FFLC BANCORP, INC.
                               2003 ANNUAL REPORT

                                  OUR MISSION

Our mission is to operate First Federal Savings Bank as a community bank, in a
manner consistent with the high expectations of our shareholders, customers and
employees. We will achieve attractive financial results for our stockholders,
provide quality financial services and products to our customers, and offer
rewarding careers to our employees, while maintaining a high level of personal
service and integrity. The Company's primary goals are to: provide an attractive
return to its shareholders, as measured by long-term capital appreciation and
the continued payment of reasonable dividends; provide a competitive,
progressive and profitable array of financial services and products in a manner
focused on excellent customer service; attract and retain highly-motivated,
top-quality employees; and make a positive impact on the communities that we
serve.

                           FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 evidences Congress'
determination that the disclosure of forward-looking information is desirable
for investors and encourages such disclosure by providing a safe harbor for
forward-looking statements by corporate management. This Annual Report,
including the Letter to Stockholders and the Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains
forward-looking statements that involve risk and uncertainty. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development, growth projections and results of the
Company's business include, but are not limited to, the growth of the economy,
interest rate movements, timely development by the Company of technology
enhancements for its products and operating systems, the impact of competitive
products, services and pricing, customer business requirements, Congressional
legislation and similar matters. Readers of this report are cautioned not to
place undue reliance on forward-looking statements which are subject to
influence by the named risk factors and unanticipated future events. Actual
results, accordingly, may differ materially from management expectations.

                                    CONTENTS

                                                                            Page

Corporate Profile, Corporate Organization and General Information .............1
Office Locations and Common Stock Prices and Dividends ........................2
Consolidated Financial Highlights .............................................3
Letter to Stockholders ......................................................4-5
First Federal Website and Online Banking.....................................6-7
Selected Consolidated Financial Data and Financial Ratios....................8-9
Management's Discussion and Analysis of Financial
    Condition and Results of Operations ...................................10-20
Consolidated Financial Statements .........................................21-53
Independent Auditors' Report..................................................54
Directors and Officers of FFLC Bancorp, Inc. .................................55
Directors and Officers of First Federal Savings Bank of Lake County...........56
First Federal Employees ......................................................57

                                  Inside Cover

<PAGE>

CORPORATE PROFILE

FFLC Bancorp, Inc. ("FFLC" or the "Holding Company") was incorporated in
Delaware on September 16, 1993, and acquired First Federal Savings Bank of Lake
County (the "Bank") (together, the "Company") in connection with the Bank's
conversion to stock form on January 4, 1994. The Holding 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. The Bank is a community-oriented savings institution, chartered in 1934,
which offers a variety of financial services to individuals and businesses
primarily located in Lake County, Sumter County, Citrus County and Marion
County, Florida. The deposits of the Bank are insured by the Federal Deposit
Insurance Corporation ("FDIC") through the Savings Association Insurance Fund
("SAIF").

CORPORATE ORGANIZATION

Holding Company

      FFLC Bancorp, Inc.

Subsidiaries

      First Federal Savings Bank of Lake County
      First Alliance Title, LLC

Bank's Subsidiary

      Lake County Service Corporation

GENERAL INFORMATION

Corporate Headquarters

      800 North Boulevard West, Post Office Box 490420, Leesburg,
      Florida 34749-0420

      Telephone:    Local     (352) 787-3311
                    Toll Free (877) 955-2265
Annual Meeting

      The Annual Meeting of the Stockholders will be held at the Leesburg
      Community Building located at 109 East Dixie Avenue in Leesburg at 2:00
      p.m. on May 13, 2004.

Form 10-K

      A copy of the Form 10-K, as filed with the Securities and Exchange
      Commission, and the Holding Company's Code of Ethics and Business
      Conduct may be obtained by stockholders without charge upon written
      request to Sandra L. Rutschow, Vice President - Secretary, FFLC Bancorp,
      Inc., Post Office Box 490420, Leesburg, Florida 34749-0420. The Company's
      SEC filings, annual and quarterly reports and press releases are also
      available at our Website, http://www.1stfederal.com/fflc.htm., in the
      "FFLC Bancorp" section.

Stockholder Assistance

      Stockholders requiring a change of address, records or information about
      lost certificates, dividend checks or dividend reinvestment should
      contact:

      Registrar and Transfer Company
      10 Commerce Drive
      Cranford, New Jersey 07016
      800-368-5948
      Website: http://www.rtco.com

Corporate Counsel

      George W. Murphy, Jr.
      Muldoon, Murphy & Faucette LLP
      5101 Wisconsin Avenue
      Washington, D.C. 20016

Independent Auditors

      Hacker, Johnson & Smith PA
      Certified Public Accountants
      930 Woodcock Road, Suite 211
      Orlando, Florida 32803


                                       1
<PAGE>

                             FIRST FEDERAL LOGO HERE

OFFICE LOCATIONS

MAP INSERT MAP - HALF PAGE

COMMON STOCK PRICES AND DIVIDENDS

FFLC's common stock is listed on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") under the symbol FFLC. The following table sets
forth market price information, based on closing prices, as reported by the
NASDAQ for the common stock high and low closing sales prices and the amount of
dividends paid on the common stock for the periods indicated (adjusted for the
three-for-two stock split in February 2003). See Note 22 of the Consolidated
Financial Statements for a summary of quarterly financial data.

                                                                        Cash
                                                                     Dividends
                                                                       Paid
                                                   High      Low     Per Share
                                                   ----      ---     ---------
         Quarter Ended:

         March 31, 2002........................   16.90     13.53       .09
         June 30, 2002.........................   18.90     16.53       .09
         September 30, 2002....................   19.77     17.83       .09
         December 31, 2002.....................   19.71     17.83       .09
         March 31, 2003........................   25.82     19.38       .10
         June 30, 2003.........................   28.90     18.67       .10
         September 30, 2003....................   30.95     25.08       .13
         December 31, 2003.....................   30.47     26.50       .13

As of January 31, 2004, the Company had 1,752 holders of record of common stock
(includes shares held by brokers in street name).


                                       2
<PAGE>

CONSOLIDATED FINANCIAL HIGHLIGHTS
($ in thousands, except per share amounts)

<TABLE>
<CAPTION>
AT YEAR END:                                                                2003                    2002                 2001
------------                                                                ----                    ----                 ----
<S>                                                                      <C>                    <C>                   <C>
Total assets .................................................           $  947,914               915,976               823,151
Loans, net ...................................................           $  767,987               735,338               685,935
Securities ...................................................           $   82,137                77,324                59,503
Deposits .....................................................           $  705,589               668,058               585,128
Equity .......................................................           $   77,356                71,062                64,068
Book value per share (1) .....................................           $    14.33                 13.22                 11.99
Shares outstanding (1) .......................................            5,397,154             5,374,913             5,345,898
Equity-to-assets ratio .......................................                 8.16%                 7.76%                 7.78%
Nonperforming assets to total assets .........................                  .65%                  .35%                  .28%

FOR THE YEAR:

Interest income ..............................................           $   52,840                56,533                56,485
Net interest income after provision for loan losses ..........           $   26,719                25,205                20,054
Net income ...................................................           $    9,148                 8,836                 6,289
Basic income per share (1) ...................................           $     1.70                  1.65                  1.18
Diluted income per share (1) .................................           $     1.67                  1.61                  1.15
Loan originations ............................................           $  406,510               323,728               257,862
Return on average assets .....................................                  .98%                 1.00%                  .82%
Return on average equity .....................................                12.23%                13.05%                10.20%
Average equity to average assets ratio .......................                 8.02%                 7.67%                 8.05%
Noninterest expense to average assets ........................                 1.86%                 1.68%                 1.68%
</TABLE>

YIELDS AND RATES:

<TABLE>
<CAPTION>
                                                                 Weighted Average
                                                                   Rate or Yield         Average Rate or Yield During
                                                                  at December 31,           Year Ended December 31,
                                                                 ----------------        ----------------------------
                                                                 2003        2002        2003        2002        2001
                                                                 ----        ----        ----        ----        ----
<S>                                                              <C>         <C>         <C>         <C>         <C>
Loans ....................................................       6.45%       7.10%       6.71%       7.28%       7.99%
Securities ...............................................       3.24%       4.45%       2.48%       3.76%       5.84%
All interest-earning assets ..............................       5.96%       6.52%       6.02%       6.73%       7.71%
Interest-bearing deposits ................................       2.22%       2.84%       2.48%       3.27%       4.95%
All interest-bearing liabilities .........................       2.70%       3.29%       2.99%       3.72%       5.15%
Interest-rate spread (2) .................................       3.26%       3.23%       3.03%       3.01%       2.56%
Net yield on average interest-earning assets (3) .........        N/A         N/A        3.22%       3.22%       2.89%
</TABLE>

(1)   Adjusted for the three-for-two stock split declared on February 14, 2003

(2)   Average yield on all interest-earning assets less average rate paid on all
      interest-bearing liabilities.

(3)   Net interest income divided by average interest-earning assets.


                                       3
<PAGE>

                                    LOGO HERE

Dear Stockholders:

I am pleased to report to our stockholders that 2003 was another solidly
profitable year for your Company. In spite of a tentative economy, continued
media coverage of corporate scandals and the uncertainty in world affairs, First
Federal, your Hometown Bank, enjoyed a successful year both in terms of the
growth of the Bank and in operating earnings. During 2003, we again experienced
record net income from operations. In addition, we significantly increased the
quarterly cash dividends on our common stock. First Federal, the Company's
subsidiary, set a new record for total assets during 2003, and ended the year
with total assets in excess of $946 million. Our success results from a team
effort, and I want to take this opportunity to thank all of you - our
stockholders, our directors, our employees, our customers, and our communities -
for your efforts and support as we moved through 2003 and into 2004.

The Company's net income from operations increased 3.5%, from $8.8 million in
2002 to $9.1 million in 2003. On a diluted per share basis, net income per share
increased 3.7% from $1.61 in 2002 to $1.67 in 2003. The increase in net income
from operations was primarily due to the increase in net interest income. That
increase occurred because of a significant decrease in the cost of funds that
the Bank experienced as a result of the continued reductions in market interest
rates that began in 2001. The decrease in the cost of funds was partially offset
by a reduction in interest income on loans. In addition, the Bank experienced a
significant increase in net gain on sales of loans sold from the favorable
mortgage banking environment that existed during the first three-quarters of
2003.

In February 2003, the Board approved a 3-for-2 split of our common stock.
Stockholders received one additional share of common stock for every two shares
held as of the close of business on February 28, 2003, the record date of the
split. Because of increased profitability and the change in the Federal tax
treatment of dividends, your Board of Directors approved a 30% increase in the
quarterly cash dividend in July 2003. The quarterly dividend was increased from
$.10 per common share to $.13. That increase continues the practice of periodic
increases in the dividends paid since 1994, when the quarterly cash dividend was
$.02 per common share (adjusted for stock splits in 1997 and 2003).

It is gratifying to note that our stock price rose over 45% during 2003, from
$19.71 to $28.75. Since our initial public offering in 1994, your stock has
yielded an average annual return, including dividends, of 23.2%. We remain
convinced that our best strategy for creating long-term value to our
stockholders is to focus on profitability and excellence in customer service.

Asset growth continues to be a focal point for the Company. The Company's total
assets grew 3.5%, from $916 million at December 31, 2002 to $948 million at
December 31, 2003. During 2003, loans receivable grew 4.4%, from $735 million to
$768 million. During 2003, the Bank's loan originations totaled $406.5 million,
compared to $323.7 million in 2002. The Bank originated $191.0 million in
residential loans, $118.6 million in commercial loans and $96.7 million in
consumer loans in 2003. As reflected in our financial statements, those volume
levels, as well as the increases in our cash and investment securities, reflect
significant increases over our results from 2002. In reviewing our financial
statements, you will see that the Company's asset growth was funded primarily by
an increase in the Bank's deposits. We are particularly pleased that, during
2003, the Bank's deposits grew 5.6% with a substantial portion of that growth in
checking and other non-certificate of deposit accounts.

The Company's continued success and growth is designed to keep pace with the
growth of our communities and the increasing competition in the financial
services sector. In order to ensure that our customers have sufficient physical
locations at which to conduct banking transactions, we continue to expand our
branch structure. During 2003, we opened a branch in Crystal River, Florida, and
acquired land and began construction for another branch located in The Villages
area. We expect to open that branch in the second quarter of 2004.


                                       4
<PAGE>

As you know, more and more banking transactions are conducted electronically,
and I am very pleased to report that First Federal Online Banking, our Internet
banking solution, continues to enjoy support from both our retail and commercial
customers. We currently have over 4,485 registered users of our online banking
service, representing an increase over last year of approximately 54.7%.

If you have not had a chance to check out First Federal Online Banking, I
encourage you to visit our website, www.1stfederal.com, and click the "Test
Drive" button. I believe you will be pleased at how easily and completely you
can obtain account balances, transfer funds, pay bills, and access cash
management services (for commercial customers) on a 24-hours-a-day,
7-days-a-week basis. While you are at our website, I also encourage you to note
all the other useful information, including our loan and deposit products, links
to our press releases and financial reports, local weather, and links to some
other "local-interest" websites.

Our customers have welcomed our efforts to provide other financial services. We
have been pleased with the positive feedback and customer acceptance of the
program offering various investment products (which include mutual funds,
annuities, discount brokerage services and financial planning). The Financial
Network Investment Corporation, a securities broker-dealer firm and member of
the NASD and SIPC, offers those investment services at First Federal offices. We
began offering these services in 2001, and have been pleased with the growth in
that area. We also continue to offer trust services to our customers, provided
by the Trust Department of the First National Bank of Mount Dora, under a
referral agreement. At December 31, 2003, the market valuation of trust accounts
serviced was $42 million.

As I did last year, I want to renew our commitment to honesty and integrity. In
light of the disturbing examples of poor corporate governance so widely reported
in the national press, I want you to know of our unrelenting commitment to the
highest standards of ethics, fair and honest reporting, and sound corporate
oversight on which this Company was founded and on which we continue to operate.
We continue to carefully monitor those stories, and the resulting laws and
regulations that have been issued, and believe we are in compliance with all of
those guidelines. We appreciate the trust that you have placed in us over the
past years, and will strive to continue to be worthy of that trust. We have
recently reviewed and updated our Company's Ethics policy, and are implementing
a system by which any employee may anonymously report unethical behavior within
our company either by use of a toll-free telephone number or a dedicated
website.

Community banking very much remains a "people" business. We are blessed to have
a number of directors and staff members who have been with the Bank for many
years. Also, many new employees have joined the Bank with extensive banking
experience in our market area. It is my belief that our team is second to none
in terms of providing our customers with quality customer service.

We remain committed to increasing the long-term value of our Company. That
commitment includes meeting the investment needs of our stockholders, the
financial needs of our customers, the personal growth needs of our employees and
the needs of the communities in which we have the privilege to serve. We believe
that FFLC Bancorp, Inc., is well positioned to meet those needs, and we look
forward to the challenges of the future.

Cordially yours,


Stephen T. Kurtz
President and Chief Executive Officer


                                       5
<PAGE>

                           First Federal New Logo Here

                    Insert by Ford Press (www.1stfederal.com)

                   Insert by Ford Press (First Federal Online)

                               [GRAPHIC OMITTED]

Visit First Federal's website at http://www.1stfederal.com. This site serves as
a portal for First Federal banking services, local news, and information
regarding our communities. From this site, customers can gain access to First
Federal Online Banking, our fully interactive banking system, that allows bill
payments, account inquiries, transfer of funds and more. In addition, commercial
customers can access cash management tools, make tax payments and make payroll
direct deposit payments through First Federal Online Banking. You'll also find
current information about the Bank's locations, products and services at our
website.

Investors can also get the latest information regarding FFLC, including stock
quotes, press releases, SEC filings, beneficial ownership reports, and other
supplemental data, in the "FFLC Bancorp" section of our website.

                               www.1stfederal.com


                                       6
<PAGE>

                            First Federal online logo

                               [GRAPHIC OMITTED]

First Federal introduced First Federal Online Banking in July 2000 through the
Bank's website at http://www.1stfederal.com. First Federal customers can now
access practically their entire First Federal relationship through the website,
24 hours a day, 7 days a week. From the First Federal website, customers can
view our online banking product and may enroll online. After receiving their
user ID and password, customers may log-on to check balances, pay their bills
online, reconcile their account statements, transfer funds from one account to
another, review account histories, reorder checks and more. First Federal Online
Banking is just one more added convenience to banking with First Federal.

                           First Federal new logo here


                                       7
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
($ in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                          At December 31,
                                                              ---------------------------------------------------------------------
                                                                  2003            2002          2001           2000           1999
                                                                  ----            ----          ----           ----           ----
<S>                                                           <C>               <C>            <C>            <C>            <C>
Total assets ............................................     $  947,914        915,976        823,151        711,493        590,432
Loans, net ..............................................        767,987        735,338        685,935        615,484        500,901
Cash and cash equivalents ...............................         62,160         69,394         49,792         30,481         34,339
Securities ..............................................         82,137         77,324         59,503         42,717         36,909
Deposits ................................................        705,589        668,058        585,128        518,885        429,274
Borrowed funds ..........................................        155,941        168,458        167,327        129,376        102,914
Stockholders' equity ....................................         77,356         71,062         64,068         59,283         55,637

<CAPTION>
                                                                                   For the Year Ended December 31,
                                                              ---------------------------------------------------------------------
                                                                  2003            2002          2001           2000           1999
                                                                  ----            ----          ----           ----           ----
<S>                                                           <C>             <C>            <C>            <C>            <C>
Interest income .........................................     $   52,840         56,533         56,485         49,128         38,383
Interest expense ........................................         24,607         29,483         35,316         30,065         21,214
Net interest income .....................................         28,233         27,050         21,169         19,063         17,169
Provision for loan losses ...............................          1,514          1,845          1,115            880            719
Net interest income after provision for loan losses .....         26,719         25,205         20,054         18,183         16,450
Noninterest income (1) ..................................          5,364          3,776          2,773          1,904          1,675
Noninterest expense .....................................         17,355         14,868         12,841         11,414         10,313
Income before income taxes (1) ..........................         14,728         14,113          9,986          8,673          7,812
Income taxes (1) ........................................          5,580          5,277          3,697          3,364          2,962
Net income (1) ..........................................          9,148          8,836          6,289          5,309          4,850
Basic income per share (1) (2) ..........................     $     1.70           1.65           1.18           1.00            .91
Weighted average number of common
      shares outstanding for basic (2) ..................      5,385,199      5,360,498      5,321,646      5,312,100      5,322,852
Diluted income per share (1) (2) ........................     $     1.67           1.61           1.15            .97            .88
Weighted average number of common shares
      outstanding for diluted (2) .......................      5,456,896      5,466,880      5,444,148      5,423,610      5,515,557
</TABLE>

----------

(1)   Excludes gain on sale of real estate held for development in 1999 of $886
      ($552 net of tax).

