[FFLC LOGO HERE]

1996 ANNUAL REPORT

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
Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................................7-17
Consolidated Financial Statements ........................................18-46
Independent Auditors' Report.................................................47
Directors and Officers of FFLC Bancorp, Inc. ................................48
Directors and Officers of First Federal Savings Bank of Lake County..........49
Employees ...................................................................50

[Inside Cover]

CORPORATE PROFILE

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

CORPORATE ORGANIZATION

Holding Company
FFLC Bancorp, Inc.

Thrift Subsidiary
First Federal Savings Bank of Lake County

Affiliate of Thrift Subsidiary
Lake County Service Corporation

GENERAL INFORMATION

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

Annual Meeting
The Annual Meeting of the Stockholders will be held at the Leesburg
Community Building located at 109 East Dixie Avenue in Leesburg at 2:00 p.m.
on May 8, 1997.

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.

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

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

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

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

[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 20 of the Consolidated Financial Statements for
a summary of quarterly financial data.

Cash
Dividends
Paid
High Low Per Share
---- --- ---------

Quarter Ended:
March 31, 1995............................................... 17 1/4 14 1/4 .06
June 30, 1995................................................ 17 15 3/4 .08
September 30, 1995........................................... 20 1/4 16 1/4 .08
December 31, 1995............................................ 20 1/4 18 3/4 .08
March 31, 1996............................................... 19 1/8 17 1/4 .08
June 30, 1996................................................ 18 3/4 17 1/4 .10
September 30, 1996........................................... 19 18 .10
December 31, 1996............................................ 22 18 1/4 .10

As of January 27, 1997, the Company had 941 holders of record of common stock.

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

AT YEAR END: 1996 1995 1994
---------- --------- ---------

Total assets ........................................................... $ 346,442 325,832 310,622
Loans receivable, net .................................................. $ 227,948 183,448 148,286
Investment securities .................................................. $ 32,832 25,265 27,851
Mortgage-backed securities ............................................. $ 65,736 93,883 117,003
Deposits ............................................................... $ 282,664 267,703 251,752
Equity, substantially restricted ....................................... $ 53,626 55,360 53,762
Book value per share ................................................... $ 22.00 20.99 19.47
Shares outstanding ..................................................... 2,437,737 2,637,356 2,761,819
Equity-to-assets ratio ................................................. 15.48% 16.99% 17.31%
Nonperforming assets to total assets ................................... 0.30% 0.10% 0.13%

FOR THE YEAR:

Interest income ........................................................ $ 24,218 22,493 19,480
Net interest income after provision for loan losses .................... $ 11,152 10,186 10,083
Net income ............................................................. $ 2,184 3,093 3,570
Earnings per share ..................................................... $ .85 1.16 1.35
Loan originations ...................................................... $ 83,569 56,751 49,190
Return on average assets ............................................... .65% .98% 1.19%
Return on average equity ............................................... 3.94% 5.59% 6.81%
Average equity to average assets ratio ................................. 16.62% 17.46% 17.47%
Noninterest expense to average assets .................................. 2.49% 1.85% 1.74%

YIELDS AND RATES:

Weighted Average
Rate or Yield Average Rate or Yield During
at December 31, Year Ended December 31,
----------------- ------------------------------
1996 1995 1996 1995 1994
---- ---- ---- ---- ----

Mortgage loans, net ............................................... 8.08% 8.18% 8.20% 8.29% 8.21%
Collateralized mortgage obligations ............................... 5.91% 5.92% 5.76% 5.73% 5.34%
Other mortgage-backed securities .................................. 7.04% 6.84% 6.87% 6.41% 5.51%
All interest-earning assets ....................................... 7.62% 7.42% 7.52% 7.31% 6.66%
Deposits .......................................................... 4.72% 4.87% 4.72% 4.71% 3.78%
All interest-bearing liabilities .................................. 4.74% 4.87% 4.72% 4.71% 3.78%
Interest-rate spread (1) .......................................... 2.87% 2.55% 2.80% 2.60% 2.88%
Net yield on average interest-earning assets (2) .................. N/A N/A 3.50% 3.35% 3.50%

(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:

In each year's annual report, I like to mention some of the important events for
our Company during the past year, and reflect upon things we might expect during
the new year.

The year 1996 will be remembered as a very important year in our Company's
history. Significant progress was made during the year in increasing the loan
portfolio and total deposits of the Company's subsidiary, First Federal Savings
Bank of Lake County. For the year, the Bank's mortgage loan originations were
$74.4 million, an increase of more than 48% above the prior year. Consumer loan
originations totaled $12.4 million, for an increase of 101%. All told, the
Bank's loan portfolio at the end of 1996 stood at $236.9 million, a gain of 26%
when compared to the end of 1995. Deposit growth was also good, with total
deposits at year-end being 282.7 million. This represents a gain in total
deposits of $15 million, or 6%.

The single largest impact on our financial statements came from the one-time
payment all savings institutions were required to make to the Federal Deposit
Insurance Corporation (FDIC). In the case of First Federal, the required payment
to the FDIC was $1.7 million ($1.0 million after-tax). In exchange for this
one-time payment, we expect First Federal will enjoy a 72% reduction in its
deposit insurance premium in 1997. While the financial data within this annual
report fully reflects the cost of the one-time payment to the FDIC, I would like
stockholders to know what some of these figures would have been, absent the FDIC
payment.

Without the one-time payment to the FDIC, our Company's earnings for the year
would have been $3.2 million, or $123,000 more than 1995. On an earnings per
share basis, the Company would have reported earnings of $1.25 per share, a 7.8%
increase from the prior year. The return on average assets would have been
0.96%, the return on average equity would have been 5.80%, and the operating
efficiency ratio would have been 55.05%. If we were to exclude the one-time
payment to the FDIC, the Company's price-to-earnings ratio at year-end would
have been 17.2.

During the year, the Company's Board of Directors conducted a strategic planning
session in which ways to better prepare the Company for the future were
discussed. The greatest challenge for the Company is to produce a reasonable
return on equity. At year-end, the Company had a capital ratio of 15.48%. With a
capital ratio at that level, it is difficult to produce a strong return on
equity. The strategic planning session produced a plan of action that we believe
will better utilize the capital that we have and will produce improved results
in the future. It is worth noting that rather than one simple approach, the plan
of action addresses several areas.

First, we believe the repurchase of outstanding shares of stock should continue.
By the end of 1996, FFLC Bancorp had repurchased a total of nearly 340,000
shares of stock. In January, 1997, the Board of Directors approved the
repurchase of an additional 10% of the Company's outstanding shares, or more
than 238,000 shares of stock. By continuing to repurchase stock, we expect to
improve earnings per share.

With our Company's high level of capital, we have the means to grow in several
ways. We recently opened our third branch office within the past eighteen
months, and we continue to consider locations in which to open new offices.
Growth can also occur by way of acquiring another financial institution. To date
that has not occurred, but it remains an alternative.

Our Company is also moving toward increased involvement in commercial lending.
Two local financial institutions in the Lake County market have recently sold to
out-of-state regional banks, and we believe the timing is right for us to become
more involved in local commercial lending. To that end, we recently brought on
board a commercial loan officer with extensive lending experience in the Lake
County area. We believe added commercial lending will diversify our loan
portfolio, and will provide us with new opportunities both in lending and
deposits.

Growth is also possible through wholesale transactions in which the Company
finances the purchase of securities by borrowing the necessary funds. To date,
we have made two such transactions, and we have maintained a positive spread
between the earnings of the securities and the cost of the borrowing.

Looking to 1997, there are two important events that will positively influence
the Company's earnings. First, as mentioned above, the Bank's deposit insurance
premium rate has been dramatically lowered. In addition, the stock benefit
program known as the Recognition and Retention Plan (RRP) was fully expensed as
of the end of 1996. Expenses related to these two items will be substantially
reduced during 1997.

The Bank's newest branch office, located south of Leesburg at the Lake Harris
Square shopping center, opened in February 1997. We believe continued expansion
of our branch network will provide long-term benefits to the Company. Of course,
by opening new branch offices, the Company increases its current expenses.
However, we believe that by undertaking the expense of new branch locations now,
we will be enhancing the Company's profitability and franchise value for the
future.

The performance of the Company's stock is of great importance to stockholders.
The price per share of FFLC Bancorp's stock began the year at $18.75 and ended
it at $21.50. When combined with the dividends paid during 1996, the result is a
total rate of return of 16.9%. FFLC Bancorp originally issued shares of stock at
$10.00 per share on January 4, 1994. As of December 31, 1996, the stock has
enjoyed an annualized total rate of return of 31.6% from its initial public
offering.

The directors, officers and staff of FFLC Bancorp appreciate the support of our
stockholders over the past three years. We are dedicated to profitably serving
the banking needs of our local communities, and to meeting the investment goals
of our stockholders. We firmly believe our Company is on the right track to
accomplishing these goals.

Cordially yours,

Stephen T. Kurtz
President and Chief Executive Officer

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

At December 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- --------- --------- ------- -------

Total assets ................................................. $ 346,442 325,832 310,622 292,254 271,148
Loans receivable, net ........................................ 227,948 183,448 148,286 122,211 114,347
Cash and cash equivalents .................................... 10,157 13,929 10,255 24,875 8,162
Investment securities ........................................ 32,832 25,265 27,851 29,370 26,782
Mortgage-backed securities ................................... 65,736 93,883 117,003 109,077 115,331
Deposits ..................................................... 282,664 267,703 251,752 241,000 245,436
Borrowed funds ............................................... 8,198 150 3,150 150 150
Conversion stock subscriptions ............................... -- -- -- 21,834 --
Stockholders' equity ......................................... 53,626 55,360 53,762 27,246 23,705

For the Year Ended December 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- --------- --------- ------- -------

Interest income .............................................. $ 24,218 22,493 19,480 18,453 20,388
Interest expense ............................................. 12,959 12,183 9,259 9,268 11,649
Net interest income .......................................... 11,259 10,310 10,221 9,184 8,739
Provision for loan losses .................................... 107 124 138 250 232
Net interest income after provision for loan losses .......... 11,152 10,186 10,083 8,935 8,507
Noninterest income ........................................... 809 709 647 619 848
Noninterest expense .......................................... 8,299 5,874 5,212 3,936 3,721
Income before provision for income taxes ..................... 3,662 5,021 5,518 5,618 5,634
Provision for income taxes ................................... 1,478 1,928 1,948 2,114 2,120
Net income ................................................... 2,184 3,093 3,570 3,504 3,514

Earnings per share ........................................... .85 1.16 1.35 -- (1) --(1)
Weighted average number of common
shares outstanding ..................................... 2,560,795 2,656,259 2,645,829 -- (1) --(1)

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

SELECTED CONSOLIDATED FINANCIAL RATIOS
AND OTHER DATA:
At or For the Year Ended December 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- ------ ------

