass-through  pools.  Under  this  structure,  all
principal  repayments  from the various  mortgage  pools can be  allocated  to a
mortgage-related  securities class or classes  structured to have priority until
it has been paid off.  Thus,  these  securities  are  designed  to  address  the
reinvestment  concerns associated with mortgage-backed  security  pass-throughs,
namely that they tend to pay off more  rapidly  when  interest  rates fall.  The
Bank's CMOs have  coupon  rates  ranging  from 6.09% to 7.00% and had a weighted
average yield of 6.54% at December 31, 1999.
<PAGE>
The  Bank's  policy  is to  purchase  CMOs  rated  AA or  better  by  nationally
recognized  rating  services.  The  majority  of the CMOs  owned by the Bank are
insured or guaranteed  either  directly or indirectly,  through  mortgage-backed
securities underlying the obligations issued by FNMA, FHLMC or GNMA.

At December 31, 1999,  the Bank had $2.3  million in CMOs  representing  .39% of
total assets.  Of that amount,  $2.2 million or 96.12% had floating  rates which
adjust on a monthly basis.

                                       15
<PAGE>
The Company's  mortgage-backed  securities  consist of securities  issued by the
Government  National  Mortgage  Association  ("GNMA"),  the  Federal  Home  Loan
Mortgage  Corporation  ("FHLMC") and the Federal National  Mortgage  Association
("FNMA").

These  mortgage-backed  securities  totaled  $15.2  million  or  86.90% of total
mortgage-backed   securities.   Other  mortgage-backed   securities  consist  of
pass-through certificates issued by the FNMA, FHLMC or GNMA.

The  following  table  sets forth  mortgage-backed  security  purchases,  sales,
amortization and repayments during the periods indicated:
<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                    -------------------------------------
                                                      1997          1998            1999
                                                    --------        ------         ------
                                                               (In thousands)
<S>                                                 <C>             <C>            <C>
     At beginning of year                           $ 65,736        38,291         24,784
     Purchases                                            -          6,025              -
     Amortization and repayments                     (27,566)      (19,553)        (7,334)
     Change in unrealized loss on securities
          available for sale                             121            21             40
                                                    --------        ------         ------

               At end of year                       $ 38,291        24,784         17,490
                                                    ========        ======         ======
 </TABLE>
Investment Securities

At December 31, 1999, the Bank held $19.4 million in investment securities,  all
of which were classified available for sale,  consisting of $8.9 million in U.S.
Government and agency securities,  $8.8 million in mutual funds and $1.7 million
in other  investment  securities.  In addition,  the Bank holds $17.0 million in
interest-earning deposits and $5.0 million of FHLB of Atlanta stock.

The following table sets forth certain information  regarding the amortized cost
and  market  values of the  Bank's  interest-earning  deposits,  FHLB  stock and
investment securities at the dates indicated:
<PAGE>
<TABLE>
<CAPTION>
                                                                         At December 31,
                                               ----------------------------------------------------------------------
                                                       1997                     1998                     1999
                                               --------------------    ---------------------    ---------------------
                                               Amortized     Market    Amortized      Market    Amortized      Market
                                                 Cost        Value       Cost         Value       Cost         Value
                                                 ----        -----       ----         -----       ----         -----
                                                                            (In thousands)
<S>                                            <C>            <C>         <C>          <C>         <C>      <C>
Interest-earning deposits                      $  8,562       8,562       13,413       13,413      17,026   17,026
                                               ========      ======       ======       ======      ======      ======


FHLB stock                                     $  2,304       2,304        2,800        2,800       4,950       4,950
                                               ========      ======       ======       ======      ======      ======

Investment securities:
     Held-to-maturity:
          SBA-related investment securities    $  3,031       3,077        2,320        2,366           -           -
                                               ========      ======       ======       ======      ======      ======

     Available-for-sale:
          U.S. Government and
               agency securities                  7,965       7,937        4,036        4,058       8,998       8,919
          Other investment securities               151         156           97           99       1,666       1,671
          Investment in mutual funds              9,258       9,183        9,238        9,131       9,065       8,829
                                                 ------      ------       ------       ------      ------     -------

          Total available-for-sale             $ 17,374      17,276       13,371       13,288      19,729      19,419
                                               ========      ======       ======       ======      ======      ======
</TABLE>
                                       16
<PAGE>
The following  table sets forth  information  concerning  the amortized cost and
weighted  average yields by maturity on investment  securities and FHLB stock at
December 31, 1999.
<TABLE>
<CAPTION>

                                                               Due After                  Due After
                                                              One Through               Five Through             Due After
                                  Due Within One Year          Five Years                 10 Years                10 Years
                                 -----------------------  -----------------------   -----------------------  ---------------------
                                              Annualized               Annualized                Annualized             Annualized
                                               Weighted                 Weighted                  Weighted               Weighted
                                 Amortized      Average   Amortized      Average     Amortized      Average  Amortized    Average
                                   Cost         Yield        Cost        Yield         Cost         Yield       Cost        Yield
                                   ----         -----        ----        -----         ----         -----       ----        -----
                                                                        (Dollars in thousands)
<S>                              <C>            <C>          <C>           <C>         <C>            <C>       <C>          <C>
FHLB stock (no
     defined maturity)           $ 4,950        7.75%
                                 =======        ====
Investment securities:
     U.S. Government
         and agency
         obligations             $ 3,022        5.95%       $ 5,976         5.80%      $   -             - %    $    -         - %
     Other investment
         securities                    -           -              -           -            63         7.88       1,603       6.59
     Mutual funds (no
     defined maturity)             9,065        5.61%             -           -             -            -           -         -
                                 -------        ----         ------        ----        ------         ----      -------      ----
         Total investment
              securities         $12,087        5.70%        $5,976        5.80%       $   63         7.88%     $ 1,603      6.59%
                                 =======        ====         ======        ====        ======         ====      =======      ====

<CAPTION>
                                          Total
                                  ------------------------
                                                Approximate
                                   Amortized      Market
                                     Cost          Value
                                     ----          -----
<S>                                  <C>           <C>
FHLB stock (no
     defined maturity)

Investment securities:               $ 4,950       $4,950
     U.S. Government                 =======       ======
         and agency
         obligations
     Other investment
         securities                  $ 8,998        8,919
     Mutual funds (no
     defined maturity)                 1,666        1,671

         Total investment              9,065        8,829
              securities            --------     --------

                                    $ 19,729     $ 19,419
                                    ========     ========

</TABLE>
                                       17
<PAGE>
Sources of Funds

General. Repayments and maturities of mortgage-backed and investment securities,
loan  repayments,  deposits and cash flows  generated  from  operations  are the
primary sources of the Bank's funds for use in lending,  investing and for other
general purposes.