(2)   Adjusted for the three-for-two stock split declared on February 14, 2003.


                                       8
<PAGE>

SELECTED CONSOLIDATED FINANCIAL RATIOS
AND OTHER DATA:

<TABLE>
<CAPTION>
                                                                           At or For the Year Ended December 31,
                                                                  -----------------------------------------------------
                                                                    2003       2002       2001        2000        1999
                                                                    ----       ----       ----        ----        ----
<S>                                                             <C>        <C>        <C>        <C>         <C>
Return on average assets (1).................................         .98%      1.00%      0.82%      0.82%       0.93%
Return on average equity (1).................................       12.23%     13.05%     10.20%      9.24%       8.88%
Dividend payout ratio .......................................       27.18%     22.66%     29.35%     32.32%      28.95%
Average equity to average assets.............................        8.02%      7.67%      8.05%      8.88%      10.45%
Total equity to total assets.................................        8.16%      7.76%      7.78%      8.33%       9.42%
Interest rate spread during year(2)..........................        3.03%      3.01%      2.56%      2.66%       2.98%
Net interest margin (3)......................................        3.22%      3.22%      2.89%      3.08%       3.44%
Nonperforming assets to total assets (4).....................        0.65%      0.35%      0.28%      0.39%       0.47%
Nonperforming loans to total loans (5).......................        0.66%      0.34%      0.27%      0.40%       0.46%
Allowance for loan losses to nonperforming loans.............      103.84%    199.88%    224.20%    141.51%     119.01%
Allowance for loan losses to nonperforming assets............       89.01%    161.00%    187.62%    127.49%     101.77%
Allowance for loan losses to gross loans.....................        0.69%      0.68%      0.61%      0.56%       0.54%
Noninterest expenses to average assets.......................        1.86%      1.68%      1.68%      1.76%       1.97%
Operating efficiency ratio (1)...............................       51.66%     48.23%     53.63%     54.44%      54.73%
Average interest-earning assets to
      average interest-bearing liabilities...................        1.07       1.06       1.07       1.09        1.11
Net interest income to noninterest expenses..................        1.63       1.82       1.69       1.69        1.69
Total shares outstanding (6).................................   5,397,154  5,374,913  5,345,898  5,298,842   5,375,907
Book value per common share outstanding (6)..................     $ 14.33      13.22      11.99      11.19       10.35
Number of banking offices (all full-service).................          15         14         12         12          12
</TABLE>

----------

(1)   Excludes gain on sale of real estate held for development in 1999 of
      $886,000 ($552,000 net of tax).

(2)   Difference between weighted average yield on all interest-earning assets
      and weighted average rate on all interest-bearing liabilities.

(3)   Based upon net interest income before provision for loan losses divided by
      average interest-earning assets.

(4)   Nonperforming assets consist of nonperforming loans and foreclosed assets.

(5)   Nonperforming loans consist of loans 90 days or more delinquent.

(6)   Adjusted for the three-for-two stock split declared on February 14, 2003.


                                       9
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

GENERAL

First Federal Savings Bank of Lake County, the subsidiary of FFLC, was organized
in 1934 as a federally chartered savings and loan association and converted to a
federally chartered stock savings bank on January 4, 1994. The Bank's principal
business continues to be attracting retail deposits from the general public and
investing those deposits, together with principal repayments on loans and
investments and funds generated from operations, primarily in mortgage loans
secured by one-to-four-family, owner-occupied homes, commercial loans, consumer
loans and, to a lesser extent, construction loans 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 loan and mortgage-backed securities portfolios
and interest and dividends on its investment securities.

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, Citrus
and Marion counties in central Florida. Management believes that its offices are
located in communities that generally can be characterized as rural service and
retirement communities with residential neighborhoods comprised predominately of
one-to-four-family residences. The Bank is the largest (by asset size)
locally-based financial institution in Lake County, and serves its market area
with a wide selection of residential mortgage loans and other retail financial
services. Management considers the Bank's reputation for financial strength and
customer service as a major advantage in attracting and retaining customers in
its market area and believes it benefits from its community orientation as well
as its established deposit base and level of core deposits.

The Company's net income from operations increased 3.5% to $9.1 million for the
year ended December 31, 2003 from $8.8 million for the year 2002. The Company's
total assets increased 3.5% to $947.9 million at December 31, 2003 from $916.0
million at December 31, 2002. That increase resulted primarily from a 4.4%
increase in net loans to $768.0 million at December 31, 2003 from $735.3 million
at December 31, 2002, reflecting increased local loan demand. Securities
increased 6.2% or $4.8 million during 2003. Deposits increased 5.6% to $705.6
million at December 31, 2003 from $668.1 million at December 31, 2002. Advances
from the Federal Home Loan Bank decreased $16.0 million, to $133.0 million at
December 31, 2003 from $149.0 million at December 31, 2002.

CRITICAL ACCOUNTING POLICIES

Our financial condition and results of operations are sensitive to accounting
measurements and estimates of matters that are inherently uncertain. When
applying accounting policies in areas that are subjective in nature, we use our
best judgment to arrive at the carrying value of certain assets. The most
critical accounting policy we applied is related to the valuation of the loan
portfolio.

A variety of factors impact the carrying value of the loan portfolio including
the calculation of the allowance for loan losses, the valuation of underlying
collateral, the timing of loan charge-offs and the amount and amortization of
loan fees and deferred origination costs.

We believe that the determination of the allowance for loan losses represents a
critical accounting policy. The allowance for loan losses is maintained at a
level management considers to be adequate to absorb probable loan losses
inherent in the portfolio, based on evaluations of the collectibility and
historical loss experience of loans. Credit losses are charged and recoveries
are credited to the allowance. Provisions for loan losses are based on our
review of the historical loan loss experience and such factors which, in
management's judgment, deserve consideration under existing economic conditions
in estimating probable credit losses. The allowance is based on ongoing
assessments of the probable estimated losses inherent in the loan portfolio. Our
methodology for assessing the appropriate allowance level consists of several
key elements described below.


                                       10
<PAGE>

Larger commercial loans that exhibit probable or observed credit weaknesses are
subject to individual review. Where appropriate, reserves are allocated to
individual loans based on our estimate of the borrower's ability to repay the
loan given the availability of collateral, other sources of cash flows, and
available legal options. Included in the review of individual loans are those
that are impaired as provided in Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan" as amended. Any specific
reserves for impaired loans are measured based on the fair market value of the
underlying collateral. We evaluate the collectibility of both principal and
interest when assessing the need for a special reserve. Historical loss rates
are applied to other commercial loans not subject to specific reserve
allocations.

Homogenous loans, such as installment and residential mortgage loans, are not
individually reviewed by management. Reserves are established for each pool of
loans based on the expected net charge-offs. Loss rates are based on the average
net charge-off history by loan category.

Historical loss rates for commercial and consumer loans may be adjusted for
significant factors that, in management's judgment, reflect the impact of any
current conditions or loss recognition. Factors which management considers in
the analysis include the effects of the local economy, trends in the nature and
volume of loans (delinquencies, charge-offs, nonaccrual and problem loans),
changes in the internal lending policies and credit standards, collection
practices, and examination results from bank regulatory agencies and our
internal credit review function. An unallocated reserve is maintained to
recognize the imprecision in estimating and measuring loss when evaluating
reserves for individual loans or pools of loans. Specific reserves on individual
loans and historical loss rates are reviewed throughout the year and adjusted as
necessary based on changing borrower and collateral conditions and actual
collection and charge-off experience.

Based on the procedures discussed above, management believes that allowance for
loan losses were adequate to absorb estimated loan losses associated with the
loan portfolio at December 31, 2003. Actual results could differ from these
estimates. However, since the allowance is affected by management's judgment and
uncertainties, there is the likelihood that materially different amounts would
be reported under different conditions or assumptions. To the extent that the
economy, collateral values, reserve factors, or the nature and volume of problem
loans change, we may need to adjust the provision for loan losses. Material
additions to our provision for loan losses would result in a decrease in net
income and capital.

The allowance for loan losses is also discussed as part of "Results of
Operations" and in Note 3 to the consolidated financial statements. The
significant accounting policies are discussed in Note 1 to the consolidated
financial statements.

REGULATION AND LEGISLATION

General

The operating results of the Bank are affected by Federal laws and regulations
and the Bank is subject to extensive regulation, examination and supervision by
the Office of Thrift Supervision ("OTS") as its chartering agency, and the
Federal Deposit Insurance Corporation ("FDIC") as the deposit insurer. The Bank
is a member of the Federal Home Loan Bank ("FHLB") System and its deposit
accounts are insured up to applicable limits by the FDIC under the SAIF
("Savings Association Insurance Fund"). 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 financial institutions. The OTS and
the FDIC conduct periodic examinations to test the Bank's compliance with
various regulatory requirements. The activities of the Company and the Bank are
governed by the Home Owner's Loan Act, as amended (the "HOLA"), and, in certain
respects, the Federal Deposit Insurance Act (the "FDIA"). A more complete
description of the HOLA and FDIA is included in the Form 10-K.

Capital Requirements

The capital regulations of the OTS require savings institutions to meet three
capital standards: a 1.5% tangible capital standard; a 3% leverage (core
capital) ratio; and an 8% risk-based capital standard. Under the OTS final rule
implementing the Federal Deposit Insurance Corporation Improvement Act
("FDICIA'), generally, a well-capitalized institution is defined as one that
meets the following capital standards: a 5% tangible capital standard; a 6%
leverage (core capital) ratio; and a


                                       11
<PAGE>

10% risk-based capital standard, and has not been notified by the OTS that it is
in a "troubled condition." At December 31, 2003, the Bank met each of its
capital requirements and met the criteria of a "well-capitalized" institution as
defined above.

Insurance of Deposit Accounts

The FDIC has adopted a risk-based deposit insurance system that assesses deposit
insurance premiums according to the level of risk involved in an institution's
activities. An institution's risk category is based upon whether the institution
is classified as "well capitalized," "adequately capitalized" or "less than
adequately capitalized" and one of three supervisory subcategories within each
capital group. The supervisory subgroup to which an institution is assigned is
based on a supervisory evaluation and information which the FDIC determines to
be relevant to the institution's financial condition and the risk posed to the
deposit insurance fund. The FDIC has authority to raise premiums if deemed
necessary. If such action is taken, it could have an adverse effect on the
earnings of the institution.

Under the FDIA, 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.

CREDIT RISK

The Bank's primary business is lending on residential real estate, commercial
real estate and consumer financing, activities with the inherent risk of
generating potential loan losses the magnitude of which depend on a variety of
factors affecting borrowers which are beyond the control of the Bank. The Bank
has underwriting guidelines and credit review procedures designed to minimize
such credit losses.

RESULTS OF OPERATIONS

The Company's results of operations are dependent primarily on net interest
income, which is the difference between the income earned on its
interest-earning assets, primarily its loans, mortgage-backed securities and
investment securities, and its interest-bearing liabilities, consisting of
deposits and borrowings. The operating expenses of the Company principally
consist of employee compensation, occupancy expenses and other general and
administrative expenses. The Company's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.

Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
upon the volume of interest-earning assets and interest-bearing liabilities and
the interest rates earned or paid on them.


                                       12
<PAGE>

The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average costs; (iii) net interest/dividend income; (iv) interest-rate spread;
(v) net interest margin; and (vi) weighted average yields and rates at December
31, 2003. Yields and costs were derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for the periods shown.
The average balance of loans includes loans on which the Company has
discontinued accruing interest. The yields and costs include fees which are
considered to constitute adjustments to yields.

<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                             -------------------------------------------------------------------
                                                                           2003                                2002
                                                             -------------------------------     -------------------------------
                                             Yield At                    Interest    Average                 Interest    Average
                                           December 31,      Average        and       Yield/     Average        and       Yield/
                                               2003          Balance     Dividends    Cost       Balance     Dividends     Cost
                                               ----          -------     ---------    ----       -------     ---------     ----
                                                                               ($ in thousands)
<S>                                            <C>           <C>            <C>        <C>       <C>            <C>        <C>
Interest-earning assets:
    Loans ................................     6.45%         $742,461       49,844     6.71%     $721,521       52,496     7.28%
    Securities ...........................     3.24            89,536        2,218     2.48        79,757        3,002     3.76
    Other interest-earning assets (1) ....     1.45            45,209          778     1.72        38,186        1,035     2.71
                                                             --------      -------               --------      -------

         Total interest-earning assets ...     5.96           877,206       52,840     6.02       839,464       56,533     6.73
                                                                           ------                              ------

Noninterest-earning assets ...............                     55,385                              43,409
                                                             --------                            --------

         Total assets ....................                   $932,591                            $882,873
                                                             ========                            ========

Interest-bearing liabilities:
    NOW and money market
       accounts ..........................      .40           149,486          778      .52       131,538        1,449     1.10
    Passbook and statement savings
       accounts ..........................      .55            25,886          154      .59        23,501          216      .92
    Certificates .........................     2.96           484,379       15,443     3.19       460,206       18,461     4.01
    FHLB advances ........................     5.40           139,372        7,740     5.55       160,235        8,999     5.62
    Other borrowings .....................     2.04            22,654          492     2.17        16,915          358     2.12
                                                             --------      -------               --------      -------
         Total interest-bearing
           liabilities ...................     2.70           821,777       24,607     2.99       792,395       29,483     3.72
                                                                           -------                             -------

Noninterest-bearing deposits .............                     25,296                              13,655
Noninterest-bearing liabilities ..........                     10,731                               9,122
Stockholders' equity .....................                     74,787                              67,701
                                                             --------                            --------

         Total liabilities and equity ....                   $932,591                            $882,873
                                                             ========                            ========

Net interest-earning assets and
    interest-rate spread (2) .............     3.26%         $ 55,429                  3.03%     $ 47,069                  3.01%
                                               ====          ========                  ====      ========                  ====

Net interest income and net
    margin (3) ...........................                                $ 28,233     3.22%                  $ 27,050     3.22%
                                                                          ========     ====                   ========     ====
Ratio of interest-earning assets
    to interest-bearing liabilities ......                       1.07                                1.06
                                                                 ====                                ====

<CAPTION>
                                                                   Year Ended December 31,
                                                             ------------------------------
                                                                           2001
                                                             ------------------------------
                                                                         Interest   Average
                                                             Average        and      Yield/
                                                             Balance     Dividends    Cost
                                                             -------     ---------    ----
                                                                 ($ in thousands)
<S>                                                         <C>            <C>        <C>
Interest-earning assets:
    Loans .................................                 $655,306       52,384     7.99%
    Securities ............................                   49,709        2,901     5.84
    Other interest-earning assets (1) .....                   27,837        1,200     4.31
                                                            --------      -------

         Total interest-earning assets ....                  732,852       56,485     7.71
                                                                          ------

Noninterest-earning assets ................                   32,885
                                                            --------

         Total assets .....................                 $765,737
                                                            ========

Interest-bearing liabilities:
    NOW and money market
       accounts ...........................                   97,574        2,278     2.33
    Passbook and statement savings
       accounts ...........................                   20,121          359     1.78
    Certificates ..........................                  419,923       23,959     5.71
    FHLB advances .........................                  136,041        8,257     6.07
    Other borrowings ......................                   11,842          463     3.91
                                                            --------      -------
         Total interest-bearing
           liabilities ....................                  685,501       35,316     5.15
                                                                          -------

Noninterest-bearing deposits ..............                   13,683
Noninterest-bearing liabilities ...........                    4,911
Stockholders' equity ......................                   61,642
                                                            --------

         Total liabilities and equity .....                 $765,737
                                                            ========

Net interest-earning assets and
    interest-rate spread (2) ..............                 $ 47,351                  2.56%
                                                            ========                  ====

Net interest income and net
    margin (3) ............................                              $ 21,169     2.89%
                                                                         ========     ====
Ratio of interest-earning assets
    to interest-bearing liabilities .......                     1.07
                                                                ====
</TABLE>

----------

(1)   Includes interest-earning deposits and FHLB Stock.

(2)   Interest-rate spread represents the difference between the average yield
      on interest-earning assets and the average cost of
       interest bearing liabilities.

(3)   Net interest margin is net interest income divided by average
      interest-earning assets.


                                       13
<PAGE>

The following table discloses the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume) and (iii) changes attributable to changes in
rate/volume (changes in rate multiplied by changes in volume).

<TABLE>
<CAPTION>
                                                         Year Ended December 31,                   Year Ended December 31,
                                                               2003 vs. 2002                             2002 vs. 2001
                                                            Increase (Decrease)                       Increase (Decrease)
                                                ----------------------------------------    ---------------------------------------
                                                                  Due to                                    Due to
                                                ----------------------------------------    ---------------------------------------
                                                                       Rate/                                      Rate/
                                                  Rate     Volume     Volume       Net        Rate      Volume   Volume       Net
                                                  ----     ------     ------       ---        ----      ------   ------       ---
                                                                                  ($ in thousands)
<S>                                             <C>          <C>         <C>      <C>        <C>         <C>      <C>        <C>
Interest-earning assets:
    Loans, net ..............................   $(4,058)     1,524       (118)    (2,652)    (4,706)     5,293      (475)       112
    Securities ..............................    (1,026)       368       (126)      (784)    (1,030)     1,754      (623)       101
    Other interest-earning (1) ..............      (378)       190        (69)      (257)      (445)       446      (166)      (165)
                                                -------    -------    -------    -------    -------    -------   -------    -------

           Total ............................    (5,462)     2,082       (313)    (3,693)    (6,181)     7,493    (1,264)        48
                                                -------    -------    -------    -------    -------    -------   -------    -------

Interest-bearing liabilities:
    NOW and money market accounts ...........      (765)       198       (104)      (671)    (1,203)       793      (419)      (829)
    Passbook and statement savings
        accounts ............................       (76)        22         (8)       (62)      (174)        60       (29)      (143)
    Certificates ............................    (3,789)       970       (199)    (3,018)    (7,114)     2,298      (682)    (5,498)
    FHLB advances ...........................      (100)    (1,172)        13     (1,259)      (617)     1,469      (110)       742
    Other borrowings ........................         9        121          4        134       (212)       198       (91)      (105)
                                                -------    -------    -------    -------    -------    -------   -------    -------

           Total ............................    (4,721)       139       (294)    (4,876)    (9,320)     4,818    (1,331)    (5,833)
                                                -------    -------    -------    -------    -------    -------   -------    -------

Net change in net interest
    income ..................................   $  (741)     1,943        (19)     1,183      3,139      2,675        67      5,881
                                                =======    =======    =======    =======    =======    =======   =======    =======
</TABLE>

----------

(1)   Includes interest-earning deposits and FHLB Stock.


