FFLC BANCORP, INC.
1999 ANNUAL REPORT

MISSION STATEMENT

Our mission is to operate in a manner consistent with the high expectations of
our stockholders, customers and employees. We will achieve attractive financial
results for our stockholders, provide quality financial services and products to
our customers, and offer rewarding careers to our employees by increasing the
use of technology while maintaining a high level of personal service and
integrity. We exist in order to:

o provide an attractive return to our stockholders,
o provide a competitive, progressive and profitable array of financial
services and products,
o attract and retain highly-motivated, top-quality employees, and
o make a positive impact on the communities that we serve.

FORWARD-LOOKING STATEMENTS

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

CONTENTS

Page
----

Corporate Profile, Corporate Organization and General Information ........ 1
Office Locations and Common Stock Prices and Dividends ................... 2
Consolidated Financial Highlights ........................................ 3
Letter to Stockholders ................................................... 4-5
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 ........................................ 19-49
Independent Auditors' Report.............................................. 50
Directors and Officers of FFLC Bancorp, Inc. ............................. 51
Directors and Officers of First Federal Savings Bank of Lake County....... 52
Employees ................................................................ 53

Inside Cover

CORPORATE PROFILE

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

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 4, 2000.

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. The Company's
SEC filings are also available at our web site, http://www.1stfederal.com.

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

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

Corporate Counsel
George W. Murphy, Jr.
Muldoon, Murphy & Faucette LLP
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

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

FIRST FEDERAL LOGO HERE

OFFICE LOCATIONS

MAP INSERT MAP - HALF PAGE

COMMON STOCK PRICES AND DIVIDENDS

FFLC's common stock is traded in the over-the-counter market and is quoted on
the National Association of Securities Dealers Automated Quotation - National
Market System ("NASDAQ - National Market System") under the symbol FFLC. The
following table sets forth market price information, based on closing prices, as
reported by the NASDAQ -National Market System for the common stock high and low
closing sales prices and the amount of dividends paid on the common stock for
the periods indicated. See Note 19 of the Consolidated Financial Statements for
a summary of quarterly financial data.

Cash
Dividends
Paid
High Low Per Share
Quarter Ended:

March 31, 1998..................... 21 3/4 18 3/4 .09
June 30, 1998...................... 21 3/4 19 .09
September 30, 1998................. 20 16 1/2 .09
December 31, 1998.................. 17 3/8 14 3/4 .09
March 31, 1999..................... 18 1/2 15 1/2 .11
June 30, 1999...................... 19 16 .11
September 30, 1999................. 18 1/8 17 1/2 .11
December 31, 1999.................. 17 7/8 13 1/4 .11

As of February 1, 2000, the Company had 810 holders of record of common stock.

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

AT YEAR END: 1999 1998 1997
----------- --------- ---------

Total assets.................................................................. $ 590,432 463,820 400,237
Loans receivable, net......................................................... $ 501,131 389,059 315,353
Securities ................................................................... $ 36,909 40,392 58,598
Deposits...................................................................... $ 429,274 351,030 315,390
Equity........................................................................ $ 55,637 53,223 51,429
Book value per share.......................................................... $ 15.52 14.56 13.74
Shares outstanding ........................................................... 3,583,938 3,655,620 3,743,988
Equity-to-assets ratio........................................................ 9.42% 11.47% 12.85%
Nonperforming assets to total assets.......................................... .47% .17% .19%

FOR THE YEAR:

Interest income............................................................... $ 38,612 32,173 28,156
Net interest income after provision for loan losses........................... $ 16,679 14,220 12,091
Net income.................................................................... $ 5,402 4,397 3,754
Basic income per share........................................................ $ 1.52 1.22 1.01
Diluted income per share...................................................... $ 1.47 1.16 .96
Loan originations funded...................................................... $ 195,034 151,411 143,538
Return on average assets...................................................... 1.03% 1.05% 1.00%
Return on average equity...................................................... 9.89% 8.37% 7.18%
Average equity to average assets ratio........................................ 10.45% 12.52% 13.93%
Noninterest expense to average assets......................................... 1.97% 2.01% 1.99%

YIELDS AND RATES:
Weighted Average
Rate or Yield Average Rate or Yield During
at December 31, Year Ended December 31,
---------------------- ----------------------------
1999 1998 1999 1998 1997
---- ---- ---- ---- ----

Loans .................................................. 7.88% 7.96% 7.99% 8.27% 8.31%
Securities.............................................. 6.22% 6.37% 5.83% 6.32% 6.35%
All interest-earning assets ............................ 7.66% 7.72% 7.73% 7.96% 7.80%
Deposits................................................ 4.53% 4.58% 4.56% 4.78% 4.87%
All interest-bearing liabilities ....................... 4.84% 4.67% 4.70% 4.88% 4.94%
Interest-rate spread (1)................................ 2.82% 3.05% 3.03% 3.08% 2.86%
Net yield on average interest-earning assets (2)........ N/A N/A 3.48% 3.69% 3.53%

(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.

LOGO HERE

Dear Stockholders:

Once again, I am pleased to have the opportunity to present to our stockholders,
customers and friends, information about the Company's operations for the past
year. We have again enjoyed a successful year, and I would like to take this
opportunity to thank all of you - our stockholders, our customers, our
communities, and our employees - for your efforts and support as we moved
through 1999 and into the year 2000.

We all had high expectations for the transition to the new millennium, and the
Company did indeed experience a most eventful year. We enjoyed record earnings
for the year, opened three new branches, and approved the establishment of a
dividend reinvestment plan for stockholders. First Federal Savings Bank, the
Company's subsidiary, again set records for total assets, total loan volume, and
total deposits. And, of course, we successfully navigated the Y2K transition!

For 1999, the Company earned $5.4 million, a 23% increase over 1998. On a per
share basis, basic net income per share for 1999 was $1.52, compared to $1.22
for 1998. As we previously reported to you, the 1999 consolidated earnings were
positively impacted in the first quarter of 1999 by a $553,000 after-tax gain on
the sale of commercial land owned by Lake County Service Corporation, a
subsidiary of the Bank. Excluding that gain, the Company's consolidated net
income would have been $4.8 million for the year ended December 31, 1999, a 10%
increase when compared to 1998. Basic income per share for 1999 excluding the
gain would have been $1.36, an increase of 11% over 1998.

Asset growth continues to be an important focal point for the Company. The
Company's total assets grew from $463.8 million at December 31, 1998 to $590.4
million at December 31, 1999. During 1999, the Bank's loan originations totaled
$238.2 million, a 20% increase over the $198.7 million of originations in 1998.
Originations of residential loans were $133.3 million, commercial loans were
$59.2 million, and consumer loans were $45.7 million for 1999. Those volume
levels compare to $109.2 million, $58.9 million, and $31.0 million,
respectively, for 1998.

The Company's growth was funded by increases in the Bank's deposits and Federal
Home Loan Bank advances. During 1999, the Bank's deposits grew from $351.0
million to $429.3 million, an increase of 22%. Of the total increase in
deposits, checking and other transaction accounts grew $17.6 million (or 19%),
while certificates of deposit grew $60.6 million (or 23%). During 1999, advances
from the Federal Home Loan Bank grew $43 million (77%), from $56 million to $99
million.

As we look forward to 2000, we are excited about the opportunity we have to add
interactive Internet banking to our list of banking products. We have been
working on the development of our interactive Internet banking product, and
expect to be able to launch this project in the second quarter of 2000. We are
also excited about the opening in mid 2000 of our new Loan Administration
building, located immediately behind our Main Office, which will allow us to
continue to grow our Lending activities. When that building is finished, we plan
to begin remodeling our Main Office in order to continue to serve our customers
in the most efficient and convenient manner.

We are also very pleased to offer our stockholders the opportunity to reinvest
dividends automatically on the Company's common stock, through the FFLC Bancorp,
Inc. Dividend Reinvestment Plan (the "Plan"). That Plan, which was established
in January 2000, allows registered stockholders of at least 50 shares of common
stock to reinvest regular dividends on all or a portion of their common stock
into additional shares. The Plan also allows participants to make optional cash
purchases of common stock, and all costs, including brokerage commissions, are
paid by the Company. A booklet describing the Plan in detail was mailed to
stockholders in January. If you would like a copy of that booklet, there is a
reply card included in this Annual Report that you can complete and return.

In spite of the success we enjoyed this year, the performance of the Company's
stock did not reflect our profitability and growth. Perhaps because of all of
the attention directed toward the Y2K transition, or toward "technology" stocks,
or the uncertainty the market has felt toward future interest rates, financial
stocks - including the Company's - were at best neglected by the market. While
we wish the market would fully credit us with the success we are experiencing,
we remain convinced that our best strategy for creating long-term value to our
stockholders is to focus on profitability and excellence in customer service. We
truly appreciate the loyalty and support of our stockholders, our customers, and
our employees. We remain committed to doing what we can to increase the
long-term value of our Company. That commitment includes meeting our customers
needs, the investment needs of our stockholders, and the needs of the
communities in which we have the privilege to serve. We believe FFLC Bancorp,
Inc. is well positioned to meet those needs, and we look forward to the
opportunities before us.

