SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

HABERSHAM BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
2

HABERSHAM BANCORP

Highway 441 North
P.O. Box 1980
Cornelia, Georgia 30531
(706) 778-1000

NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SATURDAY, APRIL 18, 1998.

To the Shareholders of HABERSHAM BANCORP:

Notice is hereby given that the annual meeting of shareholders of
Habersham Bancorp (the "Company") will be held on Saturday, April 18, 1998, at
1:00 p.m., in the Central Office of Habersham Bank at Highway 441 North,
Cornelia, Georgia, for the following purposes:

(1) To elect the directors for the ensuing year; and

(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on March 6, 1998
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.

All shareholders are requested to mark, date, sign and return the
enclosed form of proxy as soon as possible. If you attend the meeting and wish
to vote your shares in person, you may do so at any time before the proxy is
exercised.

By Order of the Board of Directors,

/s/ David D. Stovall

David D. Stovall
President and Chief Executive Officer

March 19, 1998

HABERSHAM BANCORP

Highway 441 North
P.O. Box 1980
Cornelia, Georgia 30531

PROXY STATEMENT

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

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Habersham Bancorp (the "Company"), for use
at the annual meeting of shareholders to be held on Saturday, April 18, 1998, at
1:00 p.m., in the Central Office of Habersham Bank at Highway 441 North,
Cornelia, Georgia, and at any adjournments thereof. This Proxy Statement and the
form of proxy were first mailed to shareholders on or about March 19, 1998. If
the enclosed form of proxy is properly executed, returned and not revoked, it
will be voted in accordance with the specifications made by the shareholder. If
the form of proxy is signed and returned but specifications are not made, the
proxy will be voted FOR the election of the nominated directors. Shareholders
who sign proxies have the right to revoke them at any time before they are voted
by delivering to Edward D. Ariail, Vice President and Secretary of the Company,
at the Company's Central Office, either an instrument revoking the proxy or a
duly executed proxy bearing a later date or by attending the meeting and voting
in person.

The close of business on March 6, 1998 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting.

As of the close of business on the record date, the Company had
10,000,000 shares of common stock, $1.00 par value (the "Stock"), authorized, of
which 2,411,267 shares were issued and outstanding. Each such share is entitled
to one vote on matters to be presented at the meeting.

A quorum will be present if a majority of the votes entitled to be cast
are present in person or by valid proxy. Abstentions and broker non-votes (which
are described below) will be counted in determining whether a quorum exists.
Directors are elected by a plurality of the votes cast by the shares entitled to
be voted in such election. Only votes actually cast will be counted for the
purpose of determining whether a particular nominee received more votes than the
persons, if any, nominated for the same seat on the Board of Directors.
Accordingly, votes withheld by shareholders present at the annual meeting who do
not choose to vote in the election of directors will have no effect on the
outcome of the election.

All other matters that may be considered and acted upon by the
shareholders at the annual meeting require that the number of shares voted in
favor of the proposal exceed the number of shares voted against the proposal,
provided a quorum is present. Only votes actually cast will be counted for the
purpose of determining whether a proposal is approved by the shareholders.
Abstentions and broker "non-votes" resulting from a broker's inability to vote a
client's shares on

non-discretionary matters are treated as "true abstentions" under Georgia law
and not as negative votes. Consequently, abstentions and broker non-votes will
have no effect on the outcome of the vote on other proposals that may be brought
before the meeting.

THE COMPANY

The Company was organized in 1984 as a bank holding company under the
laws of the State of Georgia. The Company's bank subsidiaries, Habersham Bank
and Security State Bank, engage in general commercial banking business.
Habersham Bank also provides data processing services to financial institutions.
The Company has one direct nonbank subsidiary, The Advantage Group, Inc., and
three indirect nonbank subsidiaries, BancMortgage Financial Corp., Appalachian
Travel Service, Inc. and Advantage Insurers, Inc. The Advantage Group, Inc.
engages in the development and marketing of personal computer software, provides
management consulting advice to depository institutions and administers the
Company's Kids' Advantage banking program. BancMortgage Financial Corp. is a
full service mortgage lending and servicing subsidiary located in the northern
Atlanta metropolitan area. Appalachian Travel Service, Inc. is a full service
travel agency located in Cornelia, Georgia. Advantage Insurers, Inc. is an
insurance agency located in Cornelia, Georgia that offers a full line of
property, casualty and life insurance products.