                                       14
<PAGE>

CAPITAL RESOURCES

The Bank's sources of funds include proceeds from payments and prepayments on
mortgage loans and mortgage-backed securities, proceeds from the maturities of
investment securities and deposits. While maturities and scheduled amortization
of loans and investment securities are predictable sources of funds, deposit
inflows and mortgage prepayments are greatly influenced by local conditions,
general interest rates, and regulatory changes.

At December 31, 2003, the Bank had outstanding commitments to originate $12.7
million of loans, to fund unused lines of credit of $75.5 million, to fund the
undisbursed portion of loans in process of $24.6 million and $3.4 million in
outstanding standby letters of credit. The Bank believes that it will have
sufficient funds available to meet its commitments. At December 31, 2003,
certificates of deposit which were scheduled to mature in one year or less
totaled $281.6 million. Management believes, based on past experience, that a
significant portion of those funds will remain with the Bank.

REGULATORY CAPITAL REQUIREMENTS

As a federally-chartered financial institution, the Bank is required to maintain
certain minimum amounts of regulatory capital. Regulatory capital is not a
valuation allowance and has not been created by charges against earnings. The
following table provides a summary of the capital requirements, the Bank's
regulatory capital and the amounts in excess at December 31, 2003:

<TABLE>
<CAPTION>
                                                               Tangible                  Core                   Risk-Based
                                                         -------------------      --------------------    ---------------------
                                                                      % of                      % of                 % of Risk-
                                                                    Adjusted                  Adjusted                Weighted
                                                         Amount       Assets       Amount      Assets      Amount      Assets
                                                         ------       ------       ------      ------      ------      ------
                                                                                   ($ in thousands)
<S>                                                      <C>           <C>        <C>           <C>        <C>          <C>
      Regulatory capital ..........................      $78,482       8.28%      $78,482       8.28%      $83,908      13.17%
      Requirement .................................       14,217       1.50        28,435       3.00        50,961       8.00
                                                         -------      -----       -------      -----       -------      -----

      Excess ......................................      $64,265       6.78%      $50,047       5.28%      $32,947       5.17%
                                                         =======      =====       =======      =====       =======      =====
</TABLE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 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. The Company has little or no risk
related to trading accounts, commodities or foreign exchange.

Management actively monitors and manages its interest rate risk exposure. The
primary objective in managing interest-rate risk is to limit, within established
guidelines, the adverse impact of changes in interest rates on the Company's net
interest income and capital, while adjusting the Company's asset-liability
structure to obtain the maximum yield-cost spread on that structure. Management
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates could 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.

Disclosure about the fair value of financial instruments, which reflect changes
in market prices and rates, can be found in Note 9 of the notes to the
consolidated financial statements.


                                       15
<PAGE>

ASSET /LIABILITY MANAGEMENT

The Bank's primary mission is to provide financing by offering permanent and
construction residential mortgage loans, commercial real estate loans and
consumer and commercial loans and by providing conveniently located depository
facilities with transaction, savings and certificate accounts. The Bank's goal
is to continue to be a well-capitalized and profitable operation that provides
service that is professional, efficient and courteous. The Bank seeks to fulfill
its mission and accomplish its goals by pursuing the following strategies: (i)
emphasizing lending in the one-to-four-family residential mortgage, commercial
real estate and consumer lending markets; (ii) controlling interest-rate risk;
(iii) managing deposit pricing and asset growth; (iv) emphasizing cost control;
and (v) maintaining asset quality by investing in U.S. government and agency
securities which, in management's judgment, provide a balance between yield and
safety. It is management's intention to continue to employ these strategies over
the foreseeable future.

The Bank's profitability, like that of most financial institutions, is dependent
to a large extent upon its net interest income, which is the difference between
its interest income on interest-earning assets, such as loans, mortgage-backed
securities and investment securities, and its interest expense on
interest-bearing liabilities, such as deposits and other borrowings. Financial
institutions continue to be affected by general changes in levels of interest
rates and other economic factors beyond their control. At December 31, 2003, the
Bank's one-year interest sensitivity gap (the difference between the amount of
interest-earning assets anticipated by the Bank to mature or reprice within one
year and the amount of interest-bearing liabilities anticipated by the Bank to
mature or reprice within one year) as a percentage of total assets was a
positive .78% Generally, an institution with a positive gap would experience an
increase in net interest income in a period of rising interest rates or a
decrease in net interest income in a period of declining interest rates.
However, certain shortcomings are inherent in the sensitivity analysis presented
above. For example, although certain assets and liabilities may have similar
maturities or periods to repricing, they may react in different manners to
changes in market interest rates. Therefore, no assurance can be given that the
Bank will be able to maintain its net interest-rate spread as market interest
rates fluctuate.

The Bank monitors its interest-rate risk through the Asset/Liability Committee
which meets monthly and reports the results of such monitoring quarterly to the
Board of Directors. The Bank's policy is to seek to maintain a balance between
interest-earning assets and interest-bearing liabilities so that the Bank's
cumulative one-year gap is within a range established by the Board of Directors
and which management believes is conducive to maintaining profitability without
incurring undue risk. The Bank has increased its investment in adjustable-rate
and shorter average life, mortgage-related securities in order to position
itself against the consequences of rising interest rates. The Bank also
maintains liquid assets in an amount which allows for the possibility of
disintermediation when interest rates fluctuate. The Bank's liquidity ratio was
17.4% at December 31, 2003. In addition, the Bank's large, stable, core deposit
base resulting from its continuing commitment to quality customer service has
historically provided it with a steady source of funds.


                                       16
<PAGE>

The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2003 that are expected
to reprice, based upon certain assumptions and contractual maturities, in each
of the future periods shown.

<TABLE>
<CAPTION>
                                                         More         More      More       More        More
                                                         than         than      than       than        than
                                                         Three         Six       One       Three       Five       More
                                           Three        Months       Months     Year       Years       Years      than
                                          Months        to Six        to 12     to 3       to 5        to 10       Ten
                                          or Less       Months       Months     Years      Years       Years      Years       Total
                                          -------       ------       ------     -----      -----       -----      -----       -----
                                                                               ($ in thousands)
<S>                                      <C>             <C>        <C>        <C>          <C>         <C>         <C>      <C>
Rate-sensitive assets:
   Mortgage loans, net of LIP ........   $ 150,654       70,595     117,030    180,290      52,345      10,958      1,478    583,350
   Commercial and consumer
    loans, net of LIP ................      76,800       13,101      22,574     42,588      23,815       8,465      2,085    189,428
   Mortgage-backed
    securities .......................       4,440        3,685       6,036      8,598       5,427         353         --     28,539
   Interest-earning deposits .........      27,088           --          --         --          --          --         --     27,088
   Investment securities .............       5,948        2,049       9,197     20,363          --          --      7,025     44,582
   Mutual funds ......................       9,016           --          --         --          --          --         --      9,016
   FHLB stock ........................       6,900           --          --         --          --          --         --      6,900
                                         ---------     --------     -------    -------    --------     -------    -------    -------

       Total interest-earning
         assets ......................     280,846       89,430     154,837    251,839      81,587      19,776     10,588    888,903
                                         ---------     --------     -------    -------    --------     -------    -------    -------

Rate-sensitive liabilities:
   Deposits:
    Savings accounts .................      26,636           --          --         --          --          --         --     26,636
    NOW and money
       market accounts ...............     161,527           --          --         --          --          --         --    161,527
    Certificates .....................      92,598       73,924     115,081    133,083      71,259          --         --    485,945
   Borrowed funds ....................      22,941       15,000      10,000     74,000      15,000      19,000         --    155,941
                                         ---------     --------     -------    -------    --------     -------    -------    -------

       Total interest-bearing
         liabilities .................     303,702       88,924     125,081    207,083      86,259      19,000         --    830,049
                                         ---------     --------     -------    -------    --------     -------    -------    -------

Interest-sensitivity gap .............   $ (22,856)         506      29,756     44,756      (4,672)        776     10,588     58,854
                                         =========     ========     =======    =======    ========     =======    =======    =======

Cumulative interest-
    sensitivity gap ..................   $ (22,856)     (22,350)      7,406     52,162      47,490      48,266     58,854
                                         =========     ========     =======    =======    ========     =======    =======

Cumulative interest-earning
    assets ...........................   $ 280,846      370,276     525,113    776,952     858,539     878,315    888,903
                                         =========     ========     =======    =======    ========     =======    =======

Cumulative interest-bearing
    liabilities ......................   $ 303,702      392,626     517,707    724,790     811,049     830,049    830,049
                                         =========     ========     =======    =======    ========     =======    =======

Cumulative interest-sensitivity
    gap as a percentage of
    total assets .....................       (2.41)%     (2.36)%     0.78%       5.50%       5.01%      5.09%      6.21%
                                         =========     ========     =======    =======    ========     =======    =======

Cumulative interest-earning
    assets as a percentage of
    cumulative interest-bearing
    liabilities ......................       92.47%      94.31%    101.43%     107.20%     105.86%    105.81%    107.09%
                                         =========     ========     =======    =======    ========     =======    =======
</TABLE>


                                       17
<PAGE>

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2003 TO THE YEAR ENDED DECEMBER 31,
2002

General Operating Results. Net income for the year ended December 31, 2003 was
  $9.1 million, or $1.70 per basic share and $1.67 per diluted share, compared
  to $8.8 million, or $1.65 per basic share and $1.61 per diluted share, for the
  year ended December 31, 2002. All per share information has been adjusted to
  reflect the three-for-two stock split in 2003. The increase in net income was
  primarily due to increases in net interest income of $1.2 million and
  noninterest income of $1.6 million, partially offset by a $2.5 million
  increase in noninterest expense.

Interest Income. Interest income decreased $3.7 to $52.8 million for the year
  ended December 31, 2003. The decrease resulted from a decrease in the average
  yield earned on interest-earning assets from 6.73% for the year ended December
  31, 2002 to 6.02% for the year ended December 31, 2003, partially offset by a
  $37.7 million or 4.5% increase in average interest-earning assets outstanding
  for the year ended December 31, 2003 compared to 2002.

Interest Expense. Interest expense decreased $4.9 million or 16.5%, from $29.5
  million for the year ended December 31, 2002 to $24.6 million for the year
  ended December 31, 2003. The decrease was due primarily to a decrease in the
  average cost of interest-bearing liabilities from 3.72% for the year ended
  December 31, 2002 to 2.99% for 2003, partially offset by an increase of $29.4
  million in average interest-bearing liabilities outstanding. Average
  interest-bearing deposits increased from $615.2 million outstanding during the
  year ended December 31, 2002 to $659.8 million outstanding during 2003.
  Average borrowings decreased from $177.2 million outstanding during the year
  ended December 31, 2002 to $162.0 million in 2003.

Provision for Loan Losses. The provision for loan losses is charged to income to
  increase the allowance for loan losses to the level deemed appropriate by
  management. The provision is based upon the volume and type of lending
  conducted by the Company, charge-off experience, industry standards, the
  amount of nonperforming loans, general economic conditions, particularly as
  they relate to the Company's market area, and other factors related to the
  collectibility of the Company's loan portfolio. The Company recorded
  provisions for loan losses for the years ended December 31, 2003 and 2002 of
  $1.5 million and $1.8 million, respectively. Net loans charged off for the
  years ended December 31, 2003 and 2002 were $1,205,000 and $953,000,
  respectively. Management believes that the allowance for loan losses, which
  was $5.5 million or .69% of gross loans at December 31, 2003 is adequate.

Noninterest Income. Noninterest income increased $1.6 million, or 42.1% from
  $3.8 million for the year ended December 31, 2002 to $5.4 million for 2003.
  That increase was primarily due to increases of $475,000 in other service
  charges and fees and $775,000 in net gain on sales of loans held for sale. The
  increase in gain on sales of loans held for sale was due to an increase in the
  amount of residential mortgage loans originated and sold in the secondary
  market due to the low interest-rate environment.

Noninterest Expense. Noninterest expense increased by $2.5 million or 16.7%,
  from $14.9 million for the year ended December 31, 2002 to $17.4 million for
  the year ended December 31, 2003. The increase was primarily due to increases
  in salaries and employee benefits of $1.4 million, occupancy expense of
  $367,000 and $279,000 in data processing expenses related to the overall
  growth of the Company.

Income Taxes. Income taxes were $5.6 million for the year ended December 31,
  2003 (an effective tax rate of 37.9%) compared to $5.3 million (an effective
  tax rate of 37.4%) for the year ended December 31, 2002.


                                       18
<PAGE>

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2002 TO THE YEAR ENDED DECEMBER 31,
2001

General Operating Results. Net income for the year ended December 31, 2002 was
  $8.8 million, or $1.65 per basic share and $1.61 per diluted share, compared
  to $6.3 million, or $1.18 per basic share and $1.15 per diluted share, for the
  year ended December 31, 2001. All per share information has been adjusted to
  reflect the three-for-two stock split in 2003. The increase in net income was
  primarily due to an increase in net interest income of $5.9 million, partially
  offset by a $2.0 million increase in noninterest expense.

Interest Income. Interest income increased $48,000 to $56.5 million for the year
  ended December 31, 2002. The increase resulted from a $106.6 million or 14.5%
  increase in average interest-earning assets outstanding for the year ended
  December 31, 2002 compared to 2001, offset by a decrease in the average yield
  earned on interest-earning assets from 7.71% for the year ended December 31,
  2001 to 6.73% for the year ended December 31, 2002.

Interest Expense. Interest expense decreased $5.8 million or 16.5%, from $35.3
  million for the year ended December 31, 2001 to $29.5 million for the year
  ended December 31, 2002. The decrease was due primarily to a decrease in the
  average cost of interest-bearing liabilities from 5.15% for the year ended
  December 31, 2001 to 3.72% for 2002, partially offset by increases of $77.6
  million and $29.3 million in average interest-bearing deposits and borrowings
  outstanding, respectively. Average interest-bearing deposits increased from
  $537.6 million outstanding during the year ended December 31, 2001 to $615.2
  million outstanding during 2002. Average borrowings increased from $147.9
  million outstanding during the year ended December 31, 2001 to $177.2 million
  in 2002.

Provision for Loan Losses. The provision for loan losses is charged to income to
  increase the allowance for loan losses to the level deemed appropriate by
  management. The provision is based upon the volume and type of lending
  conducted by the Company, charge-off experience, industry standards, the
  amount of nonperforming loans, general economic conditions, particularly as
  they relate to the Company's market area, and other factors related to the
  collectibility of the Company's loan portfolio. The Company recorded
  provisions for loan losses for the years ended December 31, 2002 and 2001 of
  $1.8 million and $1.1 million, respectively. Net loans charged off for the
  years ended December 31, 2002 and 2001 were $953,000 and $378,000,
  respectively. Management believes that the allowance for loan losses, which
  was $5.2 million or .68% of gross loans at December 31, 2002 is adequate.

Noninterest Income. Noninterest income increased $1.0 million, or 36.2% from
  $2.8 million for the year ended December 31, 2001 to $3.8 million for 2002.
  That increase was primarily due to increases of $321,000 in other service
  charges and fees and $360,000 in net gain on sales of loans held for sale. The
  increase in gain on sales of loans held for sale was due to an increase in the
  amount of residential mortgage loans originated to be sold in the secondary
  market.

Noninterest Expense. Noninterest expense increased by $2.0 million or 15.8%,
  from $12.8 million for the year ended December 31, 2001 to $14.9 million for
  the year ended December 31, 2002. The increase was primarily due to increases
  in salaries and employee benefits of $1.3 million and occupancy expense of
  $404,000 related to the overall growth of the Company.

Income Tax Provision. The income tax provision was $5.3 million for the year
  ended December 31, 2002 (an effective tax rate of 37.4%) compared to $3.7
  million (an effective tax rate of 37.0%) for the year ended December 31, 2001.


                                       19
<PAGE>

IMPACT OF INFLATION AND CHANGING PRICES

The Consolidated Financial Statements and Notes thereto presented herein have
been prepared in accordance with GAAP, which requires the measurement of
financial position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of the
Company's operations. Unlike most industrial companies, nearly all the assets
and liabilities of the Bank are monetary in nature. As a result, interest rates
have a greater impact on the Company's performance than do the effects of
general levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the price of goods and services.