Cordially yours,

Stephen T. Kurtz
President and Chief Executive Officer

SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
At December 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Total assets................................................. $ 590,432 463,820 400,237 346,442 325,832
Loans receivable, net........................................ 501,131 389,059 315,353 227,948 183,448
Cash and cash equivalents.................................... 34,339 22,928 15,684 10,157 13,929
Securities .................................................. 36,909 40,392 58,598 98,568 119,148
Deposits .................................................. 429,274 351,030 315,390 282,664 267,703
Borrowed funds............................................... 102,914 56,789 30,000 8,198 150
Stockholders' equity......................................... 55,637 53,223 51,429 53,626 55,360

For the Year Ended December 31,
-------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Interest income........................................... $ 38,612 32,173 28,156 24,218 22,493
Interest expense.......................................... 21,214 17,271 15,416 12,959 12,183
Net interest income....................................... 17,398 14,902 12,740 11,259 10,310
Provision for loan losses................................. 719 682 649 107 124
Net interest income after provision for loan losses....... 16,679 14,220 12,091 11,152 10,186
Noninterest income........................................ 2,332 1,264 1,219 809 709
Noninterest expense....................................... 10,313 8,446 7,473 8,299 5,874
Income before provision for income taxes.................. 8,698 7,038 5,837 3,662 5,021
Provision for income taxes................................ 3,296 2,641 2,083 1,478 1,928
Net income ............................................... 5,402 4,397 3,754 2,184 3,093
Basic income per share (1)................................ 1.52 1.22 1.01 .54 .73
Weighted average number of common
shares outstanding for basic (1).................... 3,548,568 3,592,253 3,700,220 4,069,825 4,232,498
Diluted income per share (1).............................. $ 1.47 1.16 .96 .51 .70
Weighted average number of common shares
outstanding for diluted (1)......................... 3,677,038 3,777,085 3,911,256 4,267,992 4,427,098

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

SELECTED CONSOLIDATED FINANCIAL RATIOS
AND OTHER DATA:
At or For the Year Ended December 31,
---------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Return on average assets..................................... 1.03% 1.05% 1.00% 0.65% 0.98%
Return on average equity..................................... 9.89% 8.37% 7.18% 3.94% 5.59%
Dividend payout ratio ....................................... 28.95% 29.51% 28.51% 44.71% 25.86%
Average equity to average assets............................. 10.45% 12.52% 13.93% 16.62% 17.46%
Total equity to total assets................................. 9.42% 11.47% 12.85% 15.48% 16.99%
Interest rate spread during year(1).......................... 3.03% 3.08% 2.86% 2.73% 2.54%
Net interest margin (2)...................................... 3.48% 3.69% 3.53% 3.50% 3.35%
Nonperforming assets to total assets (3)..................... 0.47% 0.17% 0.19% 0.30% 0.10%
Nonperforming loans to total loans (4)....................... 0.46% 0.11% 0.07% 0.28% 0.09%
Allowance for loan losses to non-performing loans............ 119.01% 514.19% 695.87% 159.61% 561.49%
Allowance for loan and REO
losses to nonperforming assets......................... 101.77% 281.85% 224.83% 103.51% 288.48%
Allowance for loan losses to gross loans..................... 0.54% 0.57% 0.51% 0.45% 0.52%
Operating expenses to average assets......................... 1.97% 2.01% 1.99% 2.49% 1.85%
Average interest-earning assets to
average interest-bearing liabilities................... 1.11 1.14 1.16 1.18 1.20
Net interest income to noninterest expenses.................. 1.69 1.76 1.70 1.36 1.76
Total shares outstanding (5)................................. 3,583,938 3,655,620 3,743,988 4,062,895 4,395,593
Book value per common share outstanding (5).................. $ 15.52 14.56 13.74 13.20 12.59
Number of banking offices (all full-service)................. 12 9 9 9 8

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

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

GENERAL

First Federal Savings Bank of Lake County, the subsidiary of FFLC, was organized
in 1934 as a federally chartered savings and loan association and converted to a
federally chartered stock savings bank on January 4, 1994. The Bank's principal
business continues to be attracting retail deposits from the general public and
investing those deposits, together with principal repayments on loans and
investments and funds generated from operations, primarily in mortgage loans
secured by one-to-four-family, owner-occupied homes, commercial loans,
securities and, to a lesser extent, construction loans, consumer and other
loans, and multi-family residential mortgage loans. In addition, the Bank holds
investments permitted by federal laws and regulations including securities
issued by the U.S. Government and agencies thereof. The Bank's revenues are
derived principally from interest on its loan and mortgage-backed securities
portfolios and interest and dividends on its investment securities.

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

The Company had net income of $5.4 million for the year ended December 31, 1999,
compared to net income of $4.4 million for the year ended December 31, 1998. At
December 31, 1999, the Bank had total assets of $590.4 million, an increase of
27.3% over total assets of $463.8 million at December 31, 1998. That increase
resulted primarily from an $112.0 million, or 28.8%, increase in net loans
receivable from $389.1 million at December 31, 1998 to $501.1 million at
December 31, 1999, reflecting increased local loan demand. Cash and cash
equivalents increased $11.4 million or 49.8% from $22.9 million to $34.3
million. Securities decreased $3.5 million or 8.7% during 1999. Deposits
increased $78.2 million, or 22.3%, from $351.1 million at December 31, 1998 to
$429.3 million at December 31, 1999. Advances from the Federal Home Loan Bank
increased $43.0 million, while other borrowed funds increased $3.1 million for a
net increase of $46.1 million or 81.2% in borrowings. Stockholders' equity
increased $2.4 million.

REGULATION AND LEGISLATION

General

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

Capital Requirements

The 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, 1999, the Bank met each of its capital requirements and met the
criteria of a "well-capitalized" institution as defined above.

Insurance of Deposit Accounts

The FDIC has adopted a risk-based deposit insurance system that assesses deposit
insurance premiums according to the level of risk involved in an institution's
activities. An institution's risk category is based upon whether the institution
is classified as "well capitalized," "adequately capitalized" or "less than
adequately capitalized" and one of three supervisory subcategories within each
capital group. The supervisory subgroup to which an institution is assigned is
based on a supervisory evaluation and information which the FDIC determines to
be relevant to the institution's financial condition and the risk posed to the
deposit insurance fund. Effective January 1, 1997, the FDIC lowered the annual
assessment rates for SAIF members to 0 to 27 basis points. The FDIC has
authority to raise premiums if deemed necessary. If such action is taken, it
could have an adverse effect on the earnings of the institution.

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

CREDIT RISK

The Bank's primary business is lending on residential real estate, 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 Bank. The Bank has underwriting guidelines and credit review
procedures designed to minimize such credit losses.

RESULTS OF OPERATIONS

The Company's results of operations are dependent primarily on net interest
income, which is the difference between the income earned on its
interest-earning assets, primarily its loans, mortgage-backed securities and
investment securities, and its interest-bearing liabilities, consisting of
deposits and borrowings. The operating expenses of the Company principally
consist of employee compensation, occupancy expenses, 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.

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, 1999. 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.

Year Ended December 31,
---------------------------------------------------------------
1999 1998
---------------------------------------------------------------
Yield At Average Average
December 31, Average Yield/ Average Yield/
1999 Balance Interest Cost Balance Interest Cost
---- ------- -------- ---- ------- -------- ----
(Dollars in thousands)
Interest-earning assets:

Loans receivable................... 7.88% $ 442,213 35,315 7.99% $ 343,967 28,450 8.27%
Securities......................... 6.22 37,951 2,213 5.83 44,533 2,814 6.32
Other interest-earning assets (1).. 5.03 19,404 1,084 5.59 15,606 909 5.82
--------- ------ --------- ------
Total interest-earning assets. 7.66 499,568 38,612 7.73 404,106 32,173 7.96
------ ------
Noninterest-earning assets............. 23,062 15,130
--------- ---------

Total assets.................. $ 522,630 $ 419,236
========= =========
Interest-bearing liabilities:
NOW and money market
accounts........................ 2.67 66,892 1,631 2.44 49,862 1,088 2.18
Passbook and statement savings
accounts........................ 2.00 22,170 485 2.19 23,683 517 2.18
Certificates....................... 5.30 285,898 14,967 5.24 246,375 13,674 5.55
FHLB advances...................... 5.64 74,515 4,038 5.42 33,718 1,991 5.90
Other borrowings................... 4.75 1,916 93 4.85 14 1 7.14

Total interest-bearing
liabilities................. 4.84 451,391 21,214 4.70 353,652 17,271 4.88
------ ------
Noninterest-bearing deposits........... 10,411 7,602
Noninterest-bearing liabilities........ 6,202 5,473
Stockholders' equity................... 54,626 52,509
--------- ---------

Total liabilities and equity.. $ 522,630 $ 419,236
========= =========
Net interest-earning assets and
interest-rate spread (2)........... 2.82% $ 48,177 3.03% $ 50,454 3.08%
==== ========= ==== ========= ====
Net interest income and net
margin (3)......................... $ 17,398 3.48% $ 14,902 3.69%
Ratio of interest-earning assets
to interest-bearing liabilities.... 1.11 1.14
==== ====

1997
---------------------------
Average
Average Yield/
Balance Interest Cost
------- -------- ----

Interest-earning assets:
Loans receivable................... $ 268,425 22,318 8.31%
Securities......................... 82,720 5,250 6.35
Other interest-earning assets (1).. 10,000 588 5.88
--------- ------
Total interest-earning assets. 361,145 28,156 7.80
------
Noninterest-earning assets............. 14,160
---------

Total assets.................. $ 375,305
=========

Interest-bearing liabilities:
NOW and money market
accounts........................ 40,819 991 2.43
Passbook and statement savings
accounts........................ 24,963 687 2.75
Certificates....................... 227,271 12,601 5.54
FHLB advances...................... 13,226 814 6.15
Other borrowings................... 5,629 323 5.74
--------- ------
Total interest-bearing
liabilities................. 311,908 15,416 4.94
------
Noninterest-bearing deposits........... 5,838
Noninterest-bearing liabilities........ 5,285
Stockholders' equity................... 52,274
---------

Total liabilities and equity.. $ 375,305
=========

Net interest-earning assets and
interest-rate spread (2)........... $ 49,237 2.86%
========= ====

Net interest income and net
margin (3)......................... $ 12,740 3.53%
======== ====
Ratio of interest-earning assets
to interest-bearing liabilities.... 1.16
====

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

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).

Year Ended December 31, Year Ended December 31,
1999 vs. 1998 1998 vs. 1997
Increase (Decrease) Increase (Decrease)
---------------------------------- ---------------------------------
Due to Due to
---------------------------------- ---------------------------------
Rate/ Rate/
Rate Volume Volume Net Rate Volume Volume Net
---- ------ ------ --- ---- ------ ------ ---
(Dollars in thousands)

Interest-earning assets:
Loan receivable, net................. $ (981) 8,126 (280) 6,865 (116) 6,281 (33) 6,132
Securities........................... (217) (416) 32 (601) (23) (2,424) 11 (2,436)
Other interest-earning (1)........... (37) 221 (9) 175 (6) 330 (3) 321
------ ------ ---- ------ ---- ------ -- ------

Total......................... (1,235) 7,931 (257) 6,439 (145) 4,187 (25) 4,017
----- ----- --- ----- --- ----- -- -----

Interest-bearing liabilities:
NOW and money market accounts........ 128 371 44 543 (100) 219 (22) 97
Passbook and
statement savings accounts....... 1 (33) - (32) (142) (35) 7 (170)
Certificates......................... (776) 2,193 (124) 1,293 13 1,059 1 1,073
FHLB advances........................ (164) 2,409 (198) 2,047 (24) 1,219 (18) 1,177
Other borrowings..................... - 136 (44) 92 - (322) - (322)
----- ------ ---- ------- ---- ------ ---- ------

Total......................... (811) 5,076 (322) 3,943 (253) 2,140 (32) 1,855
------ ----- --- ----- --- ----- -- -----

Net change in net interest
income ............................... $ (424) 2,855 65 2,496 108 2,047 7 2,162
====== ===== == ===== === ===== = =====

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

(1) Includes interest-bearing deposits, federal funds sold and FHLB Stock.