Deposits.  The Bank  offers a  variety  of  deposit  accounts  having a range of
interest  rates and terms.  The  Bank's  deposits  consist  of regular  savings,
non-interest-bearing  checking,  NOW  checking,  money  market  and  certificate
accounts.  Of the deposit  accounts at December 31, 1999, $35.2 million or 8.12%
consist of individual retirement accounts ("IRAs").

The Bank seeks to retain core  deposits  consisting  of passbook  and  statement
savings, money market,  noninterest-bearing  checking,  and NOW accounts,  which
contribute to a low cost of funds. Such core deposits  represented  23.8%, 26.2%
and 25.5% of total deposits at December 31, 1997, 1998 and 1999, respectively.

The following table shows the distribution of the Bank's deposits by type at the
dates indicated and the weighted-average nominal interest rates on each category
of deposits presented at December 31, 1999 (dollars in thousands).
<TABLE>
<CAPTION>
                                                                      At December 31,
                                 ------------------------------------------------------------------------------------
                                       1997                      1998                            1999
                                 -----------------       -------------------      -----------------------------------
                                          Percent                   Percent                    Percent      Weighted-
                                          of Total                  of Total                   of Total      Average
                                 Amount   Deposits       Amount     Deposits       Amount      Deposits        Rate
                                 ------   --------       ------     --------       ------      --------        ----

<S>                          <C>              <C>     <C>              <C>      <C>               <C>
Demand accounts:
     Noninterest-bearing
          checking           $   6,968        2.20%   $   8,379        2.39%    $  11,100         2.58%            --%
     NOW and money-
          market accounts       43,629       13.84       60,437       17.21        77,293        18.01           2.67
     Passbook and
          statement savings     24,503        7.77       23,038        6.56        21,110         4.92           2.00
                               -------       -----      -------     -------       -------       ------           ----

          Total                 75,100       23.81       91,854       26.16       109,503        25.51           2.27
                               -------       -----      -------      ------       -------       ------           ----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                          <C>              <C>     <C>              <C>      <C>               <C>
Certificate accounts:
     1-3 months                  9,834        3.12        9,549        2.72         8,552         1.99           4.19
     91 day                        538         .17          379         .11           358          .08           3.90
     182 day                    12,171        3.86       11,391        3.25         9,741         2.27           4.31
     7 months                        -           -            -           -         5,748         1.34           4.73
     9 months                   16,554        5.25       12,411        3.53         5,975         1.39           4.43
     10 months                  18,791        5.95          654         .19        20,729         4.83           5.70
     12 months                  39,975       12.67       31,697        9.03        31,298         7.29           4.64
     12 month IRA               14,431        4.58       12,527        3.57        10,211         2.38           4.54
     13 months                       -           -       24,835        7.07        10,486         2.44           4.82
     18 months                   2,824         .90        2,485         .71         6,637         1.55           4.52
     20 months                  23,152        7.34       93,181       26.55        63,454        14.79           5.57
     22 months                       -           -            -          -        108,261        25.22           5.55
     24 months                  60,477       19.18       29,429        8.38        16,031         3.73           5.39
     30 months                   8,841        2.80        6,482        1.85         4,970         1.16           5.03
     60 months                  32,702       10.37       24,156        6.88        17,320         4.03           6.21
                               -------      ------      -------     -------       -------      -------           ----

          Total                240,290       76.19      259,176       73.84       319,771        74.49           5.30
                               -------      ------      -------      ------       -------       ------           ----

          Total deposits     $ 315,390      100.00%     351,030      100.00%      429,274       100.00%          4.53%
                               =======      ======      =======      ======       =======       ======           ====
</TABLE>

                                       18
<PAGE>
The  following  table  presents  the deposit  activity of the Bank for the years
indicated.
<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                               ---------------------------------------
                                                  1997            1998       1999
                                                  ----            ----       ----
                                                         (In thousands)
<S>                                            <C>             <C>           <C>
     Deposits                                  $ 744,064       1,003,698     1,414,959
     Withdrawals                                (721,501)        979,194    (1,349,451)
                                                 -------       ---------     ---------

     Deposits in excess of withdrawals            22,563          24,504        65,508

     Interest credited on deposits                10,163          11,136        12,736
                                                 -------      ----------    ----------

     Total increase in deposits                $  32,726          35,640        78,244
                                                 =======      ==========    ==========
</TABLE>

The following  table presents the amount of time deposit  accounts in amounts of
$100,000 or more at December 31, 1999 maturing as follows (in thousands):

                       Maturity Period

          One month through three months               $  3,205
          Over three through six months                   4,601
          Over six through 12 months                     10,938
          Over 12 months                                 18,527
                                                       --------

                     Total                             $ 37,271
                                                       ========

                                       19
<PAGE>
The  following  table  presents,  by  various  rate  categories,  the  amount of
certificate  accounts  outstanding  at December 31, 1997,  1998 and 1999 and the
periods to maturity of the  certificate  accounts  outstanding  at December  31,
1999.
<TABLE>
<CAPTION>


                                                                                  Period to Maturity from December 31, 1999
                                  At December 31,            --------------------------------------------------------------------
                       ---------------------------------     Within        1 to         2 to         3 to         4 to
                         1997         1998         1999      1 Year       2 Years      3 Years      4 Years      5 Years      Total
                       ---------     -------     -------     -------      -------       -----        -----       -------    -------
                                                                                              (In thousands)

<S>                    <C>           <C>         <C>         <C>          <C>            <C>          <C>
     3.01% to 4.00%    $      -          374        358         358             -            -            -         -           358
     4.01% to 5.00%       23,215      56,059     106,202      88,811       15,858          604          282       647       106,202
     5.01% to 6.00%      187,028     176,729     181,001     106,986       69,184        2,028        2,803         -       181,001
     6.01% to 8.00%       30,047      26,014      32,210       9,435       22,671           76           28         -        32,210

                       $ 240,290     259,176     319,771     205,590      107,713        2,708        3,113      647        319,771
                       =========     =======    ========     =======      =======        =====        =====      ===        =======
</TABLE>
                                       20

<PAGE>
Borrowings

The Bank is  authorized  to  obtain  advances  from the  Federal  Home Loan Bank
("FHLB") of Atlanta which are generally collateralized by a blanket lien against
the Bank's  mortgage  portfolio.  Such  advances may be made pursuant to several
different credit programs,  each of which has its own interest rate and range of
maturities.  The maximum  amount that the FHLB of Atlanta will advance to member
institutions,  including the Bank, for purposes other than meeting  withdrawals,
fluctuates  from time to time in  accordance  with the  policies  of the Federal
Housing  Finance Board and the FHLB of Atlanta.  At December 31, 1999,  the Bank
had $99.0 million in FHLB advances outstanding.