                                       20
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                   ($ in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                                At December 31,
                                                                                        ----------------------------
                                                                                           2003               2002
                                                                                           ----               ----
<S>                                                                                     <C>                  <C>
            Assets

Cash and due from banks ...................................................             $  35,072             20,157
Interest-earning deposits .................................................                27,088             49,237
                                                                                        ---------          ---------

            Cash and cash equivalents .....................................                62,160             69,394

Securities available for sale .............................................                82,137             77,324
Loans, net of allowance for loan losses of $5,490 in 2003
    and $5,181 in 2002 ....................................................               767,987            735,338
Accrued interest receivable:
    Securities ............................................................                   660                811
    Loans .................................................................                 3,189              3,370
Premises and equipment, net ...............................................                21,448             19,369
Foreclosed assets .........................................................                   881                626
Federal Home Loan Bank stock, at cost .....................................                 6,900              7,700
Deferred income taxes .....................................................                 1,134                487
Other assets ..............................................................                 1,418              1,557
                                                                                        ---------          ---------

            Total .........................................................             $ 947,914            915,976
                                                                                        ---------          =========

            Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing demand deposits ...................................                31,481             18,867
    NOW and money market accounts .........................................               161,527            137,858
    Savings accounts ......................................................                26,636             25,403
    Certificates ..........................................................               485,945            485,930
                                                                                        ---------          ---------

            Total deposits ................................................               705,589            668,058

Advances from Federal Home Loan Bank ......................................               133,000            149,000
Other borrowed funds ......................................................                17,786             14,303
Junior subordinated debentures ............................................                 5,155              5,155
Accrued expenses and other liabilities ....................................                 9,028              8,398
                                                                                        ---------          ---------

            Total liabilities .............................................               870,558            844,914
                                                                                        ---------          ---------

Commitments and contingencies (Notes 4, 9 and 12)

Stockholders' equity:
    Preferred stock, $.01 par value, 1,000,000 shares authorized,
        none outstanding ..................................................                    --                 --
    Common stock, $.01 par value, 15,000,000 shares authorized,
        6,397,202 in 2003 and 4,574,944 in 2002 shares issued .............                    64                 46
    Additional paid-in-capital ............................................                31,837             31,638
    Retained income .......................................................                65,071             58,409
    Accumulated other comprehensive income ................................                   297                636
    Treasury stock, at cost (1,000,048 shares in 2003 and
        991,669 shares in 2002) ...........................................               (19,913)           (19,667)
                                                                                        ---------          ---------

            Total stockholders' equity ....................................                77,356             71,062
                                                                                        ---------          ---------

            Total .........................................................             $ 947,914            915,976
                                                                                        =========          =========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


                                       21
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

                        Consolidated Statements of Income
                   ($ in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                                  Year Ended December 31,
                                                                                     ----------------------------------------------
                                                                                        2003              2002              2001
<S>                                                                                 <C>                 <C>              <C>
Interest income:
    Loans .................................................................         $   49,844             52,496           52,384
    Securities ............................................................              2,218              3,002            2,901
    Other .................................................................                778              1,035            1,200
                                                                                    ----------         ----------       ----------

        Total interest income .............................................             52,840             56,533           56,485
                                                                                    ----------         ----------       ----------

Interest expense:
    Deposits ..............................................................             16,375             20,126           26,596
    Borrowed funds ........................................................              8,232              9,357            8,720
                                                                                    ----------         ----------       ----------

        Total interest expense ............................................             24,607             29,483           35,316
                                                                                    ----------         ----------       ----------

        Net interest income ...............................................             28,233             27,050           21,169

Provision for loan losses .................................................              1,514              1,845            1,115
                                                                                    ----------         ----------       ----------

        Net interest income after provision for loan losses ...............             26,719             25,205           20,054
                                                                                    ----------         ----------       ----------

Noninterest income:
    Deposit account fees ..................................................              1,036                953              835
    Other service charges and fees ........................................              2,375              1,900            1,579
    Net gain on sales of loans held for sale ..............................              1,178                403               43
    Other .................................................................                775                520              316
                                                                                    ----------         ----------       ----------

        Total noninterest income ..........................................              5,364              3,776            2,773
                                                                                    ----------         ----------       ----------

Noninterest expense:
    Salaries and employee benefits ........................................             10,196              8,814            7,554
    Occupancy expense .....................................................              2,787              2,420            2,016
    Data processing expense ...............................................              1,270                991              990
    Advertising and promotion .............................................                507                492              410
    Professional services .................................................                480                432              386
    Other .................................................................              2,115              1,719            1,485
                                                                                    ----------         ----------       ----------

        Total noninterest expense .........................................             17,355             14,868           12,841
                                                                                    ----------         ----------       ----------

Income before income taxes ................................................             14,728             14,113            9,986

        Income taxes ......................................................              5,580              5,277            3,697
                                                                                    ----------         ----------       ----------

Net income ................................................................         $    9,148              8,836            6,289
                                                                                    ==========         ==========       ==========

Basic income per share ....................................................         $     1.70               1.65             1.18
                                                                                    ==========         ==========       ==========

Weighted-average number of shares outstanding for basic ...................          5,385,199          5,360,498        5,321,646
                                                                                    ==========         ==========       ==========

Diluted income per share ..................................................         $     1.67               1.61             1.15
                                                                                    ==========         ==========       ==========

Weighted-average number of shares outstanding for diluted .................          5,456,896          5,466,880        5,444,148
                                                                                    ==========         ==========       ==========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


                                       22
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

           Consolidated Statements of Changes in Stockholders' Equity

                  Years Ended December 31, 2003, 2002 and 2001
                   ($ in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                  Common Stock                                          Accumulated
                                              -------------------   Additional                             Other           Total
                                               Number of              Paid-In   Treasury    Retained   Comprehensive   Stockholders'
                                                 Shares    Amount     Capital     Stock      Income        Income         Equity
                                                 ------    ------     -------     -----      ------        ------         ------
<S>                                            <C>           <C>       <C>       <C>          <C>           <C>           <C>
Balance at December 31, 2000 .............     4,491,646     $45       31,010    (18,985)     47,132         81           59,283
                                                                                                                         -------

Comprehensive income:

     Net income ..........................            --      --           --         --       6,289         --            6,289

     Change in unrealized gains on
       securities available for sale, net
       of income taxes of $217 ...........            --      --           --         --          --        359              359
                                                                                                                         -------

Comprehensive income .....................                                                                                 6,648
                                                                                                                         -------

Net proceeds from the issuance of
     common stock, stock options
     exercised ...........................        51,307      --          345         --          --         --              345

Dividends paid ($.35 per share -
     adjusted) ...........................            --      --           --         --      (1,846)        --           (1,846)

Purchase of treasury stock, 19,936
     shares ..............................            --      --           --       (362)         --         --             (362)
                                               ---------     ---       ------    -------     -------        ---          -------

Balance at December 31, 2001 .............     4,542,953     $45       31,355    (19,347)     51,575        440           64,068
                                               =========     ===       ======    =======     =======        ===          =======
</TABLE>

                                                                     (continued)


                                       23
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

      Consolidated Statements of Changes in Stockholders' Equity, Continued

                  Years Ended December 31, 2003, 2002 and 2001
                   ($ in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                Common Stock                                           Accumulated
                                            --------------------  Additional                               Other           Total
                                              Number of            Paid-In     Treasury    Retained    Comprehensive   Stockholders'
                                               Shares     Amount   Capital       Stock      Income        Income          Equity
                                               ------     ------   -------       -----      ------        ------          ------
<S>                                          <C>            <C>     <C>        <C>          <C>             <C>            <C>
Balance at December 31, 2001 .............   4,542,953      $45     31,355     (19,347)     51,575          440            64,068
                                                                                                                          -------

Comprehensive income:

     Net income ..........................          --       --         --          --       8,836           --             8,836

     Change in unrealized gains on
       securities available for sale, net
       of income taxes of $163 ...........          --       --         --          --          --          271               271
                                                                                                                          -------

     Change in unrealized loss on
       derivative instrument, net of
       income tax benefit of $45 .........          --       --         --          --          --          (75)              (75)
                                                                                                                          -------

Comprehensive income .....................                                                                                  9,032
                                                                                                                          -------

Net proceeds from the issuance of
     common stock, stock options
     exercised ...........................      31,991        1        283          --          --           --               284

Dividends paid ($.37 per share -
     adjusted) ...........................          --       --         --          --      (2,002)          --            (2,002)

Purchase of treasury stock, 12,648
     shares ..............................          --       --         --        (320)         --           --              (320)
                                             ---------      ---     ------     -------     -------         ----           -------

Balance at December 31, 2002 .............   4,574,944      $46     31,638     (19,667)     58,409          636            71,062
                                             =========      ===     ======     =======     =======         ====           =======
</TABLE>

                                                                     (continued)


                                       24
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

      Consolidated Statements of Changes in Stockholders' Equity, Continued

                  Years Ended December 31, 2003, 2002 and 2001
                   ($ in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                    Common Stock                                       Accumulated
                                                ------------------- Additional                            Other          Total
                                                Number of             Paid-In    Treasury    Retained  Comprehensive   Stockholders'
                                                 Shares      Amount   Capital      Stock      Income      Income          Equity
                                                 ------      ------   -------      -----      ------      ------          ------
<S>                                             <C>            <C>     <C>       <C>          <C>           <C>           <C>
Balance at December 31, 2002 ...............    4,574,944      $46     31,638    (19,667)     58,409        636           71,062
                                                                                                                         -------

Comprehensive income:

     Net income ............................           --       --         --         --       9,148         --            9,148

     Change in unrealized gains on
       securities available for sale, net
       of income tax benefit of $217 .......           --       --         --         --          --       (362)            (362)
                                                                                                                         -------

     Change in unrealized loss on
       derivative instrument, net of
       income taxes of $14 .................           --       --         --         --          --         23               23
                                                                                                                         -------

Comprehensive income .......................                                                                               8,809
                                                                                                                         -------

Net proceeds from the issuance of
     common stock, stock options
     exercised .............................       29,989       --        217         --          --         --              217

Dividends paid ($.46 per share) ............           --       --         --         --      (2,486)        --           (2,486)

Purchase of treasury stock, 8,379
     shares ................................           --       --         --       (246)         --         --             (246)

Three-for-two stock split ..................    1,792,269       18        (18)        --          --         --               --
                                                ---------      ---    -------    -------     -------       ----          -------

Balance at December 31, 2003 ...............    6,397,202      $64     31,837    (19,913)     65,071        297           77,356
                                                =========      ===    =======    =======     =======       ====          =======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


                                       25
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                                  -------------------------------------
                                                                                     2003          2002          2001
                                                                                     ----          ----          ----
<S>                                                                               <C>              <C>           <C>
Cash flows from operating activities:
    Net income ...........................................................        $   9,148         8,836         6,289
    Adjustments to reconcile net income
        to net cash provided by operations:
            Provision for loan losses ....................................            1,514         1,845         1,115
            Depreciation and amortization ................................            1,351         1,062           852
            Deferred income tax benefit ..................................             (444)         (331)         (251)
            Net amortization of premiums and discounts on securities .....            1,064           297           (52)
            Net amortization of deferred loan fees and costs .............              258          (142)          134
            Net gain on sales of loans held for sale .....................           (1,178)         (403)          (43)
            Loan originated for sale .....................................          (77,670)      (44,207)      (10,323)
            Proceeds from sales of loans held for sale ...................           77,704        37,289         5,191
            Decrease (increase) in accrued interest receivable ...........              332            12          (443)
            Decrease (increase) in other assets ..........................              139          (514)         (138)
            Increase in accrued expenses and other liabilities ...........              667         1,650         2,679
                                                                                  ---------      --------      --------

                    Net cash provided by operating activities ............           12,885         5,394         5,010
                                                                                  ---------      --------      --------

Cash flows from investing activities:
    Purchase of securities available for sale ............................          (42,139)      (41,433)      (30,751)
    Proceeds from principal repayments and maturities of securities
        available for sale ...............................................           35,683        23,749        14,593
    Loan disbursements ...................................................         (251,919)     (209,046)     (188,618)
    Principal repayments on loans ........................................          216,960       163,820       121,526
    Purchase of premises and equipment, net ..............................           (3,430)       (6,093)       (3,700)
    Redemption (purchase) of Federal Home Loan Bank stock ................              800            --        (1,550)
    Net proceeds from sales of foreclosed assets .........................            1,427         1,188           470
                                                                                  ---------      --------      --------

                    Net cash used in investing activities ................          (42,618)      (67,815)      (88,030)
                                                                                  ---------      --------      --------
</TABLE>

                                                                     (continued)


                                       26
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows, Continued
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                    Year Ended December 31,
                                                                                           ----------------------------------------
                                                                                              2003            2002            2001
                                                                                              ----            ----            ----
<S>                                                                                        <C>               <C>             <C>
Cash flows from financing activities:
    Net increase in deposits .......................................................       $ 37,531          82,930          66,243
    Net (decrease) increase in Federal Home Loan Bank advances .....................        (16,000)         (5,000)         31,000
    Net increase in other borrowed funds ...........................................          3,483             976           6,951
    Increase in junior subordinated debentures .....................................             --           5,155              --
    Issuance of common stock .......................................................            217             284             345
    Purchase of treasury stock .....................................................           (246)           (320)           (362)
    Cash dividends paid ............................................................         (2,486)         (2,002)         (1,846)
                                                                                           --------        --------        --------

                Net cash provided by financing activities ..........................         22,499          82,023         102,331
                                                                                           --------        --------        --------

Net (decrease) increase in cash and cash equivalents ...............................         (7,234)         19,602          19,311

Cash and cash equivalents at beginning of year .....................................         69,394          49,792          30,481
                                                                                           --------        --------        --------

Cash and cash equivalents at end of year ...........................................       $ 62,160          69,394          49,792
                                                                                           ========        ========        ========

Supplemental disclosures of cash flow information: Cash paid during the year
    for:
        Interest ...................................................................       $ 24,772          29,690          35,217
                                                                                           ========        ========        ========

        Income taxes ...............................................................       $  6,208           5,458           3,821
                                                                                           ========        ========        ========

    Noncash investing and financing activities:
        Accumulated other comprehensive income:
            Net change in unrealized gain on securities available for
                sale, net of tax ...................................................       $   (362)            271             359
                                                                                           ========        ========        ========

            Net change in unrealized loss on derivative investment,
                net of tax .........................................................       $     23             (75)             --
                                                                                           ========        ========        ========

        Transfers from loans to foreclosed assets ..................................       $  1,951           1,679             656
                                                                                           ========        ========        ========

        Loans originated on sales of foreclosed assets .............................       $    269             238              89
                                                                                           ========        ========        ========

        Loans funded by and sold to correspondent ..................................       $ 14,383          20,541          14,926
                                                                                           ========        ========        ========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


                                       27
<PAGE>

                       FFLC BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

         December 31, 2003, 2002 and For Each of the Three Years in the
                         Period Ended December 31, 2003

(1)   Summary of Significant Accounting Policies

      FFLC Bancorp, Inc. (the "Holding 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 Holding Company is a savings and loan
         holding company subject to regulation by the Office of Thrift
         Supervision ("OTS") which mainly transacts its business through its
         subsidiary, the Bank. The Bank is a community-oriented savings
         institution, chartered in 1934, which offers a variety of financial
         services to individuals and businesses primarily located in Lake
         County, Sumter County, Citrus County and Marion County, Florida. The
         Bank's deposits are insured by the Federal Deposit Insurance
         Corporation ("FDIC") through the Savings Association Insurance Fund
         ("SAIF").

         During 2001, First Alliance Title, LLC ("First Alliance"), a 90% owned
         subsidiary of the Holding Company was formed to operate as a title
         agency. First Alliance ceased operations in November 2003. During 2002,
         FFLC Statutory Trust I (the "Trust") was formed for the sole purpose of
         issuing $5,000,000 of trust preferred securities as more fully
         described in Note 7. In 2003, the Company adopted Financial Accounting
         Standards Board Interpretation No. 46, "Consolidation of Variable
         Interest Entities" as revised in December 2003. In accordance with
         Interpretation No. 46, the Trust is not consolidated in the financial
         statements of the Company, but rather accounted for under the equity
         method of accounting. The Company has elected to apply Interpretation
         No. 46 on a retroactive basis and therefore has restated its 2002
         consolidated financial statements. The effect to the 2002 consolidated
         balance sheet was to record junior subordinated debentures of
         $5,155,000, eliminate the guaranteed beneficial interest in junior
         subordinated debentures of $5,000,000 and record the Company's
         investment in the Trust of $155,000 in other assets. Interpretation No.
         46 had no effect on the 2002 consolidated statement of income.

      Principles of Consolidation. The consolidated financial statements include
         the accounts of the Holding Company and its two subsidiaries, the Bank
         and First Alliance and the Bank's wholly-owned subsidiary, Lake County
         Service Corporation (the "Service Corporation") (all together, the
         "Company"). All significant intercompany transactions and balances have
         been eliminated in consolidation.

      General. The accounting and reporting policies of the Company conform to
         accounting principles generally accepted in the United States of
         America and to general practices within the banking industry. The
         following summarizes the significant accounting policies of the
         Company:

      Use of Estimates. In preparing consolidated financial statements in
         conformity with accounting principles generally accepted in the United
         States of America, management is required to make estimates and
         assumptions that affect the reported amounts of assets and liabilities
         as of the date of the balance sheet and reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates. Material estimates that are particularly
         susceptible to significant change in the near term relate to the
         determination of the allowance for loan losses and foreclosed assets.

      Cash and Cash Equivalents. For purposes of the consolidated statements of
         cash flows, cash and cash equivalents include cash and balances due
         from banks and interest-earning deposits.

         The Bank is required to maintain certain cash reserve balances pursuant
         to regulations of the Federal Reserve Board. These balances must be
         maintained in the form of vault cash or noninterest-earning deposits at
         other banks. The reserve balances at December 31, 2003 and 2002 were
         approximately $9.0 million and $8.7 million, respectively.


                                       28
<PAGE>

      Securities. The Company may classify its securities as either trading,
         held to maturity or available for sale. Trading securities are held
         principally for resale and recorded at their fair values. Unrealized
         gains and losses on trading securities are included immediately in
         earnings. Held-to-maturity securities are those which the Company has
         the positive intent and ability to hold to maturity and are reported at
         amortized cost. Available-for-sale securities consist of securities not
         classified as trading securities nor as held-to-maturity securities.
         Unrealized holding gains and losses, net of tax, on available-for-sale
         securities are excluded from income and reported in other comprehensive
         income. Gains and losses on the sale of available-for-sale securities
         are recorded on the trade date and determined using the
         specific-identification method. Premiums and discounts on securities
         available for sale are recognized in interest income using the interest
         method over the period to maturity.

      Loans Held For Sale. Loans originated and held for sale by the Company are
         carried at the lower of cost or fair value using the specific
         identification method. At December 31, 2003 and 2002, the aggregate
         fair value of loans held for sale exceeded the carrying value. Gains
         and losses on the sales of such loans are recognized using the specific
         identification method. The Company held $15.6 million and $14.4 million
         of loans held for sale at December 31, 2003 and 2002, respectively,
         which are included in loans on the accompanying consolidated balance
         sheets.

      Loans. Loans that management has the intent and the Company has the
         ability to hold for the foreseeable future or until maturity or pay-off
         are reported at their outstanding principal adjusted for any
         charge-offs, the allowance for loan losses, and any deferred fees or
         costs on originated loans.

         Loan origination fees are deferred and certain direct origination costs
         are capitalized. Both are recognized as an adjustment of the yield of
         the related loan.

         The accrual of interest on loans is discontinued at the time the loan
         is ninety days delinquent unless the loan is well collateralized and in
         process of collection. In all cases, loans are placed on nonaccrual or
         charged-off at an earlier date if collection of principal or interest
         is considered doubtful.

         All interest accrued but not collected for loans that are placed on
         nonaccrual or charged-off is reversed against interest income. The
         interest on these loans is accounted for on the cash-basis or
         cost-recovery method, until qualifying for return to accrual. Loans are
         returned to accrual status when all the principal and interest amounts
         contractually due are brought current and future payments are
         reasonably assured.

      Allowance for Loan Losses. The allowance for loan losses is established as
         losses are estimated to have occurred through a provision for loan
         losses charged to earnings. Loan losses are charged against the
         allowance when management believes the uncollectibility of a loan
         balance is confirmed. Subsequent recoveries, if any, are credited to
         the allowance.