LIQUIDITY AND CAPITAL RESOURCES

The 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 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 Bank's liquidity ratios were 18.7% and 8.8%
at December 31, 1999 and December 31, 1998, respectively.

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

At December 31, 1999, the Bank had outstanding commitments to originate $7.8
million of loans, to fund unused lines of credit of $33.6 million, to fund the
undisbursed portion of loans in process of $15.9 million and $.7 million in
outstanding standby letters of credit. The Bank believes that it will have
sufficient funds available to meet its commitments. At December 31, 1999,
certificates of deposit which were scheduled to mature in one year or less
totaled $205.6 million. Management believes, based on past experience, that a
significant portion of these funds will remain with the Bank.

REGULATORY CAPITAL REQUIREMENTS

As a federally-chartered financial institution, the Bank is required to maintain
certain minimum amounts of regulatory capital. Regulatory capital is not a
valuation allowance and has not been created by charges against earnings. The
following table provides a summary of the capital requirements, the Bank's
regulatory capital and the amounts in excess at December 31, 1999:

Tangible Core Risk-Based
---------------- ------------------ ----------------
% of % of % of Risk-
Adjusted Adjusted Weighted
Amount Assets Amount Assets Amount Assets
------ ------ ------ ------ ------ ------
(Dollars in thousands)

Regulatory capital.......................... $ 51,177 8.68% $ 51,177 8.68% $ 53,894 14.92%
Requirement................................. 8,841 1.50 17,681 3.00 28,893 8.00
------- ---- ------ ---- ------ -----

Excess...................................... $ 42,336 7.18% $ 33,496 5.68% $ 25,001 6.92%
====== ==== ====== ==== ====== =====

MARKET RISK

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

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

ASSET /LIABILITY MANAGEMENT

The 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 Bank's goal is to continue to be a
well-capitalized and profitable operation that provides service that is
professional, efficient and courteous. The Bank seeks to fulfill its mission and
accomplish its goals by pursuing the following strategies: (i) emphasizing
lending in the one-to-four-family residential mortgage 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 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, 1999, the
Bank's one-year interest sensitivity gap (the difference between the amount of
interest-earning assets anticipated by the Bank, to mature or reprice within one
year and the amount of interest-bearing liabilities anticipated by the Bank, to
mature or reprice within one year) as a percentage of total assets was a
negative 2.98%. Generally, an institution with a negative gap would experience a
decrease in net interest income in a period of rising interest rates or an
increase in net interest income in a period of declining interest rates.
However, certain shortcomings are inherent in the sensitivity analysis presented
above. For example, although certain assets and liabilities may have similar
maturities or periods to repricing, they may react in different manners to
changes in market interest rates. Therefore, no assurance can be given that the
Bank will be able to maintain its net interest-rate spread as market interest
rates fluctuate.

The Bank monitors its interest-rate risk through the Asset/Liability Committee
which meets weekly and reports the results of such monitoring quarterly to the
Board of Directors. The Bank's policy is to seek to maintain a balance between
interest-earning assets and interest-bearing liabilities so that the Bank's
cumulative one-year gap ratio is within a range which management believes is
conducive to maintaining profitability without incurring undue risk. The Bank
has increased its investment in adjustable-rate and shorter average life,
fixed-rate mortgage-related securities in order to position itself against the
consequences of rising interest rates. The Bank also maintains liquid assets in
excess of the regulatory requirement, allowing for the possibility of
disintermediation when interest rates fluctuate. The Bank's liquidity ratio of
18.7% at December 31, 1999 is significantly higher than the regulatory
requirement of 4% due in part to the preparation of the Company for Y2K. In
addition, the Bank's large stable core deposit base resulting from its
continuing commitment to quality customer service has historically provided it
with a steady source of funds.

The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 1999 that are expected
to reprice, based upon certain assumptions, in each of the future periods shown.

More More More More More
than than than than than
Three Six One Three Five More
Three Months Months Year Years Years than
Months to Six to 12 to 3 to 5 to 10 Ten
or Less Months Months Years Years Years Years Total
------- ------ ------ ----- ----- ----- ----- -----

Rate-sensitive assets:
Mortgage loans, net of LIP.. $ 85,967 44,682 60,024 124,728 46,628 34,261 27,271 423,561
Commercial and consumer
loans...................... 21,137 6,029 10,142 25,906 12,008 1,998 350 77,570
Mortgage-backed
securities................. 6,885 4,316 2,226 2,463 1,200 400 - 17,490
Interest-earning deposits... 17,026 - - - - - - 17,026
Investment securities....... 1,608 - 2,991 4,946 982 63 - 10,590
Mutual funds................ 8,829 - - - - - - 8,829
FHLB stock ................. 4,950 - - - - - - 4,950
-------- ------ ------ ------- ------ ------ ------ -------

Total interest-earning
assets................ 146,402 55,027 75,383 158,043 60,818 36,722 27,621 560,016
-------- ------ ------ ------- ------ ------ ------ -------
Rate-sensitive liabilities:
Deposits:
Savings accounts........ 1,465 1,363 2,449 6,926 3,897 3,821 1,189 21,110
NOW and money
market accounts............ 5,363 4,992 8,968 25,361 14,265 13,989 4,355 77,293
Certificates................ 62,644 76,012 67,208 110,148 3,759 - - 319,771
Borrowed funds.............. 42,914 15,000 6,000 25,000 14,000 - - 102,914
-------- ------ ------ ------- ------ ------ ------ -------
Total interest-bearing
liabilities........... 112,386 97,367 84,625 167,435 35,921 17,810 5,544 521,088
-------- ------ ------ ------- ------ ------ ------ -------

Interest-sensitivity gap....... $ 34,016 (42,340) (9,242) (9,392) 24,897 18,912 22,077 38,928
========= ======= ====== ====== ====== ====== ====== ======
Cumulative interest-
sensitivity gap............ $ 34,016 (8,324) (17,566) (26,958) (2,061) 16,851 38,928
========= ======= ====== ====== ====== ====== ======
Cumulative interest-earning
assets..................... $ 146,402 201,429 276,812 434,855 495,673 532,395 560,016
========= ======= ====== ====== ====== ====== ======
Cumulative interest-bearing
liabilities................ $ 112,386 209,753 294,378 461,813 497,734 515,544 521,088
========= ======= ====== ====== ====== ====== ======
Cumulative interest-sensitivity
gap as a percentage of
total assets............... 5.76% (1.41)% (2.98)% (4.57)% (0.35)% 2.85% 6.59%
==== ==== ==== ==== ===== ==== ====
Cumulative interest-earning
assets as a percentage of
cumulative interest-bearing
liabilities................ 130.27% 96.03% 94.03% 94.16% 99.59% 103.27% 107.47%
====== ===== ===== ===== ===== ====== ======

COMPARISON OF YEARS ENDED DECEMBER 31, 1999 TO DECEMBER 31, 1998

General Operating Results. Net income for the year ended December 31,
1999, was $5.4 million or $1.52 per basic income per share, compared
to net income for the year ended December 31, 1998 of $4.4 million
or $1.22 per basic income per share. The increase in net income was
primarily the result of an increase of $2.5 million in net interest
income before provision for loan losses for 1999, partially offset
by an increase of $1.9 million in noninterest expenses in 1999.

Interest Income. Interest income increased $6.4 million, or 20.0%, from
$32.2 million for the year ended December 31, 1998 to $38.6 million
for the year ended December 31, 1999. The increase was due to an
increase in the average balance of total interest-earning assets,
primarily loans, from $404.1 million for the year ended December 31,
1998 to $499.6 million for the year ended December 31, 1999, an
increase of $95.5 million, or 23.6%, partially offset by a decrease
in the average yield on interest-earning assets from 7.96% for the
year ended December 31, 1998 to 7.73% for the year ended December
31, 1999. The average yield on loans decreased from 8.27% for the
year ended December 31, 1998 to 7.99% for the year ended December
31, 1999. The average yield on securities decreased from 6.32% for
the year ended December 31, 1998 to 5.83% for the year ended
December 31, 1999. The average yield on other interest earning
assets decreased from 5.82% for the year ended December 31, 1998 to
5.59% for the year ended December 31, 1999.

Interest Expense. Interest expense increased $3.9 million from $17.3
million at December 31, 1998 to $21.2 million at December 31, 1999.
The increase was due to a $97.7 million or 27.6% increase in the
average balance of total interest-bearing liabilities from $353.7
million for the year ended December 31, 1998 to $451.4 million for
the year ended December 31, 1999 offset in part by a decrease in the
weighted-average rate paid on interest-bearing liabilities from
4.88% during 1998 to 4.70% in 1999.

Provision for Loan Losses. The Bank's provision for loan losses
increased from $682,000 for the year ended December 31, 1998 to
$719,000 for the year ended December 31, 1999. The increase of
$37,000 reflects the 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 Bank's loan portfolio.

Noninterest Income. Noninterest income increased from $1.3 million for
the year ended December 31, 1998 to $2.3 million for the year ended
December 31, 1999. The increase was primarily due to a $886,000 gain
recognized in 1999 from the sale of real estate held for development
and a $117,000 increase in other service charges and fees.

Noninterest Expense. Noninterest expense consists primarily of salaries
and employee benefits and occupancy expense. Noninterest expense
increased $1.9 million for the year ended December 31, 1999 compared
to 1998. The increase was primarily due to a $998,000 increase in
salaries and employee benefits and a $459,000 increase in occupancy
expense resulting from the growth of the Company.

Provision for Income Taxes. The provision for federal and state income
taxes increased from $2.6 million for the year ended December 31,
1998 to $3.3 million for the year ended December 31, 1999. The
effective tax rate increased from 37.5% for the year ended December
31, 1998 to 37.9% for the year ended December 31, 1999.

COMPARISON OF YEARS ENDED DECEMBER 31, 1998 TO DECEMBER 31, 1997

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

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

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

Provision for Loan Losses. The Bank's provision for loan losses
increased from $649,000 for the year ended December 31, 1997 to
$682,000 for the year ended December 31, 1998. The increase of
$33,000 reflects the 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 Bank's loan portfolio.