During 1997, the Bank entered into agreements with nationally recognized primary
securities  dealers under which the Bank sells securities  subject to repurchase
agreements.  Such agreements are accounted for as borrowings by the Bank and are
secured by the securities  sold. At December 31, 1999 and 1998, the Bank did not
have any such  borrowings  outstanding.  During 1998,  the Bank began  borrowing
under retail repurchase  agreements with customers of the Bank. These agreements
are also accounted for as borrowings and are secured by securities  owned by the
Bank.

The  following  table  sets forth  certain  information  relating  to the Bank's
borrowings at the dates indicated:
<PAGE>
<TABLE>
<CAPTION>
                                                                            At or For the Year Ended
                                                                                Ended December 31,
                                                                         1997         1998         1999
                                                                       ---------   -----------  -----------
                                                                             (Dollars in thousands)
<S>                                                                    <C>         <C>          <C>
FHLB advances:
     Average balance outstanding                                       $  13,226   $    33,718  $    74,515
                                                                       =========   ===========  ===========
     Maximum amount outstanding at any month end during the year       $  30,000   $    56,000  $    99,000
                                                                       =========   ===========  ===========
     Balance outstanding at end of year                                $  30,000   $    56,000  $    99,000
                                                                       =========   ===========  ===========
     Weighted average interest rate during the year                         6.15%        5.91%         5.42%
                                                                       =========   ===========  ===========
     Weighted average interest rate at end of year                          6.01%        5.28%         5.64%
                                                                       =========   ===========  ===========

Other borrowed funds:
     Average balance outstanding                                       $   5,629   $        14  $     1,916
                                                                       =========   ===========  ===========
     Maximum amount outstanding at any month end during the year       $  11,952   $       789  $     3,914
                                                                       =========   ===========  ===========
     Balance outstanding at end of year                                $      --     $     789  $     3,914
                                                                       =========   ===========  ===========
     Weighted average interest rate during the year                         5.74%         4.65%        4.85%
                                                                       =========   ===========  ===========
     Weighted average interest rate at end of year                            --   %      4.65%        4.75%
                                                                       =========   ===========  ===========

Total borrowings:
     Average balance outstanding                                       $  18,855   $    33,732  $    76,431
                                                                          ======        ======      =======
     Maximum amount outstanding at any month end during the year       $  41,952   $    56,789  $   102,914
                                                                          ======        ======      =======
     Balance outstanding at end of year                                $  30,000   $    56,789  $   102,914
                                                                          ======        ======      =======
     Weighted average interest rate during the year                         6.03%        5.89%         5.40%
                                                                         =======      =======      ========
     Weighted average interest rate at end of year                          6.01%        5.27%         5.61%
                                                                         =======      =======      ========
</TABLE>

Subsidiary Activities

The  Bank has one  wholly-owned  subsidiary;  Lake  County  Service  Corporation
("LCSC") formed to develop a 100-lot  subdivision,  which is substantially  sold
out.  During 1999,  LCSC sold an 8.4 acre  commercial  parcel and a one-acre lot
that  adjoins the Bank's  main  office.  The gain on the sale of the  commercial
property  was  $553,000  after tax and $886,000  before tax.  During 1999,  LCSC
purchased two commercial  building  sites for possible  future bank branches and
purchased an existing branch building in Inverness, which is rented to the Bank.


                                       21
<PAGE>
Personnel

As of February 14, 2000,  the Bank had 166 full-time  employees and 15 part-time
employees. The employees are not represented by a collective bargaining unit and
the Bank considers its relationship with its employees to be good.

REGULATION AND SUPERVISION

General

As a savings and loan holding company, the Company is required by federal law to
file reports with, and otherwise  comply with, the rules and  regulations of the
OTS. The Bank is subject to extensive regulation, examination and supervision by
the OTS, as its primary federal regulator, and the FDIC, as the deposit insurer.
The Bank is a member of the Federal  Home Loan Bank System and,  with respect to
deposit insurance, of the Savings Association Insurance Fund ("SAIF") managed by
the FDIC.  The Bank must file reports with the OTS and the FDIC  concerning  its
activities and financial condition in addition to obtaining regulatory approvals
prior  to  entering  into  certain   transactions   such  as  mergers  with,  or
acquisitions  of, other  savings  institutions.  The OTS and/or the FDIC conduct
periodic  examinations  to test the Bank's safety and  soundness and  compliance
with  various   regulatory   requirements.   This   regulation  and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the  protection of the insurance  fund and
depositors.  The  regulatory  structure  also gives the  regulatory  authorities
extensive  discretion  in  connection  with their  supervisory  and  enforcement
activities  and  examination  policies,  including  policies with respect to the
classification  of assets and the  establishment  of adequate loan loss reserves
for  regulatory  purposes.  Any  change  in  such  regulatory  requirements  and
policies,  whether by the OTS, the FDIC or the  Congress,  could have a material
adverse  impact on the Company,  the Bank and their  operations.  Certain of the
regulatory  requirements  applicable to the Bank and to the Company are referred
to below or  elsewhere  herein.  The  description  of statutory  provisions  and
regulations  applicable to savings  institutions and their holding companies set
forth in this Form 10-K does not  purport to be a complete  description  of such
statutes and regulations and their effects on the Bank and the Company.

Holding Company Regulation

The Company is a nondiversified  unitary savings and loan holding company within
the meaning of federal law. Under prior law, a unitary  savings and loan holding
company,  such as the Company was not  generally  restricted  as to the types of
business activities in which it may engage,  provided that the Bank continued to
be a qualified thrift lender. See "Federal Savings Institution  Regulation - QTL
Test." The  Gramm-Leach-Bliley  Act of 1999 provides that no company may acquire
control of a savings association after May 4, 1999 unless it engages only in the
financial  activities permitted for financial holding companies under the law or
for multiple savings and loan holding companies as described below. Further, the
Gramm-Leach-Bliley   Act  specifies  that  existing  savings  and  loan  holding
companies  may only  engage  in such  activities.  The  Gramm-Leach-Bliley  Act,
however, grandfathered the unrestricted authority for activities with respect to
unitary savings and loan holding  companies  existing prior to May 4, 1999, such
as the Company,  so long as the Bank continues to comply with the QTL Test. Upon
any non-supervisory acquisition by the Company of another savings institution or
Bank that meets the  qualified  thrift lender test and is deemed to be a savings
institution  by the OTS, the Company  would  become a multiple  savings and loan
holding company (if the acquired  institution is held as a separate  subsidiary)
and would  generally  be  limited to  activities  permissible  for bank  holding
companies under Section 4(c)(8) of the Bank Holding Company Act,  subject to the
prior approval of the OTS, and certain activities authorized by OTS regulation.