Return on average assets ................................. 0.65% 0.98% 1.19% 1.29% 1.32%
Return on average equity ................................. 3.94% 5.59% 6.81% 13.72% 16.00%
Dividend payout ratio (1) ................................ 44.71% 25.86% 13.33% N/A N/A
Average equity to average assets ......................... 16.62% 17.46% 17.47% 9.40% 8.25%
Total equity to total assets ............................. 15.48% 16.99% 17.31% 9.32% 8.74%
Interest rate spread during year(2) ...................... 2.80% 2.60% 2.88% 3.15% 3.02%
Net interest margin (3) .................................. 3.50% 3.35% 3.50% 3.48% 3.36%
Nonperforming assets to total assets (4) ................. 0.30% 0.10% 0.13% 0.23% 0.17%
Nonperforming loans to total loans (5) ................... 0.28% 0.09% 0.21% 0.47% 0.34%
Allowance for loan losses to non-performing loans ........ 159.61% 561.49% 264.13% 121.29% 130.65%
Allowance for loan and REO
losses to nonperforming assets ..................... 103.51% 288.48% 210.41% 108.41% 111.11%
Allowance for loan losses to total loans ................. 0.45% 0.52% 0.55% 0.57% 0.45%
Operating expenses to average assets ..................... 2.49% 1.85% 1.74% 1.45% 1.40%
Average interest-earning assets to
average interest-bearing liabilities ............... 1.17 1.19 1.19 1.09 1.08
Net interest income to operating expenses ................ 1.36 1.76 1.96 2.33 2.35
Total shares outstanding (1) ............................. 2,437,737 2,637,356 2,761,819 -- (1) -- (1)
Book value per common share outstanding (1) .............. $ 22.00 20.99 19.47 -- (1) -- (1)
Number of banking offices (all full-service) ............. 9 8 6 6 6

- ------------------
(1) Item is only presented at December 31, 1996, 1995 and 1994 since there was
no outstanding common stock in prior years.

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

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

(4) Nonperforming assets consist of nonperforming loans and real estate owned.

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

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

GENERAL

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

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

The Savings Bank had net earnings of $2.2 million for the year ended December
31, 1996, compared to net earnings of $3.1 million for the year ended December
31, 1995. At December 31, 1996, the Savings Bank had total assets of $346.4
million, an increase of 6.3% over total assets of $325.8 million at December 31,
1995. That increase resulted primarily from a $44.5 million, or 24.3%, increase
in loans receivable from $183.4 million at December 31, 1995 to $227.9 million
at December 31, 1996, reflecting increased local loan demand. Cash and cash
equivalents decreased $3.8 million or 27.1% from $13.9 million to $10.1 million.
Mortgage-backed securities also decreased $28.1 million while investment
securities increased $7.7 million for a net decrease of $20.4 million or 17.6%
in investment and mortgage-backed securities. Deposits increased $15.0 million,
or 5.6%, from $267.7 million at December 31, 1995 to $282.7 million at December
31, 1996. Stockholders' equity decreased $1.7 million primarily due to
repurchases of Holding Company stock during 1996, partially offset by income
from operations.

REGULATION AND LEGISLATION

General

The operating results of the Savings Bank are affected by Federal laws and
regulations and the Savings Bank is subject to extensive regulation, examination
and supervision by the Office of Thrift Supervision ("OTS"), as its chartering
agency, and the Federal Deposit Insurance Corporation ("FDIC"), as the deposit
insurer. The Savings Bank is a member of the Federal Home Loan Bank ("FHLB")
System and its deposit accounts are insured up to applicable limits by the FDIC
under the SAIF ("Savings Association Insurance Fund"). The Savings Bank must
file reports with the OTS and the FDIC concerning its activities and financial
condition in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with, or acquisitions of, other financial
institutions. There are periodic examinations by the OTS and the FDIC to test
the Savings Bank's compliance with various regulatory requirements. The
activities of savings institutions are governed by the Home Owner's Loan Act, as
amended (the "HOLA") and, in certain respects, the Federal Deposit Insurance Act
(the "FDIA"). The HOLA and the FDIA were amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit
Insurance Corporation Improvement Act of 1991("FDICIA"). A more complete
description of the HOLA and FDIA as amended by FIRREA and FDICIA is included in
the Form 10-K.

Capital Requirements

The OTS capital regulations require savings institutions to meet three capital
standards: a 1.5% tangible capital standard; a 3% leverage (core capital) ratio;
and an 8% risk-based capital standard. Under the OTS final rule implementing
FDICIA, generally, a well-capitalized institution is defined as one that meets
the following capital standards: a 5% tangible capital standard; a 6% leverage
(core capital) ratio; and a 10% risk-based capital standard, and has not been
notified by its federal banking agency that it is in a "troubled condition." At
December 31, 1996, the Savings Bank met each of its capital requirements, in
each case on a fully phased-in basis, and met the criteria of a
"well-capitalized" institution as defined above.

Insurance of Deposit Accounts

The FDIC has adopted a risk-based deposit insurance system that assesses deposit
insurance premiums according to the level of risk involved in an institution's
activities. An institution's risk category is based upon whether the institution
is classified as "well capitalized," "adequately capitalized" or "less than
adequately capitalized" and one of three supervisory subcategories within each
capital group. The supervisory subgroup to which an institution is assigned is
based on a supervisory evaluation and information which the FDIC determines to
be relevant to the institution's financial condition and the risk posed to the
deposit insurance fund. Based on its capital and supervisory subgroups, each
SAIF member institution was assigned an annual FDIC assessment rate for 1996
between 23 basis points for an institution in the highest category (i.e.,
well-capitalized and healthy) and 31 basis points for an institution in the
lowest category (i.e., undercapitalized and posing substantial supervisory
concern). The Savings Bank's assessment rate for 1996 was .23% of deposits.
Effective January 1, 1997, the FDIC lowered the annual assessment rates for SAIF
members to 0 to 27 basis points, as discussed below. The FDIC has authority to
further raise premiums if deemed necessary. If such action is taken, it could
have an adverse effect on the earnings of the institution.

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

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

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

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

CREDIT RISK

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

RESULTS OF OPERATIONS

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

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

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, 1996. 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.

1996 1995 1994
------------------------- ------------------------ -------------------------
Yield At Average Average Average
December 31, Average Yield/ Average Yield/ Average Yield/
1996 Balance Interest Cost Balance Interest Cost Balance Interest Cost
---- ------- -------- ---- ------- ------------- ------- -------- ----
(Dollars in thousands)

Interest-earning assets:
Loans receivable 8.20% $ 201,840 16,813 8.33% $ 163,961 13,817 8.43% $ 132,165 10,988 8.31%
Mortgage-backed securities 6.45 80,355 5,020 6.25 106,574 6,403 6.01 116,906 6,312 5.40
Investment securities and other
interest-earning assets (1) 6.19 39,745 2,385 6.00 37,138 2,273 6.12 43,343 2,180 5.03
--------- ------ --------- ------ --------- ------

Total interest-earning
assets 7.62 321,940 24,218 7.52 307,673 22,493 7.31 292,414 19,480 6.66
------ ------ ------

Noninterest-earning assets 11,727 9,107 7,605
--------- --------- ---------

Total assets $ 333,667 $ 316,780 $ 300,019
========= ========= =========

Interest-bearing liabilities:
NOW and money market
accounts 2.38 42,682 960 2.25 42,425 967 2.28 48,205 1,063 2.21
Passbook and statement savings
accounts 2.74 24,218 629 2.60 26,802 721 2.69 29,472 745 2.53
Certificates 5.45 206,471 11,311 5.48 188,806 10,455 5.54 166,818 7,433 4.46
FHLB advances 7.17 150 11 7.33 150 11 7.33 150 11 7.33
Securities sold under agreement
to repurchase 5.63 849 48 5.65 470 29 6.17 107 7 6.54
--------- ------ --------- ------ --------- ------

Total interest-bearing
liabilities 4.74 274,370 12,959 4.72 258,653 12,183 4.71 244,752 9,259 3.78
------ ------ ------

Noninterest-bearing liabilities 3,836 2,812 2,851
Stockholders' equity 55,461 55,315 52,416
--------- --------- ---------

Total liabilities and equity $ 333,667 $ 316,780 $ 300,019
========= ========= =========

Net interest-earning assets and
interest rate spread (2) 2.87% $ 47,570 2.80% $ 49,020 2.60% $ 47,662 2.88%
===== ========= ==== ========= ==== ========= ====

Net interest income and net
margin (3) $ 11,259 3.50% $ 10,310 3.35% $ 10,221 3.50%
======== ==== ======== ==== ======== ====
Ratio of interest-earning assets
to interest-bearing liabilities 1.17 1.19 1.19
===== ==== ====

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

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

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

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), (iii) changes attributable to changes in
rate/volume (changes in rate multiplied by changes in volume), and (iv) the net
change. The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes due
to rate.

Year Ended December 31, Year Ended December 31,
1996 vs. 1995 1995 vs. 1994
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 ........................... $ (164) 3,193 (33) 2,996 159 2,642 28 2,829
Mortgage-backed securities ..................... 253 (1,576) (60) (1,383) 713 (558) (64) 91
Investment securities
and other interest-earning
assets (1) ................................. (44) 159 (3) 112 472 (312) (67) 93
------ ------ ------ ------ ------ ------ ------ ------

Total ................................... 45 1,776 (96) 1,725 1,344 1,772 (103) 3,013
------ ------ ------ ------ ------ ------ ------ ------

Interest-bearing liabilities:
NOW and money market accounts .................. (13) 6 -- (7) 34 (128) (2) (96)
Passbook and
statement savings accounts ................. (25) (69) 2 (92) 47 (67) (4) (24)
Certificates ................................... (117) 979 (6) 856 1,801 981 240 3,022
FHLB advances .................................. -- -- -- -- -- -- -- --
Securities sold under agreement
to repurchase .............................. (2) 23 (2) 19 (1) 24 (1) 22
------ ------ ------ ------ ------ ------ ------ ------

Total ................................... (157) 939 (6) 776 1,881 810 233 2,924
------ ------ ------ ------ ------ ------ ------ ------

Net change in net interest
income ......................................... $ 202 837 (90) 949 (537) 962 (336) 89
====== ====== ====== ====== ====== ====== ====== ======

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

LIQUIDITY AND CAPITAL RESOURCES

The Savings Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. That requirement, which varies periodically
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term borrowings. The current required ratio is 5%. The
Savings Bank historically has maintained a level of liquid assets in excess of
the regulatory requirement. Liquid assets consist of cash, cash equivalents and
short- and intermediate-term U.S. Government and government agency securities.
The maintenance of liquid assets allows for the possibility of disintermediation
when interest rates fluctuate. The Savings Bank's liquidity ratios were 13.5%
and 13.8% at December 31, 1996 and December 31, 1995, respectively.