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

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

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

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

FFLC BANCORP, INC.

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

December 31,
1999 1998
-------- --------
Assets

Cash and due from banks........................................................... $ 17,313 9,515
Interest-bearing deposits......................................................... 17,026 13,413
-------- --------

Cash and cash equivalents............................................. 34,339 22,928

Securities available for sale..................................................... 36,909 22,165
Securities held to maturity (market value of $18,425 in 1998)..................... - 18,227
Loans receivable, net of allowance for loan losses of $2,811 in 1999
and $2,283 in 1998............................................................ 501,131 389,059
Accrued interest receivable:
Securities .................................................................. 407 352
Loans receivable.............................................................. 2,408 1,890
Premises and equipment, net....................................................... 9,386 5,597
Foreclosed real estate............................................................ 400 366
Real estate held for development.................................................. - 122
Federal Home Loan Bank stock, at cost............................................. 4,950 2,800
Other assets .................................................................. 502 314
--------- ---------

Total................................................................. $ 590,432 463,820
======= =======

Liabilities and Stockholders' Equity

Liabilities:
Noninterest-bearing demand deposits........................................... 11,100 8,379
NOW and money market accounts................................................. 77,293 60,437
Savings accounts.............................................................. 21,110 23,038
Certificates.................................................................. 319,771 259,176
------- -------

Total deposits........................................................ 429,274 351,030
------- -------

Advances from Federal Home Loan Bank.............................................. 99,000 56,000
Other borrowed funds.............................................................. 3,914 789
Deferred income taxes............................................................. 102 284
Accrued expenses and other liabilities............................................ 2,505 2,494
-------- --------

Total liabilities..................................................... 534,795 410,597
------- -------

Commitments and contingencies (Notes 4, 9, 12 and 20)

Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding.......................................................... - -
Common stock, $.01 par value, 9,000,000 shares authorized,
4,447,461 in 1999 and 4,372,041 in 1998 shares issued..................... 44 44
Additional paid-in-capital.................................................... 30,273 29,286
Retained income............................................................... 43,539 39,714
Accumulated other comprehensive income (loss)................................. (182) (65)
Treasury stock, at cost (863,523 shares in 1999 and
716,421 shares in 1998)................................................... (17,721) (15,125)
Stock held by Incentive Plan Trusts........................................... (316) (631)
--------- --------

Total stockholders' equity............................................ 55,637 53,223
------- -------

Total................................................................. $ 590,432 463,820
======= =======

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

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

Year Ended December 31,
1999 1998 1997
----------- ------------ -----------

Interest income:
Loans receivable................................................... $ 35,315 28,450 22,318
Securities available for sale...................................... 1,798 1,169 2,440
Securities held to maturity........................................ 415 1,645 2,810
Other interest-earning assets...................................... 1,084 909 588
----------- ------------ -----------

Total interest income.......................................... 38,612 32,173 28,156
----------- ----------- ----------

Interest expense:
Deposits........................................................... 17,083 15,279 14,279
Borrowed funds..................................................... 4,131 1,992 1,137
----------- ----------- -----------

Total interest expense......................................... 21,214 17,271 15,416
---------- ---------- ----------

Net interest income............................................ 17,398 14,902 12,740

Provision for loan losses.............................................. 719 682 649
----------- ----------- -----------

Net interest income after provision for loan losses............ 16,679 14,220 12,091
---------- --------- ----------

Noninterest income:
Deposit account fees............................................... 624 558 485
Other service charges and fees..................................... 735 618 360
Gain on sale of real estate held for development................... 886 - -
Gain on sale of securities available for sale...................... - - 11
Gain on sale of other assets....................................... - - 302
Other.............................................................. 87 88 61
------------ ----------- ------------

Total noninterest income....................................... 2,332 1,264 1,219
----------- ---------- ----------

Noninterest expense:
Salaries and employee benefits..................................... 6,216 5,218 4,674
Occupancy expense.................................................. 1,519 1,060 930
Deposit insurance premium.......................................... 214 195 147
Advertising and promotion.......................................... 333 278 224
Data processing expense............................................ 612 477 429
Professional services.............................................. 282 303 229
Other.............................................................. 1,137 915 840
------------ ----------- -----------

Total noninterest expense...................................... 10,313 8,446 7,473
----------- ---------- -----------

Income before income taxes............................................. 8,698 7,038 5,837

Income taxes................................................... 3,296 2,641 2,083
----------- ---------- -----------

Net income............................................................. $ 5,402 4,397 3,754
========== ========== ===========

Basic income per share of common stock................................. $ 1.52 1.22 1.01
=========== =========== ===========

Weighted-average number of shares outstanding for basic................ 3,548,568 3,592,253 3,700,220
========= ========= =========

Diluted income per share of common stock............................... $ 1.47 1.16 .96
=========== =========== ============

Weighted-average number of shares outstanding for diluted.............. 3,677,038 3,777,085 3,911,256
========= ========= =========

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

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

Stock
Held
By Accumulated
Additional Incentive Other Total
Common Paid-In Treasury Plan Retained Comprehensive Stockholders'
Stock Capital Stock Trusts Income Income (Loss) Equity
----- ------- ----- ------ ------ ------ ------ ------

Balance at December 31, 1996........... $ 28 27,386 (6,295) (1,262) 33,962 (193) 53,626
------

Comprehensive income:

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

Change in unrealized gains
(losses) on securities available
for sale, net of income taxes
of $63.......................... - - - - - 105 105
------
Comprehensive income................... 3,859
------

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

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

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

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

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

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

FFLC BANCORP, INC.

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

Balance at December 31, 1997........... $ 43 28,265 (12,466) (947) 36,622 (88) 51,429
------

Comprehensive income:

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

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

Comprehensive income................... 4,420
------

Net proceeds from the issuance of
58,895 shares of common
stock............................. 1 359 - - - - 360

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

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

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

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

(continued)
22

FFLC BANCORP, INC.

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

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

Comprehensive income:

Net income........................ - - - - 5,402 - 5,402

Change in unrealized gains
(losses) on securities available
for sale, net of income taxes
of $70.......................... - - - - - (117) (117)
-------

Comprehensive income................... 5,285
------

Net proceeds from the issuance of
75,420 shares of common
stock............................. - 453 - - - - 453

Shares committed to participants
in incentive plans (57,355
shares remain uncommitted
at December 31, 1999)............. - 534 - 315 - - 849

Dividends paid, net of $23 of
dividends on ESOP shares
recorded as compensation
expense........................... - - - - (1,577) - (1,577)

Purchase of treasury stock,
147,102 shares.................... - - (2,596) - - - (2,596)
--- --------- ------ ----- --------- ----- ------

Balance at December 31, 1999........... $ 44 30,273 (17,721) (316) 43,539 (182) 55,637
==== ====== ======= ==== ====== ==== ======

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

Consolidated Statements of Cash Flows
($ in thousands)

Year Ended December 31,
---------------------------------------
1999 1998 1997
---- ---- ----

Cash flows from operating activities:
Net income ............................................................. $ 5,402 4,397 3,754
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses........................................ 719 682 649
Depreciation..................................................... 575 406 395
Gain on sale of securities available for sale.................... - - (11)
Gain on sale of foreclosed real estate........................... (34) (36) (11)
Gain on sale of real estate held for development................. (886) - -
Credit for deferred income taxes................................. (112) (467) (256)
Shares committed and dividends to incentive
plan participants............................................ 872 1,016 972
Net amortization of premiums and discounts on securities......... 69 (10) (44)
Net deferral of loan fees and costs.............................. (372) (193) (236)
Increase in accrued interest receivable.......................... (573) (108) (115)
Increase in other assets......................................... (188) (92) (38)
Increase (decrease) in accrued expenses and other liabilities.... 11 (187) 1,657
---------- --------- -------

Net cash provided by operating activities................ 5,483 5,408 6,716
-------- -------- -------

Cash flows from investing activities:
Proceeds from principal repayments and maturities of securities
held to maturity..................................................... 3,428 13,788 18,135
Purchase of securities available for sale................................ (10,483) (9,555) (7,490)
Proceeds from principal repayments and maturities of securities
available for sale................................................... 10,282 14,020 28,590
Proceeds from sales of securities available for sale..................... - - 958
Loan disbursements....................................................... (195,034) (151,411) (143,538)
Principal repayments on loans............................................ 82,465 77,353 55,330
Purchase of premises and equipment, net.................................. (4,364) (690) (564)
Purchase of Federal Home Loan Bank stock................................. (2,150) (496) (365)
Proceeds from sales of foreclosed real estate............................ 150 40 255
Proceeds from sale of real estate held for development................... 1,008 - -
--------- ---------- --------

Net cash used in investing activities.................... (114,698) (56,951) (48,689)
------- ------- -------

24
(continued)

FFLC BANCORP, INC.

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

Year Ended December 31,
---------------------------------------
1999 1998 1997
---- ---- ----

Cash flows from financing activities:
Net increase in deposits................................................ 78,244 35,640 32,726
Net increase in Federal Home Loan Bank advances......................... 43,000 26,000 29,850
Net increase (decrease) in other borrowed funds......................... 3,125 789 (8,048)
Stock options exercised................................................. 453 360 283
Purchase of treasury stock.............................................. (2,596) (2,659) (6,171)
Cash dividends paid..................................................... (1,600) (1,343) (1,140)
-------- ------ ------

Net cash provided by financing activities................... 120,626 58,787 47,500
------- ------ ------

Net increase in cash and cash equivalents................................... 11,411 7,244 5,527

Cash and cash equivalents at beginning of year.............................. 22,928 15,684 10,157
------- ------ ------

Cash and cash equivalents at end of year.................................... $34,339 22,928 15,684
======= ====== ======
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest............................................................ $20,795 17,564 15,125
======= ======

Income taxes........................................................ $ 3,456 3,076 2,212
======= ======= ======
Noncash investing and financing activities:

Accumulated other comprehensive income (loss), net change in
unrealized loss on securities available for sale, net of tax.... $ (117) 23 105
======= ======= ======

Transfers from loans to foreclosed real estate...................... $ 425 193 444
======= ======= ======

Loans originated on sales of foreclosed real estate................. $ 275 297 54
======= ======= ======

Loans funded by and sold to correspondent........................... $ 6,988 8,383 2,469
======= ======= ======
Transfer securities from held to maturity to available for
sale upon adoption of FAS 133................................... $ 14,784 - -
======= ======= ======

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

Notes to Consolidated Financial Statements

December 31, 1999, 1998 and 1997

(1) Summary of Significant Accounting Policies
FFLCBancorp, Inc. (the "Holding Company") was incorporated in Delaware on
September 16, 1993, and acquired First Federal Savings Bank of Lake
County (the "Bank") in connection with the Bank's conversion to stock
form on January 4, 1994. The Holding Company is a savings and loan
holding company subject to regulation by the Office of Thrift
Supervision ("OTS") which transacts its business through its subsidiary,
the Bank. The Bank is a community-oriented savings institution which
offers a variety of financial services to individuals and businesses
primarily located in Lake County, Sumter County and Citrus County,
Florida. The deposits of the 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 Bank, and the 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:

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

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

The 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 Bank exceeded this requirement,
which was $2.9 million and $1.1 million at December 31, 1999 and 1998,
respectively.