OWNERSHIP OF STOCK

Principal Holders of Stock

On March 8, 1998, the Company had 596 shareholders of record. The
following table sets forth the persons who beneficially owned, as of March 8,
1998, 5% or more of the outstanding shares of Stock to the best information and
knowledge of the Company. According to rules adopted by the Securities and
Exchange Commission, one is a "beneficial owner" of securities if one has or
shares the power to vote the securities or to direct their investment. Unless
otherwise indicated, each person is the record owner of and has sole voting and
investment power with respect to, his or her shares.

Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class (1)
- ------------------- -------------------- ------------

John Robert Arrendale 225,847 (2) 9.37%
200 Hillcrest Heights
Cornelia, Georgia 30531

Thomas A. Arrendale, III 654,361 (3)(4) 27.05%
P. O. Box 558
Baldwin, Georgia 30511

Cyndae Arrendale Bussey 510,776 (3) 21.18%
P. O. Box 558
Baldwin, Georgia 30511

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5

Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class (1)
- ------------------- -------------------- ------------

David D. Stovall 165,447 (5) 6.72%
P. O. Box 1980
Highway 441 North
Cornelia, Georgia 30531

Footnotes
- ---------

(1) The number of issued and outstanding shares used to calculate the percentage
of total ownership includes any shares covered by the option(s) issued to the
individual identified in the table.

(2) Includes 2,812 shares owned by Mr. Arrendale's spouse.

(3) Includes 400,000 shares owned by the Arrendale Undiversified Family Limited
Partnership and 85,000 shares owned by the Thomas A. Arrendale, Jr. Family
Limited Partnership. As general partners of each limited partnership, Thomas A.
Arrendale, III and Cyndae Arrendale Bussey share voting and dispositve authority
with respect to the shares owned by each partnership.

(4) Includes 7,500 shares subject to options exercisable on or before May 5,
1998.

(5) Includes 105,248 shares owned of record by Mr. Stovall and his wife, 10,881
shares owned of record by Mr. Stovall jointly with his wife and daughter, and
49,318 shares subject to options exercisable on or before May 5, 1998. Excludes
5,191 shares (as of the latest available evaluation of September 30, 1997) held
in Mr. Stovall's account in the Company's 401(k) Savings Investment Plan Trust
(the "Savings Plan"), as to which Mr. Stovall has no voting or investment power.

Stock Owned by Management

The following table sets forth the number and percentage ownership of
shares of Stock beneficially owned by each director of the Company, each
executive officer named in the Summary Compensation Table contained elsewhere in
this Proxy Statement and all directors and executive officers as a group, as of
March 6, 1998. Unless otherwise indicated, each person is the record owner of,
and has sole voting and investment power with respect to, his shares.

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6

Number of Shares Percentage
Name and Address (1) Beneficially Owned of Total (2)
- -------------------- ------------------ ------------

Directors:

Thomas A. Arrendale, Jr. (3) 7,500 (4) *
Thomas A. Arrendale, III (3) 654,361 (4)(5) 27.05%
James J. Holcomb 26,477 (4) 1.09%
James A. Stapleton, Jr. 7,950 (4)(6) *
David D. Stovall (7) 165,447 (8) 6.72%
C. Kenneth White 114,163 (9) 4.72%
Calvin R. Wilbanks 10,000 (4) *

Named Executive Officers:

Robert S. Cannon 37,000 (10) 1.51%
Daryl Grinstead 28,033 (11) 1.15%
C. Mickle Moye 32,459 (12) 1.34%
Anthony L. Watts 34,500 (13) 1.41%

All Directors and Executive
Officers as a Group (16 persons) 1,334,367 (14) 48.18%

Footnotes
- ---------

(*) Indicates less than 1%.

