FFLC
                               1997 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 .................................8-18
Consolidated Financial Statements ......................................19-50
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 7, 1998.

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
    5101 Wisconsin Avenue
    Washington, D.C. 20016

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

<PAGE>

Visit First  Federal's  World-wide Web 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

[GRAPHIC-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 20 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.

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

         March 31, 1996............. 11 1/2        10 3/8              .05
         June 30, 1996.............. 11 1/4        10 3/8              .06
         September 30, 1996......... 11 3/8        10 7/8              .06
         December 31, 1996.......... 13 1/4        11                  .06
         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


As of January 26, 1998, the Company had 879 holders of record of common stock.


                                        2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL  HIGHLIGHTS
(Dollars in thousands, except per share amounts)

AT YEAR END:                                                                          1997         1996        1995
                                                                                      ----         ----        ----
<S>                                                                               <C>           <C>         <C>   

Total assets..................................................................    $  400,237      346,442     325,832
Loans receivable, net.........................................................    $  315,353      227,948     183,448
Investment securities ........................................................    $   20,307       32,832      25,265
Mortgage-backed securities ...................................................    $   38,291       65,736      93,883
Deposits......................................................................    $  315,390      282,664     267,703
Equity, substantially restricted..............................................    $   51,429       53,626      55,360
Book value per share..........................................................    $    13.74        13.20       12.59
Shares outstanding ...........................................................     3,743,988    4,062,895   4,395,593
Equity-to-assets ratio........................................................         12.85%       15.48%      16.99%
Nonperforming assets to total assets..........................................           .19%        0.30%       0.10%

FOR THE YEAR:

Interest income...............................................................    $   28,156       24,218      22,493
Net interest income after provision for loan losses...........................    $   12,091       11,152      10,186
Net income....................................................................    $    3,754        2,184       3,093
Basic income per share........................................................    $     1.01          .54         .73
Diluted income per share......................................................    $      .96          .51         .70
Loan originations.............................................................    $  143,538       83,569      56,751
Return on average assets......................................................          1.00%         .65%        .98%
Return on average equity......................................................          7.18%        3.94%       5.59%
Average equity to average assets ratio........................................         13.93%       16.62%      17.46%
Noninterest expense to average assets.........................................          1.99%        2.49%       1.85%

YIELDS AND RATES:
<CAPTION>

                                                         Weighted Average
                                                           Rate or Yield        Average Rate or Yield During
                                                          at December 31,           Year Ended December 31,
                                                        ------------------      ------------------------------
                                                       1997          1996        1997         1996        1995
                                                       ----          ----        ----         ----        ----
<S>                                                    <C>          <C>         <C>          <C>         <C>   
Mortgage loans, net..................................  7.97%        8.08%       7.82%        8.20%       8.29%
Collateralized mortgage obligations..................  6.14%        5.91%       5.82%        5.76%       5.73%
Other mortgage-backed securities.....................  7.21%        7.04%       6.99%        6.87%       6.41%
All interest-earning assets .........................  7.87%        7.62%       7.80%        7.52%       7.31%
Deposits   ..........................................  4.83%        4.72%       4.78%        4.72%       4.71%
All interest-bearing liabilities ....................  4.94%        4.74%       4.85%        4.72%       4.71%
Interest-rate spread (1).............................  2.93%        2.87%       2.94%        2.80%       2.60%
Net yield on average interest-earning assets (2).....   N/A          N/A        3.53%        3.50%       3.35%
</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:

The annual  report is an important  way in which your Company keeps you informed
about the Company's performance.  I am pleased to have this opportunity to share
with our stockholders  and friends  information  about the Company's  operations
during the past year.

The year 1997 was very eventful.  The Company enjoyed record profits,  continued
growth, and improved performance. First Federal Savings Bank of Lake County, the
Company's  subsidiary,  finished the year with its highest loan volume,  highest
amount of total assets, and highest level of deposits.

The Company's total assets  increased by $53.8 million or 15.5% during the year,
exceeding  $400 million for the first time.  The Bank's  total loan  origination
volume in 1997 was $145.5  million,  a 62.5%  increase above the prior year. The
groundwork  for this  achievement  was laid some years  earlier.  At a strategic
planning  session in 1991, a decision was reached to place a greater emphasis on
originating  local loans. At that time, the Bank was ranked 5th in mortgage loan
origination  in  Lake  County.  As of  September  1997,  the  most  recent  data
available,  First Federal is the top ranked mortgage lender in Lake County,  and
we are understandably proud of that accomplishment.  Our goal now is to continue
our leadership in mortgage  lending.  In keeping with the Bank's strategic plan,
First Federal created a Commercial  Loan Department  during 1997 on which we are
focusing  substantial  effort. I am happy to report that our commercial  lenders
generated  $35  million  in new  loans  for the  bank in  1997.  Our  goal is to
duplicate the success of our mortgage lending in the area of commercial lending.

In the deposit area,  the Bank's total  deposits grew by $32.7 million or 11.6%,
ending the year at $315.4  million.  This is the first time that deposits at the
bank  have  exceeded  the $300  million  level.  The Bank is  placing  a greater
emphasis on attracting checking accounts,  and in January,  1998,  introduced an
entirely  new  slate  of  checking  products.  It is our  desire  to  attract  a
significant number of new checking accounts, which are considered to be the core
of a customer's banking relationship.

The Bank  understands  the 
importance of continued  growth.  In that vein, a new
branch  office  was opened in  February,  1997.  The office is located  south of
Leesburg,  in a shopping  center  anchored by a Winn-Dixie  grocery store. In an
effort to continue the Bank's expansion,  we recently acquired an outparcel at a
new Winn-Dixie  shopping center in the southernmost area of Lake County. We will
be  constructing  a new  branch  office on this site and expect the office to be
opened in late 1998.
<PAGE>

In terms of  financial  performance,  1997 was a solid year for the  Company.  A
dramatic decline in the cost of federal deposit  insurance,  along with a strong
increase in net interest income,  resulted in improved financial results. Higher
earnings per share were accomplished during 1997,  increasing to $1.01 from $.54
per share the prior year.  The return on average  assets for the year was 1.00%,
up from .65% in 1996. The return on average  equity,  boosted by higher earnings
and the  continued  repurchase of shares,  improved to 7.18% from 3.94%.  At the
same time,  noninterest  expense as a percentage of average  assets  declined to
1.99% from 2.49% and the  operating  efficiency  ratio  improved  to 53.54% from
68.77%. In October 1997, the Company announced a five-for-three stock split. The
purpose of the split was to enhance the value of a  stockholder's  investment by
increasing the liquidity of the Company's stock. Further, in January, 1998, FFLC
announced a $.09 per share quarterly cash dividend, an increase of 25% above the
previous dividend.

During 1997, the Company made significant progress in reducing its high ratio of
capital to assets. As a result of stock  repurchases and continued  growth,  the
Company  was able to reduce  its ratio of  capital  to total  assets to 12.9% at
December  31,  1997,  from  15.5% at the prior  year-end.  Book  value per share
increased to $13.74 at December 31, 1997, from $13.20 at December 31, 1996.


                                        4

<PAGE>



In looking out for events that will influence our 1998 performance, we know that
the level of  interest  rates  will  play a major  role.  Over the last  several
months,  long-term  interest rates have fallen faster than  short-term  interest
rates.  That results in a relatively  flat yield curve (the  difference  between
short-term rates and long-term  rates).  Since banks generally borrow funds from
depositors  on a  short-term  basis and lend funds to borrowers on a medium term
basis, a flat yield curve tends to impair interest income.  The financial crisis
in Asia has also had a major  impact on  interest  rates,  having  the effect of
boosting  the value of the dollar and lowering  long-term  interest  rates.  The
market's ongoing reaction to that situation will continue to influence  interest
rates.

At year-end,  there was a change in the  membership  of the Board of the Company
and the Bank.  After serving since 1974, the past three years as Chairman of the
Board,  James R. Gregg  retired as a director and was succeeded as a director by
H.D. Robuck,  Jr. Joseph J. Junod, the previous Vice Chairman and a Board member
since 1987, was elected to succeed Mr. Gregg as Chairman. Claron D. Wagner, also
a member of the Board since 1987,  was elected Vice  Chairman.  Mr. Gregg served
the  Company  and the Bank in an  excellent  fashion  during his tenure and will
continue as an Advisory Director.

During the past four years, our stockholders have provided strong support to the
Company.  We remain  committed to  profitably  serving the banking  needs of our
communities  and,  as  a  result,  provide  for  the  investment  goals  of  our
stockholders. We believe FFLC Bancorp is on course to meeting those goals and we
appreciate  the continued  support of our  stockholders  and the  communities we
serve.

Cordially yours,





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,
                                                                -----------------------------------------------------
                                                                   1997        1996        1995      1994      1993
                                                                   ----        ----        ----      ----      ----
<S>                                                             <C>           <C>         <C>       <C>      <C>   
Total assets................................................... $ 400,237     346,442     325,832   310,622   292,254
Loans receivable, net..........................................   315,353     227,948     183,448   148,286   122,211
Cash and cash equivalents......................................    15,684      10,157      13,929    10,255    24,875
Investment securities..........................................    20,307      32,832      25,265    27,851    29,370
Mortgage-backed securities.....................................    38,291      65,736      93,883   117,003   109,077
Deposits   ....................................................   315,390     282,664     267,703   251,752   241,000
Borrowed funds.................................................    30,000       8,198         150     3,150       150
Conversion stock subscriptions.................................     -            -           -         -       21,834
Stockholders' equity...........................................    51,429      53,626      55,360    53,762    27,246
<CAPTION>

                                                                            For the Year Ended December 31,
                                                                -----------------------------------------------------
                                                                   1997        1996        1995      1994      1993
                                                                   ----        ----        ----      ----      ----
<S>                                                             <C>           <C>         <C>       <C>      <C>   
Interest income................................................  $ 28,156      24,218      22,493     19,480   18,453
Interest expense...............................................    15,416      12,959      12,183      9,259    9,268
Net interest income............................................    12,740      11,259      10,310     10,221    9,184
Provision for loan losses......................................       649         107         124        138      250
Net interest income after provision for loan losses............    12,091      11,152      10,186     10,083    8,935
Noninterest income.............................................     1,219         809         709        647      619
Noninterest expense............................................     7,473       8,299       5,874      5,212    3,936
Income before provision for income taxes.......................     5,837       3,662       5,021      5,518    5,618
Provision for income taxes.....................................     2,083       1,478       1,928      1,948    2,114
Net income.....................................................     3,754       2,184       3,093      3,570    3,504
Basic income per share (2).....................................      1.01         .54         .73        .84   -  (1)
Weighted average number of common
      shares outstanding for basic (2)......................... 3,700,220   4,069,825   4,232,498  4,253,033   -  (1)
Diluted income per share (2)...................................     $ .96         .51         .70        .81   -  (1)
Weighted average number of common shares
      outstanding for diluted (2).............................. 3,911,256   4,267,992   4,427,098  4,409,715   -  (1)

</TABLE>
(1)  The  Company  issued  stock and  acquired  the Savings  Bank  during  1994,
     therefore, earnings per share prior to 1994 is not available.