Securities. The Company may classify its securities as either trading, held
to maturity or available for sale. Trading securities are held
principally for resale and recorded at their fair values. Unrealized
gains and losses on trading securities are included immediately in
earnings. Held-to-maturity securities are those which the Company has
the positive intent and ability to hold to maturity and are reported at
amortized cost. Available-for-sale securities consist of securities not
classified as trading securities nor as held-to-maturity securities.
Unrealized holding gains and losses, net of tax, on available-for-sale
securities are excluded from income and reported in other comprehensive
income. Gains and losses on the sale of available-for-sale securities
are recorded on the trade date and determined using the
specific-identification method. Premiums and discounts on securities
available for sale and held to maturity 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 loans is discontinued at the time the loan is
90 days delinquent unless the credit is well-secured and in process of
collection. In all cases, loans are placed on nonaccrual or charged-off
at an earlier date if collection of principal or interest is considered
doubtful.

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

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

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

A loan is considered impaired when, based on current information and
events, it is probable that the Company will be unable to collect the
scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement. Factors considered by
management in determining impairment include payment status, collateral
value, and the probability of collecting scheduled principal and
interest payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as impaired.
Management determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all of the
circumstances surroundings the loan and the borrower, including the
length of the delay, the reasons for the delay, the borrower's prior
payment record, and the amount of the shortfall in relation to the

principal and interest owed. Impairment is measured on a loan by loan
basis for commercial loans by either the present value of expected
future cash flows discounted at the loan's effective interest rate, the
loan's obtainable market price, or the fair value of the collateral if
the loan is collateral dependent.

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

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

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

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

Income Taxes. Deferred tax assets and liabilities are determined using the
liability (or balance sheet) method. Under this method, the net deferred
tax asset or liability is determined based on the tax effects of the
temporary differences between the book and tax bases of the various
balance sheet assets and liabilities and gives current recognition to
changes in tax rates and laws.

Stock Compensation Plans. Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation, encourages all
entities to adopt a fair value based method of accounting for employee
stock compensation plans, whereby compensation cost is measured at the
grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period. However, it also
allows an entity to continue to measure compensation cost for those
plans using the intrinsic value based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees, whereby compensation cost is the excess, if any, of the
quoted market price of the stock at the grant date (or other measurement
date) over the amount an employee must pay to acquire the stock. Stock
options issued under the Company's stock option plan have no intrinsic
value at the grant date, and under Opinion No. 25 no compensation cost
is recognized for them. The Company has elected to continue with the
accounting methodology in Opinion No. 25 and, as a result, has provided
proforma disclosures of net income and income per share and other
disclosures, as if the fair value based method of accounting had been
applied. (See Note 16).

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

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

cash flows. Accordingly, the fair value estimates may not be realized in
an immediate settlement of the instrument. SFAS 107 excludes certain
financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented may not necessarily represent the underlying fair value of the
Company. The following methods and assumptions were used by the Company
in estimating fair values of financial instruments:

Cash and Cash Equivalents. The carrying amounts of cash and short-term
instruments approximate their fair value.

Securities. Fair values for securities held to maturity and available
for sale are based on quoted market prices, where available. If quoted
market prices are not available, fair values are based on quoted market
prices of comparable instruments. The carrying value of Federal Home
Loan Bank stock approximates fair value.

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.

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

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

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

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

Income Per Share of Common Stock. During 1997, the Company adopted the
provisions of Financial Accounting Standards No. 128, "Earnings Per
Share" (SFAS No. 128). SFAS No. 128 provides accounting and reporting
standards for calculating earnings per share. Basic income per share of
common stock has been computed by dividing the net income for the year
by the weighted-average number of shares outstanding. Shares of common
stock purchased by the Employee Stock Option Plan ("ESOP") and the
Retention and Recognition Plan ("RRP") incentive plans (see Note 16) are
only considered outstanding when the shares are released or committed to
be released for allocation to participants. The ESOP initially purchased
368,242 shares, of which 4,383 shares were released for allocation to
participants each month beginning in January, 1994. The RRP initially
purchased 184,122 shares, of which 179,541, 179,541 and 179,373 were
allocated to participants and are considered outstanding for the years
ended December 31, 1997, 1998 and 1999, respectively. At December 31,
1999, 57,355 shares remain uncommitted under both plans and are not
considered outstanding for purposes of the computation of net income per
share of common stock. Diluted income per share is computed by dividing
net income by the weighted average number of shares outstanding
including the dilutive effect of stock options (see Note 16) computed
using the treasury stock method prescribed by SFAS No. 128. The
following table presents the calculation of net income per share of
common stock:

Year Ended December 31,
--------------------------------------
1999 1998 1997
---- ---- ----

Weighted-average shares of common stock issued
and outstanding before adjustments for ESOP,
RRP and common stock options................................ 3,632,058 3,728,350 3,890,019

Adjustment to reflect the effect of unallocated
ESOP and RRP shares......................................... (83,490) (136,097) (189,799)
---------- --------- ---------

Weighted average shares for basic income per share.............. 3,548,568 3,592,253 3,700,220
========= ========= =========

Basic income per share.......................................... $ 1.52 1.22 1.01
========== =========== ===========

Total weighted-average common shares and equivalents
outstanding for basic income per share
computation................................................. 3,548,568 3,592,253 3,700,220

Additional dilutive shares using the average market value
for the period utilizing the treasury stock
method regarding stock options............................. 128,470 184,832 211,036
--------- ---------- ----------

Weighted-average common shares and equivalents
outstanding for diluted income per share.................... 3,677,038 3,777,085 3,911,256
========= ========= =========

Diluted income per share........................................ $ 1.47 1.16 .96
========= ========== ==========

Reclassifications. Certain amounts in the 1997 and 1998 consolidated
financial statements have been reclassified to conform to the
presentation for 1999.

(2) Securities
Securities have been classified according to management's intent. The
carrying amounts of securities and their approximate fair values were as
follows:

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(In thousands)

Securities available for sale:
At December 31, 1999:
Mutual funds...................................... $ 9,065 - (236) 8,829
U.S. Government and agency securities............. 8,998 - (79) 8,919
Mortgage-backed securities........................ 17,471 155 (136) 17,490
Other investment securities....................... 1,666 5 - 1,671
------- ----- ------- -------

Total......................................... $ 37,200 160 (451) 36,909
====== === === ======
At December 31, 1998:
Mutual funds...................................... 9,238 - (107) 9,131
U.S. Government and agency securities............. 4,036 22 - 4,058
Mortgage-backed securities........................ 8,898 - (21) 8,877
Other investment securities....................... 97 2 - 99
------- ---- ------ --------

Total......................................... $ 22,269 24 (128) 22,165
====== === === ======
Securities held to maturity-
At December 31, 1998:
Mortgage-backed securities........................ 15,907 152 - 16,059
Other investment securities....................... 2,320 46 - 2,366
------ --- ----- ------

Total......................................... $ 18,227 198 - 18,425
====== === ===== ======

The scheduled maturities of securities available for sale at December 31,
1999 were as follows:

Amortized Fair
Cost Value
---- -----
(In thousands)

Due in less than one year............... $ 3,021 2,991
Due from one year to five years......... 5,977 5,928
Due from five years to ten years........ 63 63
Due after ten years..................... 1,603 1,608
Mortgage-backed securities.............. 17,471 17,490
Mutual funds............................ 9,065 8,829
------- -------

Total ............................ $ 37,200 36,909
====== ======

Securities with a carrying value of approximately $4.0 million and $2.9
million at December 31, 1999 and 1998, respectively, were pledged to
secure public funds and tax deposits. The Company has also pledged
securities with a carrying value of $7.9 million for borrowings under
retail repurchase agreements with customers at December 31, 1999 (See
Note 6).

There were no sales of securities during the years ended December 31, 1999
or 1998. In 1997, the Company realized gross gains on the sale of
securities available for sale of $11,000.

The Company's portfolio of mortgage-backed securities include collateralized
mortgage obligations (CMOs). CMOs are generally divided into tranches
whereby principal repayments from the underlying mortgages are used
sequentially to retire the securities according to the priority of the
tranches. The Company invests in the following collateralized mortgage
obligation tranches: sequential, planned amortization class, targeted
amortization class or support or companion floating-rate tranches. Such
tranches have stated maturities ranging from 1-22 years; however,
because of prepayments, the expected weighted-average life of these
securities at December 31, 1999 is approximately 2.8 years. The majority
of the CMOs owned by the Company are insured or guaranteed, either
directly or indirectly, through mortgage-backed securities underlying
the obligations by either the FNMA, FHLMC or GNMA. Depending on the
amount of the Company's available-for-sale mortgage-backed securities,
fluctuations in the interest rate environment and other factors, the
Company may experience material effects on its capital resources due to
categorizing these securities as available for sale. The Company's CMOs
may be subject to price movements which typically result from prepayment
on the underlying obligations. The Company's CMOs of $2.3 million have
coupon rates ranging from 6.09% to 7.00% and had a weighted-average rate
of 6.54% at December 31, 1999. The Company purchases only CMOs rated AA
or better by nationally recognized rating services.