(1) Addresses for the Company's executive officers are the same as the address
of the Company: P. O. Box 1980, Highway 441 North, Cornelia, Georgia 30531. The
directors' addresses are as follows: Mr. Arrendale Jr. and Mr. Arrendale III: P.
O. Box 558, Baldwin, Georgia 30511; Mr. Holcomb: P. O. Box 437, Clarksville,
Georgia 30523; Mr. Stapleton: P. O. Box 40, Cornelia, Georgia 30531; Mr. White:
509 Mt. Sinai, Dalton, Georgia 30720; Mr. Wilbanks: Route 1, Box 1888, Demorest,
Georgia 30535.

(2) The number of issued and outstanding shares used to calculate the percentage
of total ownership includes any shares covered by the option(s) issued to the
individual or to members of the group, as applicable, identified in the table.

(3) Thomas A. Arrendale, Jr. and Thomas A. Arrendale, III are father and son.

(4) Includes 7,500 shares subject to options exercisable on or before May 5,
1998.

(5) Includes 400,000 shares owned by the Arrendale Undiversified Family Limited
Partnership and 85,000 shares owned by the Thomas A. Arrendale, Jr. Family
Limited Partnership. As general

4
7

partners of each limited partnership, Thomas A. Arrendale, III and Cyndae
Arrendale Bussey share voting and dispositve authority with respect to the
shares owned by each partnership.

(6) Mr. Stapleton owns 450 of the indicated shares jointly with his children.

(7) Mr. Stovall is also an executive officer of the Company.

(8) Includes 105,248 shares owned of record by Mr. Stovall and his wife, 10,881
shares owned of record by Mr. Stovall jointly with his wife and daughter, and
49,318 shares subject to options exercisable on or before May 5, 1998. Excludes
5,191 shares (as of the latest available evaluation of September 30, 1997) held
in Mr. Stovall's account in the Savings Plan, as to which Mr. Stovall has no
voting or investment power.

(9) Includes 7,928 shares subject to options exercisable on or before May 5,
1998 and 103,945 shares registered to Lexus Industries of Georgia and with
respect to which Mr. White may be deemed to have sole voting and investment
power.

(10) Includes 5,000 shares owned jointly by Mr. Cannon and his wife and 32,000
shares subject to options exercisable on or before May 5, 1998. Excludes 140
shares (as of the latest available evaluation of September 30, 1997) held in Mr.
Cannon's account in the Savings Plan, as to which Mr. Cannon has no voting or
investment power.

(11) Includes 18,000 shares subject to options exercisable on or before May 5,
1998. Excludes 3,020 shares (as of the last available evaluation of September
30, 1997) held in Mr. Grinstead's account in the Savings Plan, as to which Mr.
Grinstead has no voting or investment power.

(12) Includes 609 shares owned jointly by Mr. Moye and his children and 19,318
shares subject to options exercisable on or before May 5, 1998. Excludes 514
shares (as of the last available evaluation of September 30, 1997) in the
Savings Plan, as to which Mr. Moye has no voting or investment power.

(13) Includes 2,500 shares owned jointly by Mr. Watts and his wife and 32,000
shares subject to options exercisable on or before May 5, 1998. Excludes 140
shares (as of the latest available evaluation of September 30, 1997) in the
Savings Plan, as to which Mr. Watts has no voting or investment power.

(14) Of the indicated shares, 358,453 shares are subject to options exercisable
on or before May 5, 1998. Excludes 15,156 shares (as of the latest available
evaluation of September 30, 1997) held in accounts for the benefit of the
Company's executive officers under the Savings Plan, as to which participants
have no voting or investment power.