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

At December 31, 1996, the Savings Bank had outstanding commitments to originate
$4.4 million of loans and to fund the undisbursed portion of loans in process of
$8.0 million. The Savings Bank believes that it will have sufficient funds
available to meet its commitments. At December 31, 1996, certificates of deposit
which were scheduled to mature in one year or less totaled $135.6 million.
Management believes, based on past experience, that a significant portion of
these funds will remain with the Savings Bank.

REGULATORY CAPITAL REQUIREMENTS

As a federally-chartered financial institution, the Savings Bank is required to
maintain certain minimum amounts of regulatory capital. Regulatory capital is
not a valuation allowance and has not been created by charges against earnings.
The following table is a summary of the capital requirements, the Savings Bank's
regulatory capital and the amounts in excess at December 31, 1996:

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

Regulatory capital....................... $ 41,651 12.02% $ 41,651 12.02% $ 42,714 26.96%
Requirement.............................. 5,198 1.50 10,395 3.00 12,676 8.00
-------- ----- -------- ---- -------- -----

Excess................................... $ 36,453 10.52% $ 31,256 9.02% $ 30,038 18.96%
======== ===== ======== ==== ======== =====

ASSET /LIABILITY MANAGEMENT

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

The Savings Bank's profitability, like that of most financial institutions, is
dependent to a large extent upon its net interest income, which is the
difference between its interest income on interest-earning assets, such as
loans, mortgage-backed securities and investment securities, and its interest
expense on interest-bearing liabilities, such as deposits and other borrowings.
Financial institutions continue to be affected by general changes in levels of
interest rates and other economic factors beyond their control. At December 31,
1996, the Savings Bank's one-year interest sensitivity gap (the difference
between the amount of interest-earning assets anticipated by the Savings Bank,
based on certain assumptions, to mature or reprice within one year and the
amount of interest-bearing liabilities anticipated by the Savings Bank, based on
certain assumptions, to mature or reprice within one year) as a percentage of
total assets was a positive 5.64%. Generally, an institution with a positive gap
would experience an increase in net interest income in a period of rising
interest rates. However, certain shortcomings are inherent in the sensitivity
analysis presented above. For example, although certain assets and liabilities
may have similar maturities or periods to repricing, they may react in different
manners to changes in market interest rates. Therefore, no assurance can be
given that the Savings Bank will be able to maintain its net interest-rate
spread as market interest rates fluctuate.

The Savings Bank monitors its interest rate risk through the Asset/Liability
Committee which meets weekly and reports the results of such monitoring
quarterly to the Board of Directors. The Savings Bank's policy is to seek to
maintain a balance between interest-earning assets and interest-bearing
liabilities so that the Savings Bank's cumulative one-year gap ratio is within a
range which management believes is conducive to maintaining profitability
without incurring undue risk. Considering the current interest rate environment,
the Savings Bank has increased its investment in adjustable-rate and shorter
average life, fixed-rate mortgage-related securities and, generally, has not
retained in its portfolio 30 year fixed-rate loans, in order to position itself
against the consequences of rising interest rates. The Savings Bank also
maintains liquid assets in excess of the regulatory requirement, allowing for
the possibility of disintermediation when interest rates fluctuate. The Savings
Bank's liquidity ratio of 13.5% at December 31, 1996 is significantly higher
than the regulatory requirement of 5%. In addition, the Savings Bank's large
stable core deposit base resulting from its continuing commitment to quality
customer service has historically provided it with a steady source of funds.

The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 1996 that are expected
to reprice or mature, based upon certain assumptions, in each of the future
periods shown. (DOLLARS IN THOUSANDS)

More More More More More
than than than than than
Three Six One Three Five More
Three Months Months Year Years Years than
Months to Six to 12 to 3 to 5 to 10 Ten
or Less Months Months Years Years Years Years Other (1) Total
-------- ------ ------- ------ ------ ----- ----- --------- ------

Rate-sensitive assets:
Mortgage loans, net $ 44,526 23,518 32,163 76,240 12,947 11,669 5,960 (691) 206,332
Consumer and other loans 3,226 1,891 3,108 7,282 3,714 2,641 29 (275) 21,616
Mortgage-backed securities
and related securities
and mortgage-backed
and related securities
held for sale, net 35,196 15,531 8,964 4,556 842 705 143 (201) 65,736
Interest-earning deposits 4,077 -- -- -- -- -- -- -- 4,077
Investment securities and
investment securities
held for sale............. 5,231 - - 17,450 1,000 85 205 (59) 23,912
Mutual funds................. 103 7,187 - 1,745 - - - (115) 8,920
FHLB stock................... 1,939 - - - - - - - 1,939
-------- ------ ------- ------ ------ ----- ----- ------ ------

Total interest-earning
assets............... 94,298 48,127 44,235 107,273 18,503 15,100 6,337 (1,341) 332,532
-------- ------ ------- ------ ------ ----- ----- ------ ------

Rate-sensitive liabilities:
Deposits:
Passbook and statement
savings................. 2,610 2,363 4,072 10,122 4,544 3,201 500 - 27,412
NOW accounts.............. 2,652 2,401 4,136 10,283 4,616 3,252 508 - 27,848
Money market.............. 1,473 1,333 2,296 5,708 2,562 1,805 281 - 15,458
Certificates.............. 41,956 44,482 49,141 64,578 11,789 - - - 211,946
Borrowed funds............... - 3,198 5,000 - - - - - 8,198
-------- ------ ------- ------ ------ ----- ----- ------ ------

Total interest-bearing
liabilities.......... 48,691 53,776 64,646 90,691 23,511 8,258 1,289 - 290,862
-------- ------ ------- ------ ------ ----- ----- ------ ------

Interest sensitivity gap...... $ 45,607 (5,649) (20,411) 16,582 (5,008) 6,842 5,048 (1,341) 41,670
======== ====== ======= ====== ====== ===== ===== ====== ======

Cumulative interest-
sensitivity gap.............. $ 45,607 39,958 19,547 36,130 31,121 37,963 43,011
======== ====== ====== ====== ====== ====== ======

Cumulative interest-sensitivity
gap as a percentage of
total assets................. 13.16% 11.53% 5.64% 10.43% 8.98% 10.96% 12.42%
===== ===== ==== ===== ==== ===== =====

Cumulative interest-earning assets
as a percentage of cumulative
interest-bearing liabilities 193.67% 139.00% 111.70% 114.01% 111.06% 113.11% 114.79%
====== ====== ====== ====== ====== ====== ======

- --------------------------
(1) Represents premiums, discounts, market value adjustments and provision for
loan losses.

COMPARISON OF YEARS ENDED DECEMBER 31, 1996 TO DECEMBER 31, 1995

General Operating Results. Net income for the year ended December 31, 1996, was
$2.2 million or $.85 per share, compared to net income for the year ended
December 31, 1995 of $3.1 million or $1.16 per share. The decrease in net
income was primarily the result of the effect of the one-time SAIF
assessment of $1.7 million before taxes, included in noninterest expense,
partially offset by an increase of $949,000 in net interest income before
provision for loan losses.

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

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

Net Interest Income Before Provision for Loan Losses. Net interest income before
provision for loan losses increased $949,000 or 9.2% from $10.3 million for
the year ended December 31, 1995 to $11.3 million for the comparable period
ended December 31, 1996.

Provision for Loan Losses. The Savings Bank's provision for loan losses
decreased from $124,000 for the year ended December 31, 1995 to $107,000 for
the year ended December 31, 1996. The decrease of $17,000 reflects the
Savings Bank's continuing policy of evaluating the adequacy of its allowance
for loan losses and prevailing standards within the thrift industry.
Generally, such evaluation includes consideration of the level of
nonperforming loans and the level and composition of the Savings Bank's loan
portfolio.

Noninterest Income. Noninterest income increased from $709,000 for the year
ended December 31, 1995 to $809,000 for the year ended December 31, 1996.
The increase was due to an increase in other service charges and fees of
$93,000, and deposit account fees of $12,000 for the year ended December 31,
1996.

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

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

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 TO DECEMBER 31, 1994

General Operating Results. Net income for the year ended December 31, 1995, was
$3.1 million or $1.16 per share, compared to net income for the year ended
December 31, 1994 of $3.6 million or $1.35 per share. The decrease in net
income was due to an increase in noninterest expense of $662,000 partially
offset by an increase of $89,000 in net interest income before provision for
loan losses.

Interest Income. Interest income increased $3.0 million, or 15.5% from $19.5
million for the year ended December 31, 1994 to $22.5 million for the year
ended December 31, 1995. The increase was due primarily to an increase in
the average balance of total interest-earning assets from $292.4 million for
the year ended December 31, 1994 to $307.7 million for the year ended
December 31, 1995, an increase of $15.3 million, or 5.2%. That increase is
primarily the result of new branch openings and an increase in the average
yield on interest-earning assets from 6.66% for the year ended December 31,
1994 to 7.31% for the year ended December 31, 1995. The 65 basis point
increase represented a 9.8% increase and was primarily due to an increase in
interest rates on loans and mortgage-backed securities. The yield on loans
increased from 8.31% for the year ended December 31, 1994 to 8.43% for the
year ended December 31, 1995. The yield on mortgage-backed securities
increased from 5.40% for the year ended December 31, 1994 to 6.01% for the
year ended December 31, 1995 because of increases in the rates at which new
loans were originated and existing ARM loans repriced. The yield on
investment securities and other interest earning assets increased from 5.03%
for the year ended December 31, 1994 to 6.12% for the year ended December
31, 1995.

Interest Expense. Interest expense increased $2.9 million from $9.3 million at
December 31, 1994 to $12.2 million at December 31, 1995 as the weighted
average rate paid on interest-bearing liabilities increased from 3.78%
during 1994 to 4.71% in 1995.

Net Interest Income Before Provision for Loan Losses. Net interest income before
provision for loan losses increased $89,000 or .87% from $10.2 million for
the year ended December 31, 1994 to $10.3 million for the comparable period
ended December 31, 1995.

Provision for Loan Losses. The Savings Bank's provision for loan losses
decreased from $138,000 for the year ended December 31, 1994 to $125,000 for
the year ended December 31, 1995. The decrease of $13,000 reflects the
Savings Bank's continuing policy of evaluating the adequacy of its allowance
for loan losses and prevailing standards within the thrift industry.
Generally, such evaluation includes consideration of the level of
nonperforming loans and the level and composition of the Savings Bank's loan
portfolio.

Noninterest Income. Noninterest income increased from $647,000 for the year
ended December 31, 1994 to $709,000 for the year ended December 31, 1995.
The increase was due to an increase in other service charges and fees of
$55,000, and deposit account fees of $26,000 for the year ended December 31,
1995 as compared to 1994, partially offset by a gain on sale of investment
securities available-for-sale of $27,000 during the year ended December 31,
1994 compared to none during the year ended December 31, 1995.