         The allowance for loan losses is evaluated on a regular basis by
         management and is based upon management's periodic review of the
         collectibility of the loans in light of historical experience, the
         nature and volume of the loan portfolio, adverse situations that may
         affect the borrower's ability to repay, estimated value of any
         underlying collateral and prevailing economic conditions. This
         evaluation is inherently subjective as it requires estimates that are
         susceptible to significant revision as more information becomes
         available.


                                       29
<PAGE>

         A loan is considered impaired when, based on current information and
         events, it is probable that the Company will be unable to collect the
         scheduled payments of principal or interest when due according to the
         contractual terms of the loan agreement. Factors considered by
         management in determining impairment include payment status, collateral
         value, and the probability of collecting scheduled principal and
         interest payments when due. Loans that experience insignificant payment
         delays and payment shortfalls generally are not classified as impaired.
         Management determines the significance of payment delays and payment
         shortfalls on a case-by-case basis, taking into consideration all of
         the circumstances surrounding the loan and the borrower, including the
         length of the delay, the reasons for the delay, the borrower's prior
         payment record, and the amount of the shortfall in relation to the
         principal and interest owed. Impairment is measured on a loan by loan
         basis for commercial loans by either the present value of expected
         future cash flows discounted at the loan's effective interest rate, the
         loan's obtainable market price, or the fair value of the collateral if
         the loan is collateral dependent.

         Large groups of smaller balance homogeneous loans are collectively
         evaluated for impairment. Accordingly, the Company does not separately
         identify individual consumer and residential loans for impairment
         disclosures.

      Foreclosed Assets. Assets acquired through, or in lieu of, loan
         foreclosure are held for sale and are initially recorded at the lower
         of fair value or the loan balance at the date of foreclosure.
         Subsequent to foreclosure, valuations are periodically performed by
         management and the assets are carried at the lower of carrying amount
         or fair value less cost to sell. Revenues and expenses from operations
         and changes in the valuation allowance are included in earnings.

      Premises and Equipment. Land is carried at cost. The Company's premises,
         furniture and equipment and leasehold improvements are carried at cost,
         less accumulated depreciation and amortization computed principally
         using the straight-line method.

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

      Income Taxes. Deferred income tax assets and liabilities are recorded to
         reflect the tax consequences on future years of temporary differences
         between revenues and expenses reported for financial statement and
         those reported for income tax purposes. Deferred tax assets and
         liabilities are measured using the enacted tax rates expected to apply
         to taxable income in the years in which those temporary differences are
         expected to be realized or settled. Valuation allowances are provided
         against assets which are not likely to be realized.


                                       30
<PAGE>

      Stock Compensation Plans. Statement of Financial Accounting Standards
         (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by
         SFAS No. 148, Accounting for Stock-Based Compensation Transition and
         Disclosure (collectively, "SFAS 123") encourages all entities to adopt
         a fair value based method of accounting for employee stock compensation
         plans, whereby compensation cost is measured at the grant date based on
         the value of the award and is recognized over the service period, which
         is usually the vesting period. However, it also allows an entity to
         continue to measure compensation cost for those plans using the
         intrinsic value based method of accounting prescribed by Accounting
         Principles Board Opinion No. 25, Accounting for Stock Issued to
         Employees (APB No. 25), whereby compensation cost is the excess, if
         any, of the quoted market price of the stock at the grant date (or
         other measurement date) over the amount an employee must pay to acquire
         the stock. The Company accounts for its stock option plans under the
         recognition and measurement principles of APB No. 25. No stock-based
         employee compensation cost is reflected in net income as all options
         granted under those plans had an exercise price equal to the market
         value of the underlying common stock on the date of grant. The
         following table illustrates the effect on net income and income per
         share if the Company had applied the fair value recognition provisions
         of SFAS 123 to stock-based employee compensation ($ in thousands,
         except per share data).

<TABLE>
<CAPTION>
                                                                                            Years Ended December 31,
                                                                                       --------------------------------
                                                                                         2003        2002        2001
                                                                                         ----        ----        ----
<S>                                                                                    <C>            <C>         <C>
            Net income, as reported ...............................................    $  9,148       8,836       6,289

            Deduct:  Total stock-based employee compensation
                determined under the fair value based method for all
                awards, net of related tax effect .................................         (59)         (7)        (39)
                                                                                       --------    --------    --------

            Proforma net income ...................................................    $  9,089       8,829       6,250
                                                                                       ========    ========    ========

            Basic income per share, as reported ...................................    $   1.70        1.65        1.18
                                                                                       ========    ========    ========

            Proforma basic income per share .......................................    $   1.69        1.65        1.17
                                                                                       ========    ========    ========

            Diluted income per share, as reported .................................    $   1.67        1.61        1.15
                                                                                       ========    ========    ========

            Proforma diluted income per share .....................................    $   1.67        1.61        1.15
                                                                                       ========    ========    ========
</TABLE>

         In order to calculate the fair value of the options granted using the
         Black-Scholes model, it was assumed that the risk-free interest rate
         for 2003 was 4.73%, the annualized dividend yield was 2.0%, the
         expected life of the options would be the entire exercise period and
         stock volatility was 37%. For purposes of pro forma disclosures, the
         estimated fair value is included in expense during the vesting period.

<TABLE>
<CAPTION>
                                                                                        Years Ended December 31,
                                                                                       --------------------------
                                                                                        2003       2002      2001
                                                                                        ----       ----      ----
<S>                                                                                    <C>          <C>       <C>
            Grant-date fair value per option of options issued during the year ....    $11.44       N/A       N/A
                                                                                       ======       ===       ===
</TABLE>

      Derivative Financial Instruments. The Company has one derivative
         instrument which is used to hedge its interest rate exposure by
         modifying the characteristics of the related balance sheet instrument.
         This derivative instrument qualifies as a cash flow hedge under the
         provisions of Statement of Financial Accounting Standards No. 133
         "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
         133"). Changes in the fair value of a derivative that is highly
         effective, and that is designated and qualifies as a cash flow hedge,
         are recorded in other comprehensive income, net of tax.


                                       31
<PAGE>

      Off-Balance-Sheet Instruments. In the ordinary course of business, the
         Company has entered into off-balance-sheet instruments consisting of
         commitments to extend credit, unused lines of credit, undisbursed loans
         in process and standby letters of credit. Such financial instruments
         are recorded in the financial statements when they are funded.

      Fair Values of Financial Instruments. The fair value of a financial
         instrument is the current amount that would be exchanged between
         willing parties, other than in a forced liquidation. Fair value is best
         determined based upon quoted market prices. However, in many instances,
         there are no quoted market prices for the Company's various financial
         instruments. In cases where quoted market prices are not available,
         fair values are based on estimates using present value or other
         valuation techniques. Those techniques are significantly affected by
         the assumptions used, including the discount rate and estimates of
         future cash flows. Accordingly, the fair value estimates may not be
         realized in an immediate settlement of the instrument or may not
         necessarily represent the underlying fair value of the instrument to
         the Company. The following methods and assumptions were used by the
         Company in estimating fair values of financial instruments:

            Cash and Cash Equivalents. The carrying amounts of cash and cash
            equivalents approximate their fair value.

            Securities. Fair values for securities available for sale are based
            on quoted market prices, where available. If quoted market prices
            are not available, fair values are based on quoted market prices of
            comparable instruments.

            Federal Home Loan Bank Stock. Fair value of the Company's investment
            in Federal Home Loan Bank stock is based on its redemption value,
            which is its cost of $100 per share.

            Loans. For variable-rate loans that reprice frequently and have no
            significant change in credit risk, fair values are based on carrying
            values. Fair values for fixed-rate loans are estimated using
            discounted cash flow analyses, using interest rates currently being
            offered for loans with similar terms to borrowers of similar credit
            quality.

            Deposit Liabilities. The fair values disclosed for demand, NOW,
            money market and savings deposits are, by definition, equal to the
            amount payable on demand at the reporting date (that is, their
            carrying amounts). Fair values for fixed-rate certificates of
            deposit are estimated using a discounted cash flow calculation that
            applies interest rates currently being offered on certificates to a
            schedule of aggregated expected monthly maturities of certificates
            of deposit.

            Borrowed Funds. The carrying amounts of borrowings under repurchase
            agreements approximate their fair values. Fair values of Federal
            Home Loan Bank advances and junior subordinated debentures are
            estimated using discounted cash flow analysis based on the Company's
            current incremental borrowing rates for similar types of borrowing
            arrangements.

            Derivative Instruments. Fair value for the derivative instrument
            (interest-rate swap) is based on current settlement value.

            Accrued Interest. The carrying amounts of accrued interest
            approximate their fair values.

            Off-Balance-Sheet Instruments. Fair values for off-balance-sheet
            lending commitments are based on fees currently charged to enter
            into similar agreements, taking into account the remaining terms of
            the agreements and the counterparties' credit standing.


                                       32
<PAGE>

      Income Per Share of Common Stock. The Company follows the provisions of
         Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No.
         128). SFAS No. 128 provides accounting and reporting standards for
         calculating income per share. Basic income per share of common stock
         has been computed by dividing the net income for the year by the
         weighted-average number of shares outstanding. Shares of common stock
         purchased by the Retention and Recognition Plan ("RRP") (see Note 17)
         are only considered outstanding when the shares are released or
         committed to be released for allocation to participants. As of December
         31, 2001, 2002 and 2003, 4,102, 4,102 and 3,020 shares remain
         uncommitted under the RRP plan, respectively, and are not considered
         outstanding for purposes of the computation of net income per share of
         common stock. Diluted income per share is computed by dividing net
         income by the weighted-average number of shares outstanding including
         the dilutive effect of stock options (see Note 17) computed using the
         treasury stock method. All per share amounts reflect the three-for-two
         stock split declared on February 14, 2003. The following table presents
         the calculation of basic and dilutive income per share of common stock:

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                               ----------------------------------------
                                                                                  2003           2002           2001
                                                                                  ----           ----           ----
<S>                                                                            <C>             <C>            <C>
            Weighted-average shares of common stock issued
                and outstanding before adjustments for RRP
                and common stock options ..................................     5,389,219      5,364,600      5,325,748

            Adjustment to reflect the effect of unallocated
                RRP average shares ........................................        (4,020)        (4,102)        (4,102)
                                                                               ----------     ----------     ----------

            Weighted-average shares for basic income per share ............     5,385,199      5,360,498      5,321,646
                                                                               ==========     ==========     ==========

            Basic income per share ........................................    $     1.70           1.65           1.18
                                                                               ==========     ==========     ==========

            Total weighted-average common shares and equivalents
                outstanding for basic income per share
                computation ...............................................     5,385,199      5,360,498      5,321,646

            Additional dilutive shares using the average market value
                for the period utilizing the treasury stock method
                regarding stock options ...................................        71,697        106,382        122,502
                                                                               ----------     ----------     ----------

            Weighted-average common shares and equivalents
                outstanding for diluted income per share ..................     5,456,896      5,466,880      5,444,148
                                                                               ==========     ==========     ==========

            Diluted income per share ......................................    $     1.67           1.61           1.15
                                                                               ==========     ==========     ==========
</TABLE>

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


                                       33
<PAGE>

      Other Recent Pronouncements. In November 2002, the FASB issued FASB
         Interpretation No. 45, "Guarantor's Accounting and Disclosure
         Requirements for Guarantees, Including Indirect Guarantees of
         Indebtedness to Others" ("FIN 45"), which expands previously issued
         accounting guidance and disclosure requirements for certain guarantees.
         FIN 45 requires the Company to recognize an initial liability for the
         fair value of an obligation assumed by issuing a guarantee. The
         provision for initial recognition and measurement of the liability is
         applied on a prospective basis to guarantees issued or modified after
         December 31, 2002. The adoption of FIN 45 did not have a material
         effect on the consolidated financial statements of the Company.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
         Associated with Exit or Disposal Activities." SFAS No. 146 provides
         guidance on the recognition and measurement of liabilities for costs
         associated with exit or disposal activities. SFAS No. 146 is effective
         for exit and disposal activities that are initiated after December 31,
         2002. The adoption of this Statement had no effect on the Company's
         consolidated financial statements.

         In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
         133 on Derivative Instruments and Hedging Activities." This Statement
         amends and clarifies financial accounting and reporting for derivative
         instruments, including certain derivative instruments embedded in other
         contracts (collectively referred to as derivatives) and for hedging
         activities under FASB Statement No. 133, "Accounting for Derivative
         Instruments and Hedging Activities." This Statement is effective for
         contracts entered into or modified after June 30, 2003. The adoption of
         this Statement had no effect on the Company's consolidated financial
         statements.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity." This Statement establishes standards for how an issuer
         classifies and measures certain financial instruments with
         characteristics of both liabilities and equity. This Statement is
         effective for financial instruments entered into or modified after May
         31, 2003, and otherwise is effective at the beginning of the first
         interim period beginning after June 15, 2003. The adoption of this
         Statement had no effect on the Company's consolidated financial
         statements.

      Reclassifications. Certain immaterial amounts in the 2001 and 2002
         consolidated financial statements have been reclassified to conform to
         the presentation for 2003.


                                       34
<PAGE>

(2)   Securities

      All securities have been classified as available for sale by management.
         The carrying amounts of securities available for sale and their
         approximate fair values were as follows:

<TABLE>
<CAPTION>
                                                                                     Gross          Gross
                                                                    Amortized      Unrealized     Unrealized      Fair
                                                                       Cost          Gains          Losses        Value
                                                                    ---------      ----------     ----------     -------
                                                                                        (In thousands)
<S>                                                                   <C>                <C>           <C>        <C>
         Securities available for sale:
         At December 31, 2003:
             Mutual funds ....................................        $ 9,146             --           (130)       9,016
             U.S. Government and agency securities ...........         36,298            342             (1)      36,639
             Mortgage-backed securities ......................         28,229            317             (7)      28,539
             Other investment securities .....................          7,904             39             --        7,943
                                                                      -------        -------        -------      -------

                 Total .......................................        $81,577            698           (138)      82,137
                                                                      =======        =======        =======      =======

         At December 31, 2002:
             Mutual funds ....................................          9,433             --            (59)       9,374
             U.S. Government and agency securities ...........         36,801            853             (5)      37,649
             Mortgage-backed securities ......................         21,961            335             --       22,296
             Other investment securities .....................          7,990             22             (7)       8,005
                                                                      -------        -------        -------      -------

                 Total .......................................        $76,185          1,210            (71)      77,324
                                                                      =======        =======        =======      =======
</TABLE>

      The scheduled maturities of securities available for sale at December 31,
         2003 were as follows:

<TABLE>
<CAPTION>
                                                                                           Amortized      Fair
                                                                                              Cost        Value
                                                                                           ---------     -------
                                                                                               (In thousands)
<S>                                                                                         <C>           <C>
         Due in less than one year ........................................                 $16,067       16,276
         Due from one year to five years ..................................                  20,231       20,363
         Due after ten years ..............................................                   7,904        7,943
         Mortgage-backed securities .......................................                  28,229       28,539
         Mutual funds .....................................................                   9,146        9,016
                                                                                            -------      -------

             Total ........................................................                 $81,577       82,137
                                                                                            =======      =======
</TABLE>

      Securities with a carrying value of approximately $13.5 million and $16.4
         million at December 31, 2003 and 2002, respectively, were pledged to
         secure public funds and tax deposits. The Company has also pledged
         securities with a carrying value of $22.5 million and $18.7 million for
         borrowings under retail repurchase agreements with customers at
         December 31, 2003 and 2002, respectively (See Note 6).

      There were no sales of securities during the years ended December 31,
         2003, 2002 or 2001.


                                       35
<PAGE>

(3)   Loans

      The components of loans were as follows:

<TABLE>
<CAPTION>
                                                                                                  At December 31,
                                                                                              ----------------------
                                                                                                2003          2002
                                                                                                ----          ----
                                                                                                   (In thousands)
<S>                                                                                           <C>            <C>
            First mortgage loans secured by:
                One-to-four-family residential *...........................................   $ 384,514      395,116
                Construction and land......................................................      43,575       30,792
                Multi-family units.........................................................      12,453       22,796
                Commercial real estate, churches and other.................................     167,381      140,770
            Consumer loans.................................................................     155,438      138,202
            Commercial loans...............................................................      33,990       28,879
                                                                                              ---------      -------

                    Subtotal (1)...........................................................     797,351      756,555

            Undisbursed portion of loans in process........................................     (24,573)     (16,770)
            Net deferred loan costs........................................................         699          734
            Allowance for loan losses (2)..................................................      (5,490)      (5,181)
                                                                                              ---------      -------

                    Loans, net.............................................................   $ 767,987      735,338
                                                                                              =========      =======
</TABLE>

      *     Includes $15.6 million and $14.4 million of loans held for sale at
            December 31, 2003 and 2002, respectively.