5
8

PROPOSAL 1: ELECTION OF DIRECTORS

Nominees

The Board of Directors proposes that the nominees listed below be elected
as directors of the Company to serve until the next annual meeting of
shareholders and until their successors are duly elected and qualified.

If any of such nominees becomes unavailable to serve as a director (which
is not now anticipated), then the persons named as proxies reserve full
discretion to vote for such other person or persons as may be nominated.

The following table sets forth, for each director, his name and age at
December 31, 1997, the year he was first elected as a director of the Company,
his position with the Company other than as a director and his principal
occupation and other business experience for the past five years.

Year
First Position with Company;
Name Age Elected Business Experience
- ---- --- ------- ----------------------

Thomas A. Arrendale, Jr 77 1984 Chairman of the Board of the Company and
Habersham Bank; Director and President, Fieldale
Farms, Inc. (poultry processing and distribution)

Thomas A. Arrendale, III 40 1990 Vice Chairman of the Board of the Company;
Director of Marketing, Fieldale Farms, Inc.
(poultry processing and distribution)

James J. Holcomb 75 1984 Owner, Mt. Airy Wood Preserving (wood products)

James A. Stapleton, Jr 49 1990 President and General Manager, Habersham Metal
Products

David D. Stovall 41 1989 President and Chief Executive Officer of the
Company; Vice Chairman and Chief Executive
Officer of Habersham Bank; President and Chairman
of the Board of The Advantage Group, Inc.;
Chairman of the Board of Directors of Security
State Bank, BancMortgage Financial Corp.,
Appalachian Travel Service, Inc. and Advantage
Insurers, Inc.

6
9

Year
First Position with Company;
Name Age Elected Business Experience
- ---- --- ------- ----------------------

C. Kenneth White 57 1995 Consultant, Certified Public Accountant and
Private Investor

Calvin R. Wilbanks 52 1990 Co-Owner, C.P. Wilbanks Lumber Company

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION AS DIRECTORS OF THE NOMINEES LISTED ABOVE.

Meetings and Committees of the Board

The regular meetings of the Board of Directors of the Company are
scheduled to take place on the third Saturday of the first month of each quarter
and otherwise as necessary. The Board of Directors of Habersham Bank is
scheduled to meet on the third Saturday of each month and the Board of Directors
of Security State Bank is scheduled to meet on the third Monday of each month.
During 1997, the Board of Directors of the Company met five times, the Board of
Directors of Habersham Bank met 12 times and the Board of Directors of Security
State Bank met 12 times. Each director of the Company attended at least 75% of
the meetings of the Board of Directors of the Company and the committees of
which he was a member (if any), and each director of Habersham Bank and Security
State Bank attended at least 75% of the aggregate number of meetings of the
Board of Directors and committees of which he was a member.

The Board of Directors of the Company has established a Compensation
Committee and an Audit Committee. The Compensation Committee is composed of
Thomas A. Arrendale, Jr. and James J. Holcomb, and was established to determine
the compensation of Company officers. The Committee also administers the
Company's employee stock option plans. The Committee met once in 1997.

The Audit Committee's functions include (a) providing assistance to the
Board of Directors in fulfilling its responsibilities for examinations of the
Company by regulatory agencies and independent auditors; (b) determining that
the Company has adequate administrative, operating and internal accounting
controls and that it is operating in accordance with prescribed procedures; and
(c) serving as an independent party in the review of the financial information
of the Company prior to its distribution to the Company's shareholders and the
public. The current members of the Audit Committee are: James J. Holcomb
(Chairman), James A. Stapleton, Jr., C. Kenneth White and Calvin R. Wilbanks.
Meetings are called by the Committee Chairman or the Company's internal auditor.
During 1997, the Audit Committee met three times.

Neither the Company nor any of its subsidiaries has a standing nominating
committee.