(2)  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,
                                                                    --------------------------------------------------
                                                                     1997        1996        1995      1994      1993
                                                                     ----        ----        ----      ----      ----
<S>                                                                <C>        <C>         <C>         <C>      <C>   
Return on average assets.......................................      1.00%       0.65%      0.98%       1.19%    1.29%
Return on average equity.......................................      7.18%       3.94%      5.59%       6.81%   13.72%
Dividend payout ratio (1)......................................     28.51%      44.71%     25.86%      13.33%     N/A
Average equity to average assets...............................     13.93%      16.62%     17.46%      17.47%    9.40%
Total equity to total assets...................................     12.85%      15.48%     16.99%      17.31%    9.32%
Interest rate spread during year(2)............................      2.95%       2.80%      2.60%       2.88%    3.15%
Net interest margin (3)........................................      3.53%       3.50%      3.35%       3.50%    3.48%
Nonperforming assets to total assets (4).......................       .19%       0.30%      0.10%       0.13%    0.23%
Nonperforming loans to total loans (5).........................       .07%       0.28%      0.09%       0.21%    0.47%
Allowance for loan losses to non-performing loans..............    695.87%     159.61%    561.49%     264.13%  121.29%
Allowance for loan and REO
      losses to nonperforming assets...........................    224.83%     103.51%    288.48%     210.41%  108.41%
Allowance for loan losses to total loans.......................      0.51%       0.45%      0.52%       0.55%    0.57%
Operating expenses to average assets...........................      1.99%       2.49%      1.85%       1.74%    1.45%
Average interest-earning assets to
      average interest-bearing liabilities.....................      1.14        1.17       1.19        1.19     1.09
Net interest income to noninterest expenses....................      1.70        1.36       1.76        1.96     2.33
Total shares outstanding (1) (6)............................... 3,743,988   4,062,895  4,395,593   4,603,032    - (1)
Book value per common share outstanding (1)(6).................   $ 13.74     $ 13.20      12.59       11.68    - (1)
Number of banking offices (all full-service)...................         9           9          8           6        6
----------
</TABLE>
(1)  Item is only  presented  at December 31,  1997,  1996,  1995 and 1994 since
     there was no outstanding common stock in prior years.
(2)  Difference  between weighted average yield on all  interest-earning  assets
     and weighted average rate on all interest-bearing liabilities.
(3)  Based upon net interest income before  provision for loan losses divided by
     average interest-earning assets.
(4)  Nonperforming assets consist of nonperforming loans and real estate owned.
(5)  Nonperforming loans consist of loans 90 days or more delinquent.
(6)  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, mortgage-backed 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 and
Sumter  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 oldest and largest (by
asset size)  locally-based  savings  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  earnings of $3.8  million for the year ended  December
31, 1997,  compared to net earnings of $2.2 million for the year ended  December
31,  1996.  At December  31,  1997,  the Savings Bank had total assets of $400.2
million,  an increase of 15.5% over total  assets of $346.4  million at December
31, 1996.  That increase  resulted  primarily from an $87.4  million,  or 38.3%,
increase in loans  receivable from $227.9 million at December 31, 1996 to $315.4
million at December 31, 1997,  reflecting  increased local loan demand. Cash and
cash  equivalents  increased  $5.5 million or 54.4% from $10.2  million to $15.7
million.  Mortgage-backed and investment  securities  decreased $39.9 million or
40.6% during 1997.  Deposits  increased  $32.7  million,  or 11.6%,  from $282.7
million at December 31, 1996 to $315.4  million at December  31, 1997.  Advances
from Federal Home Loan Bank increased $29.9 million, while securities sold under
agreements  to  repurchase  decreased  $8.1  million for a net increase of $21.8
million or 265.9% in  borrowings.  Stockholders'  equity  decreased $2.2 million
primarily due to  repurchases  of Holding  Company stock during 1997,  partially
offset by income from operations.

                                        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").  The HOLA and the FDIA were amended by the Financial  Institutions
Reform,  Recovery and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit
Insurance  Corporation  Improvement  Act  of  1991("FDICIA").  A  more  complete
description  of the HOLA and FDIA as amended by FIRREA and FDICIA 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, 1997,  the Savings  Bank met each of its capital  requirements,  in
each  case  on  a  fully   phased-in   basis,   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.  Based on its capital and supervisory  subgroups,  each
SAIF member  institution  was assigned an annual FDIC  assessment  rate for 1996
between 23 basis  points  for an  institution  in the  highest  category  (i.e.,
well-capitalized  and  healthy) and 31 basis  points for an  institution  in the
lowest  category  (i.e.,  undercapitalized  and posing  substantial  supervisory
concern).  The Savings  Bank's  assessment  rate for 1996 was .23% of  deposits.
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
further raise premiums if deemed  necessary.  If such action is taken,  it could
have an adverse effect on the earnings of the institution.

                                        9
<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 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.

Beginning  January 1, 1997,  BIF members 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.

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 FDI Act,  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

Management has an ongoing  program  designed to ensure that its  operational and
financial systems will not be adversely affected by year 2000 software failures,
due to processing  errors  arising from  calculations  using the year 2000 date.
Based on current estimates, the Savings Bank does not expect to incur a material
amount of expenses over the next two years on its program to redevelop, replace,
or repair its computer  applications to make them "year 2000  compliant."  While
management  believes it is doing everything  technologically  possible to assure
year 2000 compliance,  it is to some extent  dependent upon vendor  cooperation.
Management  is requiring its computer  system and software  vendors to represent
that the products provided are, or will be, year 2000 compliant, and has planned
a  program  of  testing  for  compliance.  It is  recognized  that any year 2000
compliance failures could result in additional expense to the Savings Bank.

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.
<PAGE>

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.

                                       10

<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,  1997.  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,
                                                  ----------------------------------------------------------------------------------
                                                              1997                       1996                        1995
                                                  ----------------------------------------------------------------------------------
                                      Yield At                       Average                    Average                      Average
                                     December 31,  Average            Yield/   Average           Yield/    Average            Yield/
                                        1997       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)............... 8.18%     $268,425    22,318   8.31%  $201,840    16,813   8.33%   $163,961   13,817   8.43%
    Mortgage-backed securities......... 6.78        53,170     3,431   6.45     80,355     5,020   6.25     106,574    6,403   6.01
    Investment securities and other
       interest-earning assets (2)..... 6.07        39,550     2,407   6.09     39,745     2,385   6.00      37,138    2,273   6.12
                                                  --------    ------          --------    ------           --------   ------
         Total interest-earning assets. 7.87       361,145    28,156   7.80    321,940    24,218   7.52     307,673   22,493   7.31
                                                              ------                      ------                      ------

Noninterest-earning assets.............             14,160                      11,727                        9,107
                                                  --------                    --------                     -------- 

         Total assets..................           $375,305                    $333,667                     $316,780
                                                  ========                    ========                     ========
                                                  
Interest-bearing liabilities:
    NOW and money market
       accounts........................ 1.95        46,656       991   2.12     42,682       960   2.25      42,425      967   2.28
    Passbook and statement savings
       accounts........................ 2.74        24,963       687   2.75     24,218       629   2.60      26,802      721   2.69
    Certificates....................... 5.60       227,271    12,601   5.54    206,471    11,311   5.48     188,806   10,455   5.54
    FHLB advances...................... 6.01        13,226       814   6.15        150        11   7.33         150       11   7.33
    Securities sold under agreement
       to repurchase...................    -         5,629       323   5.74        849        48   5.65         470       29   6.17
                                                  --------    ------          --------    ------           --------   ------   
         Total interest-bearing
           liabilities................. 4.94       317,746    15,416   4.85    274,370    12,959   4.72     258,653   12,183   4.71
                                                              ------                      ------                      ------  
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                  ----------------------------------------------------------------------------------
                                                              1997                       1996                        1995
                                                  ----------------------------------------------------------------------------------
                                      Yield At                       Average                    Average                      Average
                                     December 31,  Average            Yield/   Average           Yield/    Average            Yield/
                                        1997       Balance  Interest   Cost    Balance  Interest  Cost     Balance   Interest   Cost
                                                                          (Dollars in thousands)
<S>                                     <C>       <C>         <C>      <C>    <C>         <C>      <C>     <C>        <C>      <C>
Noninterest-bearing liabilities........              5,285                       3,836                        2,812
Stockholders' equity...................             52,274                      55,461                       55,315
                                                  --------                    --------                     --------  

         Total liabilities and equity..           $375,305                    $333,667                     $316,780
                                                  ========                    ========                     ========
                                                   
Net interest-earning assets and
    interest rate spread (3)........... 2.93%     $ 43,399             2.95%  $ 47,570            2.80%    $ 49,020            2.60%
                                        ====      ========             ====   ========            ====     ========            ==== 
                                         
Net interest income and net
    margin (4).........................                       $12,740   3.53%           $ 11,259  3.50%              $10,310   3.35%
                                                              =======   ====            ========  ====               =======   ==== 
Ratio of interest-earning assets
    to interest-bearing liabilities....              1.14                        1.17                          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.

                                       11
<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,
                                                      1997 vs. 1996                           1996 vs. 1995
                                                   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....................$ (31)    5,546     (10)     5,505      (164)   3,193       (33)    2,996
    Mortgage-backed securities..............  165    (1,698)    (56)    (1,589)      253   (1,576)      (60)   (1,383)
    Investment securities
        and other interest-earning
        assets (1)..........................   34       (12)     -          22       (44)     159        (3)      112
                                             ----    ------   -----     ------       ---    -----        --     -----

           Total............................  168     3,836     (66)     3,938        45    1,776       (96)    1,725
                                              ---     -----     ---      -----       ---    -----        --     -----

Interest-bearing liabilities:
    NOW and money market accounts...........  (53)       89      (5)        31       (13)       6         -        (7)
    Passbook and
        statement savings accounts..........   37        20       1         58       (25)     (69)        2       (92)
    Certificates............................  137     1,139      14      1,290      (117)     979        (6)      856
    FHLB advances...........................   (2)      959    (154)       803
    Securities sold under agreement
        to repurchase.......................    1       270       4        275        (2)      23        (2)       19
                                             ----    ------    ----     ------      ----   ------        --     -----

           Total............................  120     2,477    (140)     2,457      (157)     939        (6)      776
                                              ---     -----     ---      -----       ---    -----        --     -----

Net change in net interest
    income.................................$   48     1,359      74      1,481       202      837       (90)      949
                                             ====     =====    ====      =====       ===    =====        ==     =====

</TABLE>

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


                                       12

<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 8.7% and
13.5% at December 31, 1997 and December 31, 1996, 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,  sales of 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, 1997, the Savings Bank had outstanding  commitments to originate
$22.6  million of loans,  to fund unused lines of credit of $11.5 million and to
fund the undisbursed  portion of loans in process of $12.3 million.  The Savings
Bank  believes  that  it will  have  sufficient  funds  available  to  meet  its
commitments.  At December 31, 1997, certificates of deposit which were scheduled
to mature in one year or less totaled $168.3 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, 1997:
<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.......... $ 44,349      11.08%    $ 44,349      11.08%     $ 46,033    21.70%
      Requirement.................    6,003       1.50       12,006       3.00        16,973     8.00
                                    -------      -----       ------      -----        ------   ------

      Excess...................... $ 38,346       9.58%    $ 32,343       8.08%     $ 29,060    13.70%
                                     ======      =====       ======      =====        ======    =====
</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 10 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.