      (1)   Total loans outstanding by department consists of the following (in
            thousands):

<TABLE>
<CAPTION>
                                                                                      At December 31,
                                                                     -----------------------------------------------
                                                                             2003                        2002
                                                                     ----------------------      -------------------
                                                                                      % of                     % of
                                                                       Amount        Total         Amount      Total
                                                                       ------        -----         ------      -----
<S>                                                                  <C>             <C>         <C>          <C>
            Residential.........................................     $ 372,551        46.72%     $ 385,711     50.98%
            Commercial..........................................       265,655        33.32        229,930     30.39
            Consumer............................................       159,145        19.96        140,914     18.63
                                                                     ---------       ------      ---------    ------

                                                                     $ 797,351       100.00%     $ 756,555    100.00%
                                                                     =========       ======      =========    ======
</TABLE>


                                       36
<PAGE>

(2)   Total allowance for loan losses by department consists of the following
      (in thousands):

<TABLE>
<CAPTION>
                                                                                          At December 31,
                                                                        --------------------------------------------------
                                                                                2003                         2002
                                                                        --------------------          --------------------
                                                                                       % to                          % to
                                                                                       Gross                         Gross
                                                                        Amount         Loans          Amount         Loans
                                                                        ------         -----          ------         -----
<S>                                                                     <C>             <C>           <C>             <C>
         Residential ..........................................         $  911           .24%         $1,175           .30%
         Commercial ...........................................          3,371          1.27           2,949          1.28
         Consumer .............................................          1,208           .76           1,057           .75
                                                                        ------          ----          ------          ----

                                                                        $5,490           .69%         $5,181           .68%
                                                                        ======          ====          ======          ====
</TABLE>

      Total gross loans originated by department, including unfunded
         construction and line of credit loans, consist of the following (in
         thousands):

<TABLE>
<CAPTION>
                                                                                                           Year Ended
                                                                                                           December 31,
                                                                                                       --------------------
                                                                                                         2003        2002
                                                                                                         ----        ----
<S>                                                                                                    <C>          <C>
         Residential ............................................                                      $191,048     148,271
         Commercial .............................................                                       118,633      95,160
         Consumer ...............................................                                        96,829      80,297
                                                                                                       --------    --------

                                                                                                       $406,510     323,728
                                                                                                       ========    ========
</TABLE>

      An analysis of the change in the allowance for loan losses follows:

<TABLE>
<CAPTION>
                                                                                                Year Ended December 31,
                                                                                           ---------------------------------
                                                                                             2003         2002         2001
                                                                                             ----         ----         ----
                                                                                                   (In thousands)
<S>                                                                                        <C>            <C>          <C>
         Balance at January 1 ..............................                               $ 5,181        4,289        3,552
         Provision for loan losses .........................                                 1,514        1,845        1,115
         Net loans charged-off .............................                                (1,205)        (953)        (378)
                                                                                           -------      -------      -------

         Balance at December 31 ............................                               $ 5,490        5,181        4,289
                                                                                           =======      =======      =======
</TABLE>

      The following summarizes the amount of impaired loans at December 31, 2003
         and 2002, all of which are collateral dependent:

<TABLE>
<CAPTION>
                                                                                                         At December 31,
                                                                                                       -------------------
                                                                                                        2003         2002
                                                                                                        ----         ----
                                                                                                         (In thousands)
<S>                                                                                                    <C>             <C>
         Loans identified as impaired:
             Gross loans with no related allowance for losses .........................                $ 2,971          --
             Gross loans with related allowance for losses recorded ...................                    400         400
             Less: Allowances on these loans ..........................................                    (50)        (50)
                                                                                                       -------     -------

         Net investment in impaired loans .............................................                $ 3,321         350
                                                                                                       =======     =======
</TABLE>


                                       37
<PAGE>

      The average net investment in impaired loans and interest income
         recognized and received on impaired loans during the years ended
         December 31, 2003, 2002 and 2001 was as follows:

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                                  -------------------------------
                                                                                   2003        2002          2001
                                                                                          (In thousands)
<S>                                                                               <C>            <C>          <C>
            Average net investment in impaired loans ...................          $1,920         184          581
                                                                                  ======      ======       ======

            Interest income recognized on impaired loans ...............          $  143          35           81
                                                                                  ======      ======       ======

            Interest income received on impaired loans .................          $  143          35           81
                                                                                  ======      ======       ======
</TABLE>

      The increase in impaired loans during 2003 mainly resulted from two loans
         to an agricultural borrower being identified as impaired and placed on
         nonaccrual status. Management estimates that equity in the related
         collateral is sufficient and no loss is anticipated on these two loans.

      The Company originates or purchases nonresidential real property loans.
         These loans are considered by management to be of somewhat greater risk
         of uncollectibility due to the dependency on income production or
         future development of the real estate. Nearly all of the Company's real
         property loans were collateralized by real property in Lake, Sumter,
         Citrus and Marion Counties, Florida.

      Nonaccrual loans at December 31, 2003 and 2002 totaled $5.3 million and
         $2.6 million, respectively. There were no loans past due ninety days or
         more and still accruing interest income at December 31, 2003 or 2002.
         For the years ended December 31, 2003, 2002 and 2001, interest income
         on loans would have been increased approximately $83,000, $106,000 and
         $116,000, respectively, if the interest on nonaccrual loans had been
         recorded under the original terms of such loans.

(4)   Premises and Equipment

      Components of premises and equipment were as follows:

<TABLE>
<CAPTION>
                                                                                                  At December 31,
                                                                                               ---------------------
                                                                                                 2003          2002
                                                                                                 ----          ----
                                                                                                   (In thousands)
<S>                                                                                            <C>            <C>
         Cost:
             Land .............................................................                $  5,794        4,924
             Building and leasehold improvements ..............................                  18,292       15,553
             Furniture and equipment ..........................................                   4,045        3,539
             Construction in progress .........................................                     131          816
                                                                                               --------     --------

                 Total cost ...................................................                  28,262       24,832

         Less accumulated depreciation and amortization .......................                  (6,814)      (5,463)
                                                                                               --------     --------

             Net book value ...................................................                $ 21,448       19,369
                                                                                               ========     ========
</TABLE>


                                       38
<PAGE>

      Certain Company facilities are leased under operating leases. Rental
         expense was approximately $63,000, $70,000 and $118,000 in 2003, 2002
         and 2001, respectively. At December 31, 2003, future minimum rental
         commitments under noncancellable leases were as follows (in thousands):

            Year Ending
            December 31,                                           Amount
            ------------                                           ------

                2004.......................................       $   66
                2005.......................................           69
                2006.......................................           72
                2007.......................................           75
                2008.......................................           78
                Thereafter.................................           81
                                                                   -----

                                                                   $ 441
                                                                   =====

(5)   Deposits

      The aggregate amount of short-term jumbo time deposits, each with a
         minimum denomination of $100,000, was approximately $147.4 million and
         $140.6 million at December 31, 2003 and 2002, respectively.

      At December 31, 2003, the scheduled maturities of time deposits were as
         follows (in thousands):

            Year Ending

                2004.......................................      $ 281,603
                2005.......................................         95,183
                2006.......................................         37,900
                2007.......................................         58,359
                2008.......................................         12,900
                                                                 ---------

                                                                 $ 485,945
                                                                 =========


                                       39
<PAGE>

(6)   Advances from Federal Home Loan Bank and Other Borrowings

      As of December 31, 2003, the Bank had $133.0 million in Federal Home Loan
         Bank of Atlanta ("FHLB") advances outstanding. These advances had a
         weighted-average interest rate of 5.40% and interest rates and
         maturities as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                                                     At December 31,
                                                                 Interest            ---------------
         Year Ending December 31,                                  Rate             2003          2002
         ------------------------                                --------           ----          ----
<S>                                                                <C>            <C>            <C>
            2003 ........................................          4.90%          $     --        10,000
            2003 ........................................          4.91%                --         6,000
            2003 ........................................          4.53%                --         5,000
            2003 ........................................          3.77%                --         5,000
            2003 ........................................          1.86%(A)             --         5,000
            2004 ........................................          6.05%            10,000        10,000
            2004 ........................................          3.76%            10,000        10,000
            2004 ........................................          3.39%             5,000         5,000
            2005 ........................................          6.39%(B)         20,000        20,000
            2005 ........................................          6.60%            13,500        13,500
            2005 ........................................          6.68%(B)         12,500        12,500
            2005 ........................................          6.31%(B)          7,000         7,000
            2005 ........................................          6.04%            10,000        10,000
            2005 ........................................          6.00%             6,000         6,000
            2006 ........................................          1.23%(A)          5,000         5,000
            2008 ........................................          2.98%(B)         15,000            --
            2009 ........................................          6.39%(B)         14,000        14,000
            2011 ........................................          4.44%(B)          5,000         5,000
                                                                                  --------      --------

                 Total ..................................                         $133,000       149,000
                                                                                  ========      ========
</TABLE>

      (A)   Adjustable Rate, this is rate at year-end.

      (B)   The FHLB has the option to convert to an adjustable rate in future
            years, at which time the Company has the option to prepay the
            advance without penalty.

      The security agreement with FHLB includes a blanket floating lien
         requiring the Bank to maintain first mortgage loans as pledged
         collateral in an amount equal to at least, when discounted at 75% of
         the unpaid principal balances, 100% of these advances. The FHLB stock
         is also pledged as collateral for these advances. At December 31, 2003,
         the Bank could borrow up to $116.9 million under the FHLB security
         agreement.

      The Bank has an $8.0 million line of credit facility with one of its
         correspondent banks under which the Bank may draw funds for daily
         liquidity. Borrowings under this line of credit must be repaid within
         five days. The line of credit bears a floating interest rate equal to
         the average federal funds rate and expires on June 30, 2004. As of
         December 31, 2003, the Bank has not used this line of credit.

      Other borrowed funds were composed of retail repurchase agreements with
         customers. The Company enters into retail repurchase agreements with
         customers in which the funds received are accounted for as borrowings
         to the Company. The total amount outstanding under these agreements at
         December 31, 2003 and 2002 were $17.8 million and $14.3 million,
         respectively. The Company pledged securities with a carrying value of
         $22.5 million and $18.7 million, respectively as collateral for these
         agreements at December 31, 2003 and 2002.


                                       40
<PAGE>

(7)   Junior Subordinated Debentures

      On September 26, 2002, the Trust sold adjustable-rate Trust Preferred
         Securities due September 26, 2032 in the aggregate principal amount of
         $5,000,000 (the "Capital Securities") in a pooled trust preferred
         securities offering. The interest rate on the Capital Securities
         adjusts quarterly, to a rate equal to the then current three-month
         London Interchange Bank Offering Rate ("LIBOR"), plus 340 basis points.
         In addition, the Holding Company contributed capital of $155,000 to the
         Trust for the purchase of the common securities of the Trust. The
         proceeds from these sales were paid to the Holding Company in exchange
         for $5,155,000 of its adjustable-rate Junior Subordinated Debentures
         (the "Debentures") due September 26, 2032. The Debentures have the same
         terms as the Capital Securities. The Holding Company then invested
         $3,000,000 as a capital contribution in the Bank. The sole asset of the
         Trust, the obligor on the Capital Securities, is the Debentures.

      The Holding Company has guaranteed the Trust's payment of distributions
         on, payments on any redemptions of, and any liquidation distribution
         with respect to, the Capital Securities. Cash distributions on both the
         Capital Securities and the Debentures are payable quarterly in arrears
         on March 26, June 26, September 26 and December 26 of each year.

      The Capital Securities are subject to mandatory redemption (i) in whole,
         but not in part, upon repayment of the Debentures at stated maturity
         or, at the option of the Holding Company, their earlier redemption in
         whole upon the occurrence of certain changes in the tax treatment or
         capital treatment of the Capital Securities, or a change in the law
         such that the Trust would be considered an Investment Company and (ii)
         in whole or in part at any time on or after September 26, 2007
         contemporaneously with the optional redemption by the Holding Company
         of the Debentures in whole or in part. The Debentures are redeemable
         prior to maturity at the option of the Holding Company (i) on or after
         September 26, 2007, in whole at any time or in part from time to time,
         or (ii) in whole, but not in part, at any time within 90 days following
         the occurrence and continuation of certain changes in the tax treatment
         or capital treatment of the Capital Securities, or a change in law such
         that the Trust would be considered an Investment Company, required to
         be registered under the Investment Company Act of 1940.

      The Company has entered into a five year interest rate swap agreement that
         effectively converted the floating interest rate of these junior
         subordinated debentures into a fixed interest rate of 6.85%, thus
         reducing the impact of interest rate changes on future interest expense
         for the five year period. In accordance with SFAS 133, this interest
         rate swap qualifies as a cash flow hedge. The fair value of this
         interest rate swap is recorded as an asset or liability on the
         consolidated balance sheet with an offsetting entry recorded in other
         comprehensive income, net of the income tax effect. At December 31,
         2003 and 2002, the unrealized loss on the derivative instrument was
         $83,000 ($52,000 net of tax) and $120,000 ($75,000 net of tax),
         respectively.

(8)   Income Taxes

      The Holding Company files consolidated Federal and state income tax
         returns with the Bank and the Service Corporation. Income taxes are
         allocated proportionally to the Holding Company and each of the
         subsidiaries as though separate income tax returns were filed. First
         Alliance and the Trust file separate income tax returns.

      Income taxes are summarized as follows:

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                                --------------------------------
                                                                 2003          2002        2001
                                                                 ----          ----        ----
                                                                         (In thousands)
<S>                                                             <C>            <C>         <C>
            Current ............................                $ 6,024        5,608       3,948
            Deferred ...........................                   (444)        (331)       (251)
                                                                -------      -------     -------

                                                                $ 5,580        5,277       3,697
                                                                =======      =======     =======
</TABLE>


                                       41
<PAGE>

      The effective tax rate on income before income taxes differs from the U.S.
         statutory rate of 35% for 2003 and 2002 and 34% for 2001. The following
         summary reconciles taxes at the U.S. statutory rate with the effective
         rates:

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                     -----------------------------------------------------------------
                                                           2003                     2002                    2001
                                                     -----------------       -----------------       -----------------
                                                      Amount       %         Amount        %         Amount         %
                                                     -------      ----       -------      ----       -------      ----
                                                                              ($ in thousands)
<S>                                                  <C>          <C>        <C>          <C>        <C>          <C>
            Taxes on income at U.S.
                statutory rate .................     $ 5,155      35.0%      $ 4,940      35.0%      $ 3,395      34.0%
            State income taxes, net of
                federal tax benefit ............         527       3.6           477       3.4           341       3.4
            Graduated tax rates ................        (100)      (.7)         (100)      (.7)           --        --
            Other, net .........................          (2)       --           (40)      (.3)          (39)      (.4)
                                                     -------      ----       -------      ----       -------      ----

            Taxes on income at
                effective rates ................     $ 5,580      37.9%      $ 5,277      37.4%      $ 3,697      37.0%
                                                     =======      ====       =======      ====       =======      ====
</TABLE>

      Temporary differences between the financial statement carrying amounts and
         tax bases of assets and liabilities that gave rise to significant
         portions of the deferred tax asset relate to the following:

<TABLE>
<CAPTION>
                                                                                                  At December 31,
                                                                                             -------------------------
                                                                                              2003               2002
                                                                                              ----               ----
                                                                                                  (In thousands)
<S>                                                                                          <C>                 <C>
            Deferred tax assets:
                Allowance for loan losses ........................................           $ 2,100             1,825
                Accrued interest .................................................                55                27
                RRP incentive plan ...............................................                61                68
                Unrealized loss on derivative instrument .........................                31                45
                                                                                             -------           -------

            Gross deferred tax assets ............................................             2,247             1,965
                                                                                             -------           -------

            Deferred tax liabilities:
                FHLB stock dividends .............................................              (286)             (332)
                Building and land ................................................              (342)             (342)
                Accumulated depreciation .........................................              (156)             (363)
                Unrealized gain on securities available for sale .................              (211)             (428)
                Deferred loan costs ..............................................              (118)              (13)
                                                                                             -------           -------

            Gross deferred tax liabilities .......................................            (1,113)           (1,478)
                                                                                             -------           -------

            Net deferred tax asset ...............................................           $ 1,134               487
                                                                                             =======           =======
</TABLE>

      Retained earnings at December 31, 2003 and 2002 includes approximately
         $5.8 million for which no deferred federal income tax liability has
         been recognized. This amount represents an allocation of income to bad
         debt deductions for tax purposes only. Reduction of amounts so
         allocated for purposes other than tax bad debt losses or adjustments
         arising from carryback of net operating losses would create income for
         tax purposes only, which would be subject to the then current corporate
         income tax rate. The unrecorded deferred income tax liability on the
         above amount was approximately $2.2 million at December 31, 2003 and
         2002.


                                       42
<PAGE>

(9)   Financial Instruments

      The Company is a party to financial instruments with off-balance-sheet
         risk in the normal course of business to meet the financing needs of
         its customers and to reduce its own exposure to fluctuations in
         interest rates. These financial instruments are commitments to extend
         credit, unused lines of credit, undisbursed loans in process and
         standby letters of credit and may involve, to varying degrees, elements
         of credit and interest-rate risk in excess of the amount recognized in
         the consolidated balance sheet. The contract amounts of these
         instruments reflect the extent of involvement the Company has in these
         financial instruments.

      The Company's exposure to credit loss in the event of nonperformance by
         the other party to the financial instrument for commitments to extend
         credit is represented by the contractual amount of those instruments.
         The Company uses the same credit policies in making commitments as it
         does for on-balance-sheet instruments.

      Commitments to extend credit are agreements to lend to a customer as long
         as there is no violation of any condition established in the contract.
         Commitments generally have fixed expiration dates or other termination
         clauses and may require payment of a fee. Since some of the commitments
         are expected to expire without being drawn upon, the total commitment
         amounts do not necessarily represent future cash requirements. The
         Company evaluates each customer's credit worthiness on a case-by-case
         basis. The amount of collateral obtained if deemed necessary by the
         Company upon extension of credit is based on management's credit
         evaluation of the counterparty.

      Standby letters of credit are conditional commitments issued by the
         Company to guarantee the performance of a customer to a third party.
         The credit risk involved in issuing letters of credit is essentially
         the same as that involved in extending loans to customers.


                                       43
<PAGE>

      The estimated fair values of the Company's financial instruments were as
         follows:

<TABLE>
<CAPTION>
                                                                At December 31, 2003            At December 31, 2002
                                                                --------------------            --------------------
                                                               Carrying          Fair          Carrying          Fair
                                                                Amount          Value           Amount           Value
                                                                ------          -----           ------           -----
                                                                                    (In thousands)
<S>                                                           <C>               <C>             <C>             <C>
            Financial assets:
                Cash and cash equivalents ..............      $  62,160          62,160          69,394          69,394
                Securities available for sale ..........         82,137          82,137          77,324          77,324
                Loans ..................................        767,987         771,028         735,338         739,329
                Accrued interest receivable ............          3,849           3,849           4,181           4,181
                Federal Home Loan Bank stock ...........          6,900           6,900           7,700           7,700

            Financial liabilities:
                Deposit liabilities ....................        705,589         708,854         668,058         674,925
                Advances from FHLB .....................        133,000         140,331         149,000         156,891
                Other borrowed funds ...................         17,786          17,786          14,303          14,303
                Junior subordinated debentures .........          5,155           5,155           5,155           5,155
            Derivatives:
                Interest rate swap (loss position) .....            (83)            (83)           (120)           (120)
</TABLE>

      Commitments to extend credit typically result in loans with a market
          interest rate when funded. A summary of the Company's financial
         instruments with off-balance-sheet risk at December 31, 2003, follows:

<TABLE>
<CAPTION>
                                                                   Notional      Carrying           Fair
                                                                    Amount        Amount            Value
                                                                             (In thousands)
<S>                                                                <C>                <C>              <C>
              Commitments to extend credit.................        $ 12,710            --              --
                                                                   ========       =======          ======

              Unused lines of credit.......................        $ 75,478            --              --
                                                                   ========       =======          ======

              Undisbursed portion of loans in process .....        $ 24,573            --              --
                                                                   ========       =======          ======

              Standby letters of credit....................       $   3,382            --              --
                                                                   ========       =======          ======
</TABLE>

(10)  Significant Group Concentration of Credit Risk

      The Company grants real estate, commercial and consumer loans to customers
         primarily in the State of Florida with the majority of such loans in
         the Lake, Sumter, Citrus and Marion County area. Therefore, the
         Company's exposure to credit risk is significantly affected by changes
         in the economy of the Lake, Sumter, Citrus and Marion County areas.