                                       22
<PAGE>
A savings and loan holding company is prohibited  from,  directly or indirectly,
acquiring  more than 5% of the voting stock of another  savings  institution  or
savings and loan holding company,  without prior written approval of the OTS and
from  acquiring or retaining  control of a  depository  institution  that is not
insured by the FDIC. In evaluating  applications by holding companies to acquire
savings  institutions,  the OTS considers the financial and managerial resources
and future prospects of the company and institution involved,  the effect of the
acquisition on the risk to the deposit  insurance  funds,  the  convenience  and
needs of the community and competitive factors.

The OTS may not approve any acquisition  that would result in a multiple savings
and loan  holding  company  controlling  savings  institutions  in more than one
state,  subject to two  exceptions:  (i) the approval of interstate  supervisory
acquisitions by savings and loan holding companies and (ii) the acquisition of a
savings  institution  in  another  state if the laws of the state of the  target
savings institution  specifically  permit such acquisitions.  The states vary in
the extent to which they  permit  interstate  savings and loan  holding  company
acquisitions.

Although savings and loan holding  companies are not subject to specific capital
requirements  or  specific  restrictions  on the payment of  dividends  or other
capital  distributions,  federal  regulations do prescribe such  restrictions on
subsidiary savings institutions as described below. The Bank must notify the OTS
30 days before declaring any dividend to the Company. In addition, the financial
impact of a holding  company on its  subsidiary  institution is a matter that is
evaluated  by the OTS  and the  agency  has  authority  to  order  cessation  of
activities or divestiture of subsidiaries  deemed to pose a threat to the safety
and soundness of the institution.

Federal Savings Institution Regulation

Business Activities. The activities of federal savings institutions are governed
by federal law and regulations.  These laws and regulations delineate the nature
and extent of the  activities  in which  federal  associations  may  engage.  In
particular,  many types of lending  authority  for  federal  association,  e.g.,
commercial,  non-residential real property loans and consumer loans, are limited
to a specified percentage of the institution's capital or assets.

Capital  Requirements.  The OTS capital regulations require savings institutions
to meet three minimum  capital  standards:  a 1.5% tangible  capital ratio, a 4%
leverage ratio (3% for  institutions  receiving the highest rating on the CAMELS
rating  system) and an 8%  risk-based  capital  ratio.  In addition,  the prompt
corrective action standards discussed below also establish, in effect, a minimum
2% tangible capital standard, a 4% leverage ratio (3% for institutions receiving
the highest  rating on the CAMEL  financial  institution  rating  system),  and,
together with the risk-based  capital  standard  itself,  a 4% Tier 1 risk-based
capital  standard.  The OTS  regulations  also  require  that,  in  meeting  the
tangible, leverage and risk-based capital standards, institutions must generally
deduct  investments  in and  loans to  subsidiaries  engaged  in  activities  as
principal that are not permissible for a national bank.

The  risk-based   capital  standard  for  savings   institutions   requires  the
maintenance of Tier 1 (core) and total capital (which is defined as core capital
and  supplementary  capital)  to  risk-weighted  assets  of at  least 4% and 8%,
respectively.  In determining the amount of  risk-weighted  assets,  all assets,
including  certain  off-balance  sheet assets,  are  multiplied by a risk-weight
<PAGE>
factor of 0% to 100%,  assigned by the OTS capital regulation based on the risks
believed  inherent  in the type of asset.  Core  (Tier 1)  capital is defined as
common stockholders' equity (including retained earnings), certain noncumulative
perpetual preferred stock and related surplus,  and minority interests in equity
accounts  of  consolidated  subsidiaries  less  intangibles  other than  certain
mortgage  servicing  rights and credit card  relationships.  The  components  of
supplementary  capital currently include cumulative  preferred

                                       23
<PAGE>
stock,  long-term perpetual preferred stock,  mandatory convertible  securities,
subordinated  debt and intermediate  preferred stock, the allowance for loan and
lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45%
of  unrealized  gains  on  available-for-sale  equity  securities  with  readily
determinable fair market values.  Overall,  the amount of supplementary  capital
included as part of total capital cannot exceed 100% of core capital.

The  capital  regulations  also  incorporate  an interest  rate risk  component.
Savings institutions with "above normal" interest rate risk exposure are subject
to a deduction from total capital for purposes of calculating  their  risk-based
capital requirements.  For the present time, the OTS has deferred implementation
of the interest  rate risk capital  charge.  At December 31, 1999,  the Bank met
each of its capital requirements.

The following table presents the Bank's capital position at December 31, 1999.
<TABLE>
<CAPTION>

                                                                       Capital Ratios
                            Actual      Required     Excess          Actual      Required
                           Capital      Capital      Amount         Percent       Percent
                           -------      -------      ------         -------       -------
                                             (Dollars in thousands)
<S>                       <C>             <C>         <C>              <C>         <C>
Tangible                  $ 51,177        8,841       42,336           8.68%       1.50%
Core (Leverage)           $ 51,177       17,681       33,496           8.68        3.00
Risk-based                $ 53,894       28,893       25,001          14.92        8.00

</TABLE>

Prompt  Corrective  Regulatory  Action.  The OTS is  required  to  take  certain
supervisory actions against undercapitalized institutions, the severity of which
depends  upon the  institution's  degree of  undercapitalization.  Generally,  a
savings institution that has a ratio of total capital to risk weighted assets of
less than 8%, a ratio of Tier 1 (core) capital to  risk-weighted  assets of less
than 4% or a ratio of core  capital to total  assets of less than 4% (3% or less
for  institutions  with the  highest  examination  rating) is  considered  to be
"undercapitalized."  A savings  institution that has a total risk-based  capital
ratio less than 6%, a Tier 1 capital  ratio of less than 3% or a leverage  ratio
that is less than 3% is considered to be "significantly  undercapitalized" and a
savings institution that has a tangible capital to assets ratio equal to or less
than 2% is  deemed  to be  "critically  undercapitalized."  Subject  to a narrow
exception,  the OTS is  required  to appoint a receiver  or  conservator  for an
institution that is "critically  undercapitalized." The regulation also provides
that a capital restoration plan must be filed with the OTS within 45 days of the
date a  savings  institution  receives  notice  that  it is  "undercapitalized,"
"significantly  undercapitalized" or "critically  undercapitalized."  Compliance
with the plan must be guaranteed  by any parent  holding  company.  In addition,
numerous  mandatory  supervisory  actions  become  immediately  applicable to an
undercapitalized   institution,   including,   but  not  limited  to,  increased
monitoring by regulators and restrictions on growth,  capital  distributions and
expansion.  The OTS  could  also  take  any  one of a  number  of  discretionary
supervisory  actions,  including  the  issuance of a capital  directive  and the
replacement of senior executive officers and directors.
<PAGE>

Insurance  of  Deposit  Accounts.  The Bank is a member  of the  SAIF.  The FDIC
maintains a risk-based  assessment system by which  institutions are assigned to
one of  three  categories  based  on  their  capitalization  and  one  of  three
subcategories based on examination ratings and other supervisory information. An
institution's  assessment  rate  depends  upon  the  categories  to  which it is
assigned.   Assessment  rates  for  SAIF  member   institutions  are  determined
semiannually  by the FDIC and  currently  range from zero  basis  points for the
healthiest institutions to 27 basis points for the riskiest.