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10

Compensation of Directors

With the exception of C. Kenneth White, the same individuals who served
as directors of the Company in 1997 also served as directors of Habersham Bank.
They were compensated for their service to the Company and to Habersham Bank at
rates of from $500 to $3,000 per Board meeting attended. Directors of Security
State Bank (including Mr. Stovall and Mr. White) receive the same compensation
as directors of Habersham Bank. Directors are not compensated for their service
as members of committees. Mr. Stovall received a total of $18,500 in director
fees for 1997.

Directors of the Company and its bank subsidiaries who are not employees
of the Company or any of its subsidiaries are granted options annually under the
Habersham Bancorp Outside Directors' Stock Option Plan (the "Directors' Plan").
On December 31 of each year, so long as the Company or the applicable bank
subsidiary has a return on beginning assets of at least one percent for the
prior 12-month period, each eligible director of the Company receives an option
to purchase 1,000 shares of Stock at an exercise price equal to the fair market
value of the Stock on the date of grant and each director of a bank subsidiary
receives an option to purchase 250 shares on the same terms. Options are
exercisable in full six months after the date of grant. No directors received
options under the Directors' Plan in 1997.

Compliance With Section 16(a) of the Exchange Act

Section 16 (a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers and
persons who own beneficially more than 10% of the Company's outstanding Stock to
file with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in their ownership of the Company's Stock.
Directors, executive officers and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all such forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended December 31,
1997, its directors, executive officers and greater than 10% shareholders
complied with all applicable Section 16(a) filing requirements.

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11

EXECUTIVE OFFICERS

Executive officers of the Company are appointed by and hold office at the
discretion of the Board of Directors of the Company. The following table sets
forth for each executive officer of the Company (a) the person's name, (b) his
or her age at December 31, 1997, (c) the year he or she was first elected as an
executive officer of the Company, (d) his or her position with the Company and
its subsidiaries, and (e) other business experience for the past five years, if
he or she has been employed by the Company or any subsidiary for less than five
years.

Year
First Position and
Name Age Elected Business Experience
- ---- --- ------- ----------------------

Thomas A. Arrendale, Jr 77 1984 Chairman of the Board of the Company and Habersham
Bank; Director and President, Fieldale Farms, Inc.
(poultry processing and distribution)

David D. Stovall 41 1984 President and Chief Executive Officer of the
Company; Vice Chairman and Chief Executive Officer
of Habersham Bank; President and Chairman of the
Board of The Advantage Group, Inc.; Chairman of the
Board of Directors of BancMortgage Financial Corp.,
Security State Bank, Appalachian Travel Service,
Inc. and Advantage Insurers, Inc.

Edward D. Ariail 39 1990 Vice President and Corporate Secretary of the
Company; President and Chief Operating Officer of
Habersham Bank since April 1996; prior thereto,
Executive Vice President of Habersham Bank;
Executive Vice President of The Advantage Group,
Inc.; member of the Board of Directors of
BancMortgage Financial Corp.; Vice Chairman of the
Board of Appalachian Travel Service, Inc. and
Secretary to the Board of Advantage Insurers, Inc.

Pamela D. Spangler 50 1985 Vice President - Human Resources of the Company,
Senior Vice President of Habersham Bank and
Secretary of The Advantage Group, Inc.

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12

Year
First Position and
Name Age Elected Business Experience
- ---- --- ------- ----------------------

Annette Banks 51 1997 Vice President and Chief Financial Officer of the
Company since April 1997; prior thereto, Chief
Financial Officer of the Company and Vice
President, Controller of Habersham Bank.