Noninterest Expense. Noninterest expenses consist primarily of employee
compensation and benefits, occupancy and equipment expense and FDIC
insurance premiums. Noninterest expenses increased $662,000 for the year
ended December 31, 1995 compared to 1994. Compensation and benefits expense
increased from $3.0 million for the year ended December 31, 1994 to $3.4
million for the year ended December 31, 1995, primarily related to the
growth of the Company and normal salary increases. The remaining items in
noninterest expenses increased $238,000 for the year ended December 31, 1995
compared to the year ended December 31, 1994 primarily due to the growth of
the Company.

Provision for Income Taxes. The provision for federal and state income taxes
remained substantially the same and was $1.9 million for the years ended
December 31, 1994 and December 31, 1995. The effective tax rate increased
from 35.3% for the year ended December 31, 1994 to 38.4% for the year ended
December 31, 1995.

IMPACT OF INFLATION AND CHANGING PRICES

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

FUTURE ACCOUNTING REQUIREMENTS

The FASB has issued Statement of Financial Accounting Standards No. 125 ("SFAS
125"). The statement provides accounting and reporting standards for transfers
and servicing of financial assets as well as extinguishments of liabilities. The
statement also provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured borrowings. SFAS
125 is effective for transfers and servicing of financial assets as well as
extinguishments of liabilities occurring in 1997. Management does not anticipate
SFAS 125 will have a material impact on the Company.

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

Audited Consolidated Financial Statements
December 31, 1996 and 1995
and for each of the Years in the
Three Years Ended December 31, 1996

(Together with Independent Auditors' Report)

FFLC BANCORP, INC.

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

December 31,
1996 1995
--------- -------

Assets

Cash and due from banks ........................................................................ $ 6,080 5,005
Interest-bearing deposits ...................................................................... 4,077 8,924
--------- -------
Cash and cash equivalents .......................................................... 10,157 13,929
--------- -------
Investment securities held to maturity, at cost
(market value of $3,271 in 1996 and $3,472 in 1995) ........................................ 3,239 3,441
Investment securities available for sale, at market ............................................ 29,593 21,824
Mortgage-backed and related securities held to maturity, at cost (market value
of $47,396 in 1996 and $75,257 in 1995) .................................................... 46,892 74,925
Mortgage-backed and related securities available for sale, at market ........................... 18,844 18,958
Loans receivable, net of allowance for loan losses of $1,063 in 1996
and $977 in 1995 ........................................................................... 227,948 183,448
Accrued interest receivable:
Investment securities ...................................................................... 577 643
Mortgage-backed securities ................................................................. 243 291
Loans receivable ........................................................................... 1,199 1,012
Premises and equipment, net .................................................................... 5,144 4,817
Foreclosed real estate ......................................................................... 361 165
Real estate held for development ............................................................... 122 122
Restricted securities - Federal Home Loan Bank stock, at cost................................... 1,939 1,928
Other assets ................................................................................... 184 329
--------- -------
Total .............................................................................. $ 346,442 325,832
========= =======

FFLC BANCORP, INC.

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

December 31,
1996 1995
--------- -------

Liabilities and Stockholders' Equity

Liabilities:
NOW and money market accounts .............................................................. 43,306 40,755
Passbook and statement savings accounts .................................................... 27,412 26,811
Certificates ............................................................................... 211,946 200,137
--------- -------
Total deposits ..................................................................... 282,664 267,703
--------- -------
Advances from Federal Home Loan Bank ........................................................... 150 150
Securities sold under agreements to repurchase ................................................. 8,048 --
Deferred income taxes .......................................................................... 930 1,105
Accrued expenses and other liabilities ......................................................... 1,024 1,514
--------- -------
Total liabilities .................................................................. 292,816 270,472
--------- -------
Commitments and contingencies (Notes 5, 10 and 13)

Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding ....................................................................... -- --
Common stock, $.01 par value, 4,500,000 shares authorized,
2,761,819 shares issued ................................................................ 28 28
Additional paid-in-capital ................................................................. 27,386 27,041
Retained income ............................................................................ 33,962 32,704
Unrealized loss on securities available for sale, net of tax of
$116 in 1996 and $57 in 1995 ........................................................... (193) (94)
Treasury stock, at cost (339,656 shares in 1996 and
132,044 shares in 1995) ................................................................ (6,295) (2,373)
Stock held by Incentive Plan Trusts ........................................................ (1,262) (1,946)
--------- -------
Total stockholders' equity ......................................................... 53,626 55,360
--------- -------
Total .............................................................................. $ 346,442 325,832
========= =======

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

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

Year Ended December 31,
1996 1995 1994
--------- --------- ---------

Interest income:
Loans receivable .................................. $ 16,813 13,817 10,988
Mortgage-backed securities ........................ 5,020 6,403 6,312
Investment securities and time deposits ........... 2,385 2,273 2,180
---------- --------- ---------
Total interest income ......................... 24,218 22,493 19,480
---------- --------- ---------
Interest expense:
Deposits .......................................... 12,900 12,143 9,241
Borrowed funds .................................... 59 40 18
---------- --------- ---------
Total interest expense ........................ 12,959 12,183 9,259
---------- --------- ---------
Net interest income ................................... 11,259 10,310 10,221

Provision for loan losses ............................. 107 124 138
---------- --------- ---------
Net interest income after provision for loan losses 11,152 10,186 10,083
---------- --------- ---------
Noninterest income:
Deposit account fees .............................. 489 477 451
Other service charges and fees .................... 266 173 119
Gain on sale of securities available for sale ..... -- -- 27
Other ............................................. 54 59 50
---------- --------- ---------
Total noninterest income ...................... 809 709 647
---------- --------- ---------
Noninterest expense:
Salaries and employee benefits .................... 3,740 3,384 2,960
Occupancy expense ................................. 812 579 527
Deposit insurance premium ......................... 624 579 553
SAIF recapitalization assessment .................. 1,655 -- --
Advertising and promotion ......................... 122 120 123
Data processing expense ........................... 384 322 290
Professional services ............................. 270 259 230
Other ............................................. 692 631 529
---------- --------- ---------
Total noninterest expense ..................... 8,299 5,874 5,212
---------- --------- ---------

FFLC BANCORP, INC.

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

Year Ended December 31,
1996 1995 1994
--------- --------- ---------

Income before income taxes ............................ 3,662 5,021 5,518

Income taxes .......................................... 1,478 1,928 1,948
---------- --------- ---------
Net income ............................................ $ 2,184 3,093 3,570
========== ========= =========
Net income per share of common stock .................. $ .85 1.16 1.35
========== ========= =========
Weighted average number of shares outstanding ......... 2,560,795 2,656,529 2,645,829
========== ========= =========

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

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

Stock
Unrealized Held
Retained Loss on By
Additional Income, Securities Incentive Total
Common Paid-In Substantially Available Treasury Plan Stockholders'
Stock Capital Restricted For Sale Stock Trusts Equity
----- ------- ---------- -------- ----- ------ ------

Balance at December 31,
1993 ................. $ - - 27,259 (14) - - 27,245

Net proceeds from the
issuance of 2,761,819
shares of common
stock ................ 28 26,563 - - - - 26,591

Purchase of 331,418
shares of common
stock by incentive
plans ................ - - - - - (3,314) (3,314)

Shares committed to
participants in
incentive plans
(194,216 shares
remain uncommitted
at December 31,
1994) ................ - 161 - - - 684 845

Dividends paid, net of
$40 of dividends
on ESOP shares recorded
as compensation
expense .............. - - (457) - - - (457)

Net income ................ - - 3,570 - - - 3,570

Unrealized gains on
investment and mortgage-
backed securities
available for sale, net
of income taxes of $172
upon implementation of
SFAS No. 115 as of
January 1, 1994 ...... - - - 276 - - 276

(continued)

FFLC BANCORP, INC.

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

Change in unrealized gains
(losses) on investment
and mortgage-backed
securities available
for sale, net of income
taxes of $613 - - - (994) - - (994)
------ -------- ---------- ------- ------- ------- -----------
Balance at December 31,
1994 28 26,724 30,372 (732) - (2,630) 53,762

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

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

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

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

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

(continued)
21

FFLC BANCORP, INC.

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

Change in unrealized
gains (losses) on
investment and
mortgage-backed
securities available
for sale, net of
income taxes of
$384................ - - - 638 - - 638
------- ---------- ---------- ------- ------- ------- -----------
Balance at December 31,
1995................ 28 27,041 32,704 (94) (2,373) (1,946) 55,360

Net proceeds from the
issuance of 7,993
shares of common
stock............... - 80 - - - - 80

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

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

Purchase of treasury
stock, 207,612
shares.............. - - - - (3,922) - (3,922)

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

(continued)

FFLC BANCORP, INC.

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

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

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

Consolidated Statements of Cash Flows
($ in thousands)

Year Ended December 31,
1996 1995 1994
-------- -------- --------

Cash flows from operating activities:
Net income ........................................................................ $ 2,184 3,093 3,570
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses ................................................. 107 124 138
Depreciation .............................................................. 345 212 184
Gain on sale of securities available for sale ............................. -- -- (27)
Gain on sale of foreclosed real estate .................................... -- (7) (3)
(Credit) provision for deferred income taxes .............................. (116) 152 (265)
Shares committed and dividends to incentive
plan participants ..................................................... 1,009 981 885
Amortization of premiums or discounts
on investment and mortgage-backed securities .......................... (106) (12) 66
Accretion of deferred loan fees and unearned interest ..................... (18) (96) (251)
Deferral of loan fees collected, net of costs deferred .................... 157 80 (85)
Dividends on FHLB stock ................................................... (11) -- (24)
Increase in accrued interest receivable ................................... (73) (181) (217)
Decrease (increase) in other assets ....................................... 145 (112) 183
(Decrease) increase in accrued expenses and other liabilities ............. (490) 125 640
-------- -------- --------
Net cash provided by operating activities ......................... 3,133 4,359 4,794
-------- -------- --------
Cash flows from investing activities:
Purchase of investment securities held to maturity ................................ -- (475) (3,692)
Proceeds from maturities of investment securities held to maturity ................ 202 290 3,319
Purchase of investment securities available for sale .............................. (22,743) (2,562) (5,744)
Proceeds from maturities of investment securities available for sale .............. 14,953 5,633 3,194
Proceeds from sales of investment securities available for sale ................... -- -- 4,087
Purchase of mortgage-backed securities held to maturity ........................... -- (4,275) (40,100)
Principal repayments on mortgage-backed securities
held to maturity .............................................................. 28,098 27,013 28,603
Purchase of mortgage-backed securities available for sale ......................... (8,596) (1,762) (3,996)
Principal repayments on mortgage-backed securities
available for sale ............................................................ 8,614 2,878 6,726
Purchase of loans receivable ...................................................... (2,106) -- --
Proceeds from sale of loans receivable ............................................ 1,557 -- --
Loan disbursements ................................................................ (83,569) (56,751) (49,190)
Principal repayments on loans ..................................................... 39,106 21,302 23,274
Purchase of premises and equipment, net ........................................... (672) (1,918) (621)
Proceeds from sales of foreclosed real estate ..................................... 70 104 30
-------- -------- --------
Net cash used in investing activities ............................. (25,086) (10,523) (34,110)
-------- -------- --------

(continued)

FFLC BANCORP, INC.

