FFLC
                               1998 ANNUAL REPORT







                           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  Shareholders  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
Selected Consolidated Financial Data and Financial Ratios.................   6-7
Management's Discussion and Analysis of Financial
    Condition and Results of Operations ..................................  8-19
Consolidated Financial Statements ........................................ 20-50
Independent Auditors' Report..............................................    51
Directors and Officers of FFLC Bancorp, Inc. .............................    52
Directors and Officers of First Federal Savings Bank of Lake County.......    53
Employees ................................................................    54




                                  Inside Cover


<PAGE>
CORPORATE PROFILE

FFLC Bancorp,  Inc. ("FFLC" or the "Holding Company") became the holding company
for First Federal  Savings Bank of Lake County (the "Savings  Bank")  (together,
the  "Company")  on January 4, 1994 upon the Savings  Bank's  conversion  from a
federally  chartered mutual savings  association to a federally  chartered stock
savings bank.  The  acquisition  of the Savings Bank by the Holding  Company was
accounted for as a pooling-of-interest. The Savings Bank is a community-oriented
savings  institution  offering a variety of financial services to meet the needs
of the  communities  it serves.  The deposit  accounts  of the Savings  Bank are
insured by the Federal Deposit Insurance Corporation.

CORPORATE ORGANIZATION

Holding Company
    FFLC Bancorp, Inc.

Thrift Subsidiary
    First Federal Savings Bank of Lake County

Affiliate of Thrift Subsidiary
    Lake County Service Corporation

GENERAL INFORMATION

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

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 6, 1999.

Form 10-K
    A copy  of the  Form  10-K,  as  filed  with  the  Securities  and  Exchange
    Commission,  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.

Shareholder Assistance
    Shareholders  requiring a change of address,  records or  information  about
    lost certificates or dividend checks should contact:

       Registrar and Transfer Company
       10 Commerce Drive
       Cranford, New Jersey 07016
       800-368-5948

Corporate Counsel
    George W. Murphy, Jr.
    Muldoon, Murphy & Faucette LLP
    5101 Wisconsin Avenue
    Washington, D.C. 20016
<PAGE>

Independent Auditors
    Hacker, Johnson, Cohen & Grieb PA
    Certified Public Accountants
    930 Woodcock Road, Suite 211
    Orlando, Florida 32803




Visit First  Federal's  Internet  Site at  http://www.1stfederal.com.  This site
provides  up-to-date  rates for  certificates  of deposit and mortgage loans, as
well as access to FFLC's current stock quotes and SEC filings.



                                       1
<PAGE>



                             FIRST FEDERAL LOGO HERE
OFFICE LOCATIONS

MAP INSERT MAP - HALF PAGE













COMMON STOCK PRICES AND DIVIDENDS

FFLC's  common stock is traded in the  over-the-counter  market and is quoted on
the National  Association of Securities  Dealers Automated  Quotation - National
Market System  ("NASDAQ - National  Market  System")  under the symbol FFLC. The
following table sets forth market price information, based on closing prices, as
reported by the NASDAQ -National Market System for the common stock high and low
closing  sales prices and the amount of  dividends  paid on the common stock for
the periods indicated.  See Note 19 of the Consolidated Financial Statements for
a summary of quarterly  financial data. All per share amounts have been restated
to give effect to the five-for-three stock split in November, 1997.
<TABLE>
<CAPTION>

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

<S>                                     <C>                 <C>                 <C>
         March 31, 1997................ 16 1/2              12 1/4              .07
         June 30, 1997................. 17 1/8              15                  .07
         September 30, 1997............ 19 3/8              16 3/8              .07
         December 31, 1997............. 23 1/2              18 1/2              .07
         March 31, 1998................ 21 3/4              18 3/4              .09
         June 30, 1998................. 21 3/4              19                  .09
         September 30, 1998...........  20                  16 1/2              .09
         December 31, 1998............. 17 3/8              14 3/4              .09
</TABLE>

As of February 1, 1999, the Company had 855 holders of record of common stock.


                                        2

<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL  HIGHLIGHTS
(Dollars in thousands, except per share amounts)

AT YEAR END:                                                1998            1997            1996
                                                        ----------       ---------       ---------
<S>                                                     <C>                <C>             <C>    
Total assets ......................................     $  463,820         400,237         346,442
Loans receivable, net .............................     $  389,059         315,353         227,948
Securities ........................................     $   40,392          58,598          98,568
Deposits ..........................................     $  351,030         315,390         282,664
Equity, substantially restricted ..................     $   53,223          51,429          53,626
Book value per share ..............................     $    14.56           13.74           13.20
Shares outstanding ................................      3,655,620       3,743,988       4,062,895
Equity-to-assets ratio ............................          11.47%          12.85%          15.48%
Nonperforming assets to total assets ..............            .17%            .19%           0.30%

FOR THE YEAR:

Interest income ...................................     $   32,173          28,156          24,218
Net interest income after provision for loan losses     $   14,220          12,091          11,152
Net income ........................................     $    4,397           3,754           2,184
Basic income per share ............................     $     1.22            1.01             .54
Diluted income per share ..........................     $     1.16             .96             .51
Loan originations .................................     $  151,411         143,538          83,569
Return on average assets ..........................           1.05%           1.00%            .65%
Return on average equity ..........................           8.37%           7.18%           3.94%
Average equity to average assets ratio ............          12.52%          13.93%          16.62%
Noninterest expense to average assets .............           2.01%           1.99%           2.49%
<CAPTION>

YIELDS AND RATES:

                                                        Weighted Average
                                                          Rate or Yield           Average Rate or Yield During
                                                         at December 31,             Year Ended December 31,
                                                        -------------------         --------------------------- 
                                                        1998          1997          1998      1997      1996    
                                                        ----          ----          ----      ----      ----    
                                                                                                                
<S>                                                     <C>           <C>           <C>       <C>       <C>     
Loans ..........................................        7.96%         7.97%         8.27%     8.31%     8.33%   
Securities .....................................        6.37%         6.51%         6.32%     6.35%     6.22%   
All interest-earning assets ....................        7.72%         7.87%         7.96%     7.80%     7.52%   
Deposits .......................................        4.58%         4.83%         4.78%     4.87%     4.79%   
All interest-bearing liabilities ...............        4.67%         4.94%         4.88%     4.94%     4.79%   
Interest-rate spread (1) .......................        3.05%         2.93%         3.08%     2.86%     2.73%   
Net yield on average interest-earning assets (2)         N/A           N/A          3.69%     3.53%     3.50%   
</TABLE>                                             

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

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


                                        3
<PAGE>
                                    LOGO HERE





Dear Stockholders:

Each  year we are  pleased  to  provide  an  annual  report  for  review  by our
stockholders and other interested  parties.  The purpose of the annual report is
to present you with detailed  information  regarding FFLC Bancorp,  Inc., and to
describe ongoing activities of the Company.

The year 1998 was an  excellent  year in terms of financial  performance  by the
Company.  Each  quarter  of the  year set a new  record  for  quarterly  profit,
resulting in record earnings for the full year. The Company's subsidiary,  First
Federal  Savings  Bank,  enjoyed a year of  increases  in both loan  volume  and
deposits.  The Bank ended the year with total assets greater in amount than ever
and with strong momentum going into 1999.

For FFLC  Bancorp,  earnings for the year totaled a record $4.4  million,  a 17%
increase in net  earnings  over 1997,  which had been the  previous  record with
earnings of $3.8 million.  Basic earnings per share for 1998 were $1.22 compared
to $1.01 for 1997.

Growth of the Bank has been a primary  focus and we achieved  continued  success
this past year. During 1998, loan originations totaled $198.7 million, a gain of
29% above the prior year. The Bank's  residential loan volume amounted to $109.2
million,  an increase of 14% above 1997.  Commercial loans originated during the
year totaled  $58.9  million,  up 82% from 1997.  Consumer  lending also enjoyed
increased volume,  with total originations of $27.3 million, a gain of 18% above
the prior year.  Total loans  outstanding  at year-end were $401.5  million,  an
increase of 22%. As you will recall, we started the commercial  lending division
at the Bank in 1997 and the large percentage gain in that area is to be expected
in such a new division.

We also achieved growth in the Bank's deposit division.  For the year,  deposits
increased to a record of $351.0 million,  a gain of $35.6 million,  or 11%. As I
mentioned  in the 1997  annual  report,  the Bank  has been  placing  additional
emphasis on attracting  checking and other types of  transaction  accounts.  For
1998, we posted nearly half of the deposit gain in transaction accounts.

We continue to expand the Bank facilities in the Central Florida market.  During
the first half of 1999,  First Federal will open three new branch  offices.  The
first is in  Inverness,  the county seat of Citrus  County.  That  location  was
purchased as part of the NationsBank/Barnett Bank disposition of branch offices.
Citrus  County  is to the west of the two  counties  currently  served  by First
Federal and is a natural geographic  extension for the Bank. The second location
is Bushnell,  the county seat of Sumter County,  located in the southern half of
that  county.  The  Bushnell  branch  will have a  storefront  location in a new
Winn-Dixie  shopping  center and will  complement the Bank's  existing  Wildwood
branch located in the northern half of Sumter County.  The third office is being
constructed on the grounds of a new Winn-Dixie  shopping  center at the southern
end of  Lake  County.  That  is an  area  experiencing  considerable  growth  in
population, and ours will be only the second bank in the immediate area.

                                        4
<PAGE>
The news  media has been  giving  considerable  attention  to the  impact of the
rollover  from the year 1999 to 2000. We have been working for over two years in
preparing for the century change and the data  processing firm that provides the
bulk of the Bank's  data  processing  has been  working at it for an even longer
period of time. Last November,  First Federal and many other bank clients of the
data processing firm conducted  extensive testing.  We advanced our computers in
time to January 3, 2000,  and  performed all manner of  transactions  on deposit
accounts,  loan accounts,  and general ledger accounts.  I am pleased to say the
test  proved to be  successful.  Although  there were minor  problems  with some
reports  printed   following  the  test,  all  transactions   were  successfully
performed.  While  we  are  pleased  with  the  success  of  the  test,  we  are
nevertheless  continuing  to work on  preparation  for the  year  2000.  We have
upgraded  our  computer  network  system  and have  replaced  all  non-compliant
hardware.  While we have confidence that our systems will work properly, we have
been  preparing  contingency  plans  in  the  event  that  there  are  temporary
interruptions  of power or  communications.  More than ever, I think it is worth
reminding our depositors that no one has ever lost a penny in an account insured
by the FDIC. Customers have trusted First Federal for over sixty-five years, and
we believe that the Bank continues to be the safest place for your money.

The directors,  officers and staff of FFLC Bancorp appreciate the support of our
stockholders  over the past five years. Our focus remains on profitably  serving
the  banking  needs  of our  local  communities,  and we  believe  we have  made
continued progress to that end.

Cordially yours,





/s/Stephen T. Kurtz
-------------------
Stephen T. Kurtz
President and Chief Executive Officer







                                        5
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
                                                                                   At December 31,
                                                             -----------------------------------------------------
                                                                1998         1997        1996      1995      1994
                                                             ---------     -------     -------   -------   -------

<S>                                                          <C>           <C>         <C>       <C>       <C>    
Total assets..............................................   $ 463,820     400,237     346,442   325,832   310,622
Loans receivable, net.....................................     389,059     315,353     227,948   183,448   148,286
Cash and cash equivalents.................................      22,928      15,684      10,157    13,929    10,255
Securities ...............................................      40,392      58,598      98,568   119,148   144,854
Deposits   ...............................................     351,030     315,390     282,664   267,703   251,752
Borrowed funds............................................      56,789      30,000       8,198       150     3,150
Stockholders' equity......................................      53,223      51,429      53,626    55,360    53,762

                                                                           For the Year Ended December 31,
                                                             -----------------------------------------------------
                                                                1998         1997        1996      1995       1994
                                                             ---------   ---------   ---------   ---------  ---------
<S>                                                          <C>         <C>         <C>         <C>        <C>   
Interest income...........................................   $  32,173      28,156      24,218      22,493     19,480
Interest expense..........................................      17,271      15,416      12,959      12,183      9,259
Net interest income.......................................      14,902      12,740      11,259      10,310     10,221
Provision for loan losses.................................         682         649         107         124        138
Net interest income after provision for loan losses.......      14,220      12,091      11,152      10,186     10,083
Noninterest income........................................       1,264       1,219         809         709        647
Noninterest expense.......................................       8,446       7,473       8,299       5,874      5,212
Income before provision for income taxes..................       7,038       5,837       3,662       5,021      5,518
Provision for income taxes................................       2,641       2,083       1,478       1,928      1,948
Net income................................................       4,397       3,754       2,184       3,093      3,570
Basic income per share (1)................................        1.22        1.01         .54         .73        .84
Weighted average number of common
      shares outstanding for basic (1)....................   3,592,253   3,700,220   4,069,825   4,232,498  4,253,033
Diluted income per share (1)..............................    $   1.16         .96         .51         .70        .81
Weighted average number of common shares
      outstanding for diluted (1).........................   3,777,085   3,911,256   4,267,992   4,427,098  4,409,715

</TABLE>
(1)  All per share  amounts  have been  restated to reflect  the  five-for-three
     stock split in November, 1997.


                                        6
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL RATIOS
AND OTHER DATA:
                                                                       At or For the Year Ended December 31,
                                                              -------------------------------------------------------
                                                                 1998        1997       1996       1995        1994
                                                              ---------   ---------  ---------  ---------   ---------
<S>                                                           <C>         <C>        <C>        <C>         <C>  
Return on average assets.....................................      1.05%       1.00%      0.65%      0.98%       1.19%
Return on average equity.....................................      8.37%       7.18%      3.94%      5.59%       6.81%
Dividend payout ratio .......................................     29.51%      28.51%     44.71%     25.86%      13.33%
Average equity to average assets.............................     12.52%      13.93%     16.62%     17.46%      17.47%
Total equity to total assets.................................     11.47%      12.85%     15.48%     16.99%      17.31%
Interest rate spread during year(1)..........................      3.08%       2.86%      2.73%      2.54%       2.83%
Net interest margin (2)......................................      3.69%       3.53%      3.50%      3.35%       3.50%
Nonperforming assets to total assets (3).....................      0.17%       0.19%      0.30%      0.10%       0.13%
Nonperforming loans to total loans (4).......................      0.11%       0.07%      0.28%      0.09%       0.21%
Allowance for loan losses to non-performing loans............    514.19%     695.87%    159.61%    561.49%     264.13%
Allowance for loan and REO
      losses to nonperforming assets.........................    281.85%     224.83%    103.51%    288.48%     210.41%
Allowance for loan losses to gross loans.....................      0.57%       0.51%      0.45%      0.52%       0.55%
Operating expenses to average assets.........................      2.01%       1.99%      2.49%      1.85%       1.74%
Average interest-earning assets to
      average interest-bearing liabilities...................      1.14        1.16       1.18       1.20        1.21
Net interest income to noninterest expenses..................      1.76        1.70       1.36       1.76        1.96
Total shares outstanding (5)................................. 3,655,620   3,743,988  4,062,895  4,395,593   4,603,032
Book value per common share outstanding (5)..................   $ 14.56       13.74      13.20      12.59       11.68
Number of banking offices (all full-service).................         9           9          9          8           6

</TABLE>

(1)  Difference  between weighted average yield on all  interest-earning  assets
     and weighted average rate on all interest-bearing liabilities.
(2)  Based upon net interest income before  provision for loan losses divided by
     average interest-earning assets.
(3)  Nonperforming assets consist of nonperforming loans and real estate owned.
(4)  Nonperforming loans consist of loans 90 days or more delinquent.
(5)  All per share  amounts  have been  restated to reflect  the  five-for-three
     stock split in November, 1997.


                                        7
<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 Savings 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,
securities  and, to a lesser  extent,  construction  loans,  consumer  and other
loans, and  multi-family  residential  mortgage loans. In addition,  the Savings
Bank holds  investments  permitted  by federal  laws and  regulations  including
securities  issued by the U.S.  Government  and  agencies  thereof.  The Savings
Bank's revenues are derived  principally  from interest on its mortgage loan and
mortgage-backed   securities  portfolios  and  interest  and  dividends  on  its
investment securities.