                                       13

<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,
1997, 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 9.78%. 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. Considering the current interest rate environment,
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 8.7% at December 31, 1997 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.

                                       14
<PAGE>
The  following  table sets  forth the  amounts  of  interest-earning  assets and
interest-bearing  liabilities outstanding at December 31, 1997 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..........$  69,212     34,153     47,329    103,582     11,524     9,546      3,835     (1,123)  278,058
    Consumer and other loans.....   14,630      3,624      4,801      9,379      3,872     1,118        100       (229)   37,295
    Mortgage-backed
       securities................   23,158      9,934      3,153      1,057        550       481         11        (53)   38,291
    Interest-earning deposits....    8,562       -          -          -          -         -          -          -        8,562
    Investment securities........    3,023       -         2,000      5,000       -        1,000        151        (50)   11,124
    Mutual funds.................      325      7,187       -         1,745       -         -          -           (74)    9,183
    FHLB stock...................    2,304       -          -          -          -         -          -           -       2,304
                                 ---------     ------     ------    -------     ------    ------      -----     ------   -------
          Total interest-earning
            assets...............  121,214     54,898     57,283    120,763     15,946    12,145      4,097     (1,529)  384,817
                                 ---------     ------     ------    -------     ------    ------      -----     ======   =======
Rate-sensitive liabilities:
    Deposits:
       Passbook and statement
         savings.................    2,335      2,112      3,639      9,048      4,061     2,862        446       -       24,503
       NOW accounts..............    3,319      3,004      5,175     12,864      5,775     4,067        635       -       34,839
       Money-market..............    1,496      1,359      2,341      5,821      2,613     1,841        287       -       15,758
       Certificates..............   52,168     51,329     65,961     66,756      4,076      -          -          -      240,290
    Borrowed funds...............     -         -          -          -         30,000      -          -          -       30,000
                                 ---------     ------     ------    -------     ------    ------      -----     ------   -------
          Total interest-bearing
            liabilities..........   59,318     57,804     77,116     94,489     46,525     8,770      1,368       -      345,390
                                 ---------     ------     ------    -------     ------    ------      -----     ------   -------

Interest-sensitivity gap.........$  61,896     (2,906)   (19,833)    26,274    (30,579)    3,375      2,729     (1,529)   39,427
                                 =========     ======    =======    =======    =======    ======      =====     ======   =======

Cumulative interest-
    sensitivity gap..............$  61,896     58,990     39,157     65,431     34,852    38,227     40,956
                                 =========     ======     ======     ======     ======    ======     ======

Cumulative interest-sensitivity
    gap as a percentage of
    total assets.................    15.46%     14.74%      9.78%     16.35%      8.71%     9.55%     10.23%
                                 =========     ======     ======     ======     ======    ======     ======
Cumulative interest-earning assets
    as a percentage of cumulative
    interest-bearing liabilities.   204.35%    150.37%    120.16%    122.66%    110.40%   111.11%    111.86%
                                 =========     ======     ======     ======     ======    ======     ======

</TABLE>
(1) Represents premiums,  discounts,  market value adjustments and provision for
loan losses.

                                       15
<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  mortgage-backed
    securities  increased  from 6.25% for the year ended  December  31,  1996 to
    6.45% for the year ended  December 31, 1997. The average yield on investment
    securities  and other interest  earning assets  increased from 6.00% for the
    year ended December 31, 1996 to 6.09% 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 $43.4  million or 15.8%  increase in the  average  balance of total
    interest-bearing liabilities from $274.4 million for the year ended December
    31,  1996 to $317.7  million  for the year ended  December  31,  1997 and an
    increase in the weighted-average  rate paid on interest-bearing  liabilities
    from 4.72% during 1996 to 4.85% 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.
<PAGE>

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.

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.






                                       16

<PAGE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1996 TO DECEMBER 31, 1995

General Operating Results.  Net income for the year ended December 31, 1996, was
    $2.2  million or $.54 per share,  compared  to net income for the year ended
    December  31, 1995 of $3.1  million or $.73 per share.  The  decrease in net
    income  was  primarily  the  result  of  the  effect  of the  one-time  SAIF
    assessment of $1.7 million before taxes,  included in  noninterest  expense,
    partially  offset by an increase of $949,000 in net interest  income  before
    provision for loan losses.

Interest Income.  Interest  income  increased  $1.7 million,  or 7.7% from $22.5
    million for the year ended  December 31, 1995 to $24.2  million for the year
    ended  December 31, 1996. The increase was due to an increase in the average
    balance of total  interest-earning  assets from $307.7  million for the year
    ended  December 31, 1995 to $321.9  million for the year ended  December 31,
    1996, an increase of $14.2  million,  or 4.6%,  primarily as a result of new
    branch  openings,  and an increase in the average yield on  interest-earning
    assets from 7.31% for the year ended December 31, 1995 to 7.52% for the year
    ended December 31, 1996. The average yield on loans decreased from 8.43% for
    the year ended  December  31, 1995 to 8.33% for the year ended  December 31,
    1996. The average yield on mortgage-backed  securities  increased from 6.01%
    for the year ended  December  31, 1995 to 6.25% for the year ended  December
    31, 1996.  The average yield on  investment  securities  and other  interest
    earning assets  decreased from 6.12% for the year ended December 31, 1995 to
    6.00% for the year ended December 31, 1996.

Interest  Expense.  Interest  expense  increased  $776,000 from $12.2 million at
    December 31, 1995 to $13.0  million at December  31,  1996,  as the weighted
    average  rate paid on  interest-bearing  liabilities  increased  from  4.71%
    during 1995 to 4.72% in 1996.

Provision  for Loan  Losses.  The  Savings  Bank's  provision  for  loan  losses
    decreased from $124,000 for the year ended December 31, 1995 to $107,000 for
    the year ended  December  31,  1996.  The  decrease of $17,000  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 $709,000 for the year
    ended  December 31, 1995 to $809,000  for the year ended  December 31, 1996.
    The  increase  was due to an increase in other  service  charges and fees of
    $93,000, and deposit account fees of $12,000 for the year ended December 31,
    1996.

Noninterest  Expense.  Noninterest  expense  consists  primarily of salaries and
    employee  benefits,   occupancy  expense  and  deposit  insurance  premiums.
    Noninterest  expense  increased $2.4 million for the year ended December 31,
    1996 compared to 1995.  That increase was primarily due to the one-time SAIF
    recapitalization  expense of $1.7  million and  increases  in  salaries  and
    employee benefits of $356,000 and occupancy expense of $233,000,  due to the
    opening of two new branches.  The  remaining  items in  noninterest  expense
    increased $136,000 for the year ended December 31, 1996 compared to the year
    ended December 31, 1995 primarily due to the growth of the Company.

Provision for Income  Taxes.  The  provision  for federal and state income taxes
    decreased  from $1.9  million for the year ended  December  31, 1995 to $1.5
    million  for the year  ended  December  31,  1996.  The  effective  tax rate
    increased  from 38.4% for the year ended  December 31, 1995 to 40.4% for the
    year ended December 31, 1996.

                                       17
<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  Statements of Financial  Accounting
Standards which are relevant to the Company:

    Financial  Accounting   Standards  130  -  Reporting   Comprehensive  Income
    establishes  standards  for  reporting  comprehensive  income.  The Standard
    defines comprehensive income as the change in equity of an enterprise except
    those   resulting   from   stockholder   transactions.   All  components  of
    comprehensive  income  are  required  to  be  reported  in a  new  financial
    statement  that is displayed  with equal  prominence  as existing  financial
    statements.  The Company will be required to adopt this  Standard  effective
    January 1, 1998.  As the  Statement  addresses  reporting  and  presentation
    issues only, there will be no impact on operating  results from the adoption
    of this Standard.

    Financial  Accounting  Standards  131 -  Disclosures  about  Segments  of an
    Enterprise  and  Related  Information   establishes  standards  for  related
    disclosures  about  products  and  services,  geographic  areas,  and  major
    customers.  The Company  will be required to adopt this  Standard  effective
    January 1, 1998. As the Standard  addresses  reporting and disclosure issues
    only,  there will be no impact on operating  results  from  adoption of this
    Standard.






                                       18

<PAGE>













                               FFLC BANCORP, INC.
  (Parent Company of First Federal Savings Bank of Lake County and Subsidiary)
                                Leesburg, Florida


                    Audited Consolidated Financial Statements
                           December 31, 1997 and 1996
                        and for each of the Years in the
                       Three Years Ended December 31, 1997


                  (Together with Independent Auditors' Report)



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

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

                                                                                                December 31,
                                                                                        --------------------------
                                                                                           1997             1996
                                                                                        --------          --------
            Assets
<S>                                                                                   <C>                 <C>
Cash and due from banks...........................................................    $    7,122             6,080
Interest-bearing deposits.........................................................         8,562             4,077
                                                                                        --------          --------

            Cash and cash equivalents.............................................        15,684            10,157
                                                                                         -------          --------

Investment securities held to maturity, at cost
    (market value of $3,077 in 1997 and $3,271 in 1996)...........................         3,031             3,239
Investment securities available for sale, at market...............................        17,276            29,593
Mortgage-backed and related securities held to maturity, at cost (market value
    of $29,443 in 1997 and $47,396 in 1996).......................................        28,986            46,892
Mortgage-backed and related securities available for sale, at market..............         9,305            18,844
Loans receivable, net of allowance for loan losses of $1,684 in 1997
    and $1,063 in 1996............................................................       315,353           227,948
Accrued interest receivable:
    Investment securities.........................................................           348               577
    Mortgage-backed securities....................................................           189               243
    Loans receivable..............................................................         1,597             1,199
Premises and equipment, net.......................................................         5,313             5,144
Foreclosed real estate............................................................           507               361
Real estate held for development..................................................           122               122
Restricted securities - Federal Home Loan Bank stock, at cost.....................         2,304             1,939
Other assets    ..................................................................           222               184
                                                                                       ---------         ---------

            Total.................................................................     $ 400,237           346,442
                                                                                         =======           =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                        --------------------------
                                                                                           1997             1996
                                                                                        --------          --------
<S>                                                                                   <C>                 <C>
            Liabilities and Stockholders' Equity