Consolidated Statements of Cash Flows, Continued
($ in thousands)
Year Ended December 31,
1996 1995 1994
-------- -------- --------

Cash flows from financing activities:
Net increase (decrease) in noninterest-bearing demand, savings,
NOW and money market accounts ................................................. 3,152 (8,968) (1,624)
Net increase in certificate accounts .............................................. 11,809 24,920 12,375
Net increase (decrease) in securities sold under agreements
to repurchase ................................................................. 8,048 (3,000) 3,000
Net proceeds from the sale of common stock ........................................ -- -- 1,442
Stock options exercised ........................................................... 80 76 --
Purchase of treasury stock ........................................................ (3,922) (2,373) --
Cash dividends paid ............................................................... (986) (817) (497)
-------- -------- --------
Net cash provided by financing activities ............................. 18,181 9,838 14,696
-------- -------- --------
Net (decrease) increase in cash and cash equivalents .................................. (3,772) 3,674 (14,620)
Cash and cash equivalents at beginning of year ........................................ 13,929 10,255 24,875
-------- -------- --------
Cash and cash equivalents at end of year .............................................. $ 10,157 13,929 10,255
======== ====== ======
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest ...................................................................... $ 12,937 12,082 9,253
======== ====== ======
Income taxes .................................................................. $ 1,500 2,009 2,252
======== ====== ======
Noncash investing and financing activities:
(Decrease) increase in equity valuation allowance
for market value of investments ........................................... $ (99) 638 (718)
======== ====== ======
Common stock issued for subscriptions
outstanding ............................................................... $ -- -- 21,834
======== ====== ======
Transfers from loans to foreclosed real estate ................................ $ 287 478 232
======== ====== ======
Loans originated on sales of foreclosed real estate ........................... $ 21 300 193
======== ====== ======
Loans funded by and sold to correspondent ..................................... $ 2,368 1,151 1,198
======== ====== ======
Transfer of investment and mortgage-backed
securities to available-for-sale category, upon
adoption of SFAS No. 115 .................................................. $ -- -- 16,852
======== ====== ======
Transfer of investment and mortgage-backed
securities from held-to-maturity category
to available-for-sale category, as permitted
under SFAS No. 115 Implementation Guide ................................... $ -- 14,759 --
======== ====== ======

See accompanying Notes to Consolidated Financial Statements.

FFLC BANCORP, INC.

Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994

(1) Summary of Significant Accounting Policies
FFLC Bancorp, Inc. (the "Holding Company") was incorporated in Delaware on
September 16, 1993 as a unitary savings and loan holding company. The
Holding Company completed its public offering of 2,761,819 shares of common
stock on January 4, 1994 and acquired First Federal Savings Bank of Lake
County (the "Savings Bank") in connection with the Savings Bank's conversion
from a federally-chartered mutual savings association to a
federally-chartered stock savings bank. The Holding Company's acquisition of
the Savings Bank was accounted for as a pooling-of-interest. The Savings
Bank was established in 1934 as a federally-chartered mutual savings and
loan association. The Savings Bank is a community-oriented savings
institution which offers a variety of financial services to individuals and
businesses primarily located in Lake County and Sumter County, Florida. The
deposits of the Savings Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") through the Savings Association Insurance Fund
("SAIF").

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

General. The accounting and reporting policies of FFLC Bancorp, Inc. and its
subsidiaries (together, the "Company") conform to generally accepted
accounting principles and to general practices within the thrift industry.
The following summarizes significant accounting policies of the Company.

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

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

The Savings Bank is required to maintain certain average reserve balances
pursuant to regulations of the Federal Reserve Board. These balances must be
maintained in the form of vault cash or noninterest bearing deposits at a
Federal Reserve Bank. The Savings Bank exceeded this requirement, which was
$680,000 and $550,000 at December 31, 1996 and 1995, respectively.

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

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

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

Securities Available for Sale, Continued. Unrealized holding gains and
losses, net of tax, on available-for-sale securities are reported as a net
amount in a separate component of stockholders' equity until realized.

Gains and losses on the sale of available-for-sale securities are determined
using the specific identification method.

Declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than temporary
have resulted in write-downs of the individual securities to their fair
value. There were no such write-downs included in earnings as realized
losses during the three years ended December 31, 1996.

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

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

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

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

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

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

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

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

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

Fair Values of Financial Instruments. The following methods and assumptions
were used by the Company in estimating fair values of financial instruments:

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

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

Loans Receivable. For variable-rate loans that reprice frequently and
have no significant change in credit risk, fair values are based on
carrying values. Fair values for certain fixed-rate mortgage (e.g.
one-to-four family residential), commercial real estate and commercial
loans are estimated using discounted cash flow analyses, using interest
rates currently being offered for loans with similar terms to borrowers
of similar credit quality.

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

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

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

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

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

Net Income Per Share of Common Stock. Net income per share of common stock
has been computed since the date of conversion from a mutual to a capital
stock company, by dividing the net income for the year by the weighted
average number of shares outstanding. Shares of common stock purchased by
the Employee Stock Option Plan ("ESOP") and the Retention and Recognition
Plan ("RRP") incentive plans (see Note 17) are only considered outstanding
when the shares are released or committed to be released for allocation to
participants. The ESOP initially purchased 220,945 shares, of which 2,630
shares were released for allocation to participants each month beginning in
January, 1994. At December 31, 1996, 126,254 shares remain uncommitted and
are not considered outstanding for purposes of the computation of net income
per share of common stock. The RRP initially purchased 110,473 shares, of
which 106,838 and 106,510 were allocated to participants and are considered
outstanding for December 31, 1995 and 1996, respectively. The remaining
unallocated RRP shares were not considered outstanding during 1995 and 1996.
For the year ended December 31, 1995 and 1996, the weighted average number
of shares outstanding includes common stock equivalents (stock options-see
Note 17) computed using the treasury stock method. The following table
presents the calculation of net income per share of common stock:

Year Ended December 31,
1996 1995 1994
--------- --------- ---------

Weighted average shares of common stock issued
and outstanding before adjustments for ESOP,
RRP and common stock options ...................................................... 2,590,500 2,719,435 2,761,819

Adjustment to reflect the effect of unallocated
ESOP and RRP shares ............................................................... (148,605) (179,936) (209,999)
--------- --------- ---------
Weighted average shares outstanding before adjustments
for common stock options .......................................................... 2,441,895 2,539,499 2,551,820

Shares assumed outstanding to reflect the
dilutive effect of common stock options ........................................... 118,900 116,760 94,009
--------- --------- ---------
Weighted average shares, including common
stock equivalents for primary earnings per share .................................. 2,560,795 2,656,259 2,645,829
========= ========= =========
Primary earnings per share ............................................................ $ .85 1.16 1.35
========= ==== ====

Total weighted average common shares and equivalents
outstanding for primary earnings per share
computation ....................................................................... 2,560,795 2,656,259 2,645,829

Additional dilutive shares using the higher of the end of period
market value versus average market value for the period
utilizing the treasury stock method regarding stock options ....................... 20,495 8,588 --
--------- --------- ---------
Weighted average common shares and equivalents
outstanding for fully diluted earnings per share .................................. 2,581,290 2,664,847 2,645,829
========= ========= =========
Fully-diluted earnings per share ...................................................... $ .85 1.16 1.35
========= ==== ====

Future Accounting Requirements. The FASB has issued Statement of Financial
Accounting Standards No. 125 ("SFAS 125"). This Statement provides
accounting and reporting standards for transfers and servicing of financial
assets as well as extinguishments of liabilities. This Statement also
provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. SFAS 125
is effective for transfers and servicing of financial assets as well as
extinguishments of liabilities occurring in 1997. Management does not
anticipate SFAS 125 will have a material impact on the Company.

Reclassifications. Certain amounts in the 1994 and 1995 consolidated
financial statements have been reclassified to conform to the presentation
for 1996.

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

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

At December 31, 1996:
Investment securities held to maturity-
SBA-related investment securities ...................... $ 3,239 32 -- 3,271
======= ======= ======= =======
Investment securities available for sale:
Mutual funds ........................................... 9,035 -- 115 8,920
U.S. Government and agency securities .................. 20,208 2 34 20,176
Other investment securities ............................ 495 3 1 497
------- ------- ------- -------

Total .............................................. $29,738 5 150 29,593
======= ======= ======= =======

At December 31, 1995:
Investment securities held to maturity-
SBA-related investment securities ...................... 3,441 31 -- 3,472
======= ======= ======= =======

Investment securities available for sale:
Mutual funds ........................................... 8,939 -- 39 8,900
U.S. Government and agency securities .................. 11,475 55 138 11,392
Other investment securities ............................ 1,523 9 -- 1,532
------- ------- ------- -------
Total .............................................. $21,937 64 177 21,824
======= ======= ======= =======

Gross realized gains on sales of available-for-sale securities were $27,000
during the year ended December 31, 1994. There were no gross realized losses
during the year ended December 31, 1994. There were no sales of investment
securities during 1996 and 1995.

The scheduled maturities of investment securities held to maturity and
investment securities (other than equity) available for sale at December 31,
1996 were as follows:

Held-to-Maturity Securities Available-for-Sale Securities
--------------------------- -----------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
------- ----- ------ ------
(In thousands)

Due within one year.............................. $ - - 2,000 2,002
Due from one year to five years.................. - - 18,413 18,378
Due from five years to ten years................. - - 85 85
Due after ten years.............................. 3,239 3,271 205 208
------- ----- ------ ------
Total $ 3,239 3,271 20,703 20,673
======= ===== ====== ======

Investment securities carried at approximately $3.0 million and $1.0 million
at December 31, 1996 and 1995, respectively, were pledged to secure public
funds and tax deposits.