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

(3) Loans Receivable
The components of loans were as follows:

At December 31,
1999 1998
---- ----
(In thousands)

First mortgage loans secured by:
One-to-four-family residential........................ $ 354,317 283,372
Construction and land................................. 11,861 11,683
Multi-family units.................................... 13,394 8,165
Commercial real estate, churches and other............ 61,052 44,211
Consumer loans............................................ 64,042 43,490
Commercial loans.......................................... 14,285 10,532
-------- --------

Subtotal.......................................... 518,951 401,453

Undisbursed portion of loans in process............... (15,907) (10,637)
Net deferred loan costs............................... 898 526
Allowance for loan losses............................. (2,811) (2,283)
-------- --------

Loans receivable, net............................. $ 501,131 389,059
======= ========

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

Year Ended December 31,
1999 1998 1997
---- ---- ----
(In thousands)

Balance at January 1................ $ 2,283 1,684 1,063
Net loans charged-off............... (191) (83) (28)
Provision for loan losses........... 719 682 649
------- ------ ------

Balance at December 31.............. $ 2,811 2,283 1,684
======= ====== ======

There were no impaired loans recognized under SFAS 114 and 118 during the
years ended December 31, 1998 or 1997. The following summarizes the
amount of impaired loans at December 31, 1999, all of which are
collateral dependent (in thousands):

Loans identified as impaired:
Gross loans with no related allowance for losses..................... $ -
Gross loans with related allowance for losses recorded............... 1,348
Less: Allowances on these loans..................................... (202)
-------

Net investment in impaired loans......................................... $ 1,146
=======

The average net investment in impaired loans and interest income recognized
and received on impaired loans during the year ended December 31, 1999
was as follows (in thousands):

Average net investment in impaired loans................................. $ 1,152
=======

Interest income recognized on impaired loans............................. $ 84
=======

Interest income received on impaired loans............................... $ 84
=======

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

Nonaccrual loans at December 31, 1999 and 1998 totaled $2,362,000 and
$444,000, respectively. For the year ended December 31, 1999, interest
income on loans would have been increased approximately $99,000 if the
interest on nonaccrual loans at December 31, 1999 had been recorded
under the original terms of such loans.

Loans serviced for others, consisting solely of participations sold, are not
included in the accompanying consolidated balance sheets. The unpaid
principal balances of these loans were approximately $1,040,000 and
$930,000 at December 31, 1999 and 1998, respectively.

(4) Premises and Equipment
Components of premises and equipment were as follows:

At December 31,
1999 1998
---- ----
(In thousands)

Cost:
Land..................................... $ 2,937 1,754
Building and improvements................ 6,475 4,357
Furniture and equipment.................. 2,731 2,193
Construction in progress................. 931 424
=------- ------

Total cost........................... 13,074 8,728

Less accumulated depreciation................ (3,688) (3,131)
==------ -----

Net book value........................... $ 9,386 5,597
======== =====

Certain Company facilities are leased under various operating leases. Rental
expense was $195,000, $101,000 and $51,000 in 1999, 1998 and 1997,
respectively. At December 31, 1999, future minimum rental commitments
under noncancellable leases were as follows (in thousands):

Year Ending
December 31, Amount

2000............................ $ 141
2001............................ 145
2002............................ 149
2003............................ 154
2004............................ 159
-----

$ 748
=====

(5) Deposits
The aggregate amount of short-term jumbo certificates of deposit, each with
a minimum denomination of $100,000, was approximately $37.3 million and
$18.2 million in 1999 and 1998, respectively.

At December 31, 1999, the scheduled maturities of certificates of deposit
were as follows (in thousands):

Year Ending

2000............................. $ 205,590
2001............................. 107,713
2002............................. 2,708
2003............................. 3,113
2004............................. 647
---------

$ 319,771
=========

(6) Advances from Federal Home Loan Bank and Other Borrowings
As of December 31, 1999, the Bank had $99.0 million in Federal Home Loan
Bank of Atlanta ("FHLB") advances outstanding. These advances had a
weighted-average interest rate of 5.64% and interest rates and
maturities as follows (dollars in thousands):

Interest At December 31,
Year Ending December 31, Rate 1999 1998
------------------------ -------- ---- ----

2000............................. 4.30% $ - 6,000
2000............................. 5.95% 12,000 -
2000............................. 5.98% 15,000 -
2002............................. 6.10% 5,000 5,000
2002............................. 6.26% 5,000 5,000
2002............................. 6.09% 10,000 10,000
2002............................. 5.75% - 10,000
2003............................. 3.90% - 5,000
2003............................. 4.90% 10,000 10,000
2003............................. 4.30% 6,000 -
2004............................. 6.05% 10,000 -
2008............................. 4.19% - 5,000
2009............................. 4.17% 12,000 -
2009............................. 6.39% 14,000 -
-------- ------

Total............................ $ 99,000 56,000
======== ======

The security agreement with FHLB includes a blanket floating lien requiring
the Bank to maintain first mortgage loans as pledged collateral in an
amount equal to at least, when discounted at 75% of the unpaid principal
balances, 100% of these advances. The FHLB stock is also pledged as
collateral for these advances. At December 31, 1999, the Bank could
borrow up to $148.7 million under the FHLB security agreement.

Other borrowed funds were composed of retail repurchase agreements with
customers. The Company enters into retail repurchase agreements with
customers in which the funds received are accounted for as borrowings to
the Company. The total amount outstanding under these agreements at
December 31, 1999 and 1998 were $3.9 million and $789,000, respectively.
The Company has pledged securities with a carrying value of $7.9 million
and $3.1 million as collateral for these agreements at December 31, 1999
and 1998, respectively.

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

The income tax provision is summarized as follows:

Year Ended December 31,
------------------------------
1999 1998 1997
---- ---- ----
(In thousands)

Current ....................... $ 3,408 3,108 2,339
Deferred....................... (112) (467) (256)
------- ------ ------

$ 3,296 2,641 2,083
======= ===== =====

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:

Year Ended December 31,
--------------------------------------------------------------------------
1999 1998 1997
---------------------- -------------------- -------------------
Amount % Amount % Amount %
------ - ------ - ------ -
(Dollars in thousands)

Taxes on income at U.S.
statutory rate........ $ 2,957 34.0% $ 2,393 34.0% $ 1,985 34.0%
State income taxes, net of
federal tax benefit... 297 3.4 240 3.4 192 3.3
Other, net................ 42 .5 8 .1 (94) (1.6)
------- ---- ------- ------ ------- -----

Taxes on income at
effective rates....... $ 3,296 37.9% $ 2,641 37.5% $ 2,083 35.7%
======= ==== ======= ==== ======= ====

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:

At December 31,
1999 1998
---- ----
(In thousands)

Deferred tax liabilities:
Building and land........................................ $ 334 -
FHLB stock dividends..................................... 340 304
Accumulated depreciation................................. 188 181
Deferred loan costs...................................... 23 25
Other.................................................... 4 83
---- ----

Gross deferred tax liabilities............................... 889 593
--- ---

Deferred tax assets:
Allowance for loan losses................................ 490 140
Unrealized loss on securities available for sale......... 109 39
Deferred loan fees....................................... 71 33
RRP incentive plan....................................... 90 97
Accrued interest......................................... 27 -
---- ---

Gross deferred tax assets.................................... 787 309
--- ---

Net deferred tax liabilities................................. $ 102 284
===== ===

Retained earnings at December 31, 1999 and 1998 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, 1999 and 1998.

The Small Business Job Protection Act of 1996 (the "1996 Act") enacted on
August 2, 1996 requires savings institutions, such as the 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 Bank was required to change its method of
accounting for bad debts for tax purposes effective January 1, 1996. In
addition, the Bank was required to recapture the excess of its bad debt
reserves at December 31, 1995 over its base year reserves at December
31, 1987, ratably over a six-year period beginning in 1998. At December
31, 1999, the Bank had approximately $606,000 of deferred tax
liabilities recorded for the recapture of its excess bad debt reserves.

(8) Pension Plan
The Company has a defined contribution profit sharing 401(k) plan (the
"401(k) Plan"). 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 years ended December 31, 1999,
1998 and 1997 were $54,000, $46,000 and $37,000, respectively.

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

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

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since some of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The

Company evaluates each customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained if deemed necessary by the
Company upon extension of credit is based on management's credit
evaluation of the counterparty.

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

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

At December 31, 1999 At December 31, 1998
---------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(In thousands)

Financial assets:
Cash and cash equivalents.........................$ 34,339 34,339 22,928 22,928
Securities held to maturity....................... - - 18,227 18,425
Securities available for sale..................... 36,909 36,909 22,165 22,165
Loans receivable.................................. 501,131 499,874 389,059 391,616
Accrued interest receivable....................... 2,815 2,815 2,242 2,242
Federal Home Loan Bank stock...................... 4,950 4,950 2,800 2,800

Financial liabilities:
Deposit liabilities............................... 429,274 426,909 351,030 350,801
Advances from FHLB................................ 99,000 99,314 56,000 56,000
Other borrowed funds.............................. 3,914 3,914 789 789

A summary of the notional amounts of the Company's financial instruments
which approximates fair value, with off-balance-sheet risk at December
31, 1999, follows:

Notional
Amount
(In thousands)

Commitments to extend credit...................... $ 7,753
========

Unused lines of credit............................ $ 33,579
=======

Undisbursed portion of loans in process .......... $ 15,907
======

Standby letters of credit......................... $ 698
========
(10) Significant Group Concentration of Credit Risk
The Company grants real estate, commercial and consumer loans to customers
primarily in the State of Florida with the majority of such loans in
the Lake, Sumter and Citrus County area. Therefore, the Company's
exposure to credit risk is significantly affected by changes in the
economy of the Lake, Sumter and Citrus County area. In addition, the
Company has a concentration of single-family residential mortgage loans
in a specific residential retirement community of approximately $107.4
million.

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.

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

Year Ended
December 31,
1999 1998
---- ----
(In thousands)

Beginning balance................................ $ 3,406 1,728
Loans originated................................. 1,675 2,043
Principal repayments............................. (98) (365)
------- -------

Ending balance............................... $ 4,983 3,406
======= =======

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

(13) Restrictions on Retained Earnings
The Bank is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. At December 31, 1999,
approximately $21.4 million of retained earnings were available for
dividend declaration without prior regulatory approval.

(14) Regulatory Matters
The 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 Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are
also subject to qualitative judgements by the regulators about
components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined). Management believes, as of December
31, 1999, that the Bank meets all capital adequacy requirements to which
it is subject.

As of December 31, 1999, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized, the
Bank must maintain minimum tangible, tier I (core), tier I (risk-based)
and total risk-based capital ratios as set forth in the table. There are
no conditions or events since that notification that management believes
have changed the institution's category.

The Bank's actual capital amounts and percentages at December 31, 1999 and
1998 are also presented in the tables.