Liabilities:
    NOW and money market accounts.................................................        50,597            43,306
    Savings accounts..............................................................        24,503            27,412
    Certificates..................................................................       240,290           211,946
                                                                                         -------           -------

            Total deposits........................................................       315,390           282,664
                                                                                         -------           -------

Advances from Federal Home Loan Bank..............................................        30,000               150
Securities sold under agreements to repurchase....................................         -                 8,048
Deferred income taxes.............................................................           737               930
Accrued expenses and other liabilities............................................         2,681             1,024
                                                                                        --------          --------

            Total liabilities.....................................................       348,808           292,816
                                                                                         -------           -------

Commitments and contingencies (Notes 5, 10 and 13)

Stockholders' equity:
    Preferred stock, $.01 par value, 1,000,000 shares authorized,
        none outstanding..........................................................         -                  -
    Common stock, $.01 par value, 4,500,000 shares authorized,
        4,312,146 in 1997 and 2,777,393 in 1996 shares issued.....................            43                28
    Additional paid-in-capital....................................................        28,265            27,386
    Retained income...............................................................        36,622            33,962
    Unrealized loss on securities available for sale, net of tax of
        $53 in 1997 and $116 in 1996..............................................           (88)             (193)
    Treasury stock, at cost (568,158 shares in 1997 and
        339,656 shares in 1996)...................................................       (12,466)           (6,295)
    Stock held by Incentive Plan Trusts...........................................          (947)           (1,262)
                                                                                       ---------          --------

            Total stockholders' equity............................................        51,429            53,626
                                                                                        --------          --------

            Total.................................................................     $ 400,237           346,442
                                                                                         =======           =======

</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       19

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

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

                                                                         Year Ended December 31,
                                                                     1997           1996           1995
                                                                ----------     ----------     ----------
<S>                                                             <C>            <C>            <C>   
Interest income:
    Loans receivable                                            $   22,318         16,813         13,817
    Mortgage-backed securities                                       3,431          5,020          6,403
    Investment securities and time deposits                          2,407          2,385          2,273
                                                                ----------     ----------     ----------

        Total interest income                                       28,156         24,218         22,493
                                                                ----------     ----------     ----------
Interest expense:
    Deposits                                                        14,279         12,900         12,143
    Borrowed funds                                                   1,137             59             40
                                                                ----------     ----------     ----------

        Total interest expense                                      15,416         12,959         12,183
                                                                ----------     ----------     ----------

        Net interest income                                         12,740         11,259         10,310

Provision for loan losses                                              649            107            124
                                                                ----------     ----------     ----------

        Net interest income after provision for loan losses         12,091         11,152         10,186
                                                                ----------     ----------     ----------
Noninterest income:
    Deposit account fees                                               485            489            477
    Other service charges and fees                                     360            266            173
    Gain on sale of securities available for sale                       11           --             --
    Gain on sale of other assets                                       302           --             --
    Other                                                               61             54             59
                                                                ----------     ----------     ----------

        Total noninterest income                                     1,219            809            709
                                                                ----------     ----------     ----------

Noninterest expense:
    Salaries and employee benefits                                   4,674          3,740          3,384
    Occupancy expense                                                  930            812            579
    Deposit insurance premium                                          147            624            579
    SAIF recapitalization assessment                                  --            1,655           --
    Advertising and promotion                                          224            122            120
    Data processing expense                                            429            384            322
    Professional services                                              229            270            259
    Other                                                              840            692            631
                                                                ----------     ----------     ----------

        Total noninterest expense                                    7,473          8,299          5,874
                                                                ----------     ----------     ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                                     1997           1996           1995
                                                                ----------     ----------     ----------
<S>                                                             <C>            <C>            <C>  
Income before income taxes                                           5,837          3,662          5,021

Income taxes                                                         2,083          1,478          1,928
                                                                ----------     ----------     ----------

Net income                                                      $    3,754          2,184          3,093
                                                                ==========     ==========     ==========

Basic income per share of common stock                          $     1.01            .54            .73
                                                                ==========     ==========     ==========

Weighted average number of shares outstanding for basic          3,700,220      4,069,825      4,232,448
                                                                ==========     ==========     ==========

Diluted income per share of common stock                        $      .96            .51            .70
                                                                ==========     ==========     ==========

Weighted average number of shares outstanding for diluted        3,911,256      4,267,992      4,427,098
                                                                ==========     ==========     ==========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       20

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

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


                                                                                                            Stock
                                                                          Unrealized                         Held
                                                                            Loss on                           By
                                           Additional                     Securities                       Incentive       Total
                               Common       Paid-In         Retained      Available        Treasury          Plan      Stockholders'
                               Stock        Capital          Income        For Sale          Stock          Trusts         Equity
                              -------     -----------       --------      ----------      ----------      ----------     --------
<S>                              <C>        <C>             <C>               <C>          <C>            <C>             <C>
Balance at December 31,
     1994................       $ 28        26,724          30,372            (732)          -             (2,630)        53,762

Net proceeds from the
     issuance of 7,581
     shares of common
     stock...............         -             76            -               -              -               -                76

Shares committed to
     participants in
     incentive plans
     (164,980 shares
     remain uncommitted
     at December 31,
     1995)...............         -            241            -               -              -                684            925

Dividends paid, net of
     $56 of dividends
     on ESOP shares
     recorded as
     compensation
     expense.............         -           -               (761)           -              -               -             (761)

Purchase of treasury
     stock, 132,044
     shares..............         -           -               -               -            (2,373)           -            (2,373)

Net income...............         -           -              3,093            -              -               -             3,093

Change in unrealized
     gains (losses) on
     securities available
     for sale, net of
     income taxes of
     $384................         -           -               -                638           -               -               638
                                ----        ------          ------            ----         ------          ------         ------
                                  
Balance at December 31,
     1995................       $ 28        27,041          32,704             (94)        (2,373)         (1,946)        55,360
                                ====        ======          ======            ====         ======          ======         ======
</TABLE>
                                                                     (continued)
                                       21
<PAGE>
<TABLE>
<CAPTION>
                                                         FFLC BANCORP, INC.

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


                                                                                                            Stock
                                                                          Unrealized                         Held
                                                                            Loss on                           By
                                           Additional                     Securities                       Incentive       Total
                               Common       Paid-In         Retained      Available        Treasury          Plan      Stockholders'
                               Stock        Capital          Income        For Sale          Stock          Trusts         Equity
                              -------     -----------       --------      ----------      ----------      ----------     --------
<S>                              <C>           <C>          <C>              <C>          <C>              <C>           <C>
Balance at December 31,
     1995................        $ 28          27,041       32,704            (94)        (2,373)          (1,946)       55,360

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)

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

Change in unrealized
     gains (losses) on
     securities available
     for sale, net of
     income taxes of
     $59.................          -              -            -              (99)           -                -             (99)
                                 ----          ------       ------           ----         ------           ------        ------
Balance at December 31,
     1996................        $ 28          27,386       33,962           (193)        (6,295)          (1,262)       53,626
                                 ====          ======       ======           ====         ======           ======        ======   

</TABLE>
                                                                     (continued)
                                       22
<PAGE>
<TABLE>
<CAPTION>
                                                         FFLC BANCORP, INC.

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

                                                                                                            Stock
                                                                          Unrealized                         Held
                                                                            Loss on                           By
                                           Additional                     Securities                       Incentive       Total
                               Common       Paid-In         Retained      Available        Treasury          Plan      Stockholders'
                               Stock        Capital          Income        For Sale          Stock          Trusts         Equity
                              -------     -----------       --------      ----------      ----------      ----------     --------
<S>                              <C>          <C>           <C>               <C>            <C>              <C>           <C>
Balance at December 31,
     1996................        $ 28         27,386        33,962             (193)         (6,295)          (1,262)       53,626

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)

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

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

Five-for-three stock
     split in November,
     1997................          15            -             (15)            -               -                -             -
                                 ----         ------        ------             ----         -------             ----        ------  
Balance at December 31,
     1997................        $ 43         28,265        36,622              (88)        (12,466)            (947)       51,429
                                =====         ======        ======             ====         =======             ====        ======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.

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

                                         Consolidated Statements of Cash Flows
                                                   ($ in thousands)

                                                                                       Year Ended December 31,
                                                                                -------------------------------------
                                                                                  1997           1996           1995
                                                                                  ----           ----           ----
<S>                                                                            <C>              <C>           <C>
Cash flows from operating activities:
    Net income      .........................................................   $ 3,754           2,184         3,093
    Adjustments to reconcile net income
        to net cash provided by operations:
            Provision for loan losses........................................       649             107           124
            Depreciation.....................................................       395             345           212
            Gain on sale of securities available for sale....................       (11)            -            -
            Gain on sale of foreclosed real estate...........................       (11)            -              (7)
            (Credit) provision for deferred income taxes.....................      (256)           (116)          152
            Shares committed and dividends to incentive
                plan participants............................................       972           1,009           981
            Amortization of premiums or discounts
                on investment and mortgage-backed securities.................       (44)           (106)          (12)
            Deferral (accretion) of deferred loan fees and unearned interest.       254             139           (16)
            Purchase of Federal Home Loan Bank stock.........................      (365)            (11)         -
            Increase in accrued interest receivable..........................      (115)            (73)         (181)
            (Increase) decrease in other assets..............................       (38)            145          (112)
            Increase (decrease) in accrued expenses and other liabilities....     1,657            (490)          125
                                                                                -------          ------       -------

                    Net cash provided by operating activities................     6,841           3,133         4,359
                                                                                -------          ------        ------

Cash flows from investing activities:
    Purchase of investment securities held to maturity.......................      -                -            (475)
    Proceeds from maturities of investment securities held to maturity.......       208             202           290
    Purchase of investment securities available for sale.....................    (7,490)        (22,743)       (2,562)
    Proceeds from maturities of investment securities available for sale.....    18,924          14,953         5,633
    Proceeds from sales of investment securities available for sale..........       958             -            -
    Purchase of mortgage-backed securities held to maturity..................      -                -          (4,275)
    Principal repayments on mortgage-backed securities
        held to maturity.....................................................    17,927          28,098        27,013
    Purchase of mortgage-backed securities available for sale................      -             (8,596)       (1,762)
    Principal repayments on mortgage-backed securities
        available for sale...................................................     9,666           8,614         2,878
    Purchase of loans receivable.............................................      -             (2,106)         -
    Proceeds from sale of loans receivable...................................      -              1,557          -
    Loan disbursements.......................................................  (143,538)        (83,569)      (56,751)
    Principal repayments on loans............................................    54,840          39,106        21,302
    Purchase of premises and equipment, net..................................      (564)           (672)       (1,918)
    Proceeds from sales of foreclosed real estate............................       255              70           104
                                                                               --------         -------       -------

                    Net cash used in investing activities....................   (48,814)        (25,086)      (10,523)
                                                                                -------          ------        ------
</TABLE>
                                                                     (continued)
                                                          24
<PAGE>
<TABLE>
<CAPTION>
                                                  FFLC BANCORP, INC.