                                       24

<PAGE>
In addition to the assessment for deposit  insurance,  institutions are required
to make payments on bonds issued in the late 1980s by the Financing  Corporation
("FICO") to recapitalize the predecessor to the SAIF. During 1999, FICO payments
for SAIF  members  approximated  6.1 basis  points,  while Bank  Insurance  Fund
("BIF")  members paid 1.2 basis points.  By law,  there is equal sharing of FICO
payments between SAIF and BIF members beginning on January 1, 2000.

The Bank paid no assessment for 1999, however its payments toward the FICO bonds
amounted to $213,749.  The FDIC has authority to increase insurance assessments.
A significant  increase in SAIF insurance  premiums would likely have an adverse
effect  on the  operating  expenses  and  results  of  operations  of the  Bank.
Management cannot predict what insurance assessment rates will be in the future.

Insurance  of deposits  may be  terminated  by the FDIC upon a finding  that the
institution  has  engaged  in unsafe or  unsound  practices,  is in an unsafe or
unsound  condition to continue  operations or has violated any  applicable  law,
regulation,  rule,  order or  condition  imposed  by the  FDIC or the  OTS.  The
management  of the Bank does not know of any  practice,  condition  or violation
that might lead to termination of deposit insurance.

Loans to One  Borrower.  Federal law  provides  that  savings  institutions  are
generally subject to the limits on loans to one borrower  applicable to national
banks. A savings institution may not make a loan or extend credit to a single or
related  group of  borrowers  in excess  of 15% of its  unimpaired  capital  and
surplus.  An additional  amount may be lent, equal to 10% of unimpaired  capital
and surplus, if secured by specified readily-marketable  collateral. At December
31, 1999,  the Bank's limit on loans to one borrower was $8.1  million,  and the
Bank's largest aggregate  outstanding  balance of loans to one borrower was $7.6
million.

QTL Test.  The HOLA requires  savings  institutions  to meet a qualified  thrift
lender test. Under the test, a savings association is required to either qualify
as a "domestic building and loan association" under the Internal Revenue Code or
maintain  at  least  65% of its  "portfolio  assets"  (total  assets  less:  (i)
specified liquid assets up to 20% of total assets;  (ii) intangibles,  including
goodwill;  and (iii) the value of property used to conduct  business) in certain
"qualified  thrift  investments"  (primarily  residential  mortgages and related
investments,  including certain mortgage-backed securities) in at least 9 months
out of each 12 month period.

A savings  institution that fails the qualified thrift lender test is subject to
certain operating restrictions and may be required to convert to a bank charter.
As of December 31, 1999, the Bank maintained  79.30% of its portfolio  assets in
qualified  thrift  investments and,  therefore,  met the qualified thrift lender
test.  Recent  legislation  has  expanded the extent to which  education  loans,
credit card loans and small business loans may be considered  "qualified  thrift
investments."

Limitation on Capital Distributions. OTS regulations impose limitations upon all
capital  distributions  by a  savings  institution,  including  cash  dividends,
payments  to  repurchase  its shares and  payments  to  shareholders  of another
institution  in a cash-out  merger.  The rule  effective in the first quarter of
1999 established three tiers of institutions based primarily on an institution's
capital level. An institution that exceeded all capital  requirements before and
after a proposed capital  distribution  ("Tier 1 Bank") and had not been advised
by the OTS that it was in need of more than  normal  supervision,  could,  after
prior  notice  but  without   obtaining   approval  of  the  OTS,  make  capital
distributions  during the calendar  year equal to the greater of (i) 100% of its
net earnings to date during the calendar  year plus the amount that would reduce
by one-half the excess capital over its capital requirements at the beginning of
the calendar year or (ii) 75% of its net income for the previous four  quarters.
Any  additional

                                       23
<PAGE>
capital  distributions  required prior regulatory  approval.  Effective April 1,
1999,  the  OTS's  capital  distribution   regulation  changed.  Under  the  new
regulation,  an  application  to and the prior  approval  of the OTS is required
prior to any capital  distribution if the institution does not meet the criteria
for  "expedited   treatment"  of  applications   under  OTS  regulations  (i.e.,
generally,  examination  ratings in the two top  categories),  the total capital
distributions  for the  calendar  year  exceed net income for that year plus the
amount of retained net income for the preceding two years, the institution would
be  undercapitalized  following  the  distribution  or  the  distribution  would
otherwise  be contrary to a statute,  regulation  or  agreement  with OTS. If an
application is not required,  the institution must still provide prior notice to
OTS of the capital  distribution  if,  like the Bank,  it is a  subsidiary  of a
holding  company.  In the event the Bank's  capital  fell  below its  regulatory
requirements  or the OTS  notified  it that it was in need of more  than  normal
supervision,   the  Bank's  ability  to  make  capital  distributions  could  be
restricted.  In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS  determines  that such  distribution  would  constitute an unsafe or unsound
practice.

Liquidity.  The Bank is  required  to  maintain  an  average  daily  balance  of
specified  liquid assets equal to a monthly average of not less than a specified
percentage of its net withdrawable deposit accounts plus short-term  borrowings.
This liquidity requirement is currently 4%, but may be changed from time to time
by the OTS to any amount within the range of 4% to 10%.  Monetary  penalties may
be  imposed  for  failure  to meet  these  liquidity  requirements.  The  Bank's
liquidity  ratio for December 31, 1999 was 18.7%,  which exceeded the applicable
requirements.  The Bank has never been subject to monetary penalties for failure
to meet its liquidity requirements.

Assessments.  Savings institutions are required to pay assessments to the OTS to
fund the agency's  operations.  The general  assessments,  paid on a semi-annual
basis,  are computed  upon the savings  institution's  total  assets,  including
consolidated  subsidiaries,  as reported in the Bank's latest  quarterly  thrift
financial  report.  The Bank was not  assessed  any payments for the fiscal year
ended December 31, 1999.