(3) Mortgage-Backed Securities
The principal balance, amortized cost and estimated market values of
mortgage-backed securities were as follows:

Principal Unamortized Unearned Amortized Fair
Balance Premiums Discounts Cost Value
------- -------- --------- ---- -----

At December 31, 1996: (In thousands)
Securities held to maturity:
FHLMC certificates..................$ 9,505 3 10 9,498 9,752
GNMA certificates................... 9,520 1 41 9,480 9,791
FNMA certificates................... 5,561 - 3 5,558 5,637
Collateralized mortgage
obligations..................... 22,365 7 16 22,356 22,216
-------- -- -- ------ ------
$ 46,951 11 70 46,892 47,396
======== == == ====== ======

Securities available for sale:
FHLMC certificates.................. 5,081 4 2 5,083 4,995
FNMA certificates................... 1,973 20 - 1,993 1,998
Collateralized mortgage
obligations..................... 11,933 20 21 11,932 11,851
-------- -- -- ------ ------
$ 18,987 44 23 19,008 18,844
======== == == ====== ======

Principal Unamortized Unearned Amortized Fair
Balance Premiums Discounts Cost Value
------- -------- --------- ---- -----

(In thousands)
At December 31, 1995:
Securities held to maturity:
FHLMC certificates..................$ 12,963 5 14 12,954 13,122
GNMA certificates................... 11,237 3 50 11,190 11,503
FNMA certificates................... 7,140 - 6 7,134 7,175
Collateralized mortgage
obligations..................... 43,661 38 52 43,647 43,457
-------- -- -- ------ ------
$ 75,001 46 122 74,925 75,257
======== == === ====== ======

Securities available for sale:
FHLMC certificates.................. 5,999 8 5 6,002 5,990
FNMA certificates................... 1,272 - - 1,272 1,284
Collateralized mortgage
obligations..................... 11,724 33 35 11,722 11,684
-------- -- -- ------ ------
$ 18,995 41 40 18,996 18,958
======== == == ====== ======

The amortized cost, gross unrealized gains and losses and estimated market
values of mortgage-backed securities were as follows:

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
At December 31, 1996: (In thousands)

Securities held to maturity:
FHLMC certificates.................................. $ 9,498 268 14 9,752
GNMA certificates................................... 9,480 315 4 9,791
FNMA certificates................................... 5,558 86 7 5,637
Collateralized mortgage
obligations..................................... 22,356 8 148 22,216
-------- --- --- ------
$ 46,892 677 173 47,396
======== === === ======
Securities available for sale:
FHLMC certificates.................................. 5,083 8 96 4,995
FNMA certificates................................... 1,993 24 19 1,998
Collateralized mortgage
obligations..................................... 11,932 - 81 11,851
-------- --- --- ------
$ 19,008 32 196 18,844
======== === === ======

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(In thousands)
At December 31, 1995:

Securities held to maturity:
FHLMC certificates.................................. 12,954 168 - 13,122
GNMA certificates................................... 11,190 314 1 11,503
FNMA certificates................................... 7,134 55 14 7,175
Collateralized mortgage
obligations..................................... 43,647 24 214 43,457
-------- -- --- ------
$ 74,925 561 229 75,257
======== === === ======
Securities available for sale:
FHLMC certificates.................................. 6,002 28 40 5,990
FNMA certificates................................... 1,272 12 - 1,284
Collateralized mortgage
obligations..................................... 11,722 35 73 11,684
-------- -- --- ------
$ 18,996 75 113 18,958
======== == === ======

There were no sales of mortgage-backed securities during the years ended
December 31, 1996, 1995 and 1994.

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 1-28 years; however, because of
prepayments, the expected weighted average life of these securities at
December 31, 1996 is approximately 2.1 years. The majority of the CMOs owned
by the Company are insured or guaranteed, either directly or indirectly,
through mortgage-backed securities underlying the obligations by either the
FNMA, FHLMC or GNMA. Depending on the amount of the Company's
available-for-sale mortgage-backed securities, fluctuations in the interest
rate environment and other factors, the Company may experience material
effects on its capital resources due to categorizing these securities as
available for sale. The Company's CMOs may be subject to price movements
which typically result from prepayment on the underlying obligations. The
Company's CMOs have coupon rates ranging from 4.00% to 7.51% and had a
weighted average rate of 5.91% at December 31, 1996. The Company purchases
only CMOs rated AA or better by nationally recognized rating services.

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

At December 31,
1996 1995
---- ----
(In thousands)

First mortgage loans secured by:
One-to-four-family residential............................................. $ 191,788 159,170
Construction and land...................................................... 5,489 5,343
Multi-family units......................................................... 4,180 3,098
Commercial real estate, churches and other................................. 13,565 6,654
Consumer loans................................................................. 21,016 13,375
Other loans.................................................................... 883 1,118
--------- -------
Subtotal............................................................... 236,921 188,758
Undisbursed portion of loans in process.................................... (8,007) (4,267)
Net deferred loan costs (fees)............................................. 97 (66)
Allowance for loan losses.................................................. (1,063) (977)
--------- -------
Loans receivable, net.................................................. $ 227,948 183,448
========= =======

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

Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)

Balance at January 1.............................................. $ 977 869 735
Loans charged off................................................. (21) (17) (4)
Provision for loan losses......................................... 107 125 138
------- --- ---
Balance at December 31............................................ $ 1,063 977 869
======= === ===

There were no impaired loans recognized under SFAS 114 and 118 during the
years ended December 31, 1996 and 1995.

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

Nonaccrual loans at December 31, 1996 and 1995 totaled $666,000 and
$174,000, respectively. For the year ended December 31, 1996, interest
income on loans would have been increased approximately $23,000 if the
interest on nonaccrual loans at December 31, 1996 had been recorded under
the original terms of such loans. All of the nonaccrual loans at December
31, 1996 were first-mortgage, single-family residential loans or consumer
loans. There have been no loans restructured during any of the periods
presented.
33

(5) Premises and Equipment
Components of properties and equipment were as follows:

At December 31,
1996 1995
---- ----
(In thousands)

Cost:
Land....................................................................... $ 1,754 1,378
Building and improvements.................................................. 4,041 4,045
Furniture and equipment.................................................... 2,145 1,974
Construction in progress................................................... 112 19
------- -----
Total cost............................................................. 8,052 7,416

Less accumulated depreciation.................................................. 2,908 2,599
------- -----
Net book value............................................................. $ 5,144 4,817
======= =====

Certain company facilities are leased under various operating leases. Rental
expense was $22,000 in 1996. No related rental expense was incurred during
1995 and 1994. At December 31, 1996, future minimum rental commitments under
noncancellable leases were as follows (in thousands):

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

1997............................... $ 43
1998............................... 46
1999............................... 46
2000............................... 31
2001............................... 8
-----
$ 174
=====

(6) Deposits
The aggregate amount of short-term jumbo CDs, each with a minimum
denomination of $100,000, was approximately $9.0 million and $8.3 million in
1996 and 1995, respectively.

At December 31, 1996, the scheduled maturities of CDs were as follows (in
thousands):

1997.............................. $ 135,579
1998.............................. 55,513
1999.............................. 9,065
2000.............................. 9,879
2001 and thereafter............... 1,910
---------
$ 211,946
=========

(7) Advances from Federal Home Loan Bank and Other Borrowings
The $150,000 community investment fund advance outstanding at December 31,
1996 and 1995 bears interest at 7.17% and matures February 28, 1997. This
advance was obtained in accordance with the Community Reinvestment Act to
provide lower interest rate financing to developers of low-income housing.
The Savings Bank is required by its collateral agreement with the Federal
Home Loan Bank of Atlanta ("FHLB") to maintain qualifying first mortgage
loans in an amount equal to at least 150% of the advance as collateral. The
Savings Bank has also pledged its FHLB stock for such advances.

The Savings Bank also has $60 million of credit availability from the FHLB
under the same collateral conditions discussed above. The Savings Bank did
not draw funds on this line of credit at any time during the years ended
December 31, 1996 and 1995.

Mortgage-backed securities sold under dollar reverse repurchase agreements
were delivered to the broker-dealers who arranged the transactions. The
broker-dealers may have sold, loaned, or otherwise disposed of such
securities to other parties in the normal course of their operations, and
have agreed to resell to the Company substantially identical securities at
the maturities of the agreements. The agreements at December 31, 1996 mature
within forty-five days.

Information concerning securities sold under agreements to repurchase is
summarized as follows:

Year Ended December 31,
1996 1995
---- ----
(Dollars in thousands)

Average balance during the year........................................... $ 849 470
======= =====
Average interest rate during the year..................................... 5.65% 6.20%
======= =====
Maximum month-end balance
during the year....................................................... $ 8,048 2,031
======= =====
Mortgage-backed securities underlying the agreements at year end:

Carrying value........................................................ $ 8,245 -
======= =====
Fair value............................................................ $ 8,237 -
======= =====

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

The income tax provision is summarized as follows:

Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)

Current .............................. $ 1,594 1,776 2,213
Deferred.............................. (116) 152 (265)
------- ----- -----
$ 1,478 1,928 1,948
======= ===== =====

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,
-----------------------------------------------------------------------
1996 1995 1994
---------------------- ---------------------- ------------------
Amount % Amount % Amount %
---------------------- ---------------------- ------------------
(Dollars in thousands)

Taxes on income at U.S.
statutory rate........... $ 1,245 34.0% $ 1,707 34.0% $ 1,876 34.0%
State income taxes, net of
federal tax benefit...... 131 3.6 181 3.6 200 3.6
Other - net.................. 102 2.8 40 .8 (128) (2.3)
------- ---- ------- ---- ------- ----
Taxes on income at
effective rates.......... $ 1,478 40.4% $ 1,928 38.4% $ 1,948 35.3%
======= ==== ======= ==== ======= ====

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,
1996 1995
---- ----
(In thousands)

Deferred tax liabilities:
Deferred loan fees.................................................. $ 111 201
Bad debt expense.................................................... 501 559
FHLB stock dividends................................................ 304 304
Depreciation........................................................ 186 151
Certain accrued interest............................................ 24 34
Other............................................................... 128 93
----- -----
Gross deferred tax liabilities.......................................... 1,254 1,342
----- -----
Deferred tax assets:
Unrealized loss on securities available for sale.................... 116 57
Employee stock option plan.......................................... 208 180
----- -----
Gross deferred tax assets............................................... 324 237
----- -----
Net deferred tax liabilities............................................ $ 930 1,105
======= =====

Retained earnings at December 31, 1996 and 1995 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, 1996 and 1995.

The Small Business Job Protection Act of 1996 (the "1996 Act") enacted on
August 2, 1996 requires savings institutions, such as the Savings Bank, to
recapture certain portions of their accumulated bad debt reserves, and
eliminated the Percentage of Taxable Income Method of accounting for bad
debts for tax purposes. The Savings Bank will be required to change its
method of accounting for bad debts for tax purposes effective January 1,
1996. In addition, the Savings Bank will be required to recapture the excess
of its bad debt reserves at December 31, 1995 over its base year reserves at
December 31, 1987, ratably over a six-year period beginning in 1996. At
December 31, 1996, the Savings Bank had approximately $900,000 of deferred
tax liabilities recorded for the recapture of its excess bad debt reserves.
As provided under the 1996 Act, the Savings Bank may defer the recapture of
the excess reserves for tax purposes for each of two successive taxable
years in which the Savings Bank originates a defined minimum level of
certain residential loans. Management believes that the Savings Bank will be
able to originate such minimum levels, and accordingly expects to defer the
recapture of the excess reserves for the two years allowed under the 1996
Act.

(9) Pension Plan
Prior to 1996, the Company participated in a multi-employer defined benefit
pension plan (the "Pension Plan") which covered substantially all of its
employees. The Company's funding policy with respect to the Pension Plan was
to make an annual contribution determined by the Pension Plan's actuaries
that would not be less than the minimum required contribution, nor greater
than the maximum federal income tax deductible limit. The Company's
contributions for the Pension Plan for the years ended December 31, 1995 and
1994 were $65,000 and $31,000, respectively. During 1996, the Company
decided to withdraw from participation in the Pension Plan, and accordingly,
participants' benefits were frozen and participants became fully vested at
that date. The Company did not make a contribution to the Pension Plan for
1996.