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

                                                                                       Year Ended December 31,
                                                                               --------------------------------------
                                                                                  1997            1996          1995
                                                                                 ------         -------       -------
<S>                                                                            <C>              <C>           <C>    
Cash flows from financing activities:
    Net increase (decrease) in noninterest-bearing demand, savings,
        NOW and money market accounts........................................     4,382           3,152        (8,968)
    Net increase in certificate accounts.....................................    28,344          11,809        24,920
    Net increase in Federal Home Loan Bank advances..........................    29,850            -             -
    Net (decrease) increase in securities sold under agreements
        to repurchase........................................................    (8,048)          8,048        (3,000)
    Stock options exercised..................................................       283              80            76
    Purchase of treasury stock...............................................    (6,171)         (3,922)       (2,373)
    Cash dividends paid......................................................    (1,140)           (986)         (817)
                                                                                 ------         -------       -------

                Net cash provided by financing activities....................    47,500          18,181         9,838
                                                                                 ------          ------        ------

Net increase (decrease) in cash and cash equivalents.........................     5,527          (3,772)        3,674

Cash and cash equivalents at beginning of year...............................    10,157          13,929        10,255
                                                                                 ------          ------        ------

Cash and cash equivalents at end of year.....................................  $ 15,684          10,157        13,929
                                                                                 ======          ======        ======
Supplemental disclosures of cash flow information 
Cash paid during the year for:
        Interest..........................................................     $ 15,125         12,937         12,082
                                                                                 ======         ======         ======
        Income taxes......................................................     $  2,212          1,500          2,009
                                                                                 ======         ======         ======
    Noncash investing and financing activities:

        Increase (decrease) in equity valuation allowance
            for market value of investments...............................    $     105           (99)            638
                                                                                =======        ======         =======
        Transfers from loans to foreclosed real estate....................    $     444            287            478
                                                                                =======         ======        =======
        Loans originated on sales of foreclosed real estate...............    $      54             21            300
                                                                               ========        =======        =======
        Loans funded by and sold to correspondent.........................    $   2,469          2,368          1,151
                                                                              =========        =======        =======
        Transfer of investment and mortgage-backed
            securities from held-to-maturity category
            to available-for-sale category, as permitted
            under SFAS No. 115 Implementation Guide.......................    $      -               -         14,759
                                                                              =========        =======        =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.

                                       25
<PAGE>
                               FFLC BANCORP, INC.

                   Notes to Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

(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  and Sumter  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.

    Cashand  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 $843,000 and $680,000 at December 31, 1997
        and 1996, respectively.
<PAGE>

    Trading Securities.  Securities which are held principally for resale in the
        near term are  classified  as trading and carried at their fair  values.
        Unrealized   gains  and  losses  on  trading   securities  are  included
        immediately in income.

    Securities  Held to  Maturity.  Securities  for  which the  Company  has the
        positive  intent and ability to hold to maturity  are  reported at cost,
        adjusted for  premiums and  discounts  that are  recognized  in interest
        income using the interest method over the period to maturity.

    Securities  Available  for Sale.  Available-for-sale  securities  consist of
        securities not classified as trading securities nor as  held-to-maturity
        securities.


                                       26
<PAGE>
    Securities  Available  for Sale,  Continued.  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.

        Declines  in  the  fair  value  of   individual   held-to-maturity   and
        available-for-sale  securities  below  their  cost that are  other  than
        temporary have resulted in  write-downs of the individual  securities to
        their fair value. There were no such write-downs included in earnings as
        realized losses during the three years ended December 31, 1997.

        Premiums  and  discounts  are  recognized  in interest  income using the
        interest method over the period to maturity.

    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.

    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.
<PAGE>

    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.

    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.



                                       27
<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.

        Investment and  Mortgage-Backed  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  other
        borrowings 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.


                                       28

<PAGE>
    Net 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 17) 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.  At December 31,
        1997,   162,399  shares  remain   uncommitted  and  are  not  considered
        outstanding  for purposes of the  computation of net income per share of
        common  stock.  The RRP initially  purchased  184,122  shares,  of which
        178,063,  177,517 and 179,541  were  allocated to  participants  and are
        considered   outstanding   for  December   31,  1995,   1996  and  1997,
        respectively.  The remaining  unallocated RRP shares were not considered
        outstanding  during  1995,  1996 and 1997.  Diluted  income per share is
        computed by dividing net income by the weighted average number of shares
        outstanding including the dilutive effect of stock options (see Note 17)
        computed using the treasury stock method 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,
                                                                             ----------------------------------------
                                                                                1997           1996            1995
                                                                              ---------       ---------     ---------
<S>                                                                          <C>              <C>           <C>  
            Weighted average shares of common stock issued
                and outstanding before adjustments for ESOP,
                RRP and common stock options................................  3,890,019       4,317,500     4,532,392

            Adjustment to reflect the effect of unallocated
                ESOP and RRP shares.........................................   (189,799)       (247,675)     (299,894)
                                                                              ---------       ---------     ---------

            Weighted average shares for basic income per share..............  3,700,220       4,069,825     4,232,498
                                                                              =========       =========     =========

            Basic income per share.......................................... $     1.01             .54           .73
                                                                             ==========      ==========     ========= 
            Total weighted average common shares and equivalents
                outstanding for basic income per share
                computation.................................................  3,700,220       4,069,825     4,232,498

            Additional  dilutive  shares using the average market value 
                for the period utilizing the treasury stock method
                regarding stock options.....................................    211,036         198,167       194,600
                                                                             ----------      ----------    ----------
            Weighted average common shares and equivalents
                outstanding for diluted income per share....................  3,911,256       4,267,992     4,427,098
                                                                              =========       =========     =========

            Diluted income per share........................................ $      .96             .51           .70
                                                                             ==========       =========    ========== 
</TABLE>
                                       29
<PAGE>
    Future Accounting  Requirements.  The FASB has recently issued the following
        Statements of Financial  Accounting  Standards which are relevant to the
        Company:

            Financial Accounting Standards 130 - Reporting  Comprehensive Income
            establishes  standards  for  reporting   comprehensive  income.  The
            Standard defines  comprehensive income as the change in equity of an
            enterprise except those resulting from stockholder transactions. All
            components of comprehensive  income are required to be reported in a
            new financial  statement that is displayed with equal  prominence as
            existing financial statements. The Company will be required to adopt
            this Standard effective January 1, 1998. As the Statement  addresses
            reporting and  presentation  issues only, there will be no impact on
            operating results from the adoption of this Standard.

            Financial  Accounting  Standards 131 - Disclosures about Segments of
            an  Enterprise  and Related  Information  establishes  standards for
            related  disclosures about products and services,  geographic areas,
            and major  customers.  The  Company  will be  required to adopt this
            Standard  effective  January  1,  1998.  As the  Standard  addresses
            reporting  and  disclosure  issues only,  there will be no impact on
            operating results from adoption of this Standard.

    Reclassifications.  Certain  amounts  in  the  1995  and  1996  consolidated
        financial   statements   have  been   reclassified  to  conform  to  the
        presentation for 1997.

(2)  Investment Securities
    Investment  securities  have been  classified  in the  consolidated  balance
        sheets  according  to  management's  intent.  The  carrying  amounts  of
        securities  and their  approximate  fair values at December  31, were as
        follows:
<TABLE>
<CAPTION>

                                                                               Gross          Gross
                                                                 Amortized   Unrealized     Unrealized        Fair
                                                                   Cost        Gains          Losses          Value
                                                                   ----        -----          ------          -----
        At December 31, 1997:                                                      (In thousands)
<S>                                                             <C>                <C>       <C>             <C>
        Investment securities held to maturity-
            SBA-related investment securities...................$  3,031           46          -              3,077
                                                                  ======           ==        =====           ======

        Investment securities available for sale:
            Mutual funds........................................   9,258           -           (75)           9,183
            U.S. Government and agency securities...............   7,965            2          (30)           7,937
            Other investment securities.........................     151            5          -                156
                                                                 -------          ---        -----           ------

                Total...........................................$ 17,374            7         (105)          17,276
                                                                  ======           ==          ===           ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                               Gross          Gross
                                                                 Amortized   Unrealized     Unrealized        Fair
                                                                   Cost        Gains          Losses          Value
                                                                   ----        -----          ------          -----
<S>                                                             <C>                <C>       <C>             <C>
        At December 31, 1996:
        Investment securities held to maturity-
            SBA-related investment securities...................$  3,239           32           -             3,271
                                                                  ======           ==         ====           ======

        Investment securities available for sale:
            Mutual funds........................................   9,035            -         (115)           8,920
            U.S. Government and agency securities...............  20,208            2          (34)          20,176
            Other investment securities.........................     495            3           (1)             497
                                                                 -------           --        -----          -------

                Total...........................................$ 29,738            5         (150)          29,593
                                                                  ======           ==          ===           ======
</TABLE>


    Gross realized gains on sales of available-for-sale  securities were $11,000
        during the year ended  December 31, 1997.  There were no gross  realized
        losses during the year ended  December 31, 1997.  There were no sales of
        investment securities during 1996 and 1995.


                                       30

<PAGE>
    The scheduled  maturities  of  investment  securities  held to maturity  and
        investment securities (other than equity) available for sale at December
        31, 1997 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 within one year                  $ --         --                       2,000      2,000           
Due from one year to five years        --         --                       4,979      4,952           
Due from five years to ten years       --         --                         986        985           
Due after ten years                   3,031      3,077                       151        156           
                                     ------     ------                    ------     ------           
                                                                                                      
    Total                            $3,031      3,077                     8,116      8,093   
                                     ======      =====                     =====      =====   
</TABLE>
    Investment securities carried at approximately $3.4 million and $3.0 million
        at December  31,  1997 and 1996,  respectively,  were  pledged to secure
        public funds and tax deposits.