Transactions   with  Related   Parties.   The  Bank's  authority  to  engage  in
transactions  with  "affiliates"  (e.g.,  any company that  controls or is under
common control with an  institution,  including the Company and its  non-savings
institution  subsidiaries)  is limited by federal law. The  aggregate  amount of
covered  transactions  with any  individual  affiliate  is limited to 10% of the
capital and surplus of the savings institution.  The aggregate amount of covered
transactions with all affiliates is limited to 20% of the savings  institution's
capital and surplus.  Certain  transactions  with  affiliates are required to be
secured by collateral  in an amount and of a type  described in federal law. The
purchase of low quality  assets from  affiliates  is generally  prohibited.  The
transactions with affiliates must be on terms and under circumstances,  that are
at least as favorable to the  institution  as those  prevailing  at the time for
comparable  transactions with  non-affiliated  companies.  In addition,  savings
institutions  are  prohibited  from lending to any affiliate  that is engaged in
activities that are not  permissible  for bank holding  companies and no savings
institution   may  purchase  the  securities  of  any  affiliate  other  than  a
subsidiary.
<PAGE>
The Bank's authority to extend credit to executive  officers,  directors and 10%
shareholders  ("insiders"),  as well as entities such persons  control,  is also
governed  by  federal  law.  Such  loans  are  required  to  be  made  on  terms
substantially  the same as those  offered to  unaffiliated  individuals  and not
involve more than the normal risk of repayment.  Recent  legislation  created an
exception for loans made pursuant to a benefit or  compensation  program that is
widely  available  to all  employees  of  the  institution  and  does  not  give
preference to insiders over other employees.  The law limits both the


                                       26
<PAGE>
individual and aggregate amount of loans the Bank may make to insiders based, in
part,  on the Bank's  capital  position  and  requires  certain  board  approval
procedures to be followed.

Enforcement.  The  OTS  has  primary  enforcement  responsibility  over  savings
institutions  and has the authority to bring actions against the institution and
all institution-affiliated  parties, including stockholders,  and any attorneys,
appraisers and accountants  who knowingly or recklessly  participate in wrongful
action  likely to have an  adverse  effect  on an  insured  institution.  Formal
enforcement  action may range from the issuance of a capital  directive or cease
and desist  order to removal of officers  and/or  directors  to  institution  of
receivership,   conservatorship  or  termination  of  deposit  insurance.  Civil
penalties cover a wide range of violations and can amount to $25,000 per day, or
even  $1  million  per day in  especially  egregious  cases.  The  FDIC  has the
authority to recommend to the Director of the OTS that enforcement  action to be
taken with respect to a particular savings  institution.  If action is not taken
by the  Director,  the FDIC has  authority  to take such  action  under  certain
circumstances.  Federal  law also  establishes  criminal  penalties  for certain
violations.

Standards for Safety and Soundness.  The federal  banking  agencies have adopted
Interagency  Guidelines  prescribing  Standards  for Safety and  Soundness.  The
guidelines set forth the safety and soundness standards that the federal banking
agencies use to identify and address problems at insured depository institutions
before  capital  becomes  impaired.   If  the  OTS  determines  that  a  savings
institution fails to meet any standard prescribed by the guidelines, the OTS may
require the institution to submit an acceptable plan to achieve  compliance with
the standard.

Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank System,  which consists of 12
regional  Federal Home Loan Banks. The Federal Home Loan Bank provides a central
credit facility primarily for member institutions.  The Bank, as a member of the
Federal Home Loan Bank,  is required to acquire and hold shares of capital stock
in that  Federal  Home  Loan  Bank in an  amount  at least  equal to 1.0% of the
aggregate principal amount of its unpaid residential  mortgage loans and similar
obligations at the beginning of each year, or 1/20 of its advances  (borrowings)
from  the  Federal  Home  Loan  Bank,  whichever  is  greater.  The  Bank was in
compliance  with this  requirement  with an investment in Federal Home Loan Bank
stock at December 31, 1999 of $4.95 million.

The Federal Home Loan Banks are required to provide funds for the  resolution of
insolvent  thrifts  in the late  1980s and to  contribute  funds for  affordable
housing programs.  These  requirements could reduce the amount of dividends that
the  Federal  Home Loan Banks pay to their  members and could also result in the
Federal Home Loan Banks  imposing a higher rate of interest on advances to their
members. If dividends were reduced, or interest on future Federal Home Loan Bank
advances increased, The Bank's net interest income would likely also be reduced.
Recent  legislation  has changed the  structure  of the Federal  Home Loan Banks
funding obligations for insolvent thrifts,  revised the capital structure of the
Federal  Home Loan  Banks and  implemented  entirely  voluntary  membership  for
Federal Home Loan Banks. Management cannot predict the effect that these changes
may have with respect to its Federal Home Loan Bank membership.

                                       27
<PAGE>
Federal Reserve System

The Federal Reserve Board regulations  require savings  institutions to maintain
non-interest  earning reserves against their transaction accounts (primarily NOW
and regular checking accounts).  The regulations generally provide that reserves
be maintained against aggregate  transaction  accounts as follows:  for accounts
aggregating  $44.3 million or less (subject to adjustment by the Federal Reserve
Board) the reserve requirement is 3%; and for accounts  aggregating greater than
$44.3  million,  the reserve  requirement is $1.329 million plus 10% (subject to
adjustment by the Federal Reserve Board between 8% and 14%) against that portion
of total transaction accounts in excess of $44.3 million. The first $5.0 million
of otherwise  reservable balances (subject to adjustments by the Federal Reserve
Board) are exempted  from the reserve  requirements.  The Bank complies with the
foregoing requirements.

Year 2000

The Company's  operating and financial  systems have been found to be compliant;
the "Y2K Problem" has not adversely  affected the Company's  operations nor does
management expect that it will.



                                       28
<PAGE>
                           FEDERAL AND STATE TAXATION

Federal Taxation

General.  The Company and the Bank report their income on a  consolidated  basis
using the  accrual  method of  accounting,  and are  subject to  federal  income
taxation  in the  same  manner  as  other  corporations  with  some  exceptions,
including  particularly  the Bank's reserve for bad debts discussed  below.  The
following  discussion  of tax matters is intended only as a summary and does not
purport to be a  comprehensive  description  of the tax rules  applicable to the
Bank or the  Company.  The Bank was last  audited  by the IRS for the year ended
December 31, 1996.  For its 1999 taxable year,  the Bank is subject to a maximum
federal income tax rate of 34%.

Bad Debt Reserves. For fiscal years beginning prior to December 31, 1995, thrift
institutions  which  qualified  under  certain   definitional  tests  and  other
conditions of the Internal  Revenue Code of 1986 (the "Code") were  permitted to
use certain  favorable  provisions to calculate  their  deductions  from taxable
income  for  annual  additions  to their bad debt  reserve.  A reserve  could be
established for bad debts on qualifying real property loans  (generally  secured
by  interests  in  real  property  improved  or to be  improved)  under  (i) the
Percentage of Taxable  Income  Method (the "PTI Method") or (ii) the  Experience
Method.  The reserve for  nonqualifying  loans was computed using the Experience
Method.