Bonnie Bowling 39 1997 Vice President, Operations, Audit, Compliance of
the Company since April 1997; from December 1994 to
1997, Process Owner of Audit/Compliance of the
Company; prior thereto, Vice President of CB&T -
West Georgia, Carrollton, Georgia

Robert S. Cannon 46 1997 President, Mortgage Banking of the Company and
Principal/Director of BancMortgage Financial Corp.
since 1996; prior thereto, President of HomeBanc
Mortgage Corporation, Atlanta, Georgia

Daryl Grinstead 44 1997 Vice President, Lending of the Company since April
1997; prior thereto, Chief Lending Officer of the
Company and Senior Vice President of Habersham Bank

C. Mickle Moye 61 1997 Vice President, Commercial Banking of the Company
since April 1997 and President and Chief Executive
Officer of Security State Bank, Canton, Georgia

Lona Paulos Pope 42 1997 Vice President, Marketing of the Company and
President of Appalachian Travel, Inc. since April
1997; prior thereto, Marketing Director of the
Company and Vice President and Marketing Director
of Habersham Bank.

Anthony L. Watts 50 1997 Vice President, Mortgage Banking of the Company
since April 1997; Principal/ Director, Chief
Executive Officer of BancMortgage Financial Corp.
since 1996; prior thereto, President and Chief
Executive Officer of Mr. Vernon Federal Savings
Bank, Dunwoody, Georgia.

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13

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and the four other mostly highly
compensated executive officers of the Company who earned over $100,000 in salary
and bonus during 1997 for the fiscal years indicated. Compensation for Messrs.
Cannon, Watts, Grinstead and Moye is reported only for fiscal 1997 because they
were not appointed as executive officers of the Company until that year.

Summary Compensation Table
--------------------------

Long-Term
Annual Compensation(1) Compensation(2)
---------------------- ---------------
Securities
Name and Underlying All
Principal Salary Options/ Other
Position Year ($) Bonus($) SARs(#) Compensation($)
--------- ---- ------ -------- ------- ---------------

David D. Stovall 1997 158,862 0 12,000 7,951(3)
Chief Executive Officer 1996 132,000 0 11,000 4,844(4)
1995 120,000 0 16,318(5) 7,157(6)

Robert S. Cannon 1997 151,629 0 9,000 177,968(7)
President, Mortgage Banking of the
Company and Principal/Director of
BancMortgage Financial Corp.

Anthony L. Watts 1997 151,629 0 9,000 177,968(7)
Vice President, Mortgage Banking of the
Company and Principal/Director and Chief
Executive Officer of BancMortgage
Financial Corp.

Daryl Grinstead 1997 125,207 0 3,000 2,771(8)
Vice President, Lending of the Company

C. Mickle Moye 1997 120,828 0 3,000 3,335(8)
Vice President, Commercial Banking of
the Company and President and Chief
Executive Officer of Security State Bank

- -----------------------------
(1) Information with respect to certain perquisites and other personal
benefits has been omitted because the aggregate value of such items does
not meet the minimum amount required for disclosure under SEC
regulations.

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14

(2) The Company has not awarded any restricted stock or long-term incentives
other than stock options. Accordingly, columns relating to such awards
have been omitted.

(3) Includes $4,398 in Company contributions to Mr. Stovall's account under
the Savings Plan and $3,553 in premiums paid by the Company in 1997 under
a split dollar life insurance plan for the benefit of Mr. Stovall.

(4) Includes $3,956 in Company contributions to Mr. Stovall's account under
the Savings Plan and $888 in premiums paid by the Company in 1996 under a
split dollar life insurance policy for the benefit of Mr. Stovall.

(5) Includes options to purchase 6,318 shares that were granted in exchange
for options to purchase common stock of Security Bancorp, Inc., which was
acquired by the Company on June 30, 1995.

(6) Includes $3,604 in Company contributions to Mr. Stovall's account under
the Savings Plan and $3,553 in premiums paid by the Company in 1995 under
a split dollar life insurance policy for the benefit of Mr. Stovall.

(7) Includes $4,621 in Company contributions to the indicated person's
account under the Savings Plan and $173,347 paid as a part of a
distribution required under an agreement entered into by Habersham Bank
with Messrs. Cannon and Watts relating to the establishment of
BancMortgage Financial Corp. See "-Employment Agreements."