The Savings Bank is a community-oriented  savings institution offering a variety
of  financial  services  to meet the needs of the  communities  it  serves.  The
Savings Bank's deposit gathering and lending markets are primarily  concentrated
in the communities  surrounding its full service offices located in Lake, Sumter
and Citrus counties in central Florida. 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 Savings 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 Savings  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 Savings Bank had net income of $4.4 million for the year ended  December 31,
1998,  compared to net income of $3.8  million for the year ended  December  31,
1997. At December 31, 1998, the Savings Bank had total assets of $463.8 million,
an increase of 16% over total  assets of $400.2  million at December  31,  1997.
That increase  resulted  primarily  from an $73.6 million,  or 23%,  increase in
loans  receivable  from $315.4  million at December  31, 1997 to $389 million at
December  31,  1998,  reflecting  increased  local  loan  demand.  Cash and cash
equivalents  increased  $7.2 million or 46% from $15.7 million to $22.9 million.
Securities  decreased  $18.2  million or 31.1% during 1998.  Deposits  increased
$35.6 million,  or 11%, from $315.4 million at December 31, 1997 to $351 million
at December  31,  1998.  Advances  from  Federal  Home Loan Bank  increased  $26
million,  while other  borrowed funds  increased  $789,000 for a net increase of
$26.8 million or 89% in borrowings. Stockholders' equity increased $1.8 million.



                                        8
<PAGE>
REGULATION AND LEGISLATION

General

The  operating  results of the Savings  Bank are  affected  by Federal  laws and
regulations and the Savings 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 Savings  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 Savings 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.  There are periodic  examinations  by the OTS and the FDIC to test
the  Savings  Bank's  compliance  with  various  regulatory  requirements.   The
activities of savings institutions 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 OTS capital regulations  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
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 10% risk-based  capital  standard,  and has not been
notified by its federal banking agency that it is in a "troubled  condition." At
December 31, 1998, the Savings 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.  Effective January 1, 1997, the FDIC lowered the annual
assessment  rates for SAIF members to 0 to 27 basis points,  as discussed below.
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.

On September  30,  1996,  legislation  was enacted  which,  among other  things,
imposed a special one-time assessment on SAIF member institutions, including the
Savings Bank, to  recapitalize  the SAIF and spread the obligations for payments
of Financing  Corporation ("FICO") bonds across all SAIF and Bank Insurance Fund
("BIF")  members.  The FDIC  special  assessment  levied  amounted to 65.7 basis
points on SAIF  assessable  deposits  held as of March  31,  1995.  The  special
assessment  of $1.7 million  before taxes was  recognized by the Savings Bank in
the third quarter of 1996 and was tax deductible.  That  legislation  eliminated
the substantial  disparity between the amount that BIF and SAIF members had been
paying for deposit insurance premiums.
<PAGE>

During 1998,  BIF members paid a portion of the FICO payment equal to 1.22 basis
points on  BIF-insured  deposits,  compared to 6.22 basis points payable by SAIF
members  on  SAIF-insured  deposits,  and will pay a pro rata  share of the FICO
payment  on the  earlier  of  January  1, 2000 or the date  upon  which the last
savings association,  such as the Savings Bank, ceases to exist. The legislation
also requires BIF and SAIF to be merged provided that subsequent  legislation is
adopted to eliminate the savings association charter and no savings associations
remain as of that time.



                                        9
<PAGE>
Effective January 1, 1997, the FDIC lowered annual SAIF assessment rates to 0 to
27 basis  points,  a range  comparable  to those of BIF members,  although  SAIF
members  continue to be subject to the higher  FICO  payments  described  above.
Management cannot predict the level of FDIC insurance  assessments on an ongoing
basis or whether the BIF and SAIF will eventually be merged.

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 Savings Bank does not know of any practice, condition
or violation that might lead to termination of deposit insurance.

YEAR 2000 COMPLIANCE

The  Company  is  acutely  aware of the many  areas  affected  by the Year  2000
computer issue, as addressed by the Federal Financial  Institutions  Examination
Council  ("FFIEC") in its  interagency  statement  which provided an outline for
institutions  to manage the Year 2000 challenges  effectively.  A Year 2000 plan
has been  approved by the Board of Directors  which  includes  multiple  phases,
tasks to be completed, and target dates for completion.  Issues addressed in the
plan include  awareness,  assessment,  renovation,  validation,  implementation,
testing, and contingency planning.

The Company has formed a Year 2000  committee that is charged with the oversight
of completing the Year 2000 project on a timely basis. The Company has completed
its  awareness,  assessment and  renovation  phases and is actively  involved in
validating  and  implementing  its plan.  At the present  time,  the Company has
substantially  completed its testing  phase,  the results of which indicate that
the Company's  internal systems appear to be Year 2000 ready. Since it routinely
upgrades  and  purchases  technologically  advanced  software  and hardware on a
continual   basis,   the  Company  has  determined   that  the  cost  of  making
modifications  to  correct  any Year  2000  issues  will not  materially  affect
reported  operating  results.  Management  does not believe that the Company has
incurred or will incur material costs associated with the Year 2000 issue.

The Company's vendors and suppliers have been contacted for written confirmation
of their  product  readiness  for Year 2000  compliance.  Negative or  deficient
responses are analyzed and  periodically  reviewed to prescribe  timely  actions
within the Company's contingency  planning.  The Company's main service provider
has  completed  testing of its mission  critical  application  software and item
processing software; the test results, which have been documented and validated,
are  deemed to be Year 2000  compliant.  FFIEC  guidance  on  testing  Year 2000
compliance  of  service   providers  states  that  proxy  tests  are  acceptable
compliance  tests.  In  proxy  testing,   the  service  provider  tests  with  a
representative  sample of financial  institutions that use a particular service,
with the results of such testing shared with all similarly  situated  clients of
the service provider. The Company has authorized the acceptance of proxy testing
since the proxy tests have been conducted with financial  institutions  that are
similar  in type and  complexity  to its own using the same  version of the Year
2000 ready software and the same hardware and operating systems.

The Company also recognizes the importance of determining that its borrowers are
facing the Year 2000 problem in a timely  manner to avoid  deterioration  of the
loan portfolio  solely due to this issue. All material  relationships  have been
identified and questionnaires  have been completed to assess the inherent risks.
Deposit customers have received statement stuffers and informational material in
this regard.  The Company plans to work on a one-on-one  basis with any borrower
who has been identified as having high Year 2000 risk exposure.
<PAGE>
Notwithstanding  our actions,  there can be no assurances  that all hardware and
software  that the  Company  will use will be Year  2000  compliant.  Management
cannot  predict  the  amount  of  financial  difficulties  it may  incur  due to
customers and vendors  inability to perform  according to their  agreements with
the  Company or the effects  that other  third  parties may cause as a result of
this issue.  Therefore,  there can be no assurance  that the failure or delay of
others to address the issue or that the costs  involved in such process will not
have a material adverse effect on the Company's business,  financial  condition,
and results of operations.



                                       10

<PAGE>
Based on  testing  results  to date (as  noted  above),  the  Company's  mission
critical  systems  have been  deemed to be Year 2000 ready.  However,  a written
contingency  plan has been  developed to address  problems  that might be caused
from Year 2000 system  failures.  Testing of the contingency plan is in progress
and is scheduled to be  completed by June 30, 1999.  With regard to  non-mission
critical internal systems, the Company's  contingency plans are to replace those
systems that test as being  noncompliant.  Alternatively,  some systems could be
handled  manually on an interim basis.  Should outside service  providers not be
able  to  provide   compliant   systems,   the  Company  will  terminate   those
relationships  and  transfer  to  other  vendors.  It is  anticipated  that  the
Company's  deposit  customers will have increased demands for cash in the latter
part of 1999 and,  correspondingly,  the Company will maintain higher  liquidity
levels.

CREDIT RISK

The Savings Bank's primary  business is lending on residential  real estate,  an
activity  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  Savings  Bank.  The  Savings  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 Company's operating expenses principally consist of
employee  compensation,  occupancy expenses,  federal deposit insurance premiums
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.

                                       11
<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,  1998.  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 receivable  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,
                                                 -----------------------------------------------------------------------------------
                                                               1998                      1997                       1996
                                                 ----------------------------  ------------------------  ---------------------------
                                     Yield At                         Average                   Average                      Average
                                   December 31,   Average             Yield/   Average          Yield/     Average            Yield/
                                        1998       Balance   Interest  Cost    Balance Interest  Cost      Balance  Interest   Cost 
                                        ----       -------   --------  ----    ---------------------      -------  --------   ---- 
                                                                               (Dollars in thousands)
<S>                                     <C>      <C>          <C>      <C>    <C>        <C>     <C>     <C>        <C>       <C>   
Interest-earning assets:                                                                                                            
    Loans receivable (1)............... 7.96%    $ 343,967    28,450   8.27%  $ 268,425  22,318  8.31%   $ 201,840  16,813    8.33% 
    Securities......................... 6.37        44,533     2,814   6.32      82,720   5,250  6.35      108,523   6,745    6.22  
    Other interest-earning assets (2).. 5.32        15,606       909   5.82      10,000     588  5.88       11,577     660    5.70  
                                                  --------   -------            -------  ------            ------- -------          
                                                                                                                                    
         Total interest-earning assets. 7.72       404,106    32,173   7.96     361,145  28,156  7.80      321,940  24,218    7.52  
                                                              ------                     ------                     ------          
                                                                                                                                    
Noninterest-earning assets.............             15,130                       14,160                     11,727                  
                                                  --------                      -------                    -------                  
                                                                                                                                    
         Total assets..................          $ 419,236                    $ 375,305                  $ 333,667                  
                                                 =========                    =========                  =========                  
                                                                                                                                    
Interest-bearing liabilities:                                                                                                       
    NOW and money market                                                                                                            
       accounts........................ 2.25        49,862     1,088   2.18      40,819     991  2.43       38,647     960    2.48  
    Passbook and statement savings                                                                                                  
       accounts........................ 2.00        23,683       517   2.18      24,963     687  2.75       24,218     629    2.60  
    Certificates....................... 5.44       246,375    13,674   5.55     227,271  12,601  5.54      206,471  11,311    5.48  
    FHLB advances...................... 5.27        33,718     1,991   5.90      13,226     814  6.15          150      11    7.33  
    Other borrowings...................  -              14         1   7.14       5,629     323  5.74          849      48    5.65  
                                                 ---------   -------            -------  ------            -------  ------          
                                                                                                                                    
         Total interest-bearing                                                                                                     
           liabilities................. 4.67       353,652    17,271   4.88     311,908  15,416  4.94      270,335  12,959    4.79  
                                                              ------                     ------                     ------          
                                                                                                                                    
Noninterest-bearing deposits...........              7,602                        5,838                      4,035                  
Noninterest-bearing liabilities........              5,473                        5,285                      3,836                  
Stockholders' equity...................             52,509                       52,274                     55,461                  
                                                   -------                      -------                    -------                  
                                                                                                                                    
         Total liabilities and equity..          $ 419,236                    $ 375,305                  $ 333,667                  
                                                 =========                    =========                  =========                  
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                 -----------------------------------------------------------------------------------
                                                               1998                      1997                       1996
                                                 ----------------------------  ------------------------  ---------------------------
                                     Yield At                         Average                   Average                      Average
                                   December 31,   Average             Yield/   Average          Yield/     Average            Yield/
                                        1998       Balance   Interest  Cost    Balance Interest  Cost      Balance  Interest   Cost 
                                        ----       -------   --------  ----    ---------------------      -------  --------   ----  
                                                                               (Dollars in thousands)
<S>                                     <C>      <C>          <C>      <C>    <C>        <C>     <C>     <C>        <C>       <C>   
                                                                                                                                    
Net interest-earning assets and                                                                                                     
    interest rate spread (3)........... 3.05%    $  50,454             3.08%  $  49,237          2.86%   $  51,605            2.73% 
                                        ====     =========             ====   =========          ====    =========            ====  
                                                                                                                                    
Net interest income and net                                                                                                         
    margin (4).........................                     $ 14,902   3.69%           $ 12,740  3.53%            $ 11,259    3.50% 
                                                            ========   ====            ========  ====             ========    ====  
Ratio of interest-earning assets                                                                                                    
    to interest-bearing liabilities....               1.14                         1.16                       1.19                  
                                                      ====                         ====                       ====                  
                                                 
</TABLE>


(1)  Includes nonaccrual loans.
(2)  Includes interest-bearing deposits and FHLB Stock.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the  average  cost  of  interest-   bearing
     liabilities.
(4)  Net   interest   margin  is  net   interest   income   divided  by  average
     interest-earning assets.


                                       12
<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,
                                                    1998 vs. 1997                                   1997 vs. 1996
                                                 Increase (Decrease)                             Increase (Decrease)
                                      ------------------------------------------      ------------------------------------------
                                                        Due to                                         Due to
                                      ------------------------------------------      ------------------------------------------
                                                              Rate/                                          Rate/
                                        Rate     Volume       Volume        Net        Rate       Volume     Volume         Net
                                      ------      ------      ------      ------      ------      ------      ------      ------
                                                                        (Dollars in thousands)
<S>                                    <C>         <C>           <C>       <C>           <C>       <C>           <C>       <C>  
Interest-earning assets:
    Loan receivable, net...........    $(116)      6,281         (33)      6,132         (31)      5,546         (10)      5,505
    Securities ....................      (23)     (2,424)         11      (2,436)        143      (1,604)        (34)     (1,495)
    Other interest-earning (1) ....       (6)        330          (3)        321          21         (90)         (3)        (72)
                                      ------      ------      ------      ------      ------      ------      ------      ------

           Total ..................     (145)      4,187         (25)      4,017         133       3,852         (47)      3,938
                                      ------      ------      ------      ------      ------      ------      ------      ------

Interest-bearing liabilities:
    NOW and money market accounts .     (100)        220         (22)         98         (22)         54          (1)         31
    Passbook and
        statement savings accounts      (142)        (35)          7        (170)         37          20           1          58
    Certificates ..................       13       1,059           1       1,073         137       1,139          14       1,290
    FHLB advances .................      (24)        896         (18)        854          (2)        959        (154)        803
    Other borrowings ..............     --          --          --          --             1         270           4         275
                                      ------      ------      ------      ------      ------      ------      ------      ------

           Total ..................     (253)      2,140         (32)      1,855         151       2,442        (136)      2,457
                                      ------      ------      ------      ------      ------      ------      ------      ------

Net change in net interest
    income.........................   $  108       2,047           7       2,162         (18)      1,410          89       1,481
                                      ======      ======      ======      ======      ======      ======      ======      ======

</TABLE>

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

                                       13
<PAGE>
LIQUIDITY AND CAPITAL  RESOURCES

The Savings  Bank is required to  maintain  minimum  levels of liquid  assets as
defined  by  OTS  regulations.  That  requirement,   which  varies  periodically
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and  short-term  borrowings.  The current  required ratio is 4%. The
Savings Bank  historically  has maintained a level of liquid assets in excess of
the regulatory requirement.  Liquid assets consist of cash, cash equivalents and
short-and  intermediate-term  U.S.  Government and government agency securities.
The maintenance of liquid assets allows for the possibility of disintermediation
when interest rates fluctuate. The Savings Bank's liquidity ratios were 8.8% and
8.7% at December 31, 1998 and December 31, 1997, respectively.

The  Savings  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, 1998, the Savings Bank had outstanding  commitments to originate
$9.2 million of loans,  to fund unused  lines of credit of $29.6  million and to
fund the undisbursed  portion of loans in process of $10.6 million.  The Savings
Bank  believes  that  it will  have  sufficient  funds  available  to  meet  its
commitments.  At December 31, 1998, certificates of deposit which were scheduled
to mature in one year or less totaled $168.1 million. Management believes, based
on past experience,  that a significant  portion of these funds will remain with
the Savings Bank.