The Small  Business  Job  Protection  Act of 1996 (the  "1996  Act"),  which was
enacted on August 20, 1996,  requires  savings  institutions to recapture (i.e.,
take into income) certain portions of their  accumulated bad debt reserves.  The
1996 Act repeals the reserve  method of accounting  for bad debts  effective for
tax years beginning  after 1995.  Thrift  institutions  that would be treated as
small banks are  allowed to utilize the  Experience  Method  applicable  to such
institutions,  while thrift  institutions that are treated as large banks (those
generally  exceeding  $500  million  in  assets)  are  required  to use only the
specific charge-off method.  Thus, the PTI Method of accounting for bad debts is
no longer available for any financial institution.

A thrift institution required to change its method of computing reserves for bad
debts will treat such change as a change in method of  accounting,  initiated by
the  taxpayer,  and having  been made with the  consent of the IRS.  Any Section
481(a)  adjustment  required to be taken into income with respect to such change
generally  will be taken into income  ratably  over a  six-taxable  year period,
beginning  with the first  taxable  year  beginning  after 1995,  subject to the
residential loan requirement.

Under the residential loan requirement provision,  the recapture required by the
1996 Act is suspended for each of two successive  taxable years,  beginning with
1996, in which the Bank originates a minimum of certain  residential loans based
upon the average of the principal  amounts of such loans made by the Bank during
its six taxable years  preceding its current  taxable year.  Under the 1996 Act,
for its  current  and  future  taxable  years,  the  Bank is  permitted  to make
additions to its tax bad debt  reserves.  In  addition,  the Bank is required to
recapture  (i.e.,  take into  income)  over a six year  period the excess of the
balance of its tax bad debt reserves as of December 31, 1995 over the balance of
such  reserves as of December  31,  1987.  At December  31,  1999,  the Bank had
approximately $606,000 of deferred tax liabilities recorded for the recapture of
its bad debt reserves.


                                       29
<PAGE>
Distributions.   Under  the  1996   Act,   if  the  Bank   makes   "non-dividend
distributions"  to the Company,  such  distributions  will be considered to have
been made from the Bank's  unrecaptured  tax bad debt  reserves  (including  the
balance of its reserves as of December 31, 1987) to the extent thereof, and then
from the Bank's supplemental reserve for losses on loans, to the extent thereof,
and an amount based on the amount  distributed  (but not in excess of the amount
of  such  reserves)  will  be  included  in  the  Bank's  income.   Non-dividend
distributions  include  distributions  in  excess  of  the  Bank's  current  and
accumulated earnings and profits, as calculated for federal income tax purposes,
distributions in redemption of stock,  and  distributions in partial or complete
liquidation.  Dividends paid out of the Bank's  current or accumulated  earnings
and profits will not be so included in the Bank's income.

The amount of additional taxable income triggered by a non-dividend is an amount
that, when reduced by the tax attributable to the income, is equal to the amount
of the distribution.  Thus, if the Bank makes a non-dividend distribution to the
Company,  approximately  one and one-half times the amount of such  distribution
(but not in excess of the amount of such reserves) would be includable in income
for federal  income tax purposes,  assuming a 35% federal  corporate  income tax
rate. The Bank does not intend to pay dividends that would result in a recapture
of any portion of its bad debt reserves.

Corporate Alternative Minimum Tax. The Code imposes a tax on alternative minimum
taxable income  ("AMTI") at a rate of 20%. For fiscal years  beginning  prior to
January  1,  1996,  the  excess  of the bad debt  reserve  deduction  using  the
percentage  of taxable  income  method over the  deduction  that would have been
allowable  under the  experience  method is  treated  as a  preference  item for
purposes of computing the AMTI.  Only 90% of AMTI can be offset by net operating
loss carryovers.  The adjustment to AMTI based on book income is an amount equal
to 75% of the amount by which a corporation's  adjusted current earnings exceeds
its AMTI  (determined  without regard to this  adjustment and prior to reduction
for net  operating  losses).  In addition,  for taxable  years  through 1995, an
environmental  tax of .12% of the  excess of AMTI (with  certain  modifications)
over $2.0 million is imposed on corporations, including the Bank, whether or not
an  Alternative  Minimum  Tax  ("AMT")  is paid.  The Bank does not expect to be
subject to the AMT.

Dividends Received Deduction and Other Matters. The Company may exclude from its
income  100% of  dividends  received  from  the  Bank as a  member  of the  same
affiliated group of corporations.  The corporate dividends received deduction is
generally 70% in the case of dividends  received from unaffiliated  corporations
with which the  Company  and the Bank will not file a  consolidated  tax return,
except  that if the  Company  and the Bank own more  than 20% of the  stock of a
corporation  distributing  a  dividend,  80% of any  dividends  received  may be
deducted.

Florida  Taxation.  The Bank files Florida  franchise  tax returns.  For Florida
franchise tax purposes, savings institutions are presently taxed at a rate equal
to 5.5% of taxable income.  For this purpose,  "taxable income"  generally means
federal taxable income,  subject to certain adjustments  (including the addition
of  interest  income  on  State  and  municipal  obligations).  The  Bank is not
currently under audit with respect to its Florida franchise tax returns.



                                       30
<PAGE>
ITEM 2.   PROPERTIES

The Bank  conducts its business  through its main office and 12 branch  offices.
The following table sets forth certain  information  regarding the Bank's office
properties:

                                                        Net Book Value of Land
                                         Date               and Buildings at
Location                                Acquired             December 31, 1999
--------                                --------             -----------------
                                                        (Dollars in thousands)
Main Office
800 North Boulevard, West
Leesburg, Florida  34748-5053               1961                 $   356

Wildwood
837 South Main Street
Wildwood, Florida  34785-5302               1967                     293

Main Street
1409 West Main Street
Leesburg, Florida  34748-4854               1972                     201

Clermont
481 East Highway 50
Clermont, Florida  34711-4032               1982                     710

Eustis
2901 South Bay Street
Eustis, Florida  32726-6551                 1979                     568

Fruitland Park
410 Palm Street
Fruitland Park, Florida  34731-4013         1983                     377

Lady Lake
431 US Highway 441/27
Lady Lake, Florida  32159-3046              1995                   1,204

Lake Square
10105 US Highway 441
Leesburg, Florida  34788-3952               1995                     503

South Leesburg (1)
27405 US Highway 27, Suite 123
Leesburg, Florida  34748-7914               1996                     118

South Leesburg (2)
US Highway 27
Leesburg, Florida  34748                    1996                     375

Inverness (3)
2709 East Gulf to Lake Highway
Inverness, Florida 34453-3245               1998                     869

Four Corners
16550 Woodcrest Way
Clermont, Florida 34711-7004                1998                   1,073
<PAGE>
Bushnell (4)
1128 North Main Street
Bushnell, Florida 33513                     1998                     282

Administration (5)
Leesburg, Florida                           1961                      78

Sumter County (6)                           1999                     401


(1)  Leased branch office opened February, 1997.
(2)  Parcel of land purchased by the Bank for a future branch office location.
(3)  Leased branch office opened  February,  1999.  Owned by Lake County Service
     Corp.
(4)  Leased branch office opened May, 1999.
(5)  Parcel of land owned by Bank for future administration offices.
(6)  Two parcels of land  purchased  by Lake  County  Service  Corp.  for future
     branch office locations.