To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
------------------- -------------------- ------------------
% Amount % Amount % Amount
------ --------- ------ --------- ----- ---------
As of December 31, 1999: (Dollars in thousands)

Stockholders' equity,
and ratio to total
assets.................... 8.87% $ 52,356
Less: investment in
nonincludable
subsidiary................ (1,214)
Add back: unrealized loss on
available-for-sale
securities................ 35
--------

Tangible capital,
and ratio to adjusted
total assets.............. 8.68% $ 51,177 1.5% $ 8,841
========== ========

Tier 1 (core) capital, and
ratio to adjusted total
assets.................... 8.68% $ 51,177 3.0% $ 17,681 5.0% $ 29,469
========== ======== ========

Tier 1 capital, and ratio
to risk-weighted assets... 14.17% 51,177 4.0% $ 14,447 6.0% $ 21,670
======== ========
Less: nonincludable
investment in 80%
land loans................ (93)

Tier 2 capital (allowance for
loan losses).............. 2,810
---------
Total risk-based capital,
and ratio to risk-
weighted assets........... 14.92% $ 53,894 8.0% $ 28,893 10.0% $ 36,117
========= ========

Total assets.................. $ 590,562
=========

Adjusted total assets......... $ 589,383
=========

Risk-weighted assets.......... $ 361,168
=========

Stockholders' equity,
and ratio to total
assets.................... 9.97% $ 46,270
Less: investment in
nonincludable
subsidiary................ (187)
Add back: unrealized loss on
available-for-sale
securities................ (1)
----------
Tangible capital,
and ratio to adjusted
total assets.............. 9.94% $ 46,082 1.5% $ 6,957
========== ========
Tier 1 (core) capital, and
ratio to adjusted total
assets.................... 9.94% $ 46,082 3.0% $ 13,913 5.0% $ 23,189
========== ======== ========
Tier 1 capital, and ratio
to risk-weighted assets... 17.21% 46,082 4.0% $ 10,711 6.0% $ 16,067
======== ========
Less: nonincludable
investment in 80%
land loans................ (122)

Tier 2 capital (allowance for
loan losses).............. 2,283
---------

Total risk-based capital,
and ratio to risk-
weighted assets........... 18.02% $ 48,243 8.0% $ 21,422 10.0% $ 26,778
======== ====== ======

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

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

Risk-weighted assets.......... $ 267,778
=======

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

Current regulations allow the Bank to pay dividends on its stock after the
conversion if its regulatory capital would not thereby be reduced below
the amount then required for the aforementioned Liquidation Account.
Also, capital distribution regulations limit the Bank's ability to make
capital distributions which include dividends, stock redemptions and
repurchases, cash-out mergers, interest payments on certain convertible
debt and other transactions charged to the capital account based on
their capital level and supervisory condition. Federal regulations also
preclude any repurchase of the stock by the Bank or its holding company
for three years after conversion except for purchases of qualifying
shares of a director and repurchases pursuant to an offer made on a pro
rata basis to all stockholders and with prior approval of the Office of
Thrift Supervision or pursuant to an open-market stock repurchase
program that complies with certain regulatory criteria. See also Note
18 for information regarding the Bank's Stock Repurchase Program.

(16) Stock Benefit Plans
The Company follows 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, 1999, 1998 and 1997, 16,250, 18,000 and
10,867 options were granted under the Option Plan, and in 1997, 2,014
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 2.0% would
apply over the exercise period, the expected life of the options would
be the entire exercise period and the expected stock volatility was
36%, 42% and 23%, respectively, for 1999, 1998 and 1997. For purposes
of pro forma disclosures, the estimated fair value was included in
expense in the period vesting occurs. The proforma information has been
determined as if the Company had accounted for its stock options and
share awards under the fair value method of SFAS No. 123 and is as
follows (in thousands, except per share amounts):

Year Ended December 31,
1999 1998 1997
---- ---- ----

Weighted-average grant-date fair value of options
issued during the year..................................... $ 133 166 84
======== ====== ==

Proforma net earnings........................................... $ 5,288 4,303 3,663
======== ====== ==

Proforma basic earnings per share............................... $ 1.49 1.20 .99

Stock Option Plan. The Company has a Stock Option Plan under which 460,303
common shares are authorized to be granted to directors, officers and
employees of the Bank. 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 for
officers and employees or twenty years for directors from the date of
grant or one year following the date which the outside director,
officer or employee ceases to serve in such capacity. At December 31,
1999, 38,749 shares remain available for grant to future directors,
officers and employees.

The following is a summary of option transactions:

Weighted-
Range of Average
Number Per Share Per Share
of Shares Option Price Price
--------- ------------ -----

Outstanding, December 31, 1996...................... 365,813 $ 6.00-12.00 $ 6.19
Granted ............................................ 10,867 15.30-21.25 18.06
Exercised........................................... (46,252) 6.00-9.52 6.13
-------

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

Outstanding, December 31, 1998...................... 273,200 6.00-21.25 6.83
Granted ............................................ 16,250 16.75-17.63 17.56
Exercised........................................... (75,420) 6.00 6.00
-------

Outstanding, December 31, 1999...................... 214,030 $ 6.00-21.25 $ 7.93
======= ============= =======

The weighted-average remaining contractual life of the outstanding stock
options at December 31, 1999, 1998 and 1997 was 8.6, 5.3 and 6.2 years,
respectively. The increase in 1999 was due to the Company approving an
amendment to the Plan to extend the life of options issued to directors
to twenty years from ten years.

The outstanding options at December 31, 1999 were exercisable as follows:

Number Weighted-Average
of Weighted-Average Remaining
Year Ending Shares Exercise Price Contractual Life
----------- ------ -------------- ----------------
(In years)

Currently exercisable................... 189,558 $ 6.76 8.5
2000.................................... 8,528 16.44 9.1
2001.................................... 8,528 16.44 9.4
2002.................................... 7,416 16.62 9.7
-------

214,030 $ 7.93 8.6
======= ======== ===

Employee Stock Ownership Plan. The Company sponsors a leveraged ESOP that
covers eligible employees who have a twelve-month period of employment
with the Bank during which they worked at least 1,000 hours and who have
attained age 21. The 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, 1999, 1998 and 1997 included the following ESOP related
costs:

Year Ended December 31,
---------------------------
1999 1998 1997
---- ---- ----
(In thousands)

Amortization of the original cost, $6 per share............. $ 315 316 315
Market appreciation of the FFLC shares...................... 534 662 596
Dividends on ESOP shares.................................... 23 38 61
----- ----- ----

Total................................................... $ 872 1,016 972
===== ===== ===

The ESOP shares were as follows:

At December 31,
--------------------------
1999 1998
---- ----
($ in thousands)

Allocated shares and shares released for allocation...... 282,781 238,413
Unreleased shares........................................ 52,606 105,212
-------- -------

Total ESOP shares........................................ 335,387 343,625
======== =======

Fair value of unreleased shares.......................... $ 802 1,710
======== ========

Recognition and Retention Plan. The Company adopted, and the shareholders
approved, an RRP for directors, officers and employees to enable the
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. 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.

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, 1999, 4,749 shares
remain reserved for future directors, officers and employees.

(17) Parent Company Only Financial Statements
Condensed financial statements of the Holding Company as of December 31,
1999 and 1998 and for each of the years in the three-year period ended
December 31, 1999 are presented below. Amounts shown as cash, investment
in subsidiary, loans to subsidiary and equity in earnings of subsidiary
are eliminated in consolidation.

Condensed Balance Sheets

At December 31,
--------------------
1999 1998
------- -------
(In thousands)

Assets

Cash, deposited with subsidiary $ 481 825
Investment in subsidiary 52,356 46,270
Loans to subsidiary 2,816 6,131
------- -------

Total assets $55,653 53,226
======= =======

Liabilities and Stockholders' Equity

Accrued expense and other liabilities 16 3
Stockholders' equity 55,637 53,223
------- -------

Total liabilities and stockholders' equity $55,653 53,226
======= =======

Condensed Statements of Income

Year Ended December 31,
-----------------------------
1999 1998 1997
------- ----- -----
(In thousands)

Revenues $ 261 410 532
Expenses 190 243 280
------- ----- -----

Income before earnings of subsidiary 71 167 252
Earnings of subsidiary 5,331 4,230 3,502
------- ----- -----

Net income $ 5,402 4,397 3,754
======= ===== =====

Condensed Statements of Cash Flows
Year Ended December 31,
-----------------------------
1999 1998 1997
---- ---- ----
(In thousands)

Cash flows from operating activities:
Net income.................................................................... $ 5,402 4,397 3,754
Adjustments to reconcile net income to net cash
provided by operations:
Equity in earnings of subsidiary.......................................... (5,331) (4,230) (3,502)
Decrease (increase) in other assets....................................... - 2 (2)
Increase (decrease) in accrued expenses and other liabilities............. 13 4 (12)
------- -------- -------

Net cash provided by operating activities............................. 84 173 238
------- ------- -------
Cash flows from investing activities-
Repayment of loan to subsidiary........................................... 3,315 316 4,815
----- ------- -----
Cash flows from financing activities:
Purchase of treasury stock................................................ (2,596) (2,659) (6,171)
Stock options exercised................................................... 453 360 283
Cash dividends paid....................................................... (1,600) (1,344) (1,141)
Cash dividends received................................................... - 3,502 1,808
------- ----- -----

Net cash used in financing activities................................. (3,743) (141) (5,221)
----- ------ -----

Net (decrease) increase in cash................................................... (344) 348 (168)

Cash at beginning of year......................................................... 825 477 645
------ ------ ------

Cash at end of year............................................................... $ 481 825 477
===== ====== ======

(18) Stock Repurchase Program
In January and August 1996, the Company's Board of Directors approved stock
repurchase programs which allowed the Company to acquire 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
allowed the Company to acquire additional common stock in the open
market. During the year ended December 31, 1997, 178,690 shares or 60.6%
of the 294,928 shares approved under that program were repurchased.

In September 1998, the Company"s Board of Directors approved a program
which allowed the Company to acquire 369,285 additional common stock in
the open market. During the year ended December 31, 1998, the remaining
shares approved under the January 1997 program were repurchased. During
the year ended December 31, 1998 32,025 shares or 8.7% of the September
1998 program were repurchased.

During 1999, the Company repurchased 147,102 shares or 43.6% under the
September 1998 program. At December 31, 1999, the Company can still
repurchase up to an additional 190,158 shares under the September 1998
program.