REGULATORY  CAPITAL  REQUIREMENTS

As a federally-chartered  financial institution, the Savings 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 is a summary of the capital requirements, the Savings Bank's
regulatory capital and the amounts in excess at December 31, 1998:
<TABLE>
<CAPTION>
                                    Tangible                  Core               Risk-Based
                              -------------------    -------------------      ------------------
                                      % of                    % of                % of Risk-
                                    Adjusted                Adjusted              Weighted
                               Amount      Assets      Amount     Assets       Amount    Assets
                               ------     ------       ------       ----        ------    -----
                                                    (Dollars in thousands)

<S>                          <C>            <C>      <C>            <C>       <C>         <C>   
      Regulatory capital.... $ 46,082       9.94%    $ 46,082       9.94%     $ 48,243    18.02%
      Requirement...........    6,957       1.50       13,913       3.00        10,711     4.00
                               ------     ------       ------       ----        ------    -----

      Excess................ $ 39,125       8.44%    $ 32,169       6.94%     $ 37,532    14.02%
                               ======       ====       ======       ====        ======    =====
</TABLE>
<PAGE>

MARKET RISK

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

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


                                       14
<PAGE>
ASSET /LIABILITY MANAGEMENT

The Savings  Bank's  primary  mission is to provide  home  ownership by offering
permanent and construction residential mortgage loans and consumer financing and
by  providing  conveniently  located  depository  facilities  with  transaction,
savings and certificate accounts. The Savings Bank's goal is to continue to be a
well-capitalized   and  profitable  operation  that  provides  service  that  is
professional,  efficient  and  courteous.  The Savings 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 market; (ii)
controlling interest-rate risk; (iii) managing deposit pricing and asset growth;
(iv) emphasizing cost control; and (v) maintaining asset quality by investing in
mortgage-backed  securities which, in management's  judgment,  provide a balance
between  yield  and  safety  in  a  home  mortgage  related  investment.  It  is
management's   intention  to  continue  to  employ  these  strategies  over  the
foreseeable future.

The Savings 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,
1998, the Savings  Bank's  one-year  interest  sensitivity  gap (the  difference
between the amount of  interest-earning  assets anticipated by the Savings Bank,
based on  certain  assumptions,  to mature or  reprice  within  one year and the
amount of interest-bearing liabilities anticipated by the Savings Bank, based on
certain  assumptions,  to mature or reprice  within one year) as a percentage of
total assets was a positive 19.9%. Generally, an institution with a positive gap
would  experience  an  increase  in net  interest  income  in a period of rising
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  Savings  Bank will be able to  maintain  its net  interest-rate
spread as market interest rates fluctuate.

The Savings Bank  monitors its  interest  rate risk through the  Asset/Liability
Committee  which  meets  weekly  and  reports  the  results  of such  monitoring
quarterly to the Board of  Directors.  The Savings  Bank's  policy is to seek to
maintain  a  balance  between   interest-earning   assets  and  interest-bearing
liabilities so that the Savings Bank's cumulative one-year gap ratio is within a
range  which  management  believes is  conducive  to  maintaining  profitability
without  incurring  undue risk. The Savings Bank has increased its investment in
adjustable-rate and shorter average life, fixed-rate mortgage-related securities
and,  generally,  has not retained in its portfolio 30 year fixed-rate loans, in
order to position itself against the  consequences of rising interest rates. The
Savings  Bank  also  maintains   liquid  assets  in  excess  of  the  regulatory
requirement,  allowing for the  possibility of  disintermediation  when interest
rates fluctuate. The Savings Bank's liquidity ratio of 8.8% at December 31, 1998
is significantly higher than the regulatory  requirement of 4%. In addition, the
Savings  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.


                                       15
<PAGE>
The  following  table sets  forth the  amounts  of  interest-earning  assets and
interest-bearing  liabilities outstanding at December 31, 1998 that are expected
to reprice or mature,  based  upon  certain  assumptions,  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     Other(1)   Total
                                     ---------     ------     ------     ------     ------    ------      -----     ------   -------
<S>                                  <C>           <C>        <C>        <C>        <C>       <C>         <C>       <C>      <C>    
Rate-sensitive assets:
    Mortgage loans, net..........    $  91,660     51,539     64,429     99,937     14,292    11,239      3,601     (1,453)  335,244
    Consumer and other loans.....       17,348      4,504      7,736     17,778      5,757       892        104       (304)   53,815
    Mortgage-backed                                                                                                                 
       securities................       11,639      5,974      1,620      3,396      1,620       468       -            65    24,782
    Interest-earning deposits....       13,413       -          -          -          -         -          -          -       13,413
    Investment securities........        2,885      1,160       -           655       -        1,713       -            66     6,479
    Mutual funds.................          306      7,187       -         1,745       -         -          -          (107)    9,131
    FHLB stock...................        2,800       -          -          -          -         -          -          -        2,800
                                      --------  ---------  --------- ----------  --------- ---------   --------    -------  --------
                                                                                                                                    
         Total interest-earning                                                                                                     
            assets...............      140,051     70,364     73,785    123,511     21,669    14,312      3,705     (1,733)  445,664
                                       -------     ------     ------    -------     ------    ------     ------      =====   =======
Rate-sensitive liabilities:                                                                                                         
    Deposits:                                                                                                                       
       Passbook and statement                                                                                                       
         savings.................        1,598      1,488      2,673      7,559      4,252     4,170      1,298       -       23,038
       NOW accounts..............        3,607      3,356      6,030     17,051      9,591     9,406      2,926       -       51,968
       Money-market..............        1,169      1,088      1,955      5,528      3,109     3,049        949       -       16,848
       Certificates..............       60,454     54,414     53,234     85,840      5,234      -          -          -      259,176
    Borrowed funds...............          789       -          -         6,000     45,000     5,000       -          -       56,789
                                      --------  ---------  ---------   --------     ------    ------  ---------    -------   -------
                                                                                                                                    
         Total interest-bearing                                                                                                     
            liabilities..........       67,617     60,346     63,892    121,979     67,187    21,626      5,173       -      407,819
                                       -------     ------     ------    -------     ------    ------     ------    -------   -------
                                                                                                                                    
Interest-sensitivity gap.........     $ 72,434     10,018      9,893      1,532    (45,518)   (7,314)    (1,468)    (1,733)   37,845
                                        ======     ======     ======   ========     ======    ======     ======      =====   =======
Cumulative interest-                                                                                                                
    sensitivity gap..............     $ 72,434     82,452     92,345     93,877     48,360    41,046     39,578                     
                                        ======     ======     ======    =======     ======    ======     ======                     
Cumulative interest-sensitivity                                                                                                     
    gap as a percentage of                                                                                                          
    total assets.................        15.62%     17.78%     19.91%     20.24%     10.43%     8.85%      8.53%                    
                                        ======     ======     ======     ======     ======    ======     ======                     
Cumulative interest-earning assets                                                                                                  
    as a percentage of cumulative                                                                                                   
    interest-bearing liabilities.       207.12%    164.43%    148.13%    129.91%    112.69%   110.19%    109.70%                    
                                        ======     ======     ======     ======     ======    ======     ======                     
</TABLE>
(1) Represents premiums,  discounts,  market value adjustments and provision for
loan losses.

                                       16
<PAGE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1998 TO DECEMBER 31, 1997

General Operating Results.  Net income for the year ended December 31, 1998, was
    $4.4  million or $1.22 per share,  compared to net income for the year ended
    December  31, 1997 of $3.8  million or $1.01 per share.  The increase in net
    income  was  primarily  the  result of an  increase  of $2.2  million in net
    interest income before provision for loan losses for 1998.

Interest Income.  Interest  income  increased  $4.0 million,  or 14%, from $28.2
    million for the year ended  December 31, 1997 to $32.2  million for the year
    ended  December 31, 1998. The increase was due to an increase in the average
    balance of total  interest-earning  assets,  primarily  loans,  from  $361.1
    million for the year ended  December 31, 1997 to $404.1 million for the year
    ended December 31, 1998, an increase of $43 million,  or 12% and an increase
    in the  average  yield on  interest-earning  assets  from 7.80% for the year
    ended  December 31, 1997 to 7.96% for the year ended  December 31, 1998. The
    average yield on loans  decreased from 8.31% for the year ended December 31,
    1997 to 8.27% for the year ended  December  31, 1998.  The average  yield on
    securities  decreased  from 6.35% for the year ended  December  31,  1997 to
    6.32% for the year ended  December  31,  1998.  The  average  yield on other
    interest earning assets decreased from 5.88% for the year ended December 31,
    1997 to 5.82% for the year ended December 31, 1998.

Interest Expense.  Interest expense increased $1.9 million from $15.4 million at
    December 31, 1997 to $17.3  million at December  31, 1998.  The increase was
    due to a $41.7  million  or 13%  increase  in the  average  balance of total
    interest-bearing liabilities from $311.9 million for the year ended December
    31, 1997 to $353.6  million for the year ended  December  31, 1998 offset in
    part by a decrease  in the  weighted-average  rate paid on  interest-bearing
    liabilities from 4.94% during 1997 to 4.88% in 1998.

Provision  for Loan  Losses.  The  Savings  Bank's  provision  for  loan  losses
    increased from $649,000 for the year ended December 31, 1997 to $682,000 for
    the year ended  December  31,  1998.  The  increase of $33,000 is due to the
    growth of the loan  portfolio  and  reflects the Savings  Bank's  continuing
    policy of  evaluating  the  adequacy  of its  allowance  for loan losses and
    prevailing standards within the thrift industry.  Generally, such evaluation
    includes consideration of the level of nonperforming loans and the level and
    composition of the Savings Bank's loan portfolio.

Noninterest Income.  Noninterest income increased from $1.2 million for the year
    ended  December  31, 1997 to $1.3  million for the year ended  December  31,
    1998. The increase was due to a $258,000  increase in other service  charges
    and fees and a $73,000 increase in deposit account fees, which was partially
    offset by a $302,000 decrease in gain on sale of other assets.

Noninterest  Expense.  Noninterest  expense  consists  primarily of salaries and
    employee  benefits and  occupancy  expense.  Noninterest  expense  increased
    $973,000  for the year  ended  December  31,  1998  compared  to 1997.  This
    increase was primarily  due to a $544,000  increase in salaries and employee
    benefits and a $130,000 increase in occupancy  expense,  caused by growth of
    the Company.

Provision for Income  Taxes.  The  provision  for federal and state income taxes
    increased  from $2.1  million for the year ended  December  31, 1997 to $2.6
    million  for the year  ended  December  31,  1998.  The  effective  tax rate
    increased  from 35.7% for the year ended  December 31, 1997 to 37.5% for the
    year ended December 31, 1998.

                                       17
<PAGE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 TO DECEMBER 31, 1996

General Operating Results.  Net income for the year ended December 31, 1997, was
    $3.8  million or $1.01 per share,  compared to net income for the year ended
    December  31, 1996 of $2.2  million or $.54 per share.  The  increase in net
    income  was  primarily  the  result of an  increase  of $1.5  million in net
    interest income before provision for loan losses for 1997, and the effect of
    the one-time SAIF assessment during 1996 of $1.7 million before taxes.

Interest Income.  Interest income increased $3.9 million,  or 16.3%,  from $24.2
    million for the year ended  December 31, 1996 to $28.2  million for the year
    ended  December 31, 1997. The increase was due to an increase in the average
    balance of total  interest-earning  assets from $321.9  million for the year
    ended  December 31, 1996 to $361.1  million for the year ended  December 31,
    1997, an increase of $39.2 million,  or 12.2% and an increase in the average
    yield on interest-earning  assets from 7.52% for the year ended December 31,
    1996 to 7.80% for the year ended  December  31, 1997.  The average  yield on
    loans decreased from 8.33% for the year ended December 31, 1996 to 8.31% for
    the year ended December 31, 1997. The average yield on securities  increased
    from 6.22% for the year ended  December 31, 1996 to 6.35% for the year ended
    December  31,  1997.  The average  yield on other  interest  earning  assets
    increased  from 5.70% for the year ended  December 31, 1996 to 5.88% for the
    year ended December 31, 1997.

Interest Expense.  Interest expense increased $2.5 million from $13.0 million at
    December 31, 1996 to $15.4  million at December  31, 1997.  The increase was
    due to a $41.6  million or 15.4%  increase in the  average  balance of total
    interest-bearing liabilities from $270.3 million for the year ended December
    31,  1996 to $311.9  million  for the year ended  December  31,  1997 and an
    increase in the weighted-average  rate paid on interest-bearing  liabilities
    from 4.79% during 1996 to 4.94% in 1997.

Provision  for Loan  Losses.  The  Savings  Bank's  provision  for  loan  losses
    increased from $107,000 for the year ended December 31, 1996 to $649,000 for
    the year ended  December  31,  1997.  The increase of $542,000 is due to the
    growth of the  commercial  loan  portfolio  and reflects the Savings  Bank's
    continuing  policy of  evaluating  the  adequacy of its  allowance  for loan
    losses and prevailing standards within the thrift industry.  Generally, such
    evaluation  includes  consideration of the level of nonperforming  loans and
    the level and composition of the Savings Bank's loan portfolio.

Noninterest  Income.  Noninterest  income  increased  from $809,000 for the year
    ended  December  31, 1996 to $1.2  million for the year ended  December  31,
    1997. The increase was due to a gain on the sale of other assets during 1997
    of $302,000,  with no  corresponding  amount  during 1996 and an increase in
    other  service  charges and fees of $94,000 for the year ended  December 31,
    1997.

Noninterest  Expense.  Noninterest  expense  consists  primarily of salaries and
    employee  benefits,   occupancy  expense  and  deposit  insurance  premiums.
    Noninterest  expense decreased $826,000 for the year ended December 31, 1997
    compared to 1996.  This  decrease was  primarily  due to the  one-time  SAIF
    recapitalization  expense of $1.7 million during 1996 and a related decrease
    in deposit  insurance  premium of $477,000 during 1997,  partially offset by
    increases  in salaries  and  employee  benefits of  $934,000  and  occupancy
    expense of $118,000.  The remaining items in noninterest  expense  increased
    $254,000  for the year ended  December  31, 1997  compared to the year ended
    December 31, 1996 primarily due to the growth of the Company.
<PAGE>
Provision for Income  Taxes.  The  provision  for federal and state income taxes
    increased  from $1.5  million for the year ended  December  31, 1996 to $2.1
    million  for the year  ended  December  31,  1997.  The  effective  tax rate
    decreased  from 40.4% for the year ended  December 31, 1996 to 35.7% for the
    year ended December 31, 1997.




                                       18
<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
Savings Bank's  operations.  Unlike most  industrial  companies,  nearly all the
assets and liabilities of the Savings Bank are monetary in nature.  As a result,
interest rates have a greater impact on the Savings Bank'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.

FUTURE ACCOUNTING REQUIREMENTS

The FASB has recently  issued the  following  Statement of Financial  Accounting
Standards which is relevant to the Company:

    Financial Accounting  Standards 133 - Accounting for Derivative  Investments
    and Hedging  Activities  requires  companies  to record  derivatives  on the
    balance  sheet as assets or  liabilities,  measured at fair value.  Gains or
    losses  resulting from changes in the values of those  derivatives  would be
    accounted  for  depending  on the use of the  derivatives  and whether  they
    qualify for hedge accounting. The key criterion for hedge accounting is that
    the hedging  relationship  must be highly effective in achieving  offsetting
    changes in fair value or cash flows.  The Company  will be required to adopt
    this Statement  effective  January 1, 2000.  Management  does not anticipate
    that this Statement will have a material impact on the Company.





                                       19
<PAGE>
<TABLE>
<CAPTION>
                                           FFLC BANCORP, INC.

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

                                                                                     December 31,
                                                                              ------------------------
                                                                                 1998           1997
                                                                              ---------       --------
<S>                                                                           <C>                <C>  
            Assets

Cash and due from banks .................................................     $   9,515          7,122
Interest-bearing deposits ...............................................        13,413          8,562
                                                                              ---------       --------
            Cash and cash equivalents ...................................        22,928         15,684
                                                                              ---------       --------

Securities available for sale ...........................................        22,165         26,581
Securities held to maturity (market value of $18,425 in 1998
    and $32,520 in 1997) ................................................        18,227         32,017
Loans receivable, net of allowance for loan losses of $2,283 in 1998
    and $1,684 in 1997 ..................................................       389,059        315,353
Accrued interest receivable:
    Securities ..........................................................           352            537
    Loans receivable ....................................................         1,890          1,597
Premises and equipment, net .............................................         5,597          5,313
Foreclosed real estate ..................................................           366            507
Real estate held for development ........................................           122            122
Restricted securities - Federal Home Loan Bank stock, at cost ...........         2,800          2,304
Other assets ............................................................           314            222
                                                                              ---------       --------

            Total .......................................................     $ 463,820        400,237
                                                                              =========       ========

            Liabilities and Stockholders' Equity

Liabilities:
    NOW and money market accounts .......................................        68,816         50,597
    Savings accounts ....................................................        23,038         24,503
    Certificates ........................................................       259,176        240,290
                                                                              ---------       --------

            Total deposits ..............................................       351,030        315,390
                                                                              ---------       --------

Advances from Federal Home Loan Bank ....................................        56,000         30,000
Other borrowed funds ....................................................           789           --
Deferred income taxes ...................................................           284            737
Accrued expenses and other liabilities ..................................         2,494          2,681
                                                                              ---------       --------

            Total liabilities ...........................................       410,597        348,808
                                                                              ---------       --------

Commitments and contingencies (Notes 4, 9, 12 and 20)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                          FFLC BANCORP, INC.