(3)  Mortgage-Backed Securities
    The  principal  balance,  amortized  cost and  estimated  market  values  of
    mortgage-backed securities were as follows:
<TABLE>
<CAPTION>
                                                Principal      Unamortized      Unearned    Amortized         Fair
                                                 Balance        Premiums       Discounts      Cost            Value
                                                 -------        --------       ---------      ----            -----
        At December 31, 1997:                                              (In thousands)
<S>                                             <C>                <C>          <C>          <C>             <C>
          Securities held to maturity:
            FHLMC certificates..................$  8,051             2           (8)           8,045           8,226
            GNMA certificates...................   7,834             1          (28)           7,807           8,044
            FNMA certificates...................   3,951            -            (2)           3,949           4,009
            Collateralized mortgage
                obligations.....................   9,187             1           (3)           9,185           9,164
                                                  ------            --           --          -------          ------

                                                $ 29,023             4          (41)          28,986          29,443
                                                  ======            ==           ==           ======          ======

          Securities available for sale:
            FHLMC certificates..................   1,482             1           -             1,483           1,462
            FNMA certificates...................   1,730            18           -             1,748           1,766
            Collateralized mortgage
                obligations.....................   6,109             9           (1)           6,117           6,077
                                                  ------            --           --          -------          ------

                                                $  9,321            28           (1)           9,348           9,305
                                                  ======            ==           ==          =======          ======
</TABLE>
                                       31

<PAGE>
<TABLE>
<CAPTION>
                                                Principal      Unamortized      Unearned    Amortized         Fair
                                                 Balance        Premiums       Discounts      Cost            Value
                                                 -------        --------       ---------      ----            -----
                                                                            (In thousands)
<S>                                             <C>                <C>          <C>          <C>             <C>
        At December 31, 1996:
          Securities held to maturity:
            FHLMC certificates..................$  9,505              3          (10)           9,498           9,752
            GNMA certificates...................   9,520              1          (41)           9,480           9,791
            FNMA certificates...................   5,561             -            (3)           5,558           5,637
            Collateralized mortgage
                obligations.....................  22,365              7          (16)          22,356          22,216
                                                  ------             --           --           ------          ------

                                                $ 46,951             11          (70)          46,892          47,396
                                                  ======             ==           ==           ======          ======
          Securities available for sale:
            FHLMC certificates..................   5,081              4           (2)           5,083           4,995
            FNMA certificates...................   1,973             20            -            1,993           1,998
            Collateralized mortgage
                obligations.....................  11,933             20          (21)          11,932          11,851
                                                  ------             --           --           ------          ------

                                                $ 18,987             44          (23)          19,008          18,844
                                                  ======             ==           ==           ======          ======
</TABLE>
    The amortized cost,  gross  unrealized gains and losses and estimated market
        values of mortgage-backed securities were as follows:
<TABLE>
<CAPTION>
                                                                     Gross        Gross
                                                      Amortized    Unrealized   Unrealized         Fair
                                                        Cost         Gains        Losses           Value
                                                        ----         -----        ------           -----
        At December 31, 1997:                                            (In thousands)
<S>                                                   <C>            <C>            <C>           <C>
          Securities held to maturity:
            FHLMC certificates....................... $   8,045         183          (2)           8,226
            GNMA certificates........................     7,807         237          -             8,044
            FNMA certificates........................     3,949          61          (1)           4,009
            Collateralized mortgage
                obligations..........................     9,185         -           (21)           9,164
                                                         ------       -----          --           ------

                                                       $ 28,986         481         (24)          29,443
                                                         ======         ===          ==           ======
          Securities available for sale:
            FHLMC certificates.......................     1,483          -          (21)           1,462
            FNMA certificates........................     1,748          25          (7)           1,766
            Collateralized mortgage
                obligations..........................     6,117          -          (40)           6,077
                                                         ------       -----          --           ------

                                                       $  9,348          25         (68)           9,305
                                                         ======         ===          ==           ======
</TABLE>
                                       32
<PAGE>
<TABLE>
<CAPTION>
                                                                Gross        Gross
                                                 Amortized    Unrealized   Unrealized         Fair
                                                   Cost         Gains        Losses           Value
                                                   ----         -----        ------           -----
                                                                   (In thousands)
<S>                                               <C>              <C>          <C>           <C>
        At December 31, 1996:
          Securities held to maturity:
            FHLMC certificates..................  $  9,498         268           (14)          9,752
            GNMA certificates...................     9,480         315            (4)          9,791
            FNMA certificates...................     5,558          86            (7)          5,637
            Collateralized mortgage
                obligations.....................    22,356           8          (148)         22,216
                                                    ------         ---           ---          ------

                                                  $ 46,892         677          (173)         47,396
                                                    ======         ===           ===          ======
          Securities available for sale:
            FHLMC certificates..................     5,083           8           (96)          4,995
            FNMA certificates...................     1,993          24           (19)          1,998
            Collateralized mortgage
                obligations.....................    11,932          -            (81)         11,851
                                                    ------         ---           ---          ------

                                                  $ 19,008          32          (196)         18,844
                                                    ======         ===           ===          ======
</TABLE>

    There were no sales of  mortgage-backed  securities  during the years  ended
December 31, 1997, 1996 and 1995.

    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 1-27  years;  however,
        because of  prepayments,  the  expected  weighted  average life of these
        securities at December 31, 1997 is approximately 2.2 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 have coupon rates
        ranging from 4.00% to 7.53% and had a weighted  average rate of 6.14% at
        December 31, 1997. The Company purchases only CMOs rated AA or better by
        nationally recognized rating services.


                                       33
<PAGE>
(4)  Loans Receivable
    The components of loans were as follows:
<TABLE>
<CAPTION>
                                                            At December 31,
                                                          1997           1996
                                                       ---------      ---------
                                                            (In thousands)
<S>                                                    <C>            <C>
First mortgage loans secured by:
    One-to-four-family residential                     $ 245,524        191,788
    Construction and land                                  3,528          5,489
    Multi-family units                                     4,464          4,180
    Commercial real estate, churches and other            37,975         13,565
Consumer loans                                            32,834         21,899
Commercial loans                                           4,632           --
                                                       ---------      ---------

        Subtotal                                         328,957        236,921

    Undisbursed portion of loans in process              (12,253)        (8,007)
    Net deferred loan costs                                  333             97
    Allowance for loan losses                             (1,684)        (1,063)
                                                       ---------      ---------

        Loans receivable, net                          $ 315,353        227,948
                                                       =========      =========
</TABLE>
    An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>

                                                 Year Ended December 31,
                                        ---------------------------------------
                                           1997           1996           1995
                                        -------         -------         -------
                                                    (In thousands)
<S>                                     <C>             <C>             <C>
Balance at January 1                    $ 1,063             977             869

Loans charged off                           (28)            (21)            (16)

Provision for loan losses                   649             107             124
                                        -------         -------         -------

Balance at December 31                  $ 1,684           1,063             977
                                        =======         =======         =======
</TABLE>

    There were no impaired  loans  recognized  under SFAS 114 and 118 during the
        years ended December 31, 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.
<PAGE>

    Nonaccrual  loans  at  December  31,  1997  and 1996  totaled  $242,000  and
        $666,000,  respectively.  For the year ended December 31, 1997, interest
        income on loans would have been  increased  approximately  $9,000 if the
        interest  on  nonaccrual  loans at December  31, 1997 had been  recorded
        under the original terms of such loans.  All of the nonaccrual  loans at
        December   31,   1997  and  1996  were   first-mortgage,   single-family
        residential   loans  or  consumer  loans.   There  have  been  no  loans
        restructured during any of the periods presented.




                                       34

<PAGE>
(5)  Premises and Equipment
    Components of premises and equipment were as follows:
<TABLE>
<CAPTION>
                                                              At December 31,
                                                          ----------------------
                                                             1997          1996
                                                           ------          -----
                                                              (In thousands)
<S>                                                       <C>              <C>
        Cost:
            Land.......................................   $ 1,754          1,754
            Building and improvements..................     4,380          4,041
            Furniture and equipment....................     2,152          2,145
            Construction in progress...................        11            112
                                                           ------          -----

                Total cost.............................     8,297          8,052

        Less accumulated depreciation..................     2,984          2,908
                                                            -----          -----

            Net book value.............................   $ 5,313          5,144
                                                            =====          =====
</TABLE>
    Certain company facilities are leased under various operating leases. Rental
        expense  was  $51,000  and  $22,000 in 1997 and 1996,  respectively.  No
        related rental  expense was incurred  during 1995. At December 31, 1997,
        future minimum rental  commitments under  noncancellable  leases were as
        follows (in thousands):

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

                1998..........................................     $  68
                1999..........................................        73
                2000..........................................        21
                2001..........................................        18
                2002..........................................        18
                                                                    ----
                                                                   $ 190
                                                                   =====

(6)  Deposits
    The aggregate   amount  of  short-term   jumbo  CDS,  each  with  a  minimum
        denomination  of  $100,000,  was  approximately  $12.2  million and $9.0
        million in 1997 and 1996, respectively.

    At December 31, 1997,  the  scheduled  maturities of CDS were as follows (in
thousands):

            1998............................................... $ 167,162
            1999...............................................    57,898
            2000...............................................    11,094
            2001...............................................     1,924
            2002 and thereafter................................     2,212
                                                                ---------
                                                                $ 240,290
                                                                =========

                                       35
<PAGE>
(7)  Advances from Federal Home Loan Bank and Other Borrowings
    As  of December 31, 1997, the Savings Bank had $30.0 million in Federal Home
        Loan Bank of Atlanta ("FHLB") advances outstanding. These advances had a
        weighted  average interest rate of 6.01% and will mature during the year
        ended  December 31, 2002.  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.

    The Savings Bank had $30 million of  additional  credit  availability  via a
        FHLB line of credit. The Savings Bank did not draw funds on this line of
        credit at any time during the years ended December 31, 1997 and 1996.

    The $150,000 community  investment fund advance  outstanding at December 31,
        1996 and 1995 bears  interest at 7.17% and matured  February  28,  1997.
        This advance was obtained in accordance with the Community  Reinvestment
        Act to provide lower interest rate financing to developers of low-income
        housing.

    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.

    Information  concerning  securities  sold under  agreements to repurchase is
summarized as follows:
<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                               ---------------------------
                                                                                  1997             1996
                                                                                  ----             ----
                                                                                  (Dollars in thousands)
<S>                                                                            <C>                  <C>

       Average balance during the year.....................................    $  5,629               849
                                                                               ========             =====
       Average interest rate during the year...............................        5.74%             5.65%
                                                                               -=======             =====
       Maximum month-end balance
           during the year.................................................    $ 11,952             8,048
                                                                               ========             =====
       Mortgage-backed securities underlying the agreements at year end:

           Carrying value..................................................    $     -              8,245
                                                                               ========             =====
           Fair value......................................................    $     -              8,237
                                                                               ========             =====
</TABLE>
(8)  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.
                                                     
                                       36
<PAGE>
    The income tax provision is summarized as follows:
<TABLE>
<CAPTION>


                                                  Year Ended December 31,
                                            -------------------------------
                                              1997       1996         1995
                                             ------       -----      -----
                                                     (In thousands)
<S>                                         <C>           <C>        <C>

            Current.......................  $ 2,339       1,594      1,776
            Deferred......................     (256)       (116)       152
                                            -------       -----      -----

                                            $ 2,083       1,478      1,928
                                             ======       =====      =====
</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,
                                            --------------------------------------------------------------------------
                                                      1997                       1996                       1995
                                            --------------------       -------------------       ---------------------
                                             Amount           %         Amount           %         Amount           %
                                                                      (Dollars in thousands)
<S>                                         <C>            <C>         <C>            <C>         <C>            <C>
            Taxes on income at U.S.
                statutory rate........      $ 1,985        34.0%       $ 1,245        34.0%       $ 1,707        34.0%
            State income taxes, net of
                federal tax benefit...          192         3.3            131         3.6            181         3.6
            Other - net...............          (94)       (1.6)           102         2.8             40          .8
                                             ------        ----          -----        ----          -----        ----

            Taxes on income at
                effective rates.......      $ 2,083        35.7%       $ 1,478        40.4%       $ 1,928        38.4%
                                            =======        ====        =======        ====        =======        ====
</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,
                                                                         ------------------------
                                                                          1997             1996
                                                                          ----             ----
                                                                               (In thousands)
<S>                                                                      <C>               <C>
            Deferred tax liabilities:
                Deferred loan fees.....................................  $   27               111
                Allowance for loan losses..............................     256               501
                FHLB stock dividends...................................     304               304
                Depreciation...........................................     222               186
                Certain accrued interest...............................      17                24
                Other..................................................      82               128
                                                                         ------             -----

            Gross deferred tax liabilities.............................     908             1,254
                                                                         ------             -----

            Deferred tax assets:
                Unrealized loss on securities available for sale.......      53               116
                RRP incentive plan.....................................     118               208
                                                                         ------             -----

            Gross deferred tax assets..................................     171               324
                                                                         ------             -----

            Net deferred tax liabilities...............................  $  737               930
                                                                         ======             =====  
</TABLE>

                                       37

<PAGE>
    Retained  earnings at  December  31,  1997 and 1996  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, 1997 and 1996.