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

Year Ended December 31, 1999
--------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----

Interest income............................... $ 8,851 9,317 9,801 10,643 38,612
Interest expense.............................. 4,748 5,005 5,365 6,096 21,214
----- ----- ----- ------ ------

Net interest income........................... 4,103 4,312 4,436 4,547 17,398

Provision for loan losses..................... 200 150 150 219 719
------ ------ ------ ------ -------
Net interest income after provision
for loan losses........................... 3,903 4,162 4,286 4,328 16,679
------ ----- ----- ------ ------

Noninterest income............................ 1,289 370 319 354 2,332
Noninterest expense........................... 2,374 2,562 2,642 2,735 10,313
----- ----- ----- ------ ------

Income before income taxes.................... 2,818 1,970 1,963 1,947 8,698

Income taxes.................................. 1,084 739 739 734 3,296
----- ----- ------ ------ ------

Net income.................................... $ 1,734 1,231 1,224 1,213 5,402
===== ===== ===== ====== ======

Basic income per common share.................$ .49 .34 .35 .34 1.52
======= ======= ======= ======= =======

Diluted income per common share...............$ .47 .33 .33 .34 1.47
======= ======= ======= ======= =======

Year Ended December 31, 1998
---------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----

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

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

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

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

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

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

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

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

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

(20) Year 2000 Issues
The Company's operating and financial systems have been found to be
compliant; the "Y2K Problem" has not adversely affected the Company's
operations nor does management expect that it will.

(21) Dividend Reinvestment Plan
On January 7, 2000, the Company established a Dividend Reinvestment Plan
(the "Plan"). The Plan was approved by the Board of Directors on
December 30, 1999 and is intended to provide stockholders of record of
at least 50 shares with a convenient and economical way to
automatically reinvest all or a portion of their cash dividends and to
invest optional cash payments, subject to minimum and maximum purchase
limitations, in additional shares of common stock. Stockholders pay no
service charges or brokerage commissions for common stock purchased
under the Plan.

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, 1999 and 1998 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999.
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, 1999 and 1998 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1999 in
conformity with generally accepted accounting principles.

/s/HACKER, JOHNSON, COHEN & GRIEB PA
- ------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Orlando, Florida
January 14, 2000

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

James P. Logan President/Owner, Logan Sitework Contractors, Inc.
Ted R. Ostrander, Jr. President, Lassiter-Ware, Inc.
H.D. Robuck, Jr. Attorney; CEO, Ro-Mac Lumber & Supply, Inc.
Stephen T. Kurtz President, FFLC Bancorp, Inc. & Subsidiary
Paul K. Mueller Executive Vice President, FFLC Bancorp, Inc.
& Subsidiary

Advisory Directors:
- -------------------

James R. Gregg President, Jarol Company
James H. Herlong General Partner, A.S. Herlong, Ltd.
Horace D. Robuck President, Ro-Mac Lumber & Supply, Inc.

Officers:
- ---------

Stephen T. Kurtz
President and Chief Executive Officer

Paul K. Mueller
Executive Vice President and Treasurer

Sandra L. Rutschow
Vice President and Secretary

FIRST FEDERAL SAVINGS BANK
OF LAKE COUNTY

DIRECTORS, OFFICERS AND MANAGERS

DIRECTORS

Joseph J. Junod
Chairman of the Board

Claron D. Wagner
Vice Chairman

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

Advisory Directors

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

OFFICERS

Stephen T. Kurtz
President
Chief Executive Officer

Paul K. Mueller
Executive Vice President
and Treasurer

Dwight L. Hart
Senior Vice President and Mortgage Loan Manager

Joseph D. Cioppa
Senior Vice President and Commercial Loan Manager

Paul S. Allen
Senior Vice President, Audit and Planning

Jay Bartholomew
Vice President and Retail Banking Manager

Susan L. Berkebile
Vice President and Area Loan Manager

Michael J. Cox
Vice President and Area Loan Manager

Jankie Dhanpat
Vice President, SEC Reporting & Controller

Brenda M. Grubb
Vice President and Human Resources Manager

James D. Haug
Vice President and Lady Lake Branch Manager

Lawrence E. Hoag
Vice President and Operations Manager

Brian R. Hofer
Vice President and Commercial Loan Officer

Karen Hollister
Vice President and Loan Operations Manager

Dennis R. Rogers
Vice President and Wildwood Branch Manager

Sandra L. Rutschow
Vice President and Corporate Secretary

Sandra L. Seaton
Vice President and South Leesburg Branch Manager

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

Phil Tompetrini
Vice President and Inverness Branch Manager

Lynda F. Wemple
Vice President and Accounting Manager

Vickie S. Baxter
Assistant Vice President and Loan Officer

Donna Boyett
Assistant Vice President and Branch
Operations Coordinator

Stephanie Hodges
Assistant Vice President and Secondary Market Manager

Penny Hollis
Assistant Vice President and Compliance Officer

Cindy Lay
Assistant Vice President and Data Manager &
MIS Coordinator

Charles L. Lee
Assistant Vice President and Security Officer

Debra L. McFarlane
Assistant Vice President and Deposit Administrator

Carmen C. Passwaters
Assistant Vice President and Benefits Administrator

Sandra A. Rowe
Assistant Vice President and Loan Servicing Manager

Victoria Boren
Eustis Branch Manager

James M. Combs
Indirect Loan Manager

James R. Cummings
Collections Manager

Barbara A. Cordes
Information Systems Manager

Karen A. Dixon
Inverness Loan Officer

Lori Farfaglia
Four Corners Branch Manager

Linda C. Gallop
Clermont Branch Manager

Greg Heckler
Main Street Office Manager

Doris E. Hyatt
Loan Closing Manager

Jennifer Kitchens
Bushnell Branch Manager

Marilyn Leugers
Main Office Branch Manager

Catherine M. Wallin
Lake Square Office Manager

Michael J. Price
Eustis Loan Officer

Leigh S. Skehan
Marketing Coordinator

Craig Smith
Fruitland Park Branch Manager

Betty Wolcott
Facilities & Purchasing Manager

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:

Annette McCullough
Barbara A. Cordes
Barbara Boscana
Betty J. Leech
Betty L. Wolcott
Bobby H. Inscoe
Brenda M. Grubb
Carlos E. Colon
Carmen C. Passwaters
Carol A. Dewey
Carol B. Holley
Charles L. Lee
Cheryl A. Davis
Cleire M. Geidel
Craig S. Cannon
Cynthia A. Lord
Cynthia M. Lay
Dawn Rene Davison
Debra L. McFarlane
Deena M. Bryant
Diane S. Cook
Dorene K. Shahan
Doris E. Hyatt
Dwight L. Hart
Erika R. Morgan
Ginger L. Devine
Jacqueline E. Widows
James M. Combs
James R. Cummings
James Schaeffer
Jankie Dhanpat
Jay R. Bartholomew
Jeffrey W. Wright
Jennette L. Roode
Jennifer Grovesteen
Jewel M. Correll
Jill S. Spires
Joan P. Gibson
John LaVallie
Joseph D. Cioppa
Juanita F. Jackson
Judith A. Cook
Karen L. Hollister
Kathy E. Bauer
Kathy Mantlo
Keri L. Morris
Lacey A. Lee

Landa A. Russell
Lawrence E. Hoag
Leigh S. Skehan
Leslie A. Leach
Linda B. Law
Linda J. Giggey
Linda N. Landers
Lisa K. Woolwine
Lynda F. Wemple
Lynn P. Stoffel
Margaret H. Locke
Margaret M. Siegel
Margaret R. White
Marilyn A. Leugers
Mary A. Durre
Maryann D. Chantos
Michelle M. Thompson
Michelle Williams
Nancy J. Lane
Natalie L. Rojas
Norma J. Caron
Orpha M. Vogt
Pamela A. O"Neal
Pamela J. Linville
Patricia B. Inman
Patti L. Martel-Spencer
Paul K. Mueller
Paul S. Allen
Peggy L. Harris
Penny M. Hollis
Raynard S. Taylor
Ruth E. Fielding
Sandra A. Rowe
Sandra L. Rutschow
Sheila C. Coffey
Shu Een Chen
Sondra Jones
Stephanie Hodges
Stephen T. Kurtz
Terry J. French
Tina R. Clancy
Tricka M. Parker
Vickie S. Baxter
Victoria J. Langford
Virgina D. Vann
Virginia I. Grantham
Yvonne K. Ross
Zoann Goodman

FRUITLAND PARK OFFICE:

Brandi L. Shaw
Craig R. Smith
Delphine C. Williams
Michelle E. Odell

LADY LAKE OFFICE:

Betty T. Woods
Constance Merrell-Kasch
Deedee A. Dye
Estelle E. Crawley
Heather L. Varner
James D. Haug
Julie A. Hankins
Karen Bednarik
Mindy L. Tritt
Patricia L. Sizemore
Shanda R. Gamble

MAIN STREET OFFICE:

Angela Nicole Phillips
Celeste A. James
Cynthia M. Page
Donna L. Boyett
Gregory F. Heckler
Kari K. Caulk
Rhonda L. Wilkerson

LAKE SQUARE
MALL OFFICE:

Catherine M. Wallin
Melissa J. Asbury
Regina D. Shiver
Shannon J. Peters

CLERMONT OFFICE:

Arthur E. Middleton
Brian R. Hofer
Donna L. Franklin
Holly Ogg
Janna R. Michell
Judy L. Garafola
Karen M. Seddon
Kris R. Helms
Linda Gallop
Lynda S. Cole
Rebecca A. Gibson
Sharon M. Slack
Susan Lynn Berkebile

EUSTIS OFFICE:

Amanda L. Leap
Erin M. Moore
Hilda Lozano
Michael Cox
Michael J. Price
Natasha L. Pender
Stephanie L. Freer
Tamika J. Rolle
Victoria M. Boren
Vivian R. Curry

WILDWOOD OFFICE:

Carla A. McAllister
Cheryl P. Yates
Crystal L. Schmidt
Dana L. Fields
Dennis R. Rogers
Elaine C. Buzzard
Latahna J. Green
Mona M. Riggs
Paula D. Williams
Shirley A. Davis
Sophia A. Hamilton

SOUTH LEESBURG OFFICE:

Brandi M. Simko
Carol A. Sieder
Cynthia M. Deeb
Eva J. Snead
Sandra L. Seaton

INVERNESS:

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

FOUR CORNERS

Janis K. Spencer
Lori M. Farfaglia
Sarah L. Williams
Stephany M. Barr
Trinia C. McClendon
Whitney L. White

BUSHNELL:

Betty J. Hewett
Inge Pelfrey
Jennifer Kitchens
Natalie D. Langford
Sylvie M. Zimmerman