(8) Consists of Company contributions to the indicated person's account under
the Savings Plan.

The following table sets forth information regarding the grant of stock
options to the executives named in the Summary Compensation Table during 1997.
All options shown are presently exercisable. The Company did not award any stock
appreciation rights during 1997.

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15

Option Grants in Last Fiscal Year
(Individual Grants)

Number of Percent of Total
Securities Options Granted
Underlying to Employees in Exercise Price Expiration
Name Options Granted Fiscal Year ($/share) Date
---- --------------- ----------- --------- ----

David D. Stovall 12,000 15.19 $ 19.00 12/31/02
Robert S. Cannon 9,000 11.39 19.00 12/31/02
Anthony L. Watts 9,000 11.39 19.00 12/31/02
Daryl Grinstead 3,000 3.80 19.00 12/31/02
C. Mickle Moye 3,000 3.80 19.00 12/31/02

The following table contains information, with respect to the executives
named in the Summary Compensation Table, concerning the exercise of options
during 1997 and unexercised options held as of the end of 1997.

Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values

Value of Unexercised
Number of Unexercised In-the-Money
Options at FY-End (#) Options/SARs at FY /End
--------------------- -----------------------
($)(1)
------
Shares
Acquired Value
on Exercise Realized
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------- --------- ----------- ------------- ----------- -------------
Name
----

David D. Stovall 10,000 106,660 49,318 0 $229,377 0
Robert S. Cannon 0 0 32,000 0 109,125 0
Anthony L. Watts 0 0 32,000 0 109,125 0
Daryl Grinstead 5,000 53,330 18,000 0 87,185 0
C. Mickle Moye 0 0 19,318 0 91,007 0

(1) Calculated by subtracting the exercise price from the market price of the
Common Stock at fiscal year-end ($19.00) and multiplying the resulting
figure by the number of shares subject to in-the-money options.

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16

Employment Agreements

Pursuant to an agreement dated as of January 2, 1996 among the Company,
Habersham Bank (the "Bank"), BancMortgage Financial Corp. ("BancMortgage"),
Robert S. Cannon and Anthony L. Watts, each of Messrs. Cannon and Watts is
entitled to an annual base salary of $150,000 and a percentage of BancMortgage's
annual net income before taxes. See "Executive Compensation - Summary
Compensation Table." Other elements of compensation include the use of a company
car, club memberships, life insurance and such other benefits as are provided
under the Bank's employee benefit plans. If the Company or the Bank is acquired
or if the Bank receives and wishes to accept a bona fide offer for the
acquisition of BancMortgage, Messrs. Cannon and Watts have a right of first
refusal to acquire BancMortgage.

CERTAIN TRANSACTIONS

Some Company directors, officers, principal shareholders and their
associates were customers of, or had transactions with, the Company or its
subsidiaries in the ordinary course of business during 1997. Some of the
directors of the Company are directors, officers, trustees or principal
securities holders of corporations or other organizations which also were
customers of, or had transactions with, the Company or its subsidiaries in the
ordinary course of business during 1997.

All outstanding loans and other transactions with the directors, officers
and principal shareholders of the Company or its subsidiaries were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and, when made, did not involve more than the
normal risk of collectability or present other unfavorable features. In addition
to banking and financial transactions, the Company and its subsidiaries may have
had additional transactions with, or used products or services of, various
organizations of which directors of the Company and its subsidiaries were
associated. The amounts involved in such noncredit transactions have not been
material in relation to the business of the Company, its subsidiaries or such
other organizations. It is expected that the Company and its subsidiaries will
continue to have similar transactions in the ordinary course of its business
with such individuals and their associates in the future.