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


                                       44
<PAGE>

(11)  Related Parties

      Loans to directors and executive officers of the Company were made in the
         ordinary course of business and did not involve more than normal risk
         of collectibility or present other unfavorable features. Activity in
         loans to directors and executive officers were as follows:

<TABLE>
<CAPTION>
                                                                                         Year Ended
                                                                                         December 31,
                                                                                    ---------------------
                                                                                     2003          2002
                                                                                     ----          ----
                                                                                        (In thousands)
<S>                                                                                 <C>             <C>
            Beginning balance ....................................                  $  8,307        6,785
            Loans originated .....................................                     2,546        5,401
            Principal repayments .................................                      (385)      (3,879)
                                                                                    --------     --------

                Ending balance ...................................                  $ 10,468        8,307
                                                                                    ========     ========
</TABLE>

      Other related party transactions which were made in the ordinary course of
         business were are follows (in thousands):

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                          -------------------------------
                                                                           2003         2002        2001
                                                                           ----         ----        ----
<S>                                                                       <C>           <C>           <C>
            Legal fees paid ................................              $  137          103          56
                                                                          ======       ======      ======
            Insurance premiums paid ........................              $  205          282         128
                                                                          ======       ======      ======
            Construction contracts paid ....................              $1,518        1,098          --
                                                                          ======       ======      ======
</TABLE>

(12)  Legal Contingencies

      Various legal claims also arise from time to time in the normal course of
         business which, in the opinion of management, will not have a material
         effect on the Company's consolidated financial statements.

(13)  Restrictions on Retained Earnings

      The Bank is subject to certain restrictions on the amount of dividends
         that it may declare without prior regulatory approval. At December 31,
         2003, approximately $28.6 million of retained earnings were available
         for dividend declaration without prior regulatory approval.

(14)  Regulatory Matters

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

      Quantitative measures established by regulation to ensure capital adequacy
         require the Bank to maintain minimum amounts (set forth in the table
         below) of total and Tier I capital (as defined in the regulations) to
         risk-weighted assets (as defined). Management believes, as of December
         31, 2003, that the Bank meets all capital adequacy requirements to
         which it is subject.

      As of December 31, 2003, the most recent notification from the OTS
         categorized the Bank as well capitalized under the regulatory framework
         for prompt corrective action. To be categorized as well capitalized,
         the Bank must maintain minimum tangible, tier I (core), tier I
         (risk-based) and total risk-based capital ratios as set forth in the
         table. There are no conditions or events since that notification that
         management believes have changed the institution's category.


                                       45
<PAGE>

    The Bank's actual capital amounts and percentages at December 31, 2003 and
2002 are also presented in the tables.

<TABLE>
<CAPTION>
                                                                                                             To Be Well
                                                                                Minimum                     Capitalized
                                                                              For Capital                    For Prompt
                                                                                Adequacy                 Corrective Action
                                                     Actual                     Purposes                     Provisions
                                                ------------------         ------------------           -------------------
                                                 %         Amount           %          Amount            %         Amount
                                                ---      ---------         ---       --------           ---       --------
         As of December 31, 2003:                                           ($ in thousands)
<S>                                            <C>          <C>            <C>       <C>                <C>      <C>
         Stockholders' equity, and
             ratio to total assets.....         8.4%     $  79,165
         Less: investment in
             nonincludable
             subsidiary................                       (253)
         Unrealized gain on
             available-for-sale
             securities................                       (430)
                                                         ---------

         Tangible capital,
             and ratio to adjusted
             total assets..............         8.3%     $  78,482         1.5%      $ 14,217
                                                         =========                   ========

         Tier 1 (core) capital, and
             ratio to adjusted total
             assets....................         8.3%     $  78,482         3.0%      $ 28,435           5.0%     $ 47,391
                                                         =========                   ========                    ========

         Tier 1 capital, and ratio
             to risk-weighted assets...        12.3%        78,482         4.0%      $ 26,062           6.0%     $ 39,094
                                                                                     ========                    ========

         Less: nonincludable
             investment in 80%
             land loans................                         --

         Tier 2 capital (allowance for
             loan losses)..............                      5,426
                                                         ---------

         Total risk-based capital,
             and ratio to risk-
             weighted assets...........        13.2%     $  83,908         8.0%      $ 50,961          10.0%     $ 63,702
                                                         =========                   ========                    ========

         Total assets..................                  $ 948,503
                                                         =========

         Adjusted total assets.........                  $ 947,820
                                                         =========

         Risk-weighted assets..........                  $ 637,018
                                                         =========
</TABLE>


                                       46
<PAGE>

<TABLE>
<CAPTION>
                                                                                                       To Be Well
                                                                           Minimum                    Capitalized
                                                                         For Capital                   For Prompt
                                                                           Adequacy                Corrective Action
                                                Actual                     Purposes                    Provisions
                                           -------------------         -----------------           -----------------
                                             %        Amount            %        Amount             %        Amount
                                           ----     ----------         ---      --------           ---      --------
         As of December 31, 2002:                                      ($ in thousands)
<S>                                        <C>          <C>            <C>      <C>                <C>      <C>
         Stockholders' equity, and
             ratio to total assets.....     7.9%    $   72,404
         Less: investment in
             nonincludable
             subsidiary................                   (518)
         Unrealized gain on
             available-for-sale
             securities................                   (747)
                                                    ----------

         Tangible capital,
             and ratio to adjusted
             total assets..............     7.8%    $   71,139         1.5%     $ 13,719
                                                    ==========                  ========

         Tier 1 (core) capital, and
             ratio to adjusted total
             assets....................     7.8%    $   71,139         3.0%     $ 27,439           5.0%     $ 45,731
                                                    ==========                  ========                    ========

         Tier 1 capital, and ratio
             to risk-weighted assets...    11.9%        71,139         4.0%     $ 23,897           6.0%     $ 35,846
                                                                                ========                    ========

         Less: nonincludable
             investment in 80%
             land loans................                   (499)

         Tier 2 capital (allowance for
             loan losses)..............                  5,005
                                                    ----------

         Total risk-based capital,
             and ratio to risk-
             weighted assets...........    12.7%    $   75,645         8.0%     $ 47,794          10.0%     $ 59,743
                                                    ==========                  ========                    ========

         Total assets..................             $  915,881
                                                    ==========

         Adjusted total assets.........             $  914,624
                                                    ==========

         Risk-weighted assets..........             $  597,427
                                                    ==========
</TABLE>


                                       47
<PAGE>

(15)  Conversion to Stock Savings Bank

      The Bank successfully completed a conversion from a federally chartered
         mutual savings association to a federally chartered stock savings bank
         on January 4, 1994 pursuant to the Plan of Conversion. The Plan of
         Conversion provided for the establishment of a Liquidation Account
         equal to the retained income of the Bank as of September 30, 1993 (the
         date of the most recent financial statement presented in the final
         conversion prospectus). The Liquidation Account is established to
         provide a limited priority claim to the assets of the Bank to
         qualifying depositors as of September 30, 1992 (Eligible Account
         Holders) who continue to maintain deposits in the Bank after
         conversion. In the unlikely event of a complete liquidation of the
         Bank, and only in such event, each Eligible Account Holder would
         receive from the Liquidation Account a liquidation distribution based
         on their proportionate share of the then total remaining qualifying
         deposits.

      Current regulations allow the Bank to pay dividends on its stock after the
         conversion if its regulatory capital would not thereby be reduced below
         the amount then required for the aforementioned Liquidation Account.
         Also, capital distribution regulations limit the Bank's ability to make
         capital distributions which include dividends, stock redemptions and
         repurchases, cash-out mergers, interest payments on certain convertible
         debt and other transactions charged to the capital account based on
         their capital level and supervisory condition.

(16)  401(k) Plan

      The Company has a single-employer 401(k) plan ("KSOP"). Under the KSOP,
         participation is open to all employees the month after hire date (for
         purposes of employer contributions, one year of service is required),
         and participants have twelve investment options, plus a Company stock
         fund. The Company makes a contribution of at least 3% of compensation
         (for all participants who have met the one-year of service
         requirement), which vests immediately. In addition, the Company will
         make a discretionary matching contribution (for all participants who
         have met the one-year of service requirement), which will vest after
         five years of service. For 2003, 2002 and 2001, the Board approved a
         matching contribution equal to 100% of employees' deferrals up to 3% of
         compensation. The Company also makes quarterly profit sharing
         contributions (more fully discussed below) in connection with the KSOP.
         Total contribution expense recognized by the Company under the KSOP
         during the years ended December 31, 2003, 2002 and 2001 were $765,000,
         $642,000 and $513,000, respectively. The amounts of employee and
         employer contributions under the KSOP, 401(k) and the ESOP are subject
         to IRS limitations.

      The Company makes quarterly profit-sharing contributions to the KSOP in
         amounts approved by the Board, and those contributions are allocated to
         the accounts of participating employees on a quarterly basis. Company
         profit-sharing contributions vest after five years of service. For
         2003, 2002 and 2001, the Board approved profit-sharing contributions
         equal to four percent (4%) of the Bank's operating net income, which
         were made after each quarter based on the actual results of the
         preceding quarter. During the years ended December 31, 2003, 2002 and
         2001, the Company made profit sharing contributions totaling $365,000,
         $312,000 and $231,000, respectively, to the KSOP. The Plan allows the
         Company to fund such KSOP contributions by either issuing shares, or
         purchasing the required number of shares on the open market. As these
         shares are allocated on a quarterly basis, the Company records
         compensation expense, and either an offsetting credit to capital (in
         the event that new shares are issued) or to cash (in the event that
         shares are purchased on the open market), equal to the current market
         price of the shares. The shares become outstanding for income per share
         computations when allocated.


                                       48
<PAGE>

(17)  Stock Benefit Plans

      Stock Option Plan. During 2002, the Company adopted a new stock option
         plan (the "2002 Plan") which authorizes the Company to issue up to
         375,000 shares (adjusted) in connection with options granted to
         directors, officers or employees of the Company. The terms and vesting
         periods will be determined as each option is granted, but the option
         price can not be less than the then current market value of the common
         stock at the grant date. No options have been granted under the 2002
         Plan.

         The Company also has a 1993 stock option plan (the "1993 Plan") under
         which 477,161 (adjusted) common shares were authorized to be issued in
         connection with options granted to directors, officers and employees of
         the Company. Options granted under the 1993 Plan are exercisable at the
         market price of the common stock at the date of grant. Such incentive
         stock options granted to officers and employees are exercisable in
         three equal annual installments, with the first installment becoming
         exercisable one year from the date of grant. Options granted to outside
         directors are exercisable immediately, but any common shares obtained
         from exercise of the options may not be sold prior to one year from the
         date of grant. All options expire at the earlier of ten years for
         officers and employees or twenty years for directors from the date of
         grant or one year following the date which the outside director,
         officer or employee ceases to serve in such capacity. During 2003, all
         remaining available options under the 1993 were granted.

         The following is a summary of option transactions (all options and
         exercise price information has been adjusted to reflect the
         three-for-two stock split in 2003): Weighted-

<TABLE>
<CAPTION>
                                                                                           Range of        Average
                                                                          Number           Exercise        Exercise
                                                                        of Options          Prices           Price
                                                                        ----------          ------           -----
<S>                                                                       <C>            <C>                <C>
            Outstanding, December 31, 2000 .......................        277,272        $ 4.00-14.17          5.66
            Exercised ............................................        (76,960)          4.00-8.37          4.51
                                                                         --------

            Outstanding, December 31, 2001 .......................        200,312          4.00-14.17          6.01
            Exercised ............................................        (47,985)         4.00-10.83          4.69
                                                                         --------

            Outstanding, December 31, 2002 .......................        152,327          4.00-14.17          6.61
           Granted ..............................................         50,571               26.74         26.74
            Exercised ............................................        (32,102)         4.00-14.17          5.56
                                                                         --------

            Outstanding, December 31, 2003 .......................        170,796        $ 4.00-26.74       $ 12.61
                                                                         ========        ============       =======
</TABLE>

         The weighted-average remaining contractual life of the outstanding
         stock options at December 31, 2003, 2002 and 2001 was 9.7, 8.3 and 7.7
         years, respectively.


                                       49
<PAGE>

         The Company's outstanding stock options at December 31, 2003 are
         exercisable as follows:

                                                                     Weighted-
                                                                      Average
                During the Year Ended                 Number of      Exercise
                December 31,                           Options        Price
                                                      ---------      ---------

                  Currently exercisable..........      127,778       $   6.50
                  2004...........................       14,339          26.74
                  2005...........................       14,339          26.74
                  2006...........................       14,340          26.74
                                                       -------

                                                       170,796        $ 12.61
                                                       =======        =======

      Recognition and Retention Plan. The Company also has a Recognition and
         Retention Plan (the "RRP") under which 185,489 shares (adjusted) of the
         Company's common stock were reserved for grants to directors, officers
         and employees. The shares are granted in the form of restricted stock
         to be earned in three equal annual installments. If a holder of
         restricted stock under the RRP terminated employment for reasons other
         than death, disability, retirement or change of control in the Company,
         such employee forfeited all rights to any allocated shares which are
         still restricted. If termination is caused by death, disability,
         retirement or change in control of the Company, all allocated shares
         become unrestricted. Forfeitures are reallocated to eligible
         participants annually. At December 31, 2003, 3,020 (adjusted) shares
         remain reserved for future directors.

(18)  Stock Repurchase Program

      The Company has a stock repurchase program which allows the Company to
         acquire shares of the Company's common stock in the open market. The
         Company's Board of Directors approves the maximum amount of shares that
         can be acquired. During the years ended December 31, 2003, 2002 and
         2001, the Company repurchased 8,379, 12,648 and 19,936 shares,
         respectively under this program. At December 31, 2003, the Company
         currently holds 1,000,048 shares as treasury stock and can still
         repurchase an additional 232,673 under this program.

(19)  Dividend Reinvestment Plan

      The Company has a Dividend Reinvestment Plan (the "DRP"). The DRP provides
         stockholders of record of at least 50 shares with a convenient and
         economical way to automatically reinvest all or a portion of their cash
         dividends and to invest optional cash payments, subject to minimum and
         maximum purchase limitations, in additional shares of common stock.
         Stockholders pay no service charges or brokerage commissions for common
         stock purchased under the DRP. During the years ended December 31,
         2003, 2002 and 2001, 10,288, 8,772 and 19,341 shares of common stock,
         respectively, were purchased under the DRP, all of which were purchased
         in the open market.

(20)  Stock Split

      On February 14, 2003, the Board of Directors declared a three-for-two
         stock split on all outstanding common shares for shareholders of record
         on February 28, 2003, which were distributed on March 14, 2003.
         Stockholders received cash in lieu of fractional shares resulting from
         the split based on the closing price on the record date.


                                       50
<PAGE>

(21)  Parent Company Only Financial Statements

      Condensed financial statements of the Holding Company are presented below.
         Amounts shown as cash, investment in subsidiaries, loans to
         subsidiaries and equity in earnings of subsidiaries are eliminated in
         consolidation.

                            Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                                                At December 31,
                                                                                              --------------------
                                                                                               2003         2002
                                                                                               ----         ----
                                                                                                 (In thousands)
<S>                                                                                           <C>           <C>
            Assets

         Cash, deposited with subsidiary ..........................................           $ 1,491        1,720
         Investment in subsidiaries ...............................................            79,224       72,421
         Loans to subsidiaries ....................................................             1,550        1,850
         Other assets .............................................................               352          372
                                                                                              -------      -------

                 Total assets .....................................................           $82,617       76,363
                                                                                              =======      =======

             Liabilities and Stockholders' Equity

         Junior subordinated debentures ...........................................             5,155        5,155
         Other liabilities ........................................................               106          146
         Stockholders' equity .....................................................            77,356       71,062
                                                                                              -------      -------

                 Total liabilities and stockholders' equity .......................           $82,617       76,363
                                                                                              =======      =======
</TABLE>

                         Condensed Statements of Income

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                               -----------------------------------
                                                                                 2003          2002          2001
                                                                                 ----          ----          ----
                                                                                          (In thousands)
<S>                                                                            <C>              <C>          <C>
         Revenues ...................................................          $    34             60          130
         Expenses ...................................................             (410)          (205)        (160)
                                                                               -------        -------      -------

                 Loss before earnings of subsidiaries ...............             (376)          (145)         (30)
                 Earnings of subsidiaries ...........................            9,524          8,981        6,319
                                                                               -------        -------      -------

                 Net income .........................................          $ 9,148          8,836        6,289
                                                                               =======        =======      =======
</TABLE>


                                       51
<PAGE>

                       Condensed Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                     Year Ended December 31,
                                                                                              -------------------------------------
                                                                                                2003          2002            2001
                                                                                                ----          ----            ----
                                                                                                         (In thousands)
<S>                                                                                           <C>             <C>            <C>
Cash flows from operating activities:
    Net income ........................................................................       $ 9,148          8,836          6,289
    Adjustments to reconcile net income to net cash used in
      operating activities:
        Equity in earnings of subsidiaries ............................................        (9,524)        (8,981)        (6,319)
        Net (increase) decrease in other, net .........................................           (38)          (376)             4
                                                                                              -------        -------        -------

            Net cash used in operating activities .....................................          (414)          (521)           (26)
                                                                                              -------        -------        -------

Cash flows from investing activities:
        Investment in subsidiaries ....................................................            --         (3,000)            (5)
        Cash dividends received from subsidiaries .....................................         2,400             --          2,700
        Repayment of loans to subsidiaries ............................................           300            650             --
                                                                                              -------        -------        -------

            Net cash provided by (used in) investing activities .......................         2,700         (2,350)         2,695
                                                                                              -------        -------        -------

Cash flows from financing activities:
        Proceeds from issuance of junior subordinated debentures ......................            --          5,155             --
        Purchase of treasury stock ....................................................          (246)          (320)          (362)
        Proceeds from issuance of stock ...............................................           217            284            345
        Cash dividends paid ...........................................................        (2,486)        (2,002)        (1,846)
                                                                                              -------        -------        -------

            Net cash (used in) provided by financing activities .......................        (2,515)         3,117         (1,863)
                                                                                              -------        -------        -------

Net (decrease) increase in cash .......................................................          (229)           246            806