In connection with the above, the Company adopted a new defined contribution
profit sharing 401(k) plan (the "401(k) Plan") effective April 1, 1996. All
employees who have met a minimum service requirement (1,000 hours of service
in a twelve-month period) may participate in the Plan. Under the 401(k)
Plan, a participant may elect to contribute up to 15% of their annual
compensation, subject to IRS limitations on total annual contributions. The
Company will make contributions to the 401(k) Plan on a monthly basis at two
percent of participants' compensation. Contributions to the 401(k) Plan for
the year ended December 31, 1996 were $23,000.

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

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.

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

At December 31, 1996 At December 31, 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(in thousands)

Financial assets:
Cash and cash equivalents.........................$ 10,157 10,157 13,929 13,929
Investment securities............................. 32,832 32,865 25,265 25,296
Mortgage-backed securities........................ 65,736 66,240 93,883 94,215
Loans receivable.................................. 227,948 224,177 183,448 186,360
Accrued interest receivable....................... 2,019 2,019 1,946 1,946
Federal Home Loan Bank stock...................... 1,939 1,939 1,928 1,928

Financial liabilities:
Deposit liabilities............................... 282,664 284,034 267,704 270,660
Advance from FHLB................................. 150 150 150 152
Securities sold under agreements
to repurchase................................. 8,048 8,048 - -

A summary of the notional amounts of the Company's financial instruments
which approximates fair value, with off-balance-sheet risk at December 31,
1996, follows-

Notional
Amount
------
(in thousands)

Commitments to extend credit.............. $ 4,376
=======

(11) Significant Group Concentration of Credit Risk
The Company grants real estate and consumer loans to customers primarily in
the State of Florida with the majority of such loans in the Lake and Sumter
County area. Therefore, the Company's exposure to credit risk is
significantly affected by changes in the economy of the Lake and Sumter
County area.

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

(12) Related Parties
Loans to directors and executive officers of the Company, which were made
at market rates, 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,
1996 1995
---- ----
(In thousands)

Beginning balance.......................................................... $ 1,038 541
Amounts related to new officers and directors.............................. - 402
Loans originated........................................................... 111 226
Principal repayments....................................................... (119) (131)
------- -----
Ending balance......................................................... $ 1,030 1,038
======= =====

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

(14) Restrictions on Retained Earnings
The Savings Bank is subject to certain restrictions on the amount of
dividends that it may declare without prior regulatory approval. At December
31, 1996, approximately $15 million of retained earnings were available for
dividend declaration without prior regulatory approval.

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

Quantitative measures established by regulation to ensure capital adequacy
require the Savings Bank to maintain minimum amounts (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined). Management believes, as of December 31,
1996, that the Savings Bank meets all capital adequacy requirements to which
it is subject.

As of December 31, 1996, the most recent notification from the OTS
categorized the Savings Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well
capitalized, the Savings Bank must maintain minimum tangible, tier I (core),
tier I (risk-based) and total risk-based capital ratios as set forth in the
table. There are no conditions or events since that notification that
management believes have changed the institution's category.

The Savings Bank's actual capital amounts and ratios at December 31, 1996
are also presented in the table.

To Be Well
Minimum Capitalized
For Capital For Prompt
Adequacy Corrective Action
Actual Purposes Provisions
----------------- ----------------- -----------------
Ratio Amount Ratio Amount Ratio Amount
----- ------ ----- ------ ----- ------
(Dollars in thousands)

Stockholders' equity,
and ratio to total
assets..................... 12.05% $ 41,731
Less: investment in
nonincludable
subsidiary................. (201)
Add back: unrealized loss on
available-for-sale
securities................. 121
---

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

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

Tier 1 capital, and ratio
to risk-weighted assets.... 26.29% 41,651 4.0% $ 6,338 6.0% $ 9,507
======== ========
Tier 2 capital (allowance for
loan losses)............... 1,063
-----

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

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

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

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

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

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

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

(16) Conversion to Stock Savings Bank
The Savings Bank successfully completed a conversion from a federally
chartered mutual savings association to a federally chartered stock savings
bank on January 4, 1994 pursuant to the Plan of Conversion adopted by the
Savings Bank's Board of Directors on June 17, 1993 and subsequently approved
by regulatory authorities and members of the Bank. FFLC Bancorp, Inc. was
created as the holding company for the Savings Bank as part of this
conversion, generating proceeds of $23.3 million (net of shares purchased by
the Savings Bank for employee stock incentive plans) from the sale of
2,761,819 shares of stock at the price of $10 per share in a subscription
and community offering.

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

Current regulations allow the Savings Bank to pay dividends on its stock
after the conversion if its regulatory capital would not thereby be reduced
below the amount then required for the aforementioned Liquidation Account.
Also, capital distribution regulations limit the Savings Bank's ability to
make capital distributions which include dividends, stock redemptions and
repurchases, cash-out mergers, interest payments on certain convertible debt
and other transactions charged to the capital account based on their capital
level and supervisory condition. Federal regulations also preclude any
repurchase of the stock by the Savings Bank or its holding company for three
years after conversion except for purchases of qualifying shares of a
director and repurchases pursuant to an offer made on a pro rata basis to
all stockholders and with prior approval of the Office of Thrift Supervision
or pursuant to an open-market stock repurchase program that complies with
certain regulatory criteria. See also Note 19 for information regarding the
Savings Bank's Stock Repurchase Program.

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

During the years ended December 31, 1996 and 1995, 5,000 and 3,021 options
were granted under the Option Plan, and 3,600 and 2,709 shares were awarded
under the Recognition and Retention Plan. If compensation cost for the
Option Plan and the Recognition and Retention Plan had been determined based
on the fair value of the awards at the grant date, using the fair value
method defined in SFAS No. 123, the Company's net income and earnings per
share for 1996 and 1995 would not have been materially reduced.

Stock Option Plan. During 1993, the Company adopted and the shareholders
approved the Option Plan. On January 4, 1994, upon conversion of the Savings
Bank to a stock association, stock options for 276,182 common shares were
authorized to be granted to directors, officers and employees of the Savings
Bank including 39,801 shares reserved for future directors, officers and
employees. Shares granted under the Option Plan are exercisable at the
market price at the date of grant. Such incentive stock options granted to
officers and employees are exercisable in three equal annual installments,
with the first installment becoming exercisable one year from the date of
grant. Options granted to outside directors are exercisable immediately, but
any common shares obtained from exercise of the options may not be sold
prior to one year from the date of grant. All options expire at the earlier
of ten years from the date of grant or one year following the date which the
outside director, officer or employee ceases to serve in such capacity. At
December 31, 1996, the Company is authorized to grant options for future
directors, officers and employees for 41,114 shares.

The following is a summary of option transactions:

Option
Number Prices Per
of Shares Shares
--------- ------

Granted.............................................................. 237,881 $10.00-13.50
Forfeited............................................................ (8,500) $10.00-13.50
-------
Outstanding, December 31, 1994....................................... 229,381 $10.00
Granted.............................................................. 3,021 $15.88
Forfeited............................................................ (667) $10.00
Exercised............................................................ (7,581) $10.00
-------
Outstanding, December 31, 1995....................................... 224,154 $10.00-15.88
Granted.............................................................. 5,000 $20.00
Forfeited............................................................ (1,667) $10.00
Exercised............................................................ (7,993) $10.00
-------
Outstanding, December 31, 1996....................................... 219,494 $10.00-20.00
=======

Employee Stock Ownership Plan. The Company sponsors a leveraged ESOP that
covers eligible employees who have a twelve-month period of employment with
the Savings Bank during which they worked at least 1,000 hours and who have
attained age 21. The Savings Bank makes quarterly contributions to the ESOP
equal to the ESOP's debt service. The ESOP Trust purchased 220,945 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, 1996, 1995 and 1994 included the following ESOP
related costs:

Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)

Amortization of the original cost, $10 per share............................ $ 315 315 315
Market appreciation of the FFLC shares...................................... 265 242 160
Dividends on ESOP shares.................................................... 60 56 39
----- --- ---
Total................................................................... $ 640 613 514
===== === ===

The ESOP shares were as follows:

At December 31,
1996 1995
---- ----
(In thousands)

Allocated shares and shares released for allocation.................... $ 91,731 62,070
Unreleased shares...................................................... 126,254 157,817
--------- -------

Total ESOP shares...................................................... 217,985 219,887
========= =======

Fair value of unreleased shares........................................ $ 2,714 2,959
========= =======

Recognition and Retention Plan. The Company adopted, and the shareholders
approved, an RRP for directors, officers and employees to enable the Savings
Bank to attract and retain experienced and capable personnel. On January 4,
1994, the conversion date, 110,473 shares of common stock were purchased for
the RRP which included 4,840 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 are excluded from stockholders'
equity. The Company will recognize compensation expense in the amount of the
fair market value of the common stock at the grant date of $10 per share,
pro rata over the years during which the shares are earned and payable and
is recorded as a credit to shareholders' equity. Compensation expense
attributable to the RRP amounted to $368,000 in 1996, 1995 and 1994. 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, 1996, 3,963 shares remain reserved for future directors,
officers and employees.

(18) Parent Company Only Financial Statements
Condensed financial statements of the Holding Company as of and for the
years ended December 31, 1996 and 1995 are presented below. Amounts shown as
investment in subsidiary, loans to subsidiary and equity in earnings of
subsidiary are eliminated in consolidation.