ACCOUNTING MATTERS

On February 25, 1997, the Company replaced its existing independent
public accounting firm, Deloitte & Touche LLP ("Deloitte"), with KPMG Peat
Marwick. Neither of Deloitte's reports on the Company's financial statements for
the years ended December 31, 1995 or 1996 contained an adverse opinion or a
disclaimer of opinion or was qualified or modified as to uncertainty, audit
scope or accounting principles. The change of accountants was approved by the
Company's Board of Directors. The Company had no disagreements with Deloitte
during any of the years ended December 31, 1995 or 1996 or during the interim
period through February 25, 1997 (date of dismissal) on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure that would have caused that firm to make reference to the

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subject disagreement if it had not been resolved to Deloitte's satisfaction. A
representative of KPMG is expected to be present at the meeting to respond to
any appropriate questions and to make a statement if he or she desires to do so.

MISCELLANEOUS

Shareholder Proposals

Any shareholder of the Company wishing to submit a proposal for action at
the next annual meeting of shareholders of the Company and desiring inclusion of
the same in management's proxy materials must provide a written copy of the
proposal to management of the Company not later than November 16, 1998. Any such
proposal must comply in all respects with the rules and regulations of the SEC.

Other Matters

The Board of Directors of the Company knows of no other matters which may
be brought before the meeting. If, however, any matter other than the election
of directors or matters incident thereto should properly come before the
meeting, votes will be cast pursuant to the proxies in accordance with the best
judgment of the proxyholders.

Expenses and Solicitation of Proxies

The expenses of the solicitation will be paid by the Company. In addition
to solicitation by mail, certain directors, officers and regular employees of
the Company and its subsidiaries may solicit proxies by telephone, telegram or
personal interview for which they will receive no compensation in addition to
their regular salaries. The Company will request brokerage houses and
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of the shares of Stock held of record by such persons, and,
upon request, will reimburse them for their reasonable out-of-pocket expenses in
connection therewith.

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APPENDIX

HABERSHAM BANCORP

PROXY

SOLICITED BY THE BOARD OF DIRECTORS

FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 18, 1998

The undersigned shareholder of Habersham Bancorp (the "Company") hereby appoints
David D. Stovall and Edward D. Ariail as proxies with full power of
substitution, acting unanimously or by either of them if only one be present and
acting, to vote all shares of common stock of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders (the "Meeting") to be held at the Central Office of the Company,
Highway 441 North, Cornelia, Georgia on Saturday, April 18, 1998 at 1:00 p.m.
and at any adjournments thereof, upon the proposals described in the
accompanying Notice of the Annual Meeting and the Proxy Statement relating to
the Meeting (the "Proxy Statement"), receipt of which is hereby acknowledged.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.

PROPOSAL 1: To elect the nominees listed below to serve as directors of the
Company for the ensuing year:

Thomas A. Arrendale, Jr., Thomas A. Arrendale III, James J.
Holcomb, James A. Stapleton, Jr., David D. Stovall, C. Kenneth
White and Calvin R. Wilbanks

_____ FOR all nominees _____ WITHHOLD AUTHORITY
listed above to vote for all
(except as indicated nominees listed
to the contrary below). above.

INSTRUCTION: To withhold authority for any individual nominees, mark "FOR"
above, and write that nominee's name in the space below:

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

This proxy, when properly executed, will be voted as directed, but if
no direction to the contrary is indicated, it will be voted FOR
Proposal 1.

Discretionary authority is hereby conferred as to all other matters
which may come before the meeting.

Dated:____________________________,1998
(Be sure to date your Proxy)

----------------------------------------
Name(s) of Shareholder(s)

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Signature(s) of Shareholder(s)

If stock is held in the name of more than one person, all holders
should sign. Signatures must correspond exactly with the name or names appearing
on the stock certificate(s). When signing as attorney, executor, administrator,
trustee, guardian or custodian, please indicate the capacity in which you are
acting. If a corporation, please sign in full corporate name by the President or
other authorized officer. If a partnership, please sign in name by authorized
person.

Please mark, date and sign this Proxy, and return it in the enclosed
return-addressed envelope. No postage is necessary.

PLEASE RETURN PROXY AS SOON AS POSSIBLE