    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 will be 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,  1997,  the Savings  Bank had  approximately
        $910,000 of deferred tax  liabilities  recorded for the recapture of its
        excess bad debt reserves.

(9)  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, 1997
        and 1996 were $37,000 and $23,000, respectively.

(10)  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
        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.
<PAGE>

    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.


                                       38

<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, 1997        At December 31, 1996
                                                                    Carrying       Fair         Carrying      Fair
                                                                      Amount       Value          Amount      Value
                                                                                        (In thousands)
<S>                                                                 <C>            <C>           <C>          <C>
              Financial assets:
                  Cash and cash equivalents.........................$  15,684       15,684        10,157       10,157
                  Investment securities.............................   20,307       20,353        32,832       32,865
                  Mortgage-backed securities........................   38,291       38,748        65,736       66,240
                  Loans receivable..................................  315,353      316,528       227,948      224,177
                  Accrued interest receivable.......................    2,134        2,134         2,019        2,019
                  Federal Home Loan Bank stock......................    2,304        2,304         1,939        1,939

              Financial liabilities:
                  Deposit liabilities...............................  315,390      316,689       282,664      284,034
                  Advances from FHLB................................   30,000       30,376           150          150
                  Securities sold under agreements
                      to repurchase.................................     -            -            8,048        8,048
</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, 1997, follows:
<TABLE>
<CAPTION>


                                                                Notional
                                                                 Amount
                                                             (In thousands)
<S>                                                             <C>
              Commitments to extend credit....................  $ 22,607
                                                                  ======
              Unused lines of credit..........................  $ 11,528
                                                                  ======
              Undisbursed portion of loans in process ........  $ 12,253
                                                                  ======
</TABLE>
<PAGE>


(11)  Significant Group Concentration of Credit Risk
     The Company grants real estate 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.

     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.







                                       39

<PAGE>
(12)  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,
                                                                   ---------------------
                                                                    1997            1996
                                                                    ----            ----
                                                                       (In thousands)
<S>                                                                <C>             <C>

            Beginning balance...................................   $ 1,030         1,038
            Amounts related to new officers and directors.......       135           -
            Loans originated....................................       725           111
            Principal repayments................................      (162)         (119)
                                                                    ------         -----

                Ending balance..................................   $ 1,728         1,030
                                                                     =====         =====
</TABLE>

(13)  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.

(14)  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, 1997, approximately $16.0 million of retained earnings were
        available for dividend declaration without prior regulatory approval.

(15)  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,  1997,  that the Savings  Bank meets all capital  adequacy
        requirements to which it is subject.

    As  of  December  31,  1997,  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.


                                       40

<PAGE>
    The Savings  Bank's actual  capital  amounts and ratios at December 31, 1997
and 1996 are also presented in the table.
<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>
<TABLE>
<CAPTION>
                                                                                                         To Be Well
                                                                              Minimum                    Capitalized
                                                                             For Capital                 For Prompt
                                                                             Adequacy                 Corrective Action
                                                        Actual                Purposes                   Provisions
                                          --------------------        ---------------------        ---------------------
                                             %         Amount            %         Amount            %         Amount
                                          -----     ----------        ------     -----------       -----      ----------
         As of December 31, 1996:                                    (Dollars in thousands)
<S>                                       <C>       <C>               <C>        <C>               <C>        <C>
         Stockholders' equity,
             and ratio to total
             assets.....................  12.05%    $   41,731
         Less: investment in
             nonincludable
             subsidiary.................                  (201)
         Add back: unrealized loss on
             available-for-sale
             securities.................                   121
                                                     ---------

         Tangible capital,
             and ratio to adjusted
             total assets...............  12.02%    $   41,651         1.5%      $  5,198
                                                      ========                     ======

         Tier 1 (core) capital, and
             ratio to adjusted total
             assets.....................  12.02%    $   41,651         3.0%      $ 10,395           5.0%      $ 17,326
                                                      ========                     ======                       ======

         Tier 1 capital, and ratio
             to risk-weighted assets....  26.29%        41,651         4.0%       $ 6,338           6.0%      $  9,507
                                                                                   ======                       ======

         Tier 2 capital (allowance for
             loan losses)...............                 1,063
                                                     ---------

         Total risk-based capital,
             and ratio to risk-
             weighted assets............  26.96%    $   42,714         8.0%      $ 12,676          10.0%      $ 15,846
                                                      ========                     ======                       ======

         Total assets...................             $ 346,442
                                                       =======

         Adjusted total assets..........             $ 346,511
                                                       =======

         Risk-weighted assets...........             $ 158,456
                                                       =======

</TABLE>
                                       42

<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.

(16)  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  19 for
         information regarding the Savings Bank's Stock Repurchase Program.


                                       43

<PAGE>
(17)  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, 1997, 1996 and 1995,  10,867,  8,332 and
         5,035 options were granted under the Option Plan, and 2,014,  6,000 and
         4,515 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
         23%, 14% and 26%,  respectively,  for 1997, 1996 and 1995. 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  1997,  1996  and  1995 (in  thousands,  except  per  share
         amounts):
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     -----------------------------------
                                                                       1997           1996          1995
                                                                       ----           ----          ----
<S>                                                                  <C>            <C>           <C>
             Weighted-average grant-date fair value of options
                  issued during the year..........................   $   84             39            21
                                                                     ======         ======        ======

             Proforma net earnings................................   $3,663          2,149         3,064
                                                                     ======         ======        ======

             Proforma basic earnings per share....................   $  .99            .53           .72
                                                                     ======         ======        ======
</TABLE>
<PAGE>

    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, 1997, 57,666 shares remain available for
         grant to future directors, officers and employees.


                                       44
<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, 1994......................      382,293              $6.00           6.00
            Granted.............................................        5,035              $9.52           9.52
            Forfeited...........................................       (1,112)             $6.00           6.00
            Exercised...........................................      (12,636)             $6.00           6.00
                                                                      -------

            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
                                                                      =======       ============          =====
</TABLE>
    The weighted-average  remaining  contractual  life of the outstanding  stock
        options at December 31, 1997,  1996 and 1995 was 6.2, 7.1 and 8.3 years,
        respectively.

    The outstanding options at December 31, 1997 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...................    319,042         $  6.33                      3.7
                1998....................................      4,721           13.36                      9.0
                1999....................................      4,721           13.36                      9.0
                2000....................................      1,944           15.30                      9.0
                                                            ------- 

                                                            330,428         $  6.58                      6.2
                                                            =======           =====                      ===
</TABLE>

                                       45

<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,  1997,  1996 and
        1995 included the following ESOP related costs:
<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                                   ----------------------------
                                                                    1997       1996        1995
                                                                    ----       ----        ----
                                                                           (In thousands)
<S>                                                                <C>          <C>         <C>

            Amortization of the original cost, $6 per share....... $  315        315        315
            Market appreciation of the FFLC shares................    597        265        242
            Dividends on ESOP shares..............................     61         60         56
                                                                     ----       ----        ---

                Total.............................................  $ 973        640        613
                                                                      ===        ===        ===
</TABLE>
    The ESOP shares were as follows:
<TABLE>
<CAPTION>
                                                                            At December 31,
                                                                    ---------------------------
                                                                       1997               1996
                                                                       ----               ----
                                                                            ($ in thousands)
<S>                                                                 <C>                <C>

            Allocated shares and shares released for allocation...  $ 199,479           152,884
            Unreleased shares.....................................    157,818           210,424
                                                                      -------           -------

            Total ESOP shares.....................................    357,297           363,308
                                                                      =======           =======

            Fair value of unreleased shares.......................  $   3,433             2,714
                                                                     ========          ========
</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.  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.




                                       46
<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,  1997,  4,581 shares
        remain reserved for future directors, officers and employees.

(18)  Parent Company Only Financial Statements
    Condensed  financial  statements  of the  Holding  Company as of and for the
        years ended  December  31, 1997 and 1996 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,
                                                            --------------------
                                                              1997         1996
                                                            -------      -------
                                                                (In thousands)
<S>                                                         <C>          <C>
    Assets

Cash, deposited with subsidiary                             $   477          645
Investment in subsidiary                                     44,503       41,731
Loans to subsidiary                                           6,447       11,262
Other assets                                                      2         --
                                                            -------      -------

        Total assets                                        $51,429       53,638
                                                            =======      =======

    Liabilities and Stockholders' Equity

Current income taxes                                           --           --
Accrued expense and other liabilities                          --             12
Stockholders' equity                                         51,429       53,626
                                                            -------      -------

        Total liabilities and stockholders' equity          $51,429       53,638
                                                            =======      =======
</TABLE>




                                       47

<PAGE>
<TABLE>
<CAPTION>

                         Condensed Statements of Income

                                                              Year Ended December 31,
                                                          ------------------------------
                                                             1997       1996        1995
                                                             ----       ----        ----
                                                                  (In thousands)
<S>                                                         <C>        <C>        <C>

        Revenues........................................    $  532        772        871
        Expenses........................................       280        396        432
                                                            ------     ------     ------

                Income before earnings of subsidiary....       252        376        439
                Earnings of subsidiary..................     3,502      1,808      2,654
                                                             -----      -----      -----

                Net income                                 $ 3,754      2,184      3,093
                                                           =======      =====      =====
<CAPTION>
                                 Condensed Statements of Cash Flows