Condensed Balance Sheets

At December 31,
1996 1995
---- ----
(In thousands)

Assets

Cash, deposited with subsidiary............................................ $ 645 1,129
Investment in subsidiary................................................... 41,731 41,667
Loans to subsidiary........................................................ 11,262 12,578
Other assets............................................................... - 6
-------- ------
Total assets....................................................... $ 53,638 55,380
======== ======

Liabilities and Stockholders' Equity

Current income taxes....................................................... - 4
Accrued expense and other liabilities...................................... 12 16
Stockholders' equity....................................................... 53,626 55,360
-------- ------
Total liabilities and stockholders' equity......................... $ 53,638 55,380
======== ======

Condensed Statements of Income

Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)

Revenues..................................................................... $ 772 871 621
Expenses..................................................................... 396 432 317
------- ----- -----
Income before earnings of subsidiary................................. 376 439 304
Earnings of subsidiary............................................... 1,808 2,654 3,266
------- ----- -----
Net income $ 2,184 3,093 3,570
======= ===== =====

Condensed Statements of Cash Flows

Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)

Cash flows from operating activities:
Net income.................................................................... $ 2,184 3,093 3,570
Adjustments to reconcile net income to net cash
provided by operations:
Equity in earnings of subsidiary.......................................... (1,808) (2,654) (3,266)
Decrease (increase) in other assets....................................... 6 8 (14)
(Decrease) increase in current income taxes payable....................... (4) (27) 30
(Decrease) increase in accrued expenses and
other liabilities..................................................... (4) 7 9
------ ------ ------
Net cash provided by operating activities............................. 374 427 329
------ ------ ------
Cash flows from investing activities:
Purchase of common stock of subsidiary.................................... - - (13,295)
Loans to subsidiary....................................................... - - (13,209)
Repayment of loan to subsidiary........................................... 1,316 316 316
------ ------ ------
Net cash provided by investing activities............................. 1,316 316 (26,188)
------ ------ ------
Cash flows from financing activities:
Purchase of treasury stock................................................ (3,922) (2,373) -
Proceeds from sale of common stock........................................ 80 76 26,590
Cash dividends paid....................................................... (986) (817) (497)
Cash dividends received................................................... 2,654 3,266 -
------ ------ ------
Net cash (used in) provided by financing activities................... (2,174) 152 26,093
------ ------ ------
Net (decrease) increase in cash................................................... (484) 895 234

Cash at beginning of year......................................................... 1,129 234 -
------ ------ ------
Cash at end of year............................................................... $ 645 1,129 234
======= ====== =======

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

In January and August 1996, the Company's Board of Directors approved
programs which allow the Company to acquire additional common stock in the
open market. The Company received OTS approval for the programs and began
repurchasing shares within one month of approval. During the year ended
December 31, 1996, all 132,000 shares approved under the January 1996
program were repurchased. Under the August 1996 program, the Company is
limited to repurchasing no more than 5% or approximately 126,000 shares of
its publicly held common stock over a one year period ending September 25,
1997. During the year ended December 31, 1996, 76,000 shares or 60.3% of the
maximum number of shares approved under that program were repurchased.

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

Year Ended December 31, 1996
-------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------ ------ ------ ------ ------

Interest income ........................................ $5,946 5,939 6,086 6,247 24,218
Interest expense ....................................... 3,215 3,168 3,240 3,336 12,959
------ ------ ------ ------ ------
Net interest income .................................... 2,731 2,771 2,846 2,911 11,259

Provision for loan losses .............................. 14 15 34 44 107
------ ------ ------ ------ ------
Net interest income after provision
for loan losses .................................... 2,717 2,756 2,812 2,867 11,152
------ ------ ------ ------ ------
Other income ........................................... 182 195 208 224 809
Other expense .......................................... 1,563 1,636 3,334 1,766 8,299
------ ------ ------ ------ ------
Income (loss) before income taxes ...................... 1,336 1,315 (314) 1,325 3,662
Income taxes (credit) .................................. 525 519 (91) 525 1,478
------ ------ ------ ------ ------
Net income (loss) ...................................... $ 811 796 (223) 800 2,184
====== ====== ====== ====== ======

Net income (loss) per common share ..................... $ .31 .31 (.09) .32 .85
====== ====== ====== ====== ======

Year Ended December 31, 1995
-------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------ ------ ------ ------ ------

Interest income ........................................ $5,372 5,569 5,728 5,824 22,493
Interest expense ....................................... 2,709 3,041 3,200 3,233 12,183
------ ------ ------ ------ ------
Net interest income .................................... 2,663 2,528 2,528 2,591 10,310

Provision for loan losses .............................. 30 30 33 31 124
------ ------ ------ ------ ------
Net interest income after provision
for loan losses .................................... 2,633 2,498 2,495 2,560 10,186
------ ------ ------ ------ ------
Other income ........................................... 157 171 163 218 709
Other expense .......................................... 1,364 1,490 1,433 1,587 5,874
------ ------ ------ ------ ------
Income before income taxes ............................. 1,426 1,179 1,225 1,191 5,021
Income taxes ........................................... 534 442 457 495 1,928
------ ------ ------ ------ ------
Net income ............................................. $ 892 737 768 696 3,093
====== ====== ====== ====== ======

Net income per common share ............................ $ .33 .28 .29 .26 1.16
====== ====== ====== ====== ======

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, 1996 and 1995 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1996. 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, 1996 and 1995 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1996 in
conformity with generally accepted accounting principles.

HACKER, JOHNSON, COHEN & GRIEB
Orlando, Florida
January 10, 1997

FFLC BANCORP, INC.

DIRECTORS AND OFFICERS

Directors: Occupation
- ---------- ----------

James R. Gregg President, Jarol Company
Chairman of the Board

Joseph J. Junod Retired, General Manager, Avesta andvik Tube
Vice Chairman

James P. Logan President/Owner, Logan Sitework Contractors, Inc.
Ted R. Ostrander, Jr. President, Lassiter-Ware, Inc.
Claron D. Wagner President, Woody Wagner, Inc.
Stephen T. Kurtz President, FFLC Bancorp, Inc. & Subsidiary
Paul K. Mueller Executive Vice President, FFLC Bancorp, Inc. &
Subsidiary

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

Frank L. Cogburn Retired, Past President, First Federal of Lake County
James H. Herlong General Partner, A.S. Herlong, Ltd.
Horace D. Robuck President, Romac Lumber

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

Stephen T. Kurtz
President and
Chief Executive Officer

Paul K. Mueller
Executive Vice President,
Chief Operating Officer and
Treasurer

Dwight L. Hart
Senior Vice President

Sandra L. Rutschow
Vice President and Secretary

Judith M. Maddox
Vice President

Lawrence E. Hoag
Vice President

FIRST FEDERAL SAVINGS BANK
OF LAKE COUNTY

DIRECTORS AND OFFICERS

DIRECTORS

James R. Gregg Doris E. Hyatt
Chairman of the Board Assistant Secretary

Joseph J. Junod Susan L. Berkebile
Vice Chairman Vice President
Clermont Branch Manager
James P. Logan
Ted R. Ostrander, Jr. Donna L. Boyett
Claron D. Wagner Assistant Vice President
Stephen T. Kurtz Wildwood Branch Manager
Paul K. Mueller
Carlos E. Colon
Advisory Directors Assistant Vice President
Fruitland Park Branch Manager
Frank L. Cogburn
Horace D. Robuck Vickie S. Baxter
James H. Herlong Assistant Vice President
Eustis Branch Manager

OFFICERS Pamela S. Hayton
Main Street Branch Manager
Stephen T. Kurtz
President Connie J. Rhode
Chief Executive Officer Lake Square Office Manager

Paul K. Mueller Sandra L. Seaton
Executive Vice President Assistant Vice President
Chief Operating Officer and Treasurer South Leesburg Branch Manager
Area Loan Manager
Dwight L. Hart
Senior Vice President Jay Bartholomew
Assistant Vice President
Sandra L. Rutschow Lady Lake Branch Manager
Vice President and Corporate Secretary
Jankie Dhanpat
Judith M. Maddox Assistant Vice President
Vice President SEC Reporting and Compliance Officer
Human Resource Manager
Karen Hollister
Lawrence E. Hoag Assistant Vice President
Vice President Loan Operations Manager
Deposit Accounts Manager
Charles L. Lee
Michael J. Cox Security Officer
Vice President and Area Loan Manager
Janet L. Glessner
Brian R. Hofer Marketing Officer
Vice President and Commercial Loan Officer
Dennis R. Rogers
Lynda F. Wemple Assistant Vice President
Vice President and Accounting Manager Area Loan Manager

Yvonne K. Ross Debra L. McFarlane
Vice President and Loan Officer Main Office Branch Manager

Brenda M. Grubb Sandra A. Rowe
Assistant Vice President Assistant Secretary and Loan Servicing Manager

Linda N. Landers Carmen C. Passwaters
Assistant Secretary Assistant Secretary

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

MAIN OFFICE:

Pamela Ali Leslie A. Leach
Barbara J. Boscana Charles L. Lee
Navena M. Brown Pamela J. Linville
Shu Een Chen Judith M. Maddox
Camilla R. Clark Debra L. McFarlane
Adriane M. Connelly Constance L. Merrell
Diane S. Cook Paul K. Mueller
Barbara A. Cordes Lillian Y. Niles
Jewel M. Correll Carmen C. Passwaters
Jennifer Culberson Debra L. Possee
Robert Cumm Michael J. Price
Cheryl A. Davis Yvonne K. Ross
Dawn Rene Davison Sandra A. Rowe
Jankie Dhanpat Landa A. Russell
Janene S. Dickerson Sandra L. Rutschow
Ruth E. Fielding Stephanie D. Salmon
Joan P. Gibson Sonja G. Sanders
Janet L. Glessner James Schaeffer
Jennifer L. Grovesteen Margaret M. Siegel
Brenda M. Grubb Cheryl L. Shepherd
Andrea Hanson Leigh S. Skehan
Dwight L. Hart Lynn P. Stoffel
Angela D. Hicks Tracy P. Storts
Lawrence E. Hoag Michelle Strickland
Penny M. Hollis Joyce H. Sutton
Karen L. Hollister Michelle M. Thompson
Stephanie Hodges Virginia D. Vann
Doris E. Hyatt Theresa R. Wells
Patricia B. Inman Lynda F. Wemple
Juanita F. Jackson Louise E. Whitlock
Kristina Keel Rhonda L. Carris-Wilkerson
Jennifer E. Kitchens Shirley Williams
Erin Klink Betty L. Wolcott
Stephen T. Kurtz Lisa K. Woolwine
Linda N. Landers
Cynthia M. Lay

FRUITLAND PARK OFFICE: CLERMONT OFFICE:

Carlos E. Colon Susan L. Berkebile
Melissa J. Judd Donna L. Franklin
Julie Misty Weirich Linda C. Gallop
Delphine C. Williams Brenda Heisner
Brian R. Hofer
Tammy R. Imundi
LADY LAKE: Trinia C. McClendon
Glenda S. Riggs
Jay R. Bartholomew Jeanne A. Sheiman
Deede A. Dye Sharon M. Slack
Julie A. Laws
Marilyn A. Leugers EUSTIS OFFICE:
Mary E. Rutz
Patricia L. Sizemore Vickie S. Baxter
Margaret A. Slimm Bernice E. Cooper
Michael J. Cox
MAIN STREET OFFICE: Kasandra L. Curry
Peggy L. Harris
Lori Cook Hilda Lozano
Casey Giordano Veronica L. Turner
Pamela S. Hayton
Sondra Jones WILDWOOD OFFICE:
Dawn M. Loth
Donna L. Boyett
LAKE SQUARE: Suzanne E. Busenlehner
Julie Elaine Glenn
Linda J. Giggey Krystal Hammond
Arthur E. Middleton Vaneeda F. Potter
Angela Nicole Phillips Dennis R. Rogers
Connie J. Rhode Ledora Smith
Willie Lee Smith
Paula D. Williams
Wendy Williams

SOUTH LEESBURG

Amy M. Eaton
Edmund J. Laclair, Jr.
Sandra L. Seaton
Eva J. Snead
Stacey L. Wrightam