The Bank owns and operates personal  computers,  teller terminals and associated
equipment. At December 31, 1999, such equipment had a net book value of $996.

                                       31
<PAGE>
ITEM 3.   LEGAL PROCEEDINGS

There are no material pending legal proceedings to which FFLC Bancorp,  Inc., or
any of its subsidiaries is a party or to which any of their property is subject.

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

No  matters  were  submitted  to a vote of the  stockholders  during  the fourth
quarter of the fiscal year ended December 31, 1999,  through the solicitation of
proxies or otherwise.

                                     PART II

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

The   above-captioned   information  appears  under  "Common  Stock  Prices  and
Dividends"  in the  Registrant's  1999  Annual  Report  to  Stockholders  and is
incorporated herein by reference.

ITEM 6.   SELECTED FINANCIAL DATA

The above-captioned  information appears under "Selected  Consolidated Financial
Data" on page 6 and 7 of the Registrant's 1999 Annual Report to Stockholders and
is incorporated herein by reference.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The  above-captioned  information  appears under  "Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations" in the  Registrant's
1999 Annual  Report to  Stockholders  on pages 8 through 18 and is  incorporated
herein by reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  Consolidated  Financial  Statements of FFLC Bancorp,  Inc. and  Subsidiary,
together with the report thereon by Hacker,  Johnson, Cohen & Grieb PA appear in
the  Registrant's  1999 Annual Report to Stockholders on pages 19 through 50 and
are incorporated herein by reference.

ITEM 9.   CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

There  have  been no  disagreements  with the  Registrant's  accountants  on any
matters  of   accounting   principles   or  practices  or  financial   statement
disclosures.

                                       32
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information related to Directors and Executive Officers of the Registrant is
incorporated  herein by reference to the  Registrant's  Proxy  Statement for the
Annual Meeting of Stockholders to be held on May 4, 2000 at pages 5 through 8.

ITEM 11.  EXECUTIVE COMPENSATION

The information  relating to executive  compensation  is incorporated  herein by
reference  to the  Registrant's  Proxy  Statement  for  the  Annual  Meeting  of
Stockholders to be held on May 4, 2000 at pages 12 through 15.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information  relating to security ownership of certain beneficial owners and
management  is  incorporated  herein  by  reference  to the  Registrant's  Proxy
Statement for the Annual  Meeting of  Stockholders  to be held on May 4, 2000 at
pages 5 through 7.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information  relating to certain  relationships and related  transactions is
incorporated  herein by reference to pages 15 and 16 of the  Registrant's  Proxy
Statement for the Annual Meeting of Stockholders to be held on May 4, 2000.


                                       33
<PAGE>
                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)  The following documents are filed as a part of this report:

     (1)  Consolidated  Financial  Statements of the Company are incorporated by
     reference from the following  indicated  pages of the 1999 Annual Report to
     Stockholders.

                                                                            Page
                                                                            ----

     Independent Auditor's Report                                             50

     Consolidated Balance Sheets as of December 31, 1999 and 1998             19

     Consolidated Statements of Income for the Years Ended
          December 31, 1999, 1998 and 1997                                    20

     Consolidated Statements of Stockholders' Equity for the
          Years Ended December 31, 1999, 1998 and 1997                     21-23

     Consolidated Statements of Cash Flows for the Years
          Ended December 31, 1999, 1998 and 1997                           24-25

     Notes to Consolidated Financial Statements for the Years
          Ended December 31, 1999, 1998 and 1997                           26-49

     The remaining information appearing in the Annual Report to Stockholders is
     not deemed to be filed as part of this report, except as expressly provided
     herein.

     (2) All schedules are omitted  because they are not required or applicable,
     or  the  required  information  is  shown  in  the  consolidated  financial
     statements or the notes thereto.

     (3)  Exhibits

          (a)  The following exhibits are filed as part of this report.

                3.1      Certificate of Incorporation of FFLC Bancorp, Inc.*
                3.2      Bylaws of FFLC Bancorp, Inc.
                4.0      Stock Certificate of FFLC Bancorp, Inc.*
               10.1      First Federal Savings Bank of Lake County Recognition
                         and Retention Plan**
               10.2      First Federal Savings Bank of Lake County Recognition
                         and Retention Plan for Outside Directors**
               10.3      FFLC Bancorp, Inc. Incentive Stock Option Plans for
                         Officers and Employees**
               10.4      FFLC Bancorp, Inc. Stock Option Plan for Outside
                         Directors**
               13.0      Annual Report to Stockholders (filed herewith)
                 99      Proxy Statement for Annual Meeting (filed herewith)
<PAGE>
     *    Incorporated  herein by reference into this document from the Exhibits
          to Form S-1, Registration Statement,  initially filed on September 27,
          1993, Registration No. 33-69466.
     **   Incorporated  herein by reference  into this  document  from the Proxy
          Statement for the Annual Meeting of Stockholders held on May 12, 1994.

          (b)  Reports on Form 8-K.
               No  reports  on Form 8-K were  filed by the  Company  during  the
               fourth quarter.




                                       34
<PAGE>
Pursuant to the  requirements  of Section 13 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.

                                                     FFLC BANCORP, INC.


                                                     By: /s/ Stephen T. Kurtz
                                                         Stephen T. Kurtz
                                                         Chief Executive Officer
                                                         and President

                                                     Dated:  March 16, 2000
                                                             --------------


Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
report has been signed by the  following  persons in the  capacities  and on the
dates indicated.

       Name                           Title                           Date
       ----                           -----                           ----


/s/ Joseph J. Junod           Chairman of the Board               March 16, 2000
-------------------
Joseph J. Junod

/s/ Claron D. Wagner          Vice Chairman of the Board          March 16, 2000
--------------------
Claron D. Wagner

/s/ James P. Logan            Director                            March 16, 2000
------------------
James P. Logan

/s/ Ted R. Ostrander, Jr.     Director                            March 16, 2000
-------------------------
Ted R. Ostrander

/s/ H.D. Robuck, Jr.          Director                            March 16, 2000
--------------------
H.D. Robuck, Jr.

/s/ Stephen T. Kurtz          Chief Executive Officer,            March 16, 2000
--------------------          President and Director
Stephen T. Kurtz

/s/ Paul K. Mueller           Executive Vice President, Chief     March 16, 2000
-------------------           Operating Officer and Treasurer
Paul K. Mueller               and Director



                                       35