Cash at beginning of year .............................................................         1,720          1,474            668
                                                                                              -------        -------        -------

Cash at end of year ...................................................................       $ 1,491          1,720          1,474
                                                                                              =======        =======        =======

Noncash investing and financing activities- Accumulated other comprehensive
    income:
        Net change in investment in subsidiaries due to net change in unrealized
            gain on securities available for sale, net of tax .........................       $  (362)           271            359
                                                                                              =======        =======        =======

        Net change in unrealized loss on derivative investment, net of tax ............       $    23            (75)            --
                                                                                              =======        =======        =======
</TABLE>


                                       52
<PAGE>

(22)  Quarterly Financial Data (Unaudited)

      The following tables present summarized quarterly data (in thousands,
         except per share amounts):

<TABLE>
<CAPTION>
                                                                               Year Ended December 31, 2003
                                                             --------------------------------------------------------------------
                                                              First          Second          Third         Fourth
                                                             Quarter         Quarter        Quarter        Quarter         Total
                                                             --------       --------       --------       --------       --------
<S>                                                          <C>              <C>            <C>            <C>            <C>
            Interest income .........................        $ 13,577         13,329         12,906         13,028         52,840
            Interest expense ........................           6,542          6,317          5,926          5,822         24,607
                                                             --------       --------       --------       --------       --------

            Net interest income .....................           7,035          7,012          6,980          7,206         28,233

            Provision for loan losses ...............             406            388            330            390          1,514
                                                             --------       --------       --------       --------       --------
            Net interest income after provision
                for loan losses .....................           6,629          6,624          6,650          6,816         26,719

            Noninterest income ......................           1,283          1,432          1,465          1,184          5,364
            Noninterest expense .....................          (4,122)        (4,263)        (4,435)        (4,535)       (17,355)
                                                             --------       --------       --------       --------       --------

            Income before income taxes ..............           3,790          3,793          3,680          3,465         14,728

            Income taxes ............................           1,436          1,427          1,387          1,330          5,580
                                                             --------       --------       --------       --------       --------

            Net income ..............................        $  2,354          2,366          2,293          2,135          9,148
                                                             ========       ========       ========       ========       ========

            Basic income per share ..................        $    .44            .44            .42            .40           1.70
                                                             ========       ========       ========       ========       ========

            Diluted income per share ................        $    .43            .43            .42            .39           1.67
                                                             ========       ========       ========       ========       ========

<CAPTION>
                                                                                 Year Ended December 31, 2002
                                                             --------------------------------------------------------------------
                                                              First          Second          Third         Fourth
                                                             Quarter         Quarter        Quarter        Quarter         Total
                                                             --------       --------       --------       --------       --------
<S>                                                          <C>              <C>            <C>            <C>            <C>
            Interest income .........................        $ 13,868         14,143         14,434         14,088         56,533
            Interest expense ........................           7,491          7,284          7,577          7,131         29,483
                                                             --------       --------       --------       --------       --------

            Net interest income .....................           6,377          6,859          6,857          6,957         27,050

            Provision for loan losses ...............             258            613            399            575          1,845
                                                             --------       --------       --------       --------       --------
            Net interest income after provision
                for loan losses .....................           6,119          6,246          6,458          6,382         25,205

            Noninterest income ......................             868            846            808          1,254          3,776
            Noninterest expense .....................          (3,444)        (3,597)        (3,774)        (4,053)       (14,868)
                                                             --------       --------       --------       --------       --------

            Income before income taxes ..............           3,543          3,495          3,492          3,583         14,113

            Income taxes ............................           1,335          1,282          1,315          1,345          5,277
                                                             --------       --------       --------       --------       --------

            Net income ..............................        $  2,208          2,213          2,177          2,238          8,836
                                                             ========       ========       ========       ========       ========

            Basic income per share ..................        $    .42            .41            .41            .41           1.65
                                                             ========       ========       ========       ========       ========

            Diluted income per share ................        $    .41            .40            .40            .40           1.61
                                                             ========       ========       ========       ========       ========
</TABLE>


                                       53
<PAGE>

                          Independent Auditors' Report

FFLC Bancorp, Inc.
Leesburg, Florida:

      We have audited the accompanying consolidated balance sheets of FFLC
Bancorp, Inc. and Subsidiaries (the "Company") as of December 31, 2003 and 2002
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2003. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 2003 and 2002, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2003 in
conformity with accounting principles generally accepted in the United States of
America.

      As discussed in Note 1 to the accompanying consolidated financial
statements, in 2003, the Company adopted Financial Accounting Standards Board
Interpretation No. 46 "Consolidation of Variable Interest Entities" as revised
in December, 2003. In accordance with this Interpretation, FFLC Statutory Trust
I is not consolidated in the financial statements of the Company. The Company
has also elected to adopt this Interpretation on a retroactive basis and
therefore, has restated its 2002 consolidated financial statements.


HACKER, JOHNSON & SMITH PA
Orlando, Florida
January 16, 2004


                                       54
<PAGE>

                               FFLC BANCORP, INC.

                             DIRECTORS AND OFFICERS

Directors:

Claron D. Wagner
Chairman of the Board

James P. Logan
Vice Chairman

Joseph J. Junod
Ted R. Ostrander, Jr.
H.D. Robuck, Jr.
Howard H. Hewitt
Stephen T. Kurtz
Paul K. Mueller

Advisory Directors:

James R. Gregg
James H. Herlong
Horace D. Robuck

Officers:

Stephen T. Kurtz
President and Chief Executive Officer

Paul K. Mueller
Executive Vice President and Treasurer

Sandra L. Rutschow
Vice President and Secretary

Occupation

President, Woody Wagner, Inc.

President/Owner, Logan Sitework Contractors, Inc.

Retired, General Manager, Avesta Sheffield Pipe
President, Lassiter-Ware, Inc.
Attorney; CEO, Ro-Mac Lumber & Supply, Inc.
President/Owner, Hewitt Construction Company
President, FFLC Bancorp, Inc. & Subsidiaries
Executive Vice President, FFLC Bancorp, Inc. & Subsidiaries

President, Jarol Company
Retired
President, Ro-Mac Lumber & Supply, Inc.


                                       55
<PAGE>

                           FIRST FEDERAL SAVINGS BANK
                                 OF LAKE COUNTY

                        DIRECTORS, OFFICERS AND MANAGERS

DIRECTORS

Claron D. Wagner
Chairman of the Board

James P. Logan
Vice Chairman

Joseph J. Junod
Ted R. Ostrander, Jr.
H.D. Robuck, Jr.
Howard H. Hewitt
Stephen T. Kurtz
Paul K. Mueller

Advisory Directors
James R. Gregg
James H. Herlong
Horace D. Robuck

OFFICERS

Stephen T. Kurtz
President and Chief Executive Officer

Paul K. Mueller
Executive Vice President and Chief Operations Officer
and Treasurer

Dwight L. Hart
Senior Vice President and Mortgage Lending Manager

Joseph D. Cioppa
Senior Vice President and Commercial Lending Manager

Paul S. Allen
Senior Vice President, Audit, Planning and Budget

Jay R. Bartholomew
Senior Vice President and Retail Banking Manager

Brenda M. Grubb
Senior Vice President and Human Resources Manager

Robert R. Wedlock
Senior Vice President, Information Technology & Operations

Kimberly R. Bailey
Vice President and Spruce Creek Branch Manager

John A. Beaulieu
Vice President and Investment Officer

Susan L. Berkebile
Vice President and Area Loan Manager

Victoria M. Boren
Vice President and Branch Operations Manager

Michael J. Cox
Vice President and Area Loan Manager

Carrie C. Cribb
Vice President and Loan Officer

Jankie Dhanpat
Vice President, SEC Reporting & Controller

James D. Haug
Vice President and Lady Lake Branch Manager

Lawrence E. Hoag
Vice President and Operations Dept. Manager

Brian R. Hofer
Vice President and Commercial Loan Officer

Karen L. Hollister
Vice President and Loan Operations Manager

Tara A. Keane
Vice President and Lake Square Branch Manager

Rhea Ann Kennedy
Vice President and Loan Officer

Stephen G. Knowles
Vice President and Main Office Branch Manager and Loan Officer

B. Stan McCullars, Jr.
Vice President Finance

Dennis R. Rogers
Vice President, Wildwood Branch Manager and Area Loan Manager

Natalie L. Rojas
Vice President and Commercial Loan Portfolio Manager

Sandra L. Rutschow
Vice President and Corporate Secretary

Sandra L. Seaton
Vice President and South Leesburg Branch Manager and Area Loan Originator

Leigh S. Skehan
Vice President and Marketing Officer

Raynard S. (Ray) Taylor
Vice President and Commercial Loan Officer

Phillip P. Tompetrini
Vice President and Inverness Branch Manager

Donald E. Turner
Vice President and Commercial Loan Officer

Tara H. Wainwright
Vice President and Kings Ridge Branch Manager

Lynda F. Wemple
Vice President and Accounting Dept. Manager

Vickie S. Baxter
Assistant Vice President and Loan Officer

Donna L. Boyett
Assistant Vice President and Branch
Operations Coordinator

Craig S. Cannon
Loan Officer

Norma J. Caron
Assistant Vice President and Checking Department Manager

James M. Combs
Assistant Vice President and Indirect Loan Manager

Amy S. Conner
Investment Officer

Ginger L. Devine
Assistant Vice President and Compliance Officer

Jeffrey R. Dwiggins
Assistant Vice President and Sales Manager

Lori M. Farfaglia
Assistant Vice President and Fruitland Park & Main Street Branch Manager

Janet B. Farrar
Assistant Vice President and Branch
Operations Coordinator

Penny M. Hollis
Assistant Vice President and Security Officer

Cynthia M. Lay
Assistant Vice President and Service Bureau Coordinator and
Data Department Manager

Marilyn A. Leugers
Assistant Vice President and IRA Coordinator

Annette McCullough
Assistant Vice President and Secondary Market Manager

Sandra A. Rowe
Assistant Vice President and Loan Servicing Manager

Pamela S. Self
Assistant Vice President and Training Manager

Catherine M. Wallin
Assistant Vice President and Loan Officer

Mary R. Asher
Inverness Branch Office Manager

Dawn R. Davison
Escrow Manager

Karen A. Dixon
Crystal River Loan Officer

Tammie C. Martin
Bushnell Branch Manager

Deedee A. Dye
Lady Lake Branch Office Manager

Cinda K. Franklin
Citrus Ridge Branch Manager

Amy L. Griffin
Business Development Officer

Pamela S. Green
Main Street Branch Office Manager

Suzzette Herman
Fruitland Park Branch Office Manager

Jennifer J. Long
Spruce Creek Branch Office Manager

Fay E. Phillips
Clermont Branch Manager

Leslie A. Rocha
Kings Ridge Branch Office Manager

Carol A. Sieder
South Leesburg Branch Office Manager

Elizabeth M. Shaw
Crystal River Branch Manager

Juanita L. Taylor
Eustis Branch Office Manager

Margaret R. White
Main Office Branch Office Manager

Betty L. Wolcott
Facilities Management Officer and Purchasing Manager

Sylvie M. Zimmerman
Wildwood Branch Office Manager


                                       56
<PAGE>

                    FIRST FEDERAL SAVINGS BANK OF LAKE COUNTY
                     is Proud of the Outstanding Service its
           Employees Provide to the Community and the People it Serves

MAIN OFFICE & ADMINISTRATION:

Jamie L. Abbott
Paul S. Allen
Angela B. Allen
Emily C. Ashline
Jay R. Bartholomew
Kathy E. Bauer
Vickie S. Baxter
Charlotte Bennett
Beth A. Bennett
Victoria M. Boren
Barbara Boscana
Donna L. Boyett
Linda S. Brown
Deena M. Bryant
Janet R. Burgess
Tammy A. Calhoun
Janet M. Caloro
Norma J. Caron
Kim L. Chamblin
Dianna L. Christensen
Constance P. Christian
Joseph D. Cioppa
Ursula T. Colla
James M. Combs
Betty Jo Conklin
Amy S. Conner
Judith A. Cook
Diane S. Cook
Cheryl R. Coon
Carrie C. Cribb
Robert Cumm
James R. Cummings
Cheryl A. Davis
Dawn R. Davison
Lawashica M. Dawson
Ginger L. Devine
Carol A. Dewey
Jankie Dhanpat
Alma H. Dunbar
Mary A. Durre
Martha M. Duty
Jeffrey R. Dwiggins
Janet B. Farrar
Charlana M. Fenwick
Amanda M Forwerck
Terry J. French
Clifford H. Frizzell Jr.
June E. Gasbarra
Joan P. Gibson
Zoann Goodman
Dexter L. Graham
Amy L. Griffin
Brenda M. Grubb
Anna O. Harrop
Dwight L. Hart
Lynette N. Hipp
Lawrence E. Hoag
Carol B. Holley
Penny M. Hollis
Karen L. Hollister
Tonya Hudson
Cathy D. Hughes
James G. Humphrey
Janie W. Hunt
Mary C. Hurst
Doris E. Hyatt
Patricia B Inman
Bobby H. Inscoe
Jennifer D. Jennings
Sondra Jones
Mary T. King
Stephen G. Knowles
Connie Kolisnyk
Kenneth G. Kramer
Stephen T. Kurtz
Diane M. Lake
Nancy J. Lane
Cynthia M. Lay
Leslie A. Leach
Debra J. Lenhart
Marilyn A. Leugers
Angie R. Liston
Margaret H. Locke
Sharon R. Luke
Melissa Marsh
B. Stan McCullars, Jr.
Annette McCullough
Janet (Jaye) I. McIntosh
Tammy M. Mizell
Keri L. Morris
Tami Mosier
Paul K. Mueller
John R. Nelson
Shu Een Chen-Noble
Pamela A. O'Neal
Marquisa L. Parham
Tricka M. Parker
Tiffany L. Parks
Angela N. Phillips
Heather Ponsell
Linda L. Radtke
Shirley R. Randolph
Jonathan D. Reeder
Carla L. Rigdon
Natalie J. Rojas
Jennette L. Roode
Landa A. Rossman
Sandra A. Rowe
Marijulia Romero
Sandra L. Rutschow
James Schaeffer
Pamela S. Self
Chessa B. Shaw
Margaret Siegel
Traci A. Simanoski
Leigh S. Skehan
Claire M. Smith
Jill S. Spires
Lynn P. Stoffel
Raynard S. Taylor
Ernestine Thomas
Carolyn Torres
Danine M. Urban
Virginia D. Vann
Orpha M. Vogt
Catherine M. Wallin
Elena R. Webb
Robert R. Wedlock
Lynda F. Wemple
Margaret R. White
Sharon A.White
Rhonda L. Wilkerson
Joyce L. Williams
Catherine N. Williams
Betty L. Wolcott
Kristin L. Woods
Ryan M. Woods
Lisa K. Woolwine
Jeffrey W. Wright
Cathy J. Wrobleski
Lori R. Young

LADY LAKE OFFICE:

John A. Beaulieu
Karen L. Bednarik
Sonja K. Craig
Estelle E. Crawley
DeeDee A. Dye
James D. Haug
Constance L. Merrell-Kasch
Mindy L. Mueller
Terri L. Paquette
Brenda A. Simmons
Patricia L. Sizemore
Vanessa D. Wall
Betty T. Woods

MAIN STREET OFFICE:

Dawn C. Alexander
Janis L. Brown
Hilda A. Foster
Pamela S. Green
Brandy A. Harris
Susan J. Riggin

LAKE SQUARE MALL OFFICE:

Eileen M. Bitting
Tammy L. Dahl
Linda J. Giggey
Bethany A. Johnson
Tara A. Keane
Shannon J. Peters
Melissa M. White

CLERMONT OFFICE:

Dawn M. Ames
Susan Lynn Berkebile
Zaida I. Colon
Jessica L. Dixon
Birgit M. Fox
Donna L. Franklin
Linda C. Gallop
Judy L. Garafola
Brian R. Hofer
Sarah L. Liston
Susan M. Morin
Darcy R. Muniz
Fay E. Phillips
Anita Rodriguez
Melissa D. Schumm
Sharon M. Slack

EUSTIS OFFICE:

Dianne A. Allen
Monica E. Baron
Patricia L. Bartels
Amanda L. Collier
Michael J. Cox
Vivian R. Curry
Rhea Ann Kennedy
Lisa P. Lee
Brenda R. Mathews
Natasha L. Pender
Jeannine M. Rivera
Carolyn A. Rodgers
Tamika J. Rolle
Juanita L. Taylor
Karen E. Wright

WILDWOOD OFFICE:

Carla A. Benavidez
Susan C. Berry
Craig S. Cannon
Kathy A. Curtis
Dana L. Fields
Linda S. Finn
Latahna J. Green
Dennis R. Rogers
Holly D. Sanders
Wendy A. Then
Cathy H. Watson
Sylvie M. Zimmerman

SOUTH LEESBURG OFFICE:

Kari K. Caulk
Jennifer L. Grovesteen
Joanna L. Natal
Geraldine L. Burgio-Pilch
Sandra L. Seaton
Carol A. Sieder
Cristina P. Simmons
Tiffany C. Rodriguez
Rachel M. Smith

BUSHNELL OFFICE:

Dawn M. Greene
Betty J Hewett
Justin A. Holloway
Tammie C. Martin
Inge Pelfrey
Megan L. Sanders

FRUITLAND PARK OFFICE:

Lori M. Farfaglia
Cynthia M. Page
Suzzette Herman
Suzanne E. Shier
Jennifer A. Strow
Delphine C. Williams

INVERNESS OFFICE:

Mary R. Asher
Jamie R. Hemmendinger
Judith Lamontagne
Linda S. Rogers
Lillian G. Russo
Phil P. Tompetrini
Jolena Sanders

CITRUS RIDGE OFFICE:

Stephany M. Barr
Cinda K. Franklin
Christine M. Martinez
Barbara J. Reutter
Amanda N. Smeltzer
Sarah L. Williams
Melissa Ann Woodward

SPRUCE CREEK OFFICE:

Kimberly R. Bailey
Loretta A. Brown
Danielle L. Dilts
Sophia A. Hamilton
Crystal L. House
Jennifer J. Long
Connie J. Rhodes

KINGS RIDGE OFFICE:

Erma R. Moore
Detra M. Tracy
Leslie A. Rocha
Isabel Saldate
Tara H. Wainwright

CRYSTAL RIVER OFFICE:

Karen A. Dixon
Elaine Giammasi
Teresa A. Kuechle
Mitzi M. Parke
Elizabeth Shaw
Jaime D. Stewart
Donald E. Turner
Jeremy Wall


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