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

                                                                                     December 31,
                                                                              ------------------------
                                                                                 1998           1997
                                                                              ---------       --------
<S>                                                                           <C>                <C>   
Stockholders' equity:
    Preferred stock, $.01 par value, 1,000,000 shares authorized,
        none outstanding ................................................          --             --
    Common stock, $.01 par value, 9,000,000 shares authorized,
        4,372,041 in 1998 and 4,312,146 in 1997 shares issued ...........            44             43
    Additional paid-in-capital ..........................................        29,286         28,265
    Retained income .....................................................        39,714         36,622
    Accumulated other comprehensive income, unrealized loss on securities
        available for sale, net of tax of $39 in 1998 and $53 in 1997 ...           (65)           (88)
    Treasury stock, at cost (716,421 shares in 1998 and
        568,158 shares in 1997) .........................................       (15,125)       (12,466)
    Stock held by Incentive Plan Trusts .................................          (631)          (947)
                                                                              ---------       --------

            Total stockholders' equity ..................................        53,223         51,429
                                                                              ---------       --------

            Total .......................................................     $ 463,820        400,237
                                                                              =========        =======


</TABLE>

          See accompanying Notes to Consolidated Financial Statements.

                                       20
<PAGE>
<TABLE>
<CAPTION>
                                            FFLC BANCORP, INC.

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

                                                                          Year Ended December 31,
                                                                ----------------------------------------
                                                                   1998            1997           1996
                                                                ----------      ---------      ---------
<S>                                                             <C>                <C>            <C>   
Interest income:
    Loans receivable ......................................     $   28,450         22,318         16,813
    Securities available for sale .........................          1,169          2,440          1,344
    Securities held to maturity ...........................          1,645          2,810          5,401
    Other interest-earning assets .........................            909            588            660
                                                                ----------      ---------      ---------

        Total interest income .............................         32,173         28,156         24,218
                                                                ----------      ---------      ---------
Interest expense:
    Deposits ..............................................         15,279         14,279         12,900
    Borrowed funds ........................................          1,992          1,137             59
                                                                ----------      ---------      ---------

        Total interest expense ............................         17,271         15,416         12,959
                                                                ----------      ---------      ---------

        Net interest income ...............................         14,902         12,740         11,259

Provision for loan losses .................................            682            649            107
                                                                ----------      ---------      ---------

        Net interest income after provision for loan losses         14,220         12,091         11,152
                                                                ----------      ---------      ---------
Noninterest income:
    Deposit account fees ..................................            558            485            489
    Other service charges and fees ........................            618            360            266
    Gain on sale of securities available for sale .........           --               11           --
    Gain on sale of other assets ..........................           --              302           --
    Other .................................................             88             61             54
                                                                ----------      ---------      ---------

        Total noninterest income ..........................          1,264          1,219            809
                                                                ----------      ---------      ---------
Noninterest expense:
    Salaries and employee benefits ........................          5,218          4,674          3,740
    Occupancy expense .....................................          1,060            930            812
    Deposit insurance premium .............................            195            147            624
    SAIF recapitalization assessment ......................           --             --            1,655
    Advertising and promotion .............................            278            224            122
    Data processing expense ...............................            477            429            384
    Professional services .................................            303            229            270
    Other .................................................            915            840            692
                                                                ----------      ---------      ---------

        Total noninterest expense .........................          8,446          7,473          8,299
                                                                ----------      ---------      ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                            FFLC BANCORP, INC.

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


                                                                          Year Ended December 31,
                                                                ----------------------------------------
                                                                   1998            1997           1996
                                                                ----------      ---------      ---------
<S>                                                             <C>                <C>            <C>   
Income before income taxes ................................          7,038          5,837          3,662

        Income taxes ......................................          2,641          2,083          1,478
                                                                ----------      ---------      ---------

Net income ................................................     $    4,397          3,754          2,184
                                                                ==========          =====          =====

Basic income per share of common stock ....................     $     1.22           1.01            .54
                                                                ==========          =====          =====

Weighted-average number of shares outstanding for basic ...      3,592,253      3,700,220      4,069,825
                                                                ==========          =====          =====

Diluted income per share of common stock ..................     $     1.16            .96            .51
                                                                ==========          =====          =====

Weighted-average number of shares outstanding for diluted .      3,777,085      3,911,256      4,267,992
                                                                ==========          =====          =====

</TABLE>
          See accompanying Notes to Consolidated Financial Statements.

                                       21
<PAGE>
<TABLE>
<CAPTION>
                                                         FFLC BANCORP, INC.

                                           Consolidated Statements of Stockholders' Equity
                                             ($ in thousands, except per share amounts)


                                                                                Stock
                                                                                 Held
                                                                                  By                    Accumulated
                                                     Additional                Incentive                  Other             Total
                                          Common      Paid-In      Treasury      Plan       Retained   Comprehensive   Stockholders'
                                          Stock       Capital        Stock       Trusts      Income       Income           Equity
                                          -----       -------        -----       ------      ------       ------           ------
<S>                                        <C>         <C>          <C>          <C>         <C>            <C>             <C>   
Balance at December 31, 1995........       $ 28        27,041       (2,373)      (1,946)     32,704          (94)           55,360
                                                                                             ------          --- 
Comprehensive income:

     Net income.....................          -             -            -            -       2,184            -             2,184

     Change in unrealized gains
       (losses) on securities available
       for sale, net of income taxes
       of $59.......................          -             -            -            -           -          (99)              (99)
                                                                                             ------          --- 

Comprehensive income................          -             -            -            -       2,184          (99)             2,085
                                                                                             ------          ---             ------
Net proceeds from the issuance
     of 7,993 shares of common
     stock..........................          -            80            -            -           -            -                 80

Shares committed to participants
     in incentive plans (130,217
     shares remain uncommitted
     at December 31, 1996)..........          -           265            -          684           -            -                949

Dividends paid, net of $60 of
     dividends on ESOP shares
     recorded as compensation
     expense........................          -             -            -            -        (926)           -               (926)

Purchase of treasury stock,
     207,612 shares.................          -             -       (3,922)           -           -            -             (3,922)
                                           ----        ------       ------       ------      ------         ----             ------
Balance at December 31, 1996........         28        27,386       (6,295)      (1,262)     33,962         (193)            53,626
                                           ====        ======       ======       ======      ======         ====             ======

</TABLE>
                                                                     (continued)

                                       22
<PAGE>
<TABLE>
<CAPTION>
                                                         FFLC BANCORP, INC.

                                     Consolidated Statements of Stockholders' Equity, Continued
                                             ($ in thousands, except per share amounts)


                                                                                 Stock
                                                                                 Held
                                                                                  By                     Accumulated
                                                       Additional               Incentive                  Other            Total
                                              Common    Paid-In     Treasury      Plan       Retained   Comprehensive  Stockholders'
                                              Stock     Capital       Stock      Trusts        Income       Income          Equity
                                              -----     -------       -----      ------        ------       ------          ------
<S>                                            <C>      <C>          <C>         <C>         <C>             <C>            <C>   
Balance at December 31, 1996...........        $ 28      27,386      (6,295)     (1,262)      33,962          (193)         53,626
                                                                                              ------         -----          ------
Comprehensive income:

     Net income........................           -           -           -           -        3,754             -           3,754

     Change in unrealized gains
       (losses) on securities available
       for sale, net of income taxes
       of $63..........................           -           -           -           -            -           105             105
                                                                                              ------         -----          ------

Comprehensive income...................           -           -           -           -        3,754           105           3,859
                                                                                              ------         -----          ------

Net proceeds from the issuance of
     34,825 shares of common
     stock.............................           -         283           -           -            -             -             283

Shares committed to participants
     in incentive plans (162,399
     shares remain uncommitted
     at December 31, 1997).............           -         596           -         315            -             -             911

Dividends paid, net of $61 of
     dividends on ESOP shares
     recorded as compensation
     expense...........................           -           -           -           -       (1,079)            -          (1,079)

Purchase of treasury stock,
     228,502 shares....................           -           -      (6,171)          -            -             -          (6,171)

Five-for-three stock split in
     November, 1997....................          15           -           -           -          (15)            -               -
                                               ----      ------     -------      ------      -------          ----          ------

Balance at December 31, 1997...........          43      28,265     (12,466)       (947)      36,622           (88)         51,429
                                               ====      ======     =======      ======      =======          ====          ======
</TABLE>
                                                                     (continued)

                                       23
<PAGE>
<TABLE>
<CAPTION>
                                                         FFLC BANCORP, INC.

                                     Consolidated Statements of Stockholders' Equity, Continued
                                             ($ in thousands, except per share amounts)


                                                                                Stock
                                                                                 Held
                                                                                  By                     Accumulated
                                                     Additional                Incentive                  Other            Total
                                            Common    Paid-In     Treasury       Plan       Retained   Comprehensive   Stockholders'
                                            Stock     Capital       Stock       Trusts        Income      Income           Equity
                                            -----     -------       -----       ------        ------      ------           ------
<S>                                          <C>        <C>        <C>            <C>        <C>           <C>              <C>   
Balance at December 31, 1997...........      $ 43       28,265     (12,466)       (947)      36,622         (88)            51,429
                                                                                             ------       -----             ------
Comprehensive income:

     Net income........................         -           -            -           -        4,397           -              4,397

     Change in unrealized gains
       (losses) on securities available
       for sale, net of income taxes
       of $14..........................         -           -            -           -            -          23                 23
                                                                                             ------       -----             ------

Comprehensive income...................         -           -            -           -        4,397          23              4,420
                                                                                             ------       -----             ------
Net proceeds from the issuance of
     58,895 shares of common
     stock.............................         1         359            -           -            -           -                360

Shares committed to participants
     in incentive plans (109,794
     shares remain uncommitted
     at December 31, 1998).............         -         662            -         316            -           -                978

Dividends paid, net of $38 of
     dividends on ESOP shares
     recorded as compensation
     expense...........................         -           -            -           -       (1,305)          -             (1,305)

Purchase of treasury stock,
     148,263 shares....................         -           -       (2,659)          -            -           -             (2,659)
                                             ----      ------      -------      ------      -------        ----             ------

Balance at December 31, 1998...........      $ 44      29,286      (15,125)       (631)      39,714         (65)            53,223
                                             ====      ======      =======      ======      =======        ====             ======

</TABLE>

          See accompanying Notes to Consolidated Financial Statements.

                                       24
<PAGE>
<TABLE>
<CAPTION>
                                                  FFLC BANCORP, INC.

                                         Consolidated Statements of Cash Flows
                                                   ($ in thousands)

                                                                                        Year Ended December 31,
                                                                              ---------------------------------------
                                                                                  1998           1997           1996
                                                                               --------        --------       ------- 
<S>                                                                            <C>             <C>            <C>     
Cash flows from operating activities:
    Net income      ......................................................... $   4,397           3,754         2,184
    Adjustments to reconcile net income
        to net cash provided by operations:
            Provision for loan losses........................................       682             649           107
            Depreciation.....................................................       406             395           345
            Gain on sale of securities available for sale....................      -                (11)          -
            Gain on sale of foreclosed real estate...........................       (36)            (11)          -
            Credit for deferred income taxes.................................      (467)           (256)         (116)
            Shares committed and dividends to incentive
                plan participants............................................     1,016             972         1,009
            Amortization of premiums or discounts on securities..............       (10)            (44)         (106)
            Deferral of deferred loan fees and unearned interest.............       413             254           139
            Purchase of Federal Home Loan Bank stock.........................      (496)           (365)          (11)
            Increase in accrued interest receivable..........................      (108)           (115)          (73)
            (Increase) decrease in other assets..............................       (92)            (38)          145
            (Decrease) increase in accrued expenses and other liabilities....      (187)          1,657          (490)
                                                                               --------        --------       ------- 

                    Net cash provided by operating activities................     5,518           6,841         3,133
                                                                               --------        --------       ------- 

Cash flows from investing activities:
    Proceeds from principal repayments and maturities of securities
        held to maturity.....................................................    13,788          18,135        28,300
    Purchase of securities available for sale................................    (9,555)         (7,490)      (31,339)
    Proceeds from principal repayments and maturities of securities
        available for sale...................................................    14,020          28,590        23,567
    Proceeds from sales of securities available for sale.....................      -                958           -
    Purchase of loans receivable.............................................      -               -           (2,106)
    Proceeds from sale of loans receivable...................................      -               -            1,557
    Loan disbursements.......................................................  (151,411)       (143,538)      (83,569)
    Principal repayments on loans............................................    76,747          54,840        39,106
    Purchase of premises and equipment, net..................................      (690)           (564)         (672)
    Proceeds from sales of foreclosed real estate............................        40             255            70
                                                                               --------        --------       ------- 

                    Net cash used in investing activities....................   (57,061)        (48,814)      (25,086)
                                                                               --------        --------       ------- 
</TABLE>
                                                                     (continued)

                                       25
<PAGE>
<TABLE>
<CAPTION>
                                                  FFLC BANCORP, INC.

                                   Consolidated Statements of Cash Flows, Continued
                                                   ($ in thousands)

                                                                                           Year Ended December 31,
                                                                                  -------------------------------------
                                                                                      1998          1997          1996
                                                                                  ---------       -------       -------
<S>                                                                               <C>             <C>           <C>   
Cash flows from financing activities:
    Net increase in noninterest-bearing demand, savings,
        NOW and money-market accounts ........................................       16,754         4,382         3,152
    Net increase in certificate accounts .....................................       18,886        28,344        11,809
    Net increase in Federal Home Loan Bank advances ..........................       26,000        29,850          --
    Net increase (decrease) in other borrowed funds ..........................          789        (8,048)        8,048
    Stock options exercised ..................................................          360           283            80
    Purchase of treasury stock ...............................................       (2,659)       (6,171)       (3,922)
    Cash dividends paid ......................................................       (1,343)       (1,140)         (986)
                                                                                   --------       -------       -------

                Net cash provided by financing activities ....................       58,787        47,500        18,181
                                                                                   --------       -------       -------

Net increase (decrease) in cash and cash equivalents .........................        7,244         5,527        (3,772)

Cash and cash equivalents at beginning of year ...............................       15,684        10,157        13,929
                                                                                   --------       -------       -------

Cash and cash equivalents at end of year .....................................     $ 22,928        15,684        10,157
                                                                                   ========       =======       =======
Supplemental disclosures of cash flow information
Cash paid during the year for:
        Interest .............................................................     $ 17,564        15,125        12,937
                                                                                   ========       =======       =======

        Income taxes .........................................................     $  3,076         2,212         1,500
                                                                                   ========       =======       =======
    Noncash investing and financing activities:

        Accumulated other comprehensive income, change in unrealized
            loss on securities available for sale, net of tax.................     $     23           105           (99)
                                                                                   ========       =======       =======

        Transfers from loans to foreclosed real estate........................     $    193           444           287
                                                                                   ========       =======       =======

        Loans originated on sales of foreclosed real estate...................     $    297            54            21
                                                                                   ========       =======       =======

        Loans funded by and sold to correspondent ............................     $  8,383         2,469         2,368
                                                                                   ========       =======       =======
</TABLE>
          See accompanying Notes to Consolidated Financial Statements.

                                       26
<PAGE>
                               FFLC BANCORP, INC.

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997 and 1996

(1)  Summary of Significant Accounting Policies
    FFLCBancorp,  Inc. (the "Holding  Company") was  incorporated in Delaware on
        September 16, 1993 as a unitary  savings and loan holding  company.  The
        Holding  Company  completed  its public  offering  of  4,603,032  shares
        (adjusted  for  stock  split)  of common  stock on  January  4, 1994 and
        acquired First Federal  Savings Bank of Lake County (the "Savings Bank")
        in   connection   with   the   Savings   Bank's    conversion   from   a
        federally-chartered  mutual savings association to a federally-chartered
        stock savings bank.  The Holding  Company's  acquisition  of the Savings
        Bank was  accounted for as a  pooling-of-interest.  The Savings Bank was
        established  in 1934 as a  federally-chartered  mutual  savings and loan
        association.   The  Savings   Bank  is  a   community-oriented   savings
        institution which offers a variety of financial  services to individuals
        and  businesses  primarily  located in Lake  County,  Sumter  County and
        Citrus County,  Florida. The deposits of the Savings Bank are insured by
        the Federal Deposit Insurance  Corporation  ("FDIC") through the Savings
        Association Insurance Fund ("SAIF").

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

    General. The accounting and reporting policies of FFLC Bancorp, Inc. and its
        subsidiaries  (together,  the "Company")  conform to generally  accepted
        accounting  principles  and  to  general  practices  within  the  thrift
        industry.  All per share  amounts  presented  reflect  the effect of the
        five-for-three  stock split in November,  1997. The following summarizes
        the significant accounting policies of the Company:

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

    Cash and  Cash  Equivalents.   For  the  purpose  of   presentation  in  the
        consolidated  statements of cash flows,  cash and cash  equivalents  are
        defined as those amounts included in the balance-sheet caption "cash and
        cash equivalents."

        The  Savings  Bank is  required  to  maintain  certain  average  reserve
        balances  pursuant to  regulations of the Federal  Reserve Board.  These
        balances  must be  maintained  in the form of vault cash or  noninterest
        bearing  deposits at a Federal  Reserve Bank.  The Savings Bank exceeded
        this  requirement,  which was $1.1  million and $843,000 at December 31,
        1998 and 1997, respectively.
<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  reported  as a net  amount in a separate  component  of
        stockholders'  equity  until  realized.  Gains and losses on the sale of
        available-for-sale     securities    are     determined     using    the
        specific-identification  method.  Premiums and  discounts on  securities
        available  for sale and held to  maturity  are  recognized  in  interest
        income using the interest method over the period to maturity.



                                       27
<PAGE>
    Loans  Receivable.  Loans  receivable  that  management  has the  intent and
        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  and  certain  direct   origination   costs  are
        capitalized  and recognized as an adjustment of the yield of the related
        loan.

        The  accrual of  interest on impaired  loans is  discontinued  when,  in
        management's  opinion,  the borrower  may be unable to meet  payments as
        they become  due.  When  interest  accrual is  discontinued,  all unpaid
        accrued interest is reversed. Interest income is subsequently recognized
        only to the extent cash payments are received.

        The  allowance  for loan  losses is  increased  by charges to income and
        decreased by  charge-offs  (net of  recoveries).  Management's  periodic
        evaluation  of the adequacy of the  allowance is based on the  Company's
        past loan loss  experience,  known and inherent  risks in the portfolio,
        adverse  situations that may affect the borrower's ability to repay, the
        estimated  value of any  underlying  collateral,  and  current  economic
        conditions.

    Foreclosed Real Estate.  Real estate properties acquired through, or in lieu
        of, loan  foreclosure are to be sold and are initially  recorded at fair
        value at the date of foreclosure  establishing  a new cost basis.  After
        foreclosure, valuations are periodically performed by management and the
        real  estate is  carried at the lower of  carrying  amount or fair value
        less cost to sell.  Revenue and expenses from  operations and changes in
        the valuation  allowance are included in the consolidated  statements of
        income.

    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 by
        the straight-line method.

    Income Taxes. Deferred tax assets and liabilities are reflected at currently
        enacted income tax rates  applicable to the period in which the deferred
        tax assets or  liabilities  are  expected to be realized or settled.  As
        changes  in tax laws or rates  are  enacted,  deferred  tax  assets  and
        liabilities are adjusted through the provision for income taxes.

    Stock-Based  Compensation.  Statement of Financial  Accounting Standards No.
        123,  "Accounting  for  Stock-Based  Compensation"  establishes  a "fair
        value" based method of accounting for stock-based compensation plans and
        encourages  all entities to adopt that method of  accounting  for all of
        their  employee stock  compensation  plans.  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 APB Opinion
        No. 25,  "Accounting  for Stock  Issued to  Employees."  The Company has
        elected  to  follow  APB  Opinion  25  and  related  interpretations  in
        accounting for its employee stock options.


                                       28
<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 and commitments under lines of credit. Such
        financial instruments are recorded in the financial statements when they
        are funded.

    FairValues of Financial  Instruments.  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 short-term
        instruments approximate their fair value.

        Securities.  Fair  values  for  securities  are based on  quoted  market
        prices.  If quoted market prices are not available,  fair value is based
        on quoted market prices for similar securities.

        Loans Receivable.  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  certain  fixed-rate  mortgage  (e.g.
        one-to-four family  residential),  commercial real estate and commercial
        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.

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

        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 on time deposits.

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

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

        Off-Balance-Sheet Instruments. 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.


                                       29
<PAGE>
    Income Per Share of Common  Stock.  During  1997,  the  Company  adopted the
        provisions  of Financial  Accounting  Standards  No. 128,  "Earnings Per
        Share" (SFAS No. 128).  SFAS No. 128 provides  accounting  and reporting
        standards for calculating  earnings 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  Employee  Stock  Option Plan  ("ESOP") and the
        Retention and Recognition Plan ("RRP") incentive plans (see Note 16) are
        only considered outstanding when the shares are released or committed to
        be released for allocation to participants. The ESOP initially purchased
        368,242  shares,  of which 4,383 shares were released for  allocation to
        participants  each month  beginning in January,  1994. The RRP initially
        purchased  184,122  shares,  of which 177,517,  179,541 and 179,541 were
        allocated to participants  and are considered  outstanding for the years
        ended December 31, 1996,  1997 and 1998,  respectively.  At December 31,
        1998,  109,794  shares remain  uncommitted  under both plans 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 16) computed
        using  the  treasury  stock  method  prescribed  by SFAS  No.  128.  The
        following  table  presents  the  calculation  of net income per share of
        common stock:
<TABLE>
<CAPTION>
                                                                                    Year Ended December 31,
                                                                         ------------------------------------------
                                                                             1998           1997            1996
                                                                         ----------      ----------      -----------
<S>                                                                      <C>             <C>             <C>      
Weighted-average shares of common stock issued
    and outstanding before adjustments for ESOP,
    RRP and common stock options ...................................      3,728,350       3,890,019       4,317,500

Adjustment to reflect the effect of unallocated
    ESOP and RRP shares ............................................       (136,097)       (189,799)       (247,675)
                                                                         ----------      ----------      ---------- 

Weighted average shares for basic income per share .................      3,592,253       3,700,220       4,069,825
                                                                         ==========      ==========      ==========

Basic income per share..............................................     $     1.22            1.01             .54
                                                                         ==========      ==========      ==========
Total weighted-average common shares and equivalents
    outstanding for basic income per share
    computation ....................................................      3,592,253       3,700,220       4,069,825

Additional  dilutive  shares using the average  market value for the
    period utilizing the treasury stock method
    regarding stock options ........................................        184,832         211,036         198,167
                                                                         ----------      ----------      ---------- 

Weighted-average common shares and equivalents
    outstanding for diluted income per share .......................      3,777,085       3,911,256       4,267,992
                                                                         ==========      ==========      ==========

Diluted income per share............................................     $     1.16             .96             .51
                                                                         ==========      ==========      ==========
</TABLE>
                                       30

<PAGE>
    Future Accounting  Requirements.  The FASB has recently issued the following
        Statement of  Financial  Accounting  Standards  which is relevant to the
        Company:
        
        Financial   Accounting   Standards  133  -  Accounting   for  Derivative
        Investments  and  Hedging   Activities   requires  companies  to  record
        derivatives on the balance sheet as assets or  liabilities,  measured at
        fair  value.  Gains or losses  resulting  from  changes in the values of
        those  derivatives  would be accounted  for  depending on the use of the
        derivatives  and  whether  they  qualify for hedge  accounting.  The key
        criterion for hedge accounting is that the hedging  relationship must be
        highly effective in achieving  offsetting  changes in fair value or cash
        flows.  The Company will be required to adopt this  Statement  effective
        January 1, 2000. Management does not anticipate that this Statement will
        have a material impact on the Company.

    Reclassifications.  Certain  amounts  in  the  1996  and  1997  consolidated
        financial statements have been reclassified to
        conform to the presentation for 1998.

(2)  Securities
    Securities  have been  classified  according  to  management's  intent.  The
        carrying amounts of securities 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, 1998:
            Mutual funds........................................       $  9,238          -           (107)            9,131         
            U.S. Government and agency securities...............          4,036           22          -               4,058         
            Mortgage-backed securities..........................          8,898          -            (21)            8,877         
            Other investment securities.........................             97            2          -                  99         
                                                                        --------        ----         ----            ------         
                                                                                                                                   
                Total...........................................       $ 22,269           24         (128)           22,165   
                                                                       ========         ====         ====            ====== 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                       Gross        Gross
                                                                      Amortized      Unrealized    Unrealized        Fair
                                                                         Cost           Gains        Losses          Value
                                                                         ----           -----        ------          -----
                                                                                           (In thousands)
<S>                                                                    <C>              <C>          <C>             <C>           
        At December 31, 1997:                                                                                                       
            Mutual funds........................................          9,258           -           (75)            9,183         
            U.S. Government and agency securities...............          7,965            2          (30)            7,937         
            Mortgage-backed securities..........................          9,348           -           (43)            9,305         
            Other investment securities.........................            151            5          -                 156         
                                                                       --------         ----         ----            ------         
                                                                                                                                    
                Total...........................................       $ 26,722            7         (148)           26,581         
                                                                       ========         ====         ====            ====== 
        Securities held to maturity:                                                                                                
        December 31, 1998:                                                                                                          
            SBA-related investment securities...................          2,320           46          -               2,366         
            Mortgage-backed securities..........................         15,907          152          -              16,059         
                                                                       --------         ----         ----            ------         
                                                                                                                                    
                Total...........................................       $ 18,227          198          -              18,425         
                                                                       ========         ====         ====            ====== 
        At December 31, 1997:                                                                                                       
            SBA-related investment securities...................          3,031           46          -               3,077         
            Mortgage-backed securities..........................         28,986          457          -              29,443         
                                                                        --------         ---         ----            ------  
                                                                                                                                   
                Total...........................................       $ 32,017          503          -              32,520         
                                                                       ========          ===         ====            ======  
</TABLE>
                                       31

<PAGE>
    The scheduled maturities of securities at December 31, 1998 were as follows:
<TABLE>
<CAPTION>


                                                             Held-to-Maturity Securities         Available-for-Sale Securities
                                                             ---------------------------         -----------------------------
                                                                 Amortized         Fair              Amortized          Fair
                                                                    Cost           Value                Cost            Value
                                                                 --------          ------              ------          ------ 
                                                                                        (In thousands)
<S>                                                              <C>               <C>                  <C>             <C>   
        Due from one year to five years..................        $      -               -               4,036           4,058 
        Due from five years to ten years.................               -               -                  97              99 
        Due after ten years..............................           2,320           2,366                   -               -    
        Mortgage-backed securities.......................          15,907          16,059               8,898           8,877 
        Mutual funds.....................................               -               -               9,238           9,131 
                                                                  --------          ------              ------          ------ 
                                                                                                                          
            Total   .....................................        $ 18,227          18,425              22,269          22,165 
                                                                 ========          ======              ======          ====== 
</TABLE>
                                                               
    Securities  with a carrying  value of  approximately  $2.9  million and $3.4
        million at December  31, 1998 and 1997,  respectively,  were  pledged to
        secure  public  funds and tax  deposits.  The Company  has also  pledged
        securities  with a carrying value of $3.1 million for  borrowings  under
        retail  repurchase  agreements  with customers at December 31, 1998 (See
        Note 6).

    There were no sales of securities  during the years ended December 31, 1998,
        1997 and 1996.

    The Company's portfolio of mortgage-backed securities include collateralized
        mortgage  obligations  (CMOs).  CMOs are generally divided into tranches
        whereby  principal  repayments  from the  underlying  mortgages are used
        sequentially  to retire the securities  according to the priority of the
        tranches. The Company invests in the following  collateralized  mortgage
        obligation tranches:  sequential,  planned amortization class,  targeted
        amortization class or support or companion  floating-rate tranches. Such
        tranches  have  stated  maturities  ranging  from 1-22  years;  however,
        because of  prepayments,  the  expected  weighted-average  life of these
        securities at December 31, 1998 is approximately 1.3 years. The majority
        of the CMOs  owned by the  Company  are  insured or  guaranteed,  either
        directly or indirectly,  through  mortgage-backed  securities underlying
        the  obligations  by either the FNMA,  FHLMC or GNMA.  Depending  on the
        amount of the Company's  available-for-sale  mortgage-backed securities,
        fluctuations  in the interest rate  environment  and other factors,  the
        Company may experience  material effects on its capital resources due to
        categorizing  these securities as available for sale. The Company's CMOs
        may be subject to price movements which typically result from prepayment
        on the underlying  obligations.  The Company's CMOs of $4.7 million have
        coupon rates ranging from 5.30% to 7.53% and had a weighted-average rate
        of 6.35% at December 31, 1998. The Company  purchases only CMOs rated AA
        or better by nationally recognized rating services.



                                       32
<PAGE>
(3)  Loans Receivable
    The components of loans were as follows:
<TABLE>
<CAPTION>

                                                                        At December 31,
                                                                   ----------------------
                                                                     1998           1997
                                                                   ---------     --------
                                                                        (In thousands)
<S>                                                                <C>            <C>    
            First mortgage loans secured by:
                One-to-four-family residential...................  $ 283,372      245,524
                Construction and land............................     11,683        3,528
                Multi-family units...............................      8,165        4,464
                Commercial real estate, churches and other.......     44,211       37,975
            Consumer loans.......................................     43,490       32,834
            Commercial loans.....................................     10,532        4,632
                                                                   ---------     --------

                    Subtotal.....................................    401,453      328,957

                Undisbursed portion of loans in process..........    (10,637)     (12,253)
                Net deferred loan costs..........................        526          333
                Allowance for loan losses........................     (2,283)      (1,684)
                                                                   ---------     --------

                    Loans receivable, net........................  $ 389,059      315,353
                                                                   =========      =======
</TABLE>

    An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                              -------------------------------------
                                                 1998           1997           1996
                                              -------           -----         -----
                                                            (In thousands)
<S>                                           <C>               <C>             <C>
            Balance at January 1............  $ 1,684           1,063           977
            Net loans charged off...........      (83)            (28)          (21)
            Provision for loan losses.......      682             649           107
                                              -------           -----         -----

            Balance at December 31..........  $ 2,283           1,684         1,063
                                              =======           =====         =====
</TABLE>
<PAGE>
    There were no impaired  loans  recognized  under SFAS 114 and 118 during the
        years ended December 31, 1998, 1997 and 1996.

    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 and Sumter
        Counties, Florida.

    Nonaccrual  loans  at  December  31,  1998  and 1997  totaled  $444,000  and
        $242,000,  respectively.  For the year ended December 31, 1998, interest
        income on loans would have been increased  approximately  $31,000 if the
        interest  on  nonaccrual  loans at December  31, 1998 had been  recorded
        under the original terms of such loans.  All of the nonaccrual  loans at
        December   31,   1998  and  1997  were   first-mortgage,   single-family
        residential loans or consumer loans.

    Mortgage loans  serviced  for others are not  included  in the  accompanying
        consolidated  balance  sheets.  The unpaid  principal  balances of these
        loans were approximately  $930,000 and $1.2 million at December 31, 1998
        and 1997, respectively.



                                       33
<PAGE>
(4)  Premises and Equipment
    Components of premises and equipment were as follows:
<TABLE>
<CAPTION>
                                                           At December 31,
                                                      -----------------------
                                                        1998            1997
                                                      -------          -----
                                                            (In thousands)
<S>                                                    <C>              <C>  
        Cost:
            Land....................................   $ 1,754          1,754
             Building and improvements...............    4,357          4,380
            Furniture and equipment.................     2,193          2,152
            Construction in progress................       424             11
                                                       -------          -----

                Total cost..........................     8,728          8,297

        Less accumulated depreciation...............     3,131          2,984
                                                       -------          -----

            Net book value..........................   $ 5,597          5,313
</TABLE>
    Certain company facilities are leased under various operating leases. Rental
        expense  was  $101,000,  $51,000  and  $22,000  in 1998,  1997 and 1996,
        respectively.  At December 31, 1998,  future minimum rental  commitments
        under noncancellable leases were as follows (in thousands):

            Year Ending
            December 31,                                       Amount
            ------------                                       ------
                1999........................................    $ 176
                2000........................................      122
                2001........................................      125
                2002........................................      129
                2003........................................      132
                                                                -----
                                                                $ 684
                                                                =====
(5)  Deposits
    The aggregate amount of short-term jumbo certificates of deposit,  each with
        a minimum denomination of $100,000,  was approximately $18.2 million and
        $12.2 million in 1998 and 1997, respectively.

    At December 31, 1998,  the scheduled  maturities of  certificate  of deposit
       were as follows (in thousands):

            Year Ending
            -----------
                1999............................................ $ 168,086
                2000............................................    82,793
                2001............................................     3,031
                2002............................................     2,083
                2003 and thereafter.............................     3,183
                                                                 ---------
                                                                 $ 259,176
                                                                 =========

                                       34
<PAGE>
(6)  Advances from Federal Home Loan Bank and Other Borrowings
    As  of December 31,  1998,  the Savings Bank had $56 million in Federal Home
        Loan Bank of Atlanta ("FHLB") advances outstanding. These advances had a
        weighted-average   interest  rate  of  5.28%  and  interest   rates  and
        maturities as follows (dollars in thousands):

                                                           At December 31,
                                        Interest        --------------------
      Year Ending December 31,            Rate             1998        1997
      ------------------------            ----             ----        ----

          2000........................    4.30%         $  6,000           -
          2002........................    6.10%            5,000       5,000
          2002........................    6.26%            5,000       5,000
          2002........................    6.09%           10,000      10,000
          2002........................    5.75%           10,000      10,000
          2003........................    3.90%            5,000           -
          2003........................    4.90%           10,000           -
          2008........................    4.19%            5,000           -
                                                        --------      ------
          Total.......................                  $ 56,000      30,000
                                                        ========      ======

    The security  agreement with FHLB includes a blanket floating lien requiring
        the Savings 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, 1998,  the
        Savings  Bank could borrow up to $100  million  under the FHLB  security
        agreement.

    Other borrowed  funds were  composed of retail  repurchase  agreements  with
        customers during 1998 and dollar reverse  repurchase  agreements  during
        1997.  The  Company  enters  into  retail  repurchase   agreements  with
        customers in which the funds received are accounted for as borrowings to
        the  Company.  Mortgage-backed  securities  sold  under  dollar  reverse
        repurchase  agreements were delivered to the broker-dealers who arranged
        the transactions. The broker-dealers may have sold, loaned, or otherwise
        disposed of such  securities  to other  parties in the normal  course of
        their operations, and have agreed to resell to the Company substantially
        identical securities at the maturities of the agreements.
<PAGE>
    Information concerning other borrowed funds is summarized as follows:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                          ----------------------------
                                                                            1998                 1997
                                                                          -------               ------
                                                                             (Dollars in thousands)
<S>                                                                       <C>                   <C>  
            Average balance during the year............................   $    14                5,629
                                                                          =======               ======

            Average interest rate during the year......................      4.65%                5.74%
                                                                          =======               ======

            Maximum month-end balance during the year..................   $   789               11,952
                                                                          =======               ======

            Securities as collateral under the agreements at year end:

                Carrying value.........................................   $ 3,073                    -
                                                                          =======               ======

                Fair value.............................................   $ 3,073                    -
                                                                          =======               ======
</TABLE>



                                       35
<PAGE>
(7)  Income Taxes
    The Holding Company and its subsidiaries file a consolidated  federal income
        tax return.  Income taxes are  allocated  proportionally  to the Holding
        Company  and each of the  subsidiaries  as though  separate  income  tax
        returns were filed.

    The income tax provision is summarized as follows:
<TABLE>
<CAPTION>
                                             Year Ended December 31,
                                  ----------------------------------------------
                                    1998               1997               1996
                                                 (In thousands)
<S>                               <C>                  <C>                <C>  
Current ...............           $ 3,108              2,339              1,594
Deferred ..............              (467)              (256)              (116)
                                  -------              -----              -----

                                  $ 2,641              2,083              1,478
                                  =======              =====              =====
</TABLE>
    The effective  tax rate on income  before income taxes differs from the U.S.
        statutory  rate of 34%. The following  summary  reconciles  taxes at the
        U.S. statutory rate with the effective rates:
<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                            -------------------------------------------------------------------------
                                                     1998                        1997                       1996
                                             Amount           %         Amount           %         Amount           %
                                            -------        ----        -------        ----        -------        ---- 
                                                                     (Dollars in thousands)
<S>                                         <C>            <C>         <C>            <C>         <C>            <C>  
            Taxes on income at U.S.
                statutory rate........      $ 2,393        34.0%       $ 1,985        34.0%       $ 1,245        34.0%
            State income taxes, net of
                federal tax benefit...          240         3.4            192         3.3            131         3.6
            Other, net................            8          .1            (94)       (1.6)           102         2.8
                                            -------        ----        -------        ----        -------        ---- 
            Taxes on income at
                effective rates.......      $ 2,641        37.5%       $ 2,083        35.7%       $ 1,478        40.4%
                                            =======        ====        =======        ====        =======        ==== 
</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 liability relate to the following:
<PAGE>
<TABLE>
<CAPTION>

                                                                 At December 31,
                                                                 ---------------
                                                                 1998       1997
                                                                 ----       ----
                                                                 (In thousands)
<S>                                                              <C>          <C>
Deferred tax liabilities:
    Deferred loan fees ...................................       $--          27
    Allowance for loan losses ............................        --         256
    FHLB stock dividends .................................        304        304
    Depreciation .........................................        181        222
    Certain accrued interest .............................         12         17
    Other ................................................         96         82
                                                                 ----       ----

Gross deferred tax liabilities ...........................        593        908
                                                                 ----       ----

Deferred tax assets:
    Allowance for loan losses ............................        140       --
    Unrealized loss on securities available for sale .....         39         53
    Deferred loan fees ...................................         33       --
    RRP incentive plan ...................................         97        118
                                                                 ----       ----

Gross deferred tax assets ................................        309        171
                                                                 ----       ----

Net deferred tax liabilities .............................       $284        737
                                                                 ====        ===

</TABLE>

                                       36

<PAGE>
    Retained  earnings at  December  31,  1998 and 1997  includes  approximately
        $5,810,000  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 $2,186,000 at December 31, 1998 and 1997.

    The Small  Business Job  Protection  Act of 1996 (the "1996 Act") enacted on
        August 2, 1996 requires savings institutions,  such as the Savings Bank,
        to recapture  certain  portions of their  accumulated bad debt reserves,
        and eliminated the Percentage of Taxable Income Method of accounting for
        bad debts for tax purposes.  The Savings Bank was required to change its
        method of accounting for bad debts for tax purposes effective January 1,
        1996. In addition, the Savings Bank was required to recapture the excess
        of its bad debt  reserves  at  December  31,  1995  over  its base  year
        reserves at December 31, 1987,  ratably over a six-year period beginning
        in 1998.  At  December  31,  1998,  the Savings  Bank had  approximately
        $757,000 of deferred tax  liabilities  recorded for the recapture of its
        excess bad debt reserves.

(8)  Pension Plan
    Prior to 1996, the Company participated in a multi-employer  defined benefit
        pension plan (the "Pension Plan") which covered substantially all of its
        employees. The Company's funding policy with respect to the Pension Plan
        was to make an annual  contribution  determined  by the  Pension  Plan's
        actuaries that would not be less than the minimum required contribution,
        nor greater than the maximum  federal income tax deductible  limit.  The
        Company's contributions for the Pension Plan for the year ended December
        31, 1995 was $65,000.  During 1996, the Company decided to withdraw from
        participation  in  the  Pension  Plan,  and  accordingly,  participants'
        benefits were frozen and participants  became fully vested at that date.
        The Company did not make a contribution to the Pension Plan for 1996.

    In  connection   with  the  above,   the  Company   adopted  a  new  defined
        contribution  profit sharing  401(k) plan (the "401(k) Plan")  effective
        April 1, 1996. All employees who have met a minimum service  requirement
        (1,000 hours of service in a twelve-month period) may participate in the
        Plan. Under the 401(k) Plan, a participant may elect to contribute up to
        15% of their annual  compensation,  subject to IRS  limitations on total
        annual contributions.  The Company will make contributions to the 401(k)
        Plan on a monthly  basis at two percent of  participants'  compensation.
        Contributions  to the 401(k) Plan for the year ended  December  31, 1998
        and 1997 were $46,000 and $37,000, respectively.

(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 and
<PAGE>
        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.


                                       37
<PAGE>
    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.

    The estimated  fair values of the Company's  financial  instruments  were as
        follows:
<TABLE>
<CAPTION>
                                                                          At December 31, 1998        At December 31, 1997
                                                                          --------------------        --------------------
                                                                          Carrying        Fair        Carrying        Fair
                                                                           Amount         Value        Amount         Value
                                                                          ---------       ------        ------       ------  
                                                                                              (In thousands)
<S>                                                                       <C>             <C>           <C>          <C>     
              Financial assets:
                  Cash and cash equivalents.........................      $  22,928       22,928        15,684       15,684  
                  Securities held to maturity.......................         18,227       18,425        32,017       32,520  
                  Securities available for sale.....................         22,165       22,165        26,581       26,581  
                  Loans receivable..................................        389,059      391,616       315,353      316,528  
                  Accrued interest receivable.......................          2,242        2,242         2,134        2,134  
                  Federal Home Loan Bank stock......................          2,800        2,800         2,304        2,304  
                                                                                                                             
              Financial liabilities:                                                                                         
                  Deposit liabilities...............................        351,030      350,801       315,390      316,689  
                  Advances from FHLB................................         56,000       56,000        30,000       30,376  
                  Other borrowed funds..............................            789          789          -            -     
</TABLE>                                                                       
     A   summary of the notional amounts of the Company's financial  instruments
         which approximates fair value, with  off-balance-sheet risk at December
         31, 1998, follows:

                                                                  Notional
                                                                   Amount
                                                                  ---------
                                                               (In thousands)

              Commitments to extend credit..................      $   9,240

              Unused lines of credit........................      $  29,543

              Undisbursed portion of loans in process ......      $  10,637

(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 and Sumter County area.  Therefore,  the Company's exposure to
         credit risk is significantly  affected by changes in the economy of the
         Lake and Sumter County area.
<PAGE>
     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.


                                       38
<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,
                                                                      1998          1997
                                                                    -------         -----
                                                                       (In thousands)

<S>                                                                 <C>             <C>  
            Beginning balance...................................    $ 1,728         1,030
            Amounts related to new officers and directors.......       -              135
            Loans originated....................................      1,313           725
            Principal repayments................................       (365)         (162)
                                                                    -------         -----

                Ending balance..................................    $ 3,406         1,728
                                                                    =======         =====

</TABLE>

(12)  Commitments and Contingencies
    In  the  ordinary  course of business,  the Company has various  outstanding
        commitments  and  contingent  liabilities  that are not reflected in the
        accompanying consolidated financial statements. In addition, the Company
        is a  defendant  in  certain  claims  and legal  actions  arising in the
        ordinary  course  of  business.  In the  opinion  of  management,  after
        consultation  with legal  counsel,  the  ultimate  disposition  of these
        matters  is not  expected  to  have a  material  adverse  effect  on the
        consolidated financial condition of the Company.

(13)  Restrictions on Retained Earnings
    The Savings  Bank is  subject  to  certain  restrictions  on the  amount  of
        dividends  that it may declare  without prior  regulatory  approval.  At
        December 31, 1998, approximately $16.9 million of retained earnings were
        available for dividend declaration without prior regulatory approval.

(14)  Regulatory Matters
    The Savings  Bank is  subject  to  various  regulatory  capital  requirement
        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   financial
        statements.   Under  capital  adequacy  guidelines  and  the  regulatory
        framework  for prompt  corrective  action,  the  Savings  Bank must meet
        specific capital  guidelines that involve  quantitative  measures of the
        Savings Bank's assets, liabilities,  and certain off-balance-sheet items
        as calculated under regulatory accounting practices.  The Savings Bank's
        capital  amounts  and  classification  are also  subject to  qualitative
        judgements by the regulators  about  components,  risk  weightings,  and
        other factors.
<PAGE>
    Quantitative  measures  established by regulation to ensure capital adequacy
        require the Savings 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,  1998,  that the Savings  Bank meets all capital  adequacy
        requirements to which it is subject.

    As  of  December  31,  1998,  the  most  recent  notification  from  the OTS
        categorized  the Savings Bank as well  capitalized  under the regulatory
        framework  for  prompt  corrective  action.  To be  categorized  as well
        capitalized,  the Savings 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.


                                       39

<PAGE>
    The Savings  Bank's actual capital  amounts and  percentages at December 31,
        1998 and 1997 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, 1998:          ----      ---------        ----       --------          ----       --------
                                                                    (Dollars in thousands)
<S>                                        <C>       <C>               <C>       <C>                <C>       <C>     
         Stockholders' equity,
             and ratio to total
             assets....................    9.97%     $  46,270
         Less: investment in
             nonincludable
             subsidiary................                   (187)
         Add back: unrealized loss on
             available-for-sale
             securities................                     (1)
                                                     ---------
         Tangible capital,
             and ratio to adjusted
             total assets..............    9.94%     $  46,082         1.5%      $  6,957
                                                     =========                   ========
         Tier 1 (core) capital, and
             ratio to adjusted total
             assets....................    9.94%     $  46,082         3.0%      $ 13,913           5.0%      $ 23,189
                                                     =========                   ========                     ========
         Tier 1 capital, and ratio
             to risk-weighted assets...   17.21%        46,082         4.0%      $ 10,711           6.0%      $ 16,067
                                                                                 ========                     ========
         Less: nonincludable
             investment in 80%
             land loans................                   (122)

         Tier 2 capital (allowance for
             loan losses)..............                  2,283
                                                     ---------
         Total risk-based capital,
             and ratio to risk-
             weighted assets...........   18.02%     $  48,243         8.0%      $ 21,422          10.0%      $ 26,778
                                                     =========                   ========                     ========

         Total assets..................              $ 463,962
                                                     =========

         Adjusted total assets.........              $ 463,774
                                                     =========

         Risk-weighted assets..........              $ 267,778
                                                     =========
</TABLE>
                                       40
<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, 1997:          ----      ---------        ----       --------          ----       --------
                                                                    (Dollars in thousands)
<S>                                       <C>       <C>               <C>       <C>                <C>       <C>     
         Stockholders' equity,
             and ratio to total
             assets....................   11.12%    $   44,502
         Less: investment in
             nonincludable
             subsidiary................                   (195)
         Add back: unrealized loss on
             available-for-sale
             securities................                     42
                                                     ---------
         Tangible capital,
             and ratio to adjusted
             total assets..............   11.08%     $  44,349         1.5%      $  6,003
                                                     =========                   ========

         Tier 1 (core) capital, and
             ratio to adjusted total
             assets....................   11.08%     $  44,349         3.0%      $ 12,006           5.0%      $ 20,009
                                                     =========                   ========                     ========

         Tier 1 capital, and ratio
             to risk-weighted assets...   20.90%        44,349         4.0%      $  8,486           6.0%      $ 12,730
                                                                                 ========                     ========
         Tier 2 capital (allowance for
             loan losses)..............                  1,684
                                                     ---------
         Total risk-based capital,
             and ratio to risk-
             weighted assets...........   21.70%     $  46,033         8.0%      $ 16,973          10.0%      $ 21,216
                                                     =========                   ========                     ========

         Total assets..................              $ 400,339
                                                     =========

         Adjusted total assets.........              $ 400,186
                                                     =========

         Risk-weighted assets..........              $ 212,162
                                                     =========
</TABLE>

                                       41

<PAGE>
    On  September 30, 1996,  legislation was enacted which,  among other things,
        imposed a  special  one-time  assessment  on SAIF  member  institutions,
        including  the Savings  Bank,  to  recapitalize  the SAIF and spread the
        obligations for payments of Financing  Corporation ("FICO") bonds across
        all SAIF and BIF members. The FDIC special assessment levied amounted to
        65.7 basis points on SAIF assessable deposits held as of March 31, 1995.
        The special  assessment  was recognized in the third quarter of 1996 and
        was tax  deductible.  The Savings Bank recorded a charge of $1.7 million
        before  taxes  during 1996 as a result of the FDIC  special  assessment.
        That legislation eliminated the substantial disparity between the amount
        that  BIF and  SAIF  members  had  been  paying  for  deposit  insurance
        premiums.

    Beginning on  January 1, 1997,  BIF  members  will pay a portion of the FICO
         payment equal to 1.3 basis points on BIF-insured deposits,  compared to
         6.48 basis points payable by SAIF members on SAIF-insured deposits, and
         will pay a pro rata share of the FICO payment on the earlier of January
         1, 2000 or the date upon which the last  savings  association,  such as
         the Savings Bank,  ceases to exist.  The legislation  also requires BIF
         and SAIF to be  merged by  January  1, 1999  provided  that  subsequent
         legislation is adopted to eliminate the savings association charter and
         no savings associations remain as of that time.

    The  FDIC  substantially  lowered SAIF  assessments to a range comparable to
         those of BIF members,  although  SAIF members will  continue to pay the
         higher FICO payments  described  above.  Management  cannot predict the
         level of FDIC insurance  assessments on an ongoing basis or whether the
         BIF and SAIF will eventually be merged.

(15)  Conversion to Stock Savings Bank
    The  Savings  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
         adopted by the Savings  Bank's  Board of Directors on June 17, 1993 and
         subsequently  approved  by  regulatory  authorities  and members of the
         Bank.  FFLC  Bancorp,  Inc. was created as the holding  company for the
         Savings Bank as part of this conversion,  generating  proceeds of $23.3
         million (net of shares purchased by the Savings Bank for employee stock
         incentive  plans)  from the sale of  4,603,032  shares  of stock at the
         price of $6 per share in a subscription and community offering.

    The  Plan of  Conversion  provided for the  establishment  of a  Liquidation
         Account  equal  to the  retained  income  of  the  Savings  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
         Savings  Bank  to  qualifying  depositors  as  of  September  30,  1992
         (Eligible  Account  Holders) who  continue to maintain  deposits in the
         Savings  Bank after  conversion.  In the  unlikely  event of a complete
         liquidation of the Savings 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.
<PAGE>
    Current  regulations  allow the Savings  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
         Savings  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. Federal regulations also preclude any repurchase
         of the stock by the Savings Bank or its holding company for three years
         after  conversion  except  for  purchases  of  qualifying  shares  of a
         director and repurchases  pursuant to an offer made on a pro rata basis
         to all  stockholders  and with prior  approval  of the Office of Thrift
         Supervision or pursuant to an open-market stock repurchase program that
         complies  with  certain  regulatory  criteria.  See  also  Note  18 for
         information regarding the Savings Bank's Stock Repurchase Program.


                                       42
<PAGE>
(16)  Stock Benefit Plans
    During 1996,  the Company  adopted the  provisions of Statement of Financial
        Accounting Standards No. 123, "Accounting for Stock-Based  Compensation"
        ("SFAS No. 123"). SFAS No. 123 applies to stock-based compensation under
        the Company's  incentive stock option plan (the "Option Plan") and under
        the Company's Recognition and Retention Plan discussed below. As allowed
        by SFAS No. 123, the Company elected to continue to measure compensation
        cost for the  options  or shares  granted  under  either  plan using the
        intrinsic  value method of accounting  prescribed by APB Opinion No. 25,
        "Accounting for Stock Issued to Employees."  SFAS No. 123 does not apply
        to the Employee Stock Ownership Plan discussed below.

    During the years ended December 31, 1998, 1997 and 1996, 18,000,  10,867 and
         8,332  options  were granted  under the Option  Plan,  and 0, 2,014 and
         6,000 shares were awarded under the  Recognition  and  Retention  Plan.
         SFAS No. 123 requires pro forma fair value disclosures if the intrinsic
         value method is being utilized. In order to calculate the fair value of
         the options,  it was assumed that the risk-free  interest rate was 7.0%
         for each period, an annualized dividend yield of approximately 2% would
         apply over the exercise period,  the expected life of the options would
         be the entire  exercise  period and the expected  stock  volatility was
         42%, 23% and 14%,  respectively,  for 1998, 1997 and 1996. For purposes
         of pro forma  disclosures,  the  estimated  fair value was  included in
         expense  in  the  period  vesting  occurs.  The  following  information
         pertains to the options  granted to  purchase  common  stock and shares
         awarded  in  1998,  1997  and  1996 (in  thousands,  except  per  share
         amounts):
<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                                 -------------------------------------
                                                                                   1998             1997          1996
                                                                                 --------          -----         -----
<S>                                                                              <C>               <C>           <C>
             Weighted-average grant-date fair value of options
                  issued during the year.....................................    $    166             84            39
                                                                                 ========          =====         =====

             Proforma net earnings...........................................    $  4,303          3,663         2,149
                                                                                 ========          =====         =====

             Proforma basic earnings per share...............................    $   1.20            .99           .53
                                                                                 ========          =====         =====
</TABLE>
    Stock Option Plan. During  1993,  the Company  adopted and the  shareholders
         approved the Option Plan.  On January 4, 1994,  upon  conversion of the
         Savings Bank to a stock  association,  stock options for 460,303 common
         shares  were  authorized  to be  granted  to  directors,  officers  and
         employees  of the Savings Bank  including  66,343  shares  reserved for
         future  directors,  officers and  employees.  Shares  granted under the
         Option Plan are  exercisable  at the market price 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 from the date of grant or one year  following  the
         date which the outside director, officer or employee ceases to serve in
         such capacity. At December 31, 1998, 54,999 shares remain available for
         grant to future directors, officers and employees.

                                       43
<PAGE>
    The following is a summary of option transactions:
<TABLE>
<CAPTION>
                                                                                                            Weighted-
                                                                                     Range of                Average
                                                                      Number         Per Share              Per Share
                                                                     of Shares     Option Price              Price
                                                                     ---------     ------------              -----
<S>                                                                   <C>           <C>                    <C>    
            Outstanding, December 31, 1995......................      373,580       $  6.00-9.52            $  6.05
            Granted.............................................        8,332              12.00              12.00
            Forfeited...........................................       (2,778)              6.00               6.00
            Exercised...........................................      (13,321)              6.00               6.00
                                                                     --------
            Outstanding, December 31, 1996......................      365,813         6.00-12.00               6.19
            Granted.............................................       10,867        15.30-21.25              18.06
            Exercised...........................................      (46,252)         6.00-9.52               6.13
                                                                     --------

            Outstanding, December 31, 1997......................      330,428         6.00-21.25               6.58
            Granted.............................................       18,000        16.25-19.25              18.08
            Exercised...........................................      (59,895)              6.00               6.00
            Forfeited...........................................      (15,333)       12.00-19.25              17.84
                                                                     --------

            Outstanding, December 31, 1998......................      273,200      $  6.00-21.25            $  6.83
                                                                     ========      =============            =======
                                             
</TABLE>
    The weighted-average  remaining  contractual  life of the outstanding  stock
        options at December 31, 1998,  1997 and 1996 was 5.3, 6.2 and 7.1 years,
        respectively.

    The outstanding options at December 31, 1998 were exercisable as follows:
<TABLE>
<CAPTION>

                                                             Number                                Weighted-Average
                                                              of         Weighted-Average             Remaining
            Year Ending                                      Shares      Exercise Price           Contractual Life
            -----------                                      ------      --------------           ----------------
                                                                                                     (In years)
<S>                                                         <C>             <C>                          <C>
                Currently exercisable...................    264,979         $  6.54                      5.2
                1999....................................      3,111           15.91                      8.6
                2000....................................      3,110           15.91                      8.6
                2001....................................      2,000           16.25                      9.0
                                                            -------
                                                            273,200         $  6.83                      5.3
                                                            =======         =======                      ===

</TABLE>

                                       44

<PAGE>
    Employee Stock  Ownership  Plan. The Company  sponsors a leveraged ESOP that
        covers eligible  employees who have a twelve-month  period of employment
        with the Savings  Bank during which they worked at least 1,000 hours and
        who have attained age 21. The Savings Bank makes quarterly contributions
        to the ESOP equal to the ESOP's debt service.  The ESOP Trust  purchased
        368,242 shares of common stock in the Company's  initial public offering
        with the proceeds from a loan from the Company. This loan bears interest
        at a fixed-rate of six percent with  principal  and interest  payable in
        equal quarterly installments over seven years. The ESOP shares initially
        were pledged as collateral  for its debt. As the debt is repaid,  shares
        are released from collateral and allocated to active  employees based on
        the  proportion  of debt  service  paid  during  the year.  The  Company
        accounts for its ESOP in  accordance  with  Statement of Position  93-6.
        Accordingly,  the debt of the ESOP is  recorded  as debt and the cost of
        the  shares  pledged  as  collateral  are  reported  as a contra  equity
        account.  As shares are released from  collateral,  the Company  records
        compensation expense, and an offsetting credit to capital,  equal to the
        current  market price of the shares,  and the shares become  outstanding
        for  earnings per share  computations.  Dividends on all ESOP shares are
        recorded as  compensation  expense as it is  management's  intention  to
        allocate   the   dividends   along  with  the  shares  when   allocated.
        Compensation  expense for the years ended  December 31,  1998,  1997 and
        1996 included the following ESOP related costs:
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                         -----------------------------
                                                                           1998       1997        1996
                                                                         -------       ----        ---
                                                                                  (In thousands)
<S>                                                                      <C>            <C>        <C>
            Amortization of the original cost, $6 per share...........   $   315        315        315
            Market appreciation of the FFLC shares....................       663        597        265
            Dividends on ESOP shares..................................        38         61         60
                                                                         -------       ----        ---

                Total.................................................   $ 1,016        973        640
                                                                         =======        ===        ===
</TABLE>

    The ESOP shares were as follows:
<TABLE>
<CAPTION>
                                                                               At December 31,
                                                                       ----------------------------
                                                                          1998               1997
                                                                       ----------          --------
                                                                              ($ in thousands)
<S>                                                                    <C>                 <C>    
            Allocated shares and shares released for allocation...        238,413           199,479
            Unreleased shares.....................................        105,212           157,818
                                                                       ----------          --------

            Total ESOP shares.....................................        343,625           357,297
                                                                       ----------          --------

            Fair value of unreleased shares.......................     $    1,710             3,433
                                                                       ==========          ========
</TABLE>
<PAGE>
    Recognition and Retention Plan. The Company  adopted,  and the  shareholders
        approved,  an RRP for  directors,  officers and  employees to enable the
        Savings Bank to attract and retain experienced and capable personnel. On
        January 4, 1994,  the  conversion  date,  184,122 shares of common stock
        were  purchased  for the RRP which  included  8,067 shares  reserved for
        future directors,  officers and employees. The shares are granted in the
        form of restricted stock to be earned in three equal annual installments
        beginning  April 4, 1995.  The RRP shares  purchased  in the  conversion
        initially  were  excluded  from   stockholders'   equity.   The  Company
        recognized  compensation  expense in the amount of the fair market value
        of the common stock at the grant date of $6 per share, pro rata over the
        years  (1996,  1995 and 1994)  during  which the shares  were earned and
        payable  and  recorded a credit to  shareholders'  equity.  Compensation
        expense  attributable  to the RRP amounted to $368,000 in 1996, 1995 and
        1994. No compensation  expense attributable to the RRP was recognized in
        1997  or  1998.  The  shares  are  entitled  to  all  voting  and  other
        shareholder rights, except that the shares, while restricted,  cannot be
        sold,  pledged or otherwise  disposed of, and are required to be held in
        escrow.




                                       45
<PAGE>
    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  forfeits 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,  1998,  4,581 shares
        remain reserved for future directors, officers and employees.

(17)  Parent Company Only Financial Statements
    Condensed  financial  statements  of the  Holding  Company as of and for the
        years ended  December  31, 1998 and 1997 are  presented  below.  Amounts
        shown as investment  in  subsidiary,  loans to subsidiary  and equity in
        earnings of subsidiary are eliminated in consolidation.
<TABLE>
<CAPTION>
                            Condensed Balance Sheets

                                                               At December 31,
                                                            --------------------
                                                             1998          1997
                                                            -------      -------
                                                                (In thousands)
            Assets

<S>                                                         <C>              <C>
Cash, deposited with subsidiary ......................      $   825          477
Investment in subsidiary .............................       46,270       44,503
Loans to subsidiary ..................................        6,131        6,447
Other assets .........................................         --              2
                                                            -------       ------
        Total assets .................................      $53,226       51,429
                                                            =======       ======

    Liabilities and Stockholders' Equity

Accrued expense and other liabilities ................            4         --
Stockholders' equity .................................       53,223       51,429
                                                            -------       ------

        Total liabilities and stockholders' equity ...      $53,226       51,429
                                                            =======       ======

</TABLE>
                                       46
<PAGE>
<TABLE>
<CAPTION>
                                            Condensed Statements of Income

                                                                                            Year Ended December 31,
                                                                                       ------------------------------
                                                                                          1998       1997        1996
                                                                                        -------      -----      -----
                                                                                                 (In thousands)

<S>                                                                                    <C>           <C>        <C>
        Revenues.....................................................................   $   410        532        772
        Expenses.....................................................................       243        280        396
                                                                                        -------      -----      -----
                Income before earnings of subsidiary.................................       167        252        376
                Earnings of subsidiary...............................................     4,230      3,502      1,808
                                                                                        -------      -----      -----

                Net income                                                              $ 4,397      3,754      2,184
                                                                                        =======      =====      =====
<CAPTION>
                                          Condensed Statements of Cash Flows
                                                                                            Year Ended December 31,
                                                                                       ------------------------------
                                                                                         1998        1997        1996
                                                                                        -------      -----      -----
                                                                                                (In thousands)
<S>                                                                                     <C>          <C>        <C>  
    Cash flows from operating activities:
        Net income....................................................................  $ 4,397      3,754      2,184
        Adjustments to reconcile net income to net cash
          provided by operations:
            Equity in earnings of subsidiary..........................................   (4,230)    (3,502)    (1,808)
            Decrease (increase) in other assets.......................................        2         (2)         6
            Decrease in current income taxes payable..................................      -         -            (4)
            Increase (decrease) in accrued expenses and other liabilities.............        4        (12)        (4)
                                                                                        -------      -----      -----
                Net cash provided by operating activities.............................      173        238        374
                                                                                        -------      -----      -----
    Cash flows from investing activities-
            Repayment of loan to subsidiary...........................................      316      4,815      1,316
                                                                                        -------      -----      -----
    Cash flows from financing activities:
            Purchase of treasury stock................................................   (2,659)    (6,171)    (3,922)
            Proceeds from sale of common stock........................................      360        283         80
            Cash dividends paid.......................................................   (1,344)    (1,141)      (986)
            Cash dividends received...................................................    3,502      1,808      2,654
                                                                                        -------      -----      -----

                Net cash (used in) provided by financing activities...................     (141)    (5,221)    (2,174)
                                                                                        -------      -----      -----

    Net increase (decrease) in cash...................................................      348       (168)      (484)

    Cash at beginning of year.........................................................      477        645      1,129
                                                                                        -------      -----      -----

    Cash at end of year............................................................... $    825        477        645
                                                                                       ========        ===        ===

</TABLE>

                                       47
<PAGE>
(18)  Stock Repurchase Program
    In  December  1994,  the  Company's  Board  of  Directors  approved  a Stock
        Repurchase  Program  ("Program") which allows the Company to acquire its
        outstanding  common stock in the open market.  The Company  subsequently
        received OTS approval for the  Program,  and began  repurchasing  shares
        early  in  1995.   Under  the  Program,   the  Company  was  limited  to
        repurchasing  no more than 5%, or  approximately  138,000  shares of its
        publicly-held  common stock over a one-year  period  ending  January 16,
        1996.  During the year ended December 31, 1995,  132,044 shares or 95.6%
        of the  maximum  number  of  shares  approved  under  the  Program  were
        repurchased.

    In  January and August  1996,  the  Company's  Board of  Directors  approved
        programs which allow the Company to acquire  additional  common stock in
        the open market.  The Company received OTS approval for the programs and
        began repurchasing shares within one month of approval.  During the year
        ended December 31, 1996,  all 132,000 shares  approved under the January
        1996 program were repurchased.  During the years ended December 31, 1996
        and 1997, all 126,000 shares approved under the August 1996 program were
        repurchased.

    In  January 1997, the Company's Board of Directors  approved a program which
        allows  the  Company  to  acquire  additional  common  stock in the open
        market. During the year ended December 31, 1997, 178,690 shares or 60.6%
        of the 294,928 shares approved under that program were repurchased.

    In  September  1998,  the  Company's  Board of Directors  approved a program
        which allows the Company to acquire 369,285  additional  common stock in
        the open market.  During the year ended December 31, 1998, the remaining
        shares approved under the January 1997 program were repurchased.  During
        the year ended  December 31, 1998 32,025 shares or 8.7% of the September
        1998 program were repurchased.
<PAGE>
(19) Quarterly Financial Data (unaudited)
    The following tables present summarized quarterly data (in thousands, except
        per share amounts):
<TABLE>
<CAPTION>
                                                                          Year Ended December 31, 1998
                                                            ---------------------------------------------------------
                                                             First       Second      Third       Fourth
                                                            Quarter      Quarter     Quarter     Quarter        Total
                                                            -------      -------     -------     -------        -----

<S>                                                         <C>            <C>          <C>         <C>        <C>   
            Interest income...............................  $ 7,753        7,889        8,110       8,421      32,173
            Interest expense..............................    4,144        4,195        4,367       4,565      17,271
                                                            -------        -----        -----       -----      ------

            Net interest income...........................    3,609        3,694        3,743       3,856      14,902

            Provision for loan losses.....................      148          225          154         155         682
                                                            -------        -----        -----       -----      ------
            Net interest income after provision
                for loan losses...........................    3,461        3,469        3,589       3,701      14,220
                                                            -------        -----        -----       -----      ------

            Noninterest income............................      228          326          318         392       1,264
            Noninterest expense...........................    2,017        2,049        2,139       2,241       8,446
                                                            -------        -----        -----       -----      ------

            Income before income taxes....................    1,672        1,746        1,768       1,852       7,038

            Income taxes..................................      681          650          636         674       2,641
                                                            -------        -----        -----       -----      ------

            Net income....................................  $   991        1,096        1,132       1,178       4,397
                                                            =======        =====        =====       =====       =====

            Basic income per common share.................  $   .28          .30          .31         .33        1.22
                                                            =======          ===          ===         ===        ====

            Diluted income per common share...............  $   .26          .29          .30         .31        1.16
                                                            =======          ===          ===         ===        ====

</TABLE>
                                       48

<PAGE>
<TABLE>
<CAPTION>
                                                                          Year Ended December 31, 1997
                                                            ---------------------------------------------------------
                                                             First       Second       Third       Fourth
                                                            Quarter      Quarter      Quarter     Quarter       Total
                                                            -------      -------      -------     -------       -----
<S>                                                         <C>            <C>          <C>         <C>        <C>   
            Interest income...............................  $ 6,483        6,880        7,264       7,529      28,156
            Interest expense..............................    3,439        3,741        4,051       4,185      15,416
                                                            -------        -----        -----       -----      ------

            Net interest income...........................    3,044        3,139        3,213       3,344      12,740

            Provision for loan losses.....................       68           70          364         147         649
                                                            -------        -----        -----       -----      ------
            Net interest income after provision
                for loan losses...........................    2,976        3,069        2,849       3,197      12,091
                                                            -------        -----        -----       -----      ------

            Noninterest income............................      198          216          541         264       1,219
            Noninterest expense...........................    1,631        1,883        1,917       2,042       7,473
                                                            -------        -----        -----       -----      ------

            Income before income taxes....................    1,543        1,402        1,473       1,419       5,837

            Income taxes..................................      570          500          547         466       2,083
                                                            -------        -----        -----       -----      ------

            Net income....................................  $   973          902          926         953       3,754
                                                            =======          ===          ===         ===       =====

            Basic income per common share.................  $   .26          .24          .25         .26        1.01
                                                            =======          ===          ===         ===        ====

            Diluted income per common share...............  $   .24          .23          .24         .25         .96
                                                            =======          ===          ===         ===         ===
</TABLE>

(20)  Year 2000 Issues
    The Company is acutely  aware of the many  areas  affected  by the Year 2000
        computer  issue,  as  addressed  by the Federal  Financial  Institutions
        Examination  Council  ("FFIEC")  in  its  interagency   statement  which
        provided an outline for  institutions to manage the Year 2000 challenges
        effectively.  A Year  2000  plan  has  been  approved  by the  Board  of
        Directors which includes  multiple  phases,  tasks to be completed,  and
        target  dates  for  completion.  Issues  addressed  in the plan  include
        awareness, assessment, renovation, validation, implementation,  testing,
        and contingency planning.

    The Company  has  formed a Year  2000  committee  that is  charged  with the
        oversight of  completing  the Year 2000 project on a timely  basis.  The
        Company has completed its awareness,  assessment  and renovation  phases
        and is actively involved in validating and implementing its plan. At the
        present time, the Company has substantially completed its testing phase,
        the results of which indicate that the Company's internal systems appear
<PAGE>
        to be Year  2000  ready.  Since  it  routinely  upgrades  and  purchases
        technologically advanced software and hardware on a continual basis, the
        Company has determined that the cost of making  modifications to correct
        any Year 2000  issues  will not  materially  affect  reported  operating
        results.  Management  does not believe  that the Company has incurred or
        will incur material costs associated with the Year 2000 issue.

    The Company's   vendors  and  suppliers  have  been  contacted  for  written
        confirmation  of  their  product  readiness  for Year  2000  compliance.
        Negative or deficient  responses are analyzed and periodically  reviewed
        to prescribe timely actions within the Company's  contingency  planning.
        The Company's main service provider has completed testing of its mission
        critical  application  software and item processing  software;  the test
        results, which have been documented and validated, are deemed to be Year
        2000  compliant.  FFIEC  guidance  on testing  Year 2000  compliance  of
        service  providers  states  that proxy tests are  acceptable  compliance
        tests.   In  proxy   testing,   the  service   provider   tests  with  a
        representative  sample of financial  institutions  that use a particular
        service,  with the results of such  testing  shared  with all  similarly
        situated clients of the service provider. The Company has authorized the
        acceptance of proxy  testing  since the proxy tests have been  conducted
        with financial  institutions  that are similar in type and complexity to
        its own using the same  version of the Year 2000 ready  software and the
        same hardware and operating systems.


                                       49
<PAGE>
    The Company also recognizes the importance of determining that its borrowers
        are  facing  the  Year  2000  problem  in  a  timely   manner  to  avoid
        deterioration  of the  loan  portfolio  solely  due to this  issue.  All
        material relationships have been identified and questionnaires have been
        completed to assess the inherent risks.  Deposit customers have received
        statement  stuffers  and  informational  material  in this  regard.  The
        Company  plans to work on a  one-on-one  basis with any borrower who has
        been identified as having high Year 2000 risk exposure.

    Notwithstanding  our actions,  there can be no assurances  that all hardware
        and  software  that the  Company  will use will be Year 2000  compliant.
        Management  cannot predict the amount of financial  difficulties  it may
        incur due to customers  and vendors  inability  to perform  according to
        their  agreements  with the  Company or the  effects  that  other  third
        parties may cause as a result of this issue. Therefore,  there can be no
        assurance  that the  failure or delay of others to address  the issue or
        that the costs involved in such process will not have a material adverse
        effect on the Company's business,  financial  condition,  and results of
        operations.

    Based on testing  results to date (as noted above),  the  Company's  mission
        critical  systems  have been  deemed to be Year 2000 ready.  However,  a
        written  contingency  plan has been  developed to address  problems that
        might  be  caused  from  Year  2000  system  failures.  Testing  of  the
        contingency plan is in progress and is scheduled to be completed by June
        30, 1999.  With regard to non-mission  critical  internal  systems,  the
        Company's  contingency  plans are to replace  those systems that test as
        being  noncompliant.   Alternatively,  some  systems  could  be  handled
        manually on an interim basis.  Should outside  service  providers not be
        able to provide  compliant  systems,  the Company will  terminate  those
        relationships and transfer to other vendors.  It is anticipated that the
        Company's  deposit customers will have increased demands for cash in the
        latter  part of 1999 and,  correspondingly,  the Company  will  maintain
        higher liquidity levels.

                                       50
<PAGE>
                          Independent Auditors' Report



The Board of Directors
FFLC Bancorp, Inc.
Leesburg, Florida:

We have audited the  accompanying  consolidated  balance sheets of FFLC Bancorp,
Inc. and Subsidiary (the "Company") (the parent company of First Federal Savings
Bank of  Lake  County)  as of  December  31,  1998  and  1997  and  the  related
consolidated statements of income,  stockholders' equity and cash flows for each
of the years in the three-year  period ended December 31, 1998.  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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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, 1998 and 1997 and the results of its  operations and its cash flows
for each of the  years in the  three-year  period  ended  December  31,  1998 in
conformity with generally accepted accounting principles.






HACKER, JOHNSON, COHEN & GRIEB PA
Orlando, Florida
January 15, 1999



                                       51

<PAGE>
                               FFLC BANCORP, INC.

                             DIRECTORS AND OFFICERS



Directors:
----------

Joseph J. Junod
Chairman of the Board

Claron D. Wagner
Vice Chairman

James P. Logan
Ted R. Ostrander, Jr.
H.D. Robuck, Jr.
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

Dwight L. Hart
Senior Vice President

Joseph D. Cioppa
Senior Vice President

Lawrence E. Hoag
Vice President

Brenda M. Grubb
Vice President

Jay Bartholomew
Vice President

Sandra L. Rutschow
Vice President and Secretary
<PAGE>
Occupation
----------


Retired, General Manager, Avesta Sheffield Pipe


President, Woody Wagner, Inc.

President/Owner, Logan Sitework Contractors, Inc.
President, Lassiter-Ware, Inc.
Attorney; CEO, Ro-Mac Lumber & Supply, Inc.
President, FFLC Bancorp, Inc. & Subsidiary
Executive Vice President, FFLC Bancorp, Inc. &
Subsidiary



President, Jarol Company
General Partner, A.S. Herlong, Ltd.
President, Ro-Mac Lumber & Supply, Inc.




                                       52

<PAGE>
                           FIRST FEDERAL SAVINGS BANK
                                 OF LAKE COUNTY

                             DIRECTORS AND OFFICERS

DIRECTORS

Joseph J. Junod
Chairman of the Board

Claron D. Wagner
Vice Chairman

James P. Logan
Ted R. Ostrander, Jr.
H.D. Robuck, Jr.
Stephen T. Kurtz
Paul K. Mueller

Advisory Directors

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

OFFICERS

Stephen T. Kurtz
President
Chief Executive Officer

Paul K. Mueller
Executive Vice President
and Treasurer

Dwight L. Hart
Senior Vice President and Mortgage Loan Manager

Joseph D. Cioppa
Senior Vice President and Commercial Loan Manager

Jay Bartholomew
Vice President and Retail Banking Manager

Susan L. Berkebile
Vice President and Area Loan Manager

Michael J. Cox
Vice President and Area Loan Manager

Jankie Dhanpat
Vice President and SEC Reporting & Compliance

Brenda M. Grubb
Vice President and Human Resources Manager

James D. Haug
Vice President and Lady Lake Branch Manager
<PAGE>
Lawrence E. Hoag
Vice President and Operations Manager

Brian R. Hofer
Vice President and Commercial Loan Officer

Karen Hollister
Vice President and Loan Operations Manager

Dennis R. Rogers
Vice President and Wildwood Branch Manager

Yvonne K. Ross
Vice President and Loan Officer

Sandra L. Rutschow
Vice President and Corporate Secretary



Sandra L. Seaton
Vice President and South Leesburg Branch Manager

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

Phil Tompetrini
Vice President and Inverness Branch Manager

Lynda F. Wemple
Vice President and Accounting Manager

Vickie S. Baxter
Assistant Vice President and Loan Officer

Donna Boyett
Assistant Vice President and Branch
Operations Coordinator

Stephanie Hodges
Assistant Vice President and Loan Underwriter

Cindy Lay
Assistant Vice President and Data Manager &
MIS Coordinator

Charles L. Lee
Assistant Vice President and Security Officer

Debra L. McFarlane
Assistant Vice President
Deposit Administrator

Sandra A. Rowe
Assistant Vice President and Loan Servicing Manager

Dee Dee Dye
Fruitland Park Office Manager
<PAGE>
Terry French
Main Street Office Manager

Linda C. Gallop
Clermont Branch Manager

Doris E. Hyatt
Loan Closing Manager

Jennifer Kitchens
Bushnell Branch Manager

Victoria Ledford
Eustis Branch Manager

Marilyn Leugers
Main Office Branch Manager

Carmen C. Passwaters
Benefits Administrator

Angie Phillips
Lake Square Office Manager

Michael J. Price
Eustis Loan Officer

Betty Wolcott
Facilities & Purchasing Manager

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<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:

Stephen T. Kurtz
Paul K. Mueller
Dwight L. Hart
Joseph D. Cioppa
Brenda M. Grubb
Lawrence E. Hoag
Jay R. Bartholomew
Sandra L. Rutschow
Lynda F. Wemple
Yvonne K. Ross
Doris E. Hyatt
Vickie S. Baxter
Debra L. McFarlane
Sandra A. Rowe
Betty L. Wolcott
Carmen C. Passwaters
Charles L. Lee
Cynthia M. Lay
Karen L. Hollister
Jankie Dhanpat
Marilyn A. Leugers
Stephanie Hodges
Raynard S. Taylor
Linda N. Landers
Dawn Rene Davison
Carlos E. Colon
Virgina D. Vann
Cheryl A. Davis
Michelle M. Thompson
Jewel M. Correll
Pamela Ali
Barbara Boscana
Pamela J. Linville
Joan P. Gibson
Lisa K. Woolwine
Patricia B. Inman
Leslie A. Leach
Jennifer Grovesteen
Juanita F. Jackson
Barbara A. Cordes
Shu Een Chen
Diane S. Cook
Theresa R. Wells
Michelle M. Strickland
Adriane M. Lacey
Landa A. Russell
<PAGE>
Margaret M. Siegel
Lynn P. Stoffel
Ruth E. Fielding
Linda J. Giggey
Sondra Jones
Penny M. Hollis
Andrea Hanson
Norma J. Caron
Zoann Goodman
Sheila C. Coffey
Carla J. Milow
Pamela A. O'Neal
Maryann D. Chantos
Margaret R. White
Constance A. Poitier-Christian
Aimee N. Barto
Taneira N. O'Neal
Annette McCullough
Carol A. Dewey
Cynthia A. Lord
Beverly L. Ross
Leigh S. Skehan
Jacqueline E. Widows
James R. Cummings
Judith A. Cook
Karen M. Falconer
Nicole Schlosser
Lilia Hanson
Gregory F. Heckler
Tina R. Clancy
Dorene K. Adkins
Betty J. Leech

HOME OFFICE - PART TIME:

Camilla R. Clark
Louise Eleanor Whitlock
James Schaeffer
Robert Cumm
Shirley N. Williams
Bobby H. Inscoe
Dana L. Morris
Natalie L. Rojas
Mary A. Durre
Joseph J. Lavallie

FRUITLAND PARK OFFICE:

Delphine C. Williams
Virginia I. Gatlin
Deedee A. Dye

LADY LAKE OFFICE:

James D. Haug
Melissa J. Chapman
Patricia L. Sizemore
Betty T. Woods
Brandi L. Shaw
Shanda R. Gamble
Heather L. Varner
Margaret A. Slimm
<PAGE>
MAIN STREET OFFICE:

Donna L. Boyett
Rhonda L. Wilkerson
Constance L. Merrell-Kasch
Victoria J. Langford
Dawn M. O'Day

LAKE SQUARE
MALL OFFICE:

Angela Nicole Phillips
Melissa J. Miller
Regina Simmons
Cynthia G. Sheffield

CLERMONT OFFICE:

Brian R. Hofer
Susan Lynn Berkebile
Glenda S. Riggs
Linda Gallop
Tammy R. Imundi
Trinia C. McClendon
Arthur E. Middleton
Sharon M. Slack
Donna L. Franklin
Sharon S. Dziorney
Annette D. Rector
Janna R. Michell
Tina M. Bragg
Holly Ogg
Erin M. Ferguson

EUSTIS OFFICE:

Michael Cox
Victoria M. Ledford
Michael J. Price
Hilda Lozano
Kristina L. Keel
Natasha L. Pender
Juanita L. Taylor
Vivian R. Curry
Tina M. Carter
Krystal L. Rushton
Latonya M. May

WILDWOOD OFFICE:

Dennis R. Rogers
Paula D. Williams
Rebecca D. Moreno
Wanetta Mae Bannister
Linda J. Hooks
Mona M. Riggs
Sharon K. Styx
Shirley A. Davis
<PAGE>
SOUTH LEESBURG OFFICE:

Sandra L. Seaton
Eva J. Snead
Carol A. Sieder
Orpha M. Vogt
Patti L. Martel-Spencer

INVERNESS:

Phil P. Tompetrini
Teresa A. Kuechle
Suzanne Mission
Lillian G. Russo
Judith Latmontagne
Jamie R. Daniels
Jean Toles

FOUR CORNERS

Lori M. Farfaglia
Terry J. French
Janis K. Spencer
Amy Romaniello
Sarah L. Williams

BUSHNELL:

Jennifer Kitchens
Sylvie M. Zimmerman
Angela B. Giangrossi
Inge Pelfrey


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