                                                                          Year Ended December 31,
                                                                    ---------------------------------
                                                                       1997        1996        1995
                                                                    -------      -------      -------
                                                                              (In thousands)
<S>                                                                 <C>          <C>          <C>
Cash flows from operating activities:
    Net income                                                      $ 3,754        2,184        3,093
    Adjustments to reconcile net income to net cash
      provided by operations:
        Equity in earnings of subsidiary                             (3,502)      (1,808)      (2,654)
        (Increase) decrease in other assets                              (2)           6            8
        (Decrease) increase in current income taxes payable            --             (4)         (27)
        (Decrease) increase in accrued expenses and
            other liabilities                                           (12)          (4)           7
                                                                    -------      -------      -------

            Net cash provided by operating activities                   238          374          427
                                                                    -------      -------      -------

Cash flows from investing activities-
        Repayment of loan to subsidiary                               4,815        1,316          316
                                                                    -------      -------      -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                    ---------------------------------
                                                                      1997       1996        1995
                                                                    -------      -------      -------
<S>                                                                 <C>          <C>          <C>
Cash flows from financing activities:
        Purchase of treasury stock                                   (6,171)      (3,922)      (2,373)
        Proceeds from sale of common stock                              283           80           76
        Cash dividends paid                                          (1,141)        (986)        (817)
        Cash dividends received                                       1,808        2,654        3,266
                                                                    -------      -------      -------

            Net cash (used in) provided by financing activities      (5,221)      (2,174)         152
                                                                    -------      -------      -------

Net (decrease) increase in cash                                        (168)        (484)         895

Cash at beginning of year                                               645        1,129          234
                                                                    -------      -------      -------

Cash at end of year                                                 $   477          645        1,129
                                                                    =======      =======      =======

</TABLE>

                                       48

<PAGE>
(19)  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.
<PAGE>

(20) Quarterly Financial Data (unaudited)
    The following tables present summarized quarterly data (in thousands, except
per share amounts):
<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
                                                              -----        -----      -----       -----      ------

            Other income..................................      198          216        541         264       1,219
            Other 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>
                                       49
<PAGE>
<TABLE>
<CAPTION>
                                                                            Year Ended December 31, 1996
                                                            ---------------------------------------------------------
                                                             First       Second       Third       Fourth
                                                            Quarter      Quarter      Quarter     Quarter       Total
                                                            -------      -------      -------     -------       -----
<S>                                                         <C>          <C>          <C>         <C>         <C>   
            Interest income...............................  $ 5,946        5,939        6,086       6,247      24,218
            Interest expense..............................    3,215        3,168        3,240       3,336      12,959
                                                              -----        -----        -----       -----      ------

            Net interest income...........................    2,731        2,771        2,846       2,911      11,259

            Provision for loan losses.....................       14           15           34          44         107
                                                             ------       ------       ------      ------     -------
            Net interest income after provision
                for loan losses...........................    2,717        2,756        2,812       2,867      11,152
                                                              -----        -----        -----       -----      ------

            Other income..................................      182          195          208         224         809
            Other expense.................................    1,563        1,636        3,334       1,766       8,299
                                                              -----        -----        -----       -----      ------

            Income (loss) before income taxes.............    1,336        1,315         (314)      1,325       3,662
            Income taxes (credit).........................      525          519          (91)        525       1,478
                                                             ------        -----       ------       -----      ------

            Net income (loss)............................. $    811          796         (223)        800       2,184
                                                             ======        =====       ======       =====      ======

            Basic income (loss) per common share.......... $    .20          .19         (.05)        .20         .54
                                                             ======        =====       ======       =====      ======

            Diluted income (loss) per common share........ $    .19          .18         (.05)        .19         .51
                                                             ======        =====       ======       =====      ======


</TABLE>

                                       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,  1997  and  1996  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, 1997.  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, 1997 and 1996 and the results of its  operations and its cash flows
for each of the  years in the  three-year  period  ended  December  31,  1997 in
conformity with generally accepted accounting principles.





/s/HACKER, JOHNSON, COHEN & GRIEB PA
------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Orlando, Florida
January 16, 1998



                                       51

<PAGE>
                               FFLC BANCORP, INC.

                             DIRECTORS AND OFFICERS



Directors:                 Occupation                                       
                                                                            
Joseph J. Junod            Retired, General Manager, Avesta Sheffield Pipe  
Chairman of the Board                                                       
                                                                            
Claron D. Wagner           President, Woody Wagner, Inc.                    
Vice Chairman                                                               
                           President/Owner, Logan Sitework Contractors, Inc.
James P. Logan             President, Lassiter-Ware, Inc.                   
Ted R. Ostrander, Jr.      Attorney, CEO Ro-Mac Lumber Supply, Inc.         
H.D. Robuck, Jr.           President, FFLC Bancorp, Inc. & Subsidiary       
Stephen T. Kurtz           Executive Vice President, FFLC Bancorp, Inc. &   
Paul K. Mueller            Subsidiary                                       
                                                                            
                                                                            
Advisory Directors:                                                         
                           
Frank L. Cogburn           Retired, Past President, First Federal Savings Bank 
                                of Lake County                                 
James R. Gregg             President, Jarol Company                            
James H. Herlong           General Partner, A.S. Herlong, Ltd.                 
Horace D. Robuck           President, Romac Lumber                             
                      
Officers:                  

Stephen T. Kurtz
President and Chief Executive Officer   

Paul K. Mueller
Executive Vice President and Treasurer

Dwight L. Hart
Senior Vice President

Danny A. Schmid
Senior Vice President

Sandra L. Rutschow
Vice President and Secretary

Lawrence E. Hoag
Vice President

                                       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

Frank L. Cogburn
James R. Gregg
Horace D. Robuck
James H. Herlong


OFFICERS

Stephen T. Kurtz
President
Chief Executive Officer

Paul K. Mueller
Executive Vice President
and Treasurer

Dwight L. Hart
Senior Vice President and Mortgage Lending Manager

Danny A. Schmid
Senior Vice President and Commercial Lending Manager

Sandra L. Rutschow
Vice President and Corporate Secretary

Lawrence E. Hoag
Vice President
Deposit Accounts Manager

Michael J. Cox
Vice President and Area Loan Manager

Brian R. Hofer
Vice President and Commercial Loan Officer

Lynda F. Wemple
Vice President and Accounting Manager
<PAGE>
Yvonne K. Ross
Vice President and Loan Officer

Brenda M. Grubb
Vice President and Human Resource Manager

Linda C. Gallop
Clermont Branch Manager
<PAGE>

Doris E. Hyatt
Assistant Secretary

Susan L. Berkebile
Vice President - Area Loan Manager

Dennis Rogers
Assistant Vice President - Area Loan Manager
Wildwood Branch Manager

Vaneeda F. Potter
Fruitland Park Office Manager

Vickie S. Baxter
Assistant Vice President
Eustis Branch Manager

Sonja G. Sanders
Main Street Office Manager

Arthur Middleton
Lake Square Office Manager

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

Jay Bartholomew
Assistant Vice President
Lady Lake Branch Manager

Jankie Dhanpat
Assistant Vice President
SEC Reporting and Compliance Officer

Karen Hollister
Assistant Vice President
Loan Operations Manager

Charles L. Lee
Security Officer

Janet L. Glessner
Marketing Officer

Debra L. McFarlane
Main Office Branch Manager

Sandra A. Rowe
Assistant Secretary and Loan Servicing Manager

Carmen C. Passwaters
Assistant Secretary

                                       53

<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:

Pamela Ali
Barbara J. Boscana
Norma J. Caron
Maryann D. Chantos
Constance A. Poitier-Christian
Shu Een Chen
Joseph D. Cioppa
Camilla R. Clark
Sheila C. Coffey
Carlos E. Colon
Diane S. Cook
Lori Cook
Barbara A. Cordes
Jewel M. Correll
Jennifer Culberson
Robert Cumm
Cheryl A. Davis
Dawn Rene Davison
Carla J. Devey
Carol A. Dewey
Jankie Dhanpat
Janine S. Dickerson
Deborah S. Edwards
Ruth E. Fielding
Joan P. Gibson
Linda J. Giggey
Janet L. Glessner
Zoann Goodman
Jennifer L. Grovesteen
Brenda M. Grubb
Andrea Hanson
Dwight L. Hart
Lawrence E. Hoag
Stephanie Hodges
Penny M. Hollis
Karen L. Hollister
Stephanie Hodges
Doris E. Hyatt
Patricia B. Inman
Juanita F. Jackson
Sondra Jones
Constance L. Merrell-Kasch
Kristina Keel
Erin Klink
Stephen T. Kurtz
Adriane M. Lacey
Linda N. Landers
Cynthia M. Lay

<PAGE>
Leslie A. Leach
Charles L. Lee
Pamela J. Linville
Cynthia A. Lord
Judith M. Maddox
Annette McCullough
Debra L. McFarlane
Paul K. Mueller
Pamela A. O'Neal
Carmen C. Passwaters
Debra L. Possee
Leslie Robinson
Beverly L. Ross
Yvonne K. Ross
Sandra A. Rowe
Sheri K. Runnels
Landa A. Russell
Sandra L. Rutschow
James Schaeffer
Danny A. Schmid
Margaret M. Siegel
Leigh S. Skehan
Lynn P. Stoffel
Michelle M. Strickland
Joyce H. Sutton
Michelle M. Thompson
Virginia D. Vann
Theresa R. Wells
Lynda F. Wemple
Margaret R. White
Louise E. Whitlock
Rhonda L. Wilkerson
Shirley N. Williams
Betty L. Wolcott
Lisa K. Woolwine

FRUITLAND PARK OFFICE:

Julie Elaine Glenn
Melissa J. Judd
Vaneeda F. Potter
Delphine C. Williams

LADY LAKE:

Jay R. Bartholomew
Deede A. Dye
Julie A. Laws
Marilyn A. Leugers
Tamara J. Lloyd
Mary E. Rutz
Patricia L. Sizemore
Margaret A. Slimm
<PAGE>
MAIN STREET OFFICE:

Aimee N. Barto
Kristy L. Lawrence
Dawn M. Loth
Sonja G. Sanders
Orpha M. Vogt

LAKE SQUARE:

Sheila M. Heitmeyer
Arthur E. Middleton
Melissa J. Miller
Angela Nicole Phillips
CLERMONT OFFICE:

Susan L. Berkebile
Sharon S. Dziorney
Annette S. Demeree
Donna L. Franklin
Linda C. Gallop
Brenda Heisner
Brian R. Hofer
Tammy R. Imundi
Trinia C. McClendon
Glenda S. Riggs
Sharon M. Slack

EUSTIS OFFICE:

Vickie S. Baxter
Michael J. Cox
Peggy L. Harris
Taneria N. O'Neal
Natasha L. Pender
Michael J. Price
Bernice E. Watkins
Juanita L. Wright

WILDWOOD OFFICE:

Donna L. Boyett
Angela B. Christopher
Jennifer Kitchens
Rebecca D. Moreno
Dennis R. Rogers
Gina R. Rusu
Karen Seybold
Ledora Smith
Willie Lee Smith
Paula D. Williams

SOUTH LEESBURG

Hilda Lozano
Sandra L. Seaton
Carol A. Sieder
Eva J. Snead


                                       54