SCHEDULE 14A
(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE DEF 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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 Section 240.14a-11(c) or Section 240.14a-12

MountainBank Financial Corporation
- --------------------------------------------------------------------------------

Payment of Filing Fee (Check the appropriate box):

(X) No fee required

( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies: N/A
--------
2) Aggregate number of securities to which transaction applies: N/A
---------
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: N/A
-----
5) Total fee paid: N/A
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( ) 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: N/A
-----
2) Form, Schedule, or Registration Statement No.: N/A
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3) Filing Party: N/A
-----
4) Date Filed: N/A
-----

MountainBank
Financial Corporation
201 Wren Drive
Hendersonville, North Carolina 28792
(828) 693-7376

----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------

To Be Held May 21, 2001

The Annual Meeting of Shareholders of MountainBank Financial Corporation
("MFC") will be held at 10:00 a.m. on Monday, May 21, 2001, at The Kellogg
Center located at 11 Broyles Road, Hendersonville, North Carolina.

The purposes of the meeting are:

1. Election of Directors. To elect three directors of MFC for terms of
three years, or until their respective successors are duly elected
and qualified;

2. Ratification of Appointment of Independent Accountants. To consider
a proposal to ratify the appointment of Larrowe & Company, PLLC as
MFC's independent accountants for 2001; and,

3. Other Business. To transact any other business that may be properly
presented for action at the Annual Meeting.

You are invited to attend the Annual Meeting in person. However, even if
you plan to attend, you are requested to complete, sign and date the enclosed
appointment of proxy and return it promptly in the accompanying envelope to
ensure that a quorum is present at the Annual Meeting. Signing an appointment of
proxy will not affect your right to revoke it and to attend the Annual Meeting
and vote in person.

By Order of the Board of Directors

/s/ J. W. Davis
---------------
J. W. Davis
President and Chief Executive Officer

April 27, 2001

MountainBank
Financial Corporation
201Wren Drive
Hendersonville, North Carolina 28792
(828) 693-7376

---------------
PROXY STATEMENT
---------------

ANNUAL MEETING OF SHAREHOLDERS

General

This Proxy Statement is being furnished to shareholders of MountainBank
Financial Corporation ("MFC") in connection with the solicitation by MFC's Board
of Directors of appointments of proxy in the enclosed form for use at the 2001
Annual Meeting of MFC's shareholders (the "Annual Meeting") and at any
adjournments of the meeting. The Annual Meeting will be held at The Kellogg
Center located at 11 Broyles Road, Hendersonville, North Carolina, at 10:00 a.m.
on Monday, May 21, 2001. This Proxy Statement is being mailed to MFC's
shareholders on or about April 27, 2001.

Reorganization

MFC was incorporated on January 10, 2001, by MountainBank (the "Bank"), at
the direction of the Bank's Board of Directors, for the purpose of serving as
the Bank's parent holding company. Effective on March 30, 2001 (the "Effective
Time"), MFC acquired the Bank in a statutory share exchange (the
"Reorganization") which was approved by the Bank's shareholders at a special
meeting held on February 20, 2001. At the Effective Time, each of the
outstanding shares of the Bank's common stock formerly held by its shareholders
(as adjusted for a five-for-four stock split in the Bank's common stock which
became effective immediately prior to the Reorganization) was converted into one
newly issued share of MFC common stock, and the Bank became a wholly-owned
subsidiary of MFC. MFC's directors and senior officers are the same as those of
the Bank, and MFC's current shareholders consist of former shareholders of the
Bank.

Appointment and Voting of Proxies

A form of "appointment of proxy" is included with this Proxy Statement
which names Peggy H. Denny, Gregory L. Gibson, and Dan T. Marchesoni (the
"Proxies") to act as proxies and represent shareholders at the Annual Meeting.
The Board of Directors requests that shareholders sign and date an appointment
of proxy and return it in the enclosed envelope.

Shares of MFC's common stock held of record by a shareholder who correctly
executes an appointment of proxy and returns it before the Annual Meeting will
be voted by the Proxies according to the shareholder's directions. If no
directions are given by the shareholder in the appointment of proxy, then those
shares will be voted by the Proxies "FOR" the election of each of the three
nominees for director named in Proposal 1 below and "FOR" Proposal 2. If, at or
before the time of the Annual Meeting, any nominee named in Proposal 1 has
become unable or unwilling to serve as a director for any reason, the Proxies
will have the discretion to vote for any substitute nominee named by the Board
of Directors. The Board is not aware of any other business that will be brought
before the Annual Meeting but, if any other matter is properly presented for
action by shareholders, the Proxies will be authorized to vote shares
represented by appointments of proxy according to their best judgment.

MFC will pay all costs of this solicitation of appointments of proxy for
the Annual Meeting, including the costs of preparing and mailing this Proxy
Statement. In addition to solicitation by mail, appointments of proxy may be
solicited in person or by telephone by officers, employees and directors of MFC
and its subsidiary, the Bank, without additional compensation.

Revocation of Appointment of Proxy

A shareholder who executes an appointment of proxy may revoke it at any
time before the voting takes place at the Annual Meeting by filing with MFC's
Secretary either a written instrument revoking it or an executed appointment of
proxy dated as of a later date, or by attending the Annual Meeting and
announcing an intention to vote in person.

Record Date

MFC's Board of Directors has set the close of business on April 20, 2001,
as the record date (the "Record Date") for determining which shareholders are
entitled to receive notice of and to vote at the Annual Meeting. A person must
be a shareholder of record on the Record Date in order to be eligible to vote at
the Annual Meeting.

Voting Securities

MFC's voting securities are the shares of its common stock, par value
$4.00 per share (the "Common Stock"), of which 1,873,461 shares were outstanding
on the Record Date. At the Annual Meeting, each shareholder may cast one vote
for each share held of record on the Record Date for each director to be elected
and on each other matter voted on by shareholders.

Voting Procedures; Vote Required for Approval

In the election of directors, the three nominees receiving the highest
numbers of votes will be elected. For Proposal 2 to be approved, the number of
votes cast in person and by proxy at the Annual Meeting in favor of the proposal
must exceed the number of votes cast against it. Abstentions and broker
non-votes will have no effect in the voting for directors or on Proposal 2.
Shareholders may not vote cumulatively in the election of directors.

Beneficial Ownership of Voting Securities

The following table describes the beneficial ownership of MFC's
outstanding Common Stock as of the Record Date by its current directors,
nominees for election as directors, and certain of its executive officers,
individually, and by all current directors and executive officers as a group.

Name of Amount and nature of Percent of
beneficial owner beneficial ownership (1) (2) class (1)
- ------------------------- ------------------------------ -------------

William H. Burton......... 42,100 2.23%

J. W. Davis............... 48,600 2.57%

Kenneth C. Feagin......... 31,111 1.65%

Danny L. Ford............. 29,000 1.55%

Boyd L. Hyder............. 78,787 4.19%

J. Edward Jones........... 10,885 .58%

Ronald R. Lamb............ 19,502 1.04%

Name of Amount and nature of Percent of
beneficial owner beneficial ownership (1) (2) class (1)
- ------------------------- ------------------------------ -------------

H. Steve McManus.......... 72,700 3.88%

Catherine H. Schroader.... 61,793 3.27%

Maurice A. Scott.......... 30,668 1.63%

William B. Taylor......... 18,581 .99%

All current directors and
executive officers
as a group (13 people) 460,592 23.13%

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

(1) Except as otherwise noted, the individuals named and included in the group
exercise sole voting and investment power with respect to all shares shown
as beneficially owned. Percentages are calculated based on 1,873,461 total
outstanding shares plus, in the case of each named individual and the
group, the number of additional shares (if any) that could be purchased by
that individual or by persons included in the group pursuant to currently
exercisable stock options.

(2) Includes the following numbers of shares with respect to which the
individuals named and included in the group have shared voting and
investment power: Mr. Burton - 6,305; Mr. Ford - 15,600; Mr. Hyder - 312;
Mr. Lamb - 4,225; Mr. McManus - 10,125; Ms. Schroader - 21,960; Mr. Scott
- 250; and all persons included in the group - 59,497. Also includes the
following numbers of shares that could be acquired by the individuals
named and included in the group pursuant to currently exercisable stock
options and with respect to which shares such persons may be deemed to
have sole investment power only: Mr. Burton - 13,610; Mr. Davis - 21,600;
Mr. Feagin - 13,681; Mr. Ford - 3,500; Mr. Hyder - 7,943; Mr. Jones -
5,000; Mr. Lamb - 6,867; Ms. Schroader - 16,673; Mr. Scott - 12,168; Mr.
Taylor - 3,500; and all persons included in the group - 117,922.

Section 16(a) Beneficial Ownership Reporting Compliance

During 2000, the Bank's directors and executive officers were required by
federal law to file reports with the Federal Deposit Insurance Corporation
regarding the amount of and changes in their beneficial ownership of the Bank's
common stock. Based on its review of copies of those reports, the Bank was
required to disclose in its proxy statement each year any failures to report
shares beneficially owned or changes in beneficial ownership, or to timely file
required reports, during the previous fiscal year. It has come to the attention
of management of MFC that reports covering options to purchase shares of the
Bank's common stock granted during October 2000 to each of Messrs. Burton,
Feagin, Ford, Hyder, Jones, Lamb, McManus, Scott and Taylor and Ms. Schroader
were not filed at year end as required by the reporting rules. A report for each
of those individuals currently is in the process of being filed. Additionally,
during 2000, other reports were filed late by three directors as follows: Mr.
Hyder -- one report covering a single purchase of shares; Mr. McManus -- the
initial ownership report required to be filed at the time he became a director
of the Bank, and another report covering two purchases of shares; and Mr. Taylor
- -- one report covering two purchases of shares. Each of those reports has been
filed.

In the future, MFC's directors and executive officers will be required to
file similar reports with the Securities and Exchange Commission regarding their
beneficial ownership of MFC's Common Stock.

PROPOSAL 1: ELECTION OF DIRECTORS

MFC's Board of Directors is structured and elected in a manner which is
the same as the Bank's Board prior to the Reorganization. MFC's Bylaws provide
for a Board of Directors consisting of not less than eight nor more than 20
members and authorize the Board to set and change the number of directors from
time to time within those limits. The Board of Directors is divided into three
classes and directors are elected to staggered three-year terms. At the time MFC
was incorporated, the Bank's directors were appointed to serve as MFC's
directors for terms of office equal to the remainder of the terms to which they
previously had been elected by the Bank's shareholders. Following the
Reorganization, the terms of MFC's directors in one class will expire each year
and directors in that class will be elected for new three-year terms.

Nominees. The number of MFC's directors currently is set at eleven. The
terms of the following three directors expire at the Annual Meeting and they
have been nominated by the Board of Directors for reelection to new three-year
terms as directors.

Position(s)
with MFC First Principal occupation
Name and age and the Bank elected (1) and business experience
- ------------------- ------------ ------------- ----------------------------------

J. W. Davis (2) President, Chief 1997 Executive Officer of MFC and the Bank
(54) Executive Officer
and Director

Danny L. Ford Director 1999 Self-employed cattle rancher; formerly, head
(52) football coach, University of Arkansas (1993-
1997)

William B. Taylor Director 1999 Chief Executive Officer, President and Manager,
(58) Taylor Land and Cattle, Inc. (cattle ranching and
real estate development and sales) and Taylor
Contracting Co., Inc. (grading contractor)

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

(1) Each person first became a director of MFC during January 2001 at the time
MFC was incorporated, and each director previously served, and continues
to serve, as a director of the Bank. The term "First elected" refers to
the year in which each individual first took office as a director of the
Bank.

(2) Mr. Davis' employment agreement with the Bank provides that he be
nominated each year for election as a director.

The Board of Directors recommends that shareholders vote "FOR" each of the
three nominees listed above. The three nominees receiving the highest numbers of
votes will be elected.

Incumbent Directors. The following table contains information about the
remaining eight directors of MFC whose current terms extend beyond the date of
the Annual Meeting.

Position First elected/
with MFC current term Principal occupation
Name and age and the Bank expires (1) and business experience
- ------------------- ------------ ------------- ----------------------------------

William H. Burton Director 1997 / 2003 President and Chief Executive Officer,
(46) Cafe Enterprises, Inc. (regional restaurant company)

Kenneth C. Feagin Director 1997 / 2002 President, Ken Feagin Truck & Trailer Sales; Partner,
(46) Martin-Feagin Ford Lincoln Mercury; formerly,
partner and owner, Bryan Easler Ford (automobile
dealerships) (1980-2001)

Boyd L. Hyder Chairman 1997 / 2003 President and owner, B&A Hyder Trucking, Inc.
(59) (trucking company)

J. Edward Jones Director 1998 / 2002 President, Sutherland Insurance & Realty Company
(66) (general insurance and real estate)

Ronald R. Lamb Director 1997 / 2002 Owner, Lamb Fruit Co., Inc. and Ottanola Farms
(65) (apple production and sales)

H. Steve McManus Director 2000 / 2002 President, Beacon Food Services, Inc. (restaurant),
(59) McManus Development LLC, and Moon McManus
Developers LLC (residential real estate developers);
formerly, Chief Executive Officer, Hardee's Food
Systems, Inc. (1995-1997)

Catherine H. Schroader Director 1997 / 2003 Co-owner and manager, Schroader's Honda, Inc.
(64) (motorcycle dealership)

Maurice A. Scott Director 1997 / 2003 Retired; previously served as Plant Manager for
(56) Monsanto Company (chemical manufacturer) (1981-
1997)

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

Meetings and Committees of the Board of Directors

MFC was incorporated on January 10, 2001, so its Board of Directors did
not meet during 2000. However, each director of MFC previously served, and
continues to serve, as a director of the Bank and, during 2000, the Bank's Board
of Directors met thirteen times. Each current director attended 75% or more of
the aggregate number of meetings of the Bank's Board of Directors and any
committees on which he or she served.

MFC's and the Bank's Boards of Directors have several standing committees,
including a joint Executive Committee, which will serve as a nominating
committee for MFC, and a joint Audit Committee, which is further described
below. Neither MFC nor the Bank has a separate compensation committee.

The Executive Committee functions as a joint committee of MFC's and the
Bank's Boards of Directors. It may act with all the authority of the full
Boards, and it will act as a nominating committee for MFC by making
recommendations to the Board regarding nominees for election as directors. MFC's
Board of Directors will make all final determinations regarding the selection of
nominees. The current members of the Executive Committee are: Boyd L. Hyder --
Chairman, J. W. Davis, J. Edward Jones, H. Steve McManus, and Maurice A. Scott.
The Committee met once during 2000 in its capacity as the Bank's nominating
committee. In making its recommendations to MFC's Board of Directors, the
Committee will consider candidates recommended by shareholders. Any shareholder
recommendation should be made in writing and include a statement of the
candidate's qualifications to serve as a director.

Audit Committee

Function. Following the Reorganization, the Audit Committee will function
as a joint committee of MFC's and the Bank's Boards of Directors. The Committee
reviews the work of the Bank's internal auditor and the scope of the Bank's
internal audit program. The Committee and MFC's Board of Directors will engage
independent accountants each year to conduct an annual audit of MFC's
consolidated financial statements, and the Committee will review reports from
the accounting firm and reports of examinations of MFC and the Bank by their
regulators. A copy of the Charter of the Audit Committee as originally approved
by the Bank's Board of Directors and as adopted by MFC's Board following the
Reorganization is included as Appendix A to this Proxy Statement. During 2000
(prior to the Reorganization), the Committee met six times in its capacity as
the Bank's Audit Committee.

Members. The current members of the Audit Committee are William H.
Burton--Chairman, Danny L. Ford, and Maurice A. Scott. Each member of the
Committee is "independent" as that term is defined by the listing standards of
The Nasdaq Stock Market.

Audit Committee Report. Prior to the Reorganization, and in its capacity
as the Bank's Audit Committee, the Committee (i) reviewed the Bank's audited
financial statements for 2000 and discussed them with management, (ii) discussed
with the Bank's independent accountants the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended, (iii) received written
disclosures and a letter from the Bank's independent accountants required by
Independence Standards Board Standard No. 1, and (iv) discussed the independence
of the Bank's accountants with the accountants. Based on the above review and
discussions, the Committee recommended to the Bank's Board of Directors that it
approve inclusion of the Bank's audited financial statements in the Bank's 2000
Annual Report on Form 10-KSB as filed with the Federal Deposit Insurance
Corporation.

The Bank's Audit Committee:

William H. Burton Danny L. Ford Maurice A. Scott

Compensation Matters

Function. MFC's executive officers are compensated by the Bank for their
services as officers and employees of the Bank, and they will receive no
separate cash compensation from MFC. Therefore, it is not expected that MFC's
Board of Directors will have a compensation committee.

Committee Report on Executive Compensation. The Bank attempts to provide
compensation at levels that will enable it to attract and retain qualified and
motivated individuals as officers and employees. Currently, the Bank's executive
compensation program includes only base salary, cash bonuses, and contributions
to the individual accounts of all participating employees (including executive
officers) under the Bank's Section 401(k) salary deferral plan. However, the
Bank also provides other employee benefit and welfare plans customary for
companies of its size and, prior to the Reorganization, granted options to its
executive officers to purchase shares of the Bank's common stock under its 1997
Employee Stock Option Plan (the "Option Plan"). In connection with the
Reorganization, MFC assumed the Option Plan and all outstanding options that had
been granted, and the outstanding options were converted into options to
purchase MFC's Common Stock. Following the Reorganization, the Bank's Board of
Directors will continue to administer the Bank's compensation program and have
the responsibility for matters involving the compensation of its executive
officers. MFC's Board of Directors will assume responsibility for the grant and
administration of stock options under the Option Plan.

For 2000, amounts of salary and cash bonus paid to each executive officer,
including the executive officers listed in the Summary Compensation Table below,
were established based on an evaluation of that officer's individual level of
responsibility and performance. The performance of

individual executive officers and the Bank's financial performance in general
were considered in connection with the determination of salaries and cash
bonuses for 2000. However, the determination of salary and bonus amounts largely
is subjective and there are no specific formulae, objective criteria, or other
such mechanisms by which adjustments to each executive officer's salary, or the
amounts of cash bonuses paid, are tied empirically to his individual performance
or to the Bank's financial performance.

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility of annual compensation in excess of $1,000,000 paid to certain
executive officers of public corporations. As none of the Bank's executive
officers receives annual compensation approaching that amount, the Board of
Directors has not adopted a policy with respect to Section 162(m).

The Bank's Board of Directors:

William H. Burton Boyd L. Hyder H. Steve McManus
J. W. Davis J. Edward Jones Catherine H. Schroader
Kenneth C. Feagin Ronald R. Lamb Maurice A. Scott
Danny L. Ford William B. Taylor

Director Compensation

Director Fees. The Bank pays each of its directors a fee of $200 ($300 in
the case of the Chairman) for his or her attendance at each meeting of its Board
of Directors, and $50 for attendance at each meeting of a committee of the
Board. Directors currently do not receive any additional compensation for their
services as members of MFC's Board of Directors.

Director Stock Options. Since the incorporation of the Bank during 1997,
options have been granted to the Bank's current directors pursuant to the Bank's
1997 Director Stock Option Plan which was approved by the Bank's shareholders
during 1998. At the time the Reorganization became effective, those options and
the Plan were assumed by MFC and the options were converted into options to
purchase MFC's Common Stock. The numbers of shares of MFC's Common Stock covered
by options currently held by MFC's and the Bank's directors under the Plan are
as follows: Mr. Burton - 20,287; Mr. Feagin - 20,582; Mr. Ford - 14,602; Mr.
Hyder - 17,498; Mr. Jones - 12,886; Mr. Lamb - 12,717; Mr. McManus - 5,391; Ms.
Schroader - 22,254; Mr. Scott - 18,554; and Mr. Taylor - 15,515.

Executive Officers

MFC's and the Bank's executive officers are listed below:

J. W. Davis, age 54, currently serves as President and Chief Executive
Officer of MFC and the Bank. He was first employed by the Bank's organizers
during 1996 to coordinate and direct the Bank's initial organization, and he was
elected President upon commencement of the Bank's operations during 1997.
Previously, Mr. Davis was employed for 15 years with NationsBank where he held
various positions, the most recent of which was Senior Vice President and
Regional Executive for that bank's western South Carolina branches. He has a
total of 32 years of banking experience.

Vincent K. Rees, age 34, has served as the Bank's Chief Lending Officer
since commencement of its operations in June 1997, and he was elected Executive
Vice President of the Bank during November 1999. He previously was employed for
seven years by NationsBank where he served as Vice President and in various
positions in branch management, credit analysis, and consumer and commercial
lending. Mr. Rees has a total of 12 years of banking experience.

Gregory L. Gibson, age 44, serves as Chief Financial Officer of MFC and as
the Bank's Senior Vice President and Chief Financial Officer. He became a
full-time employee of the Bank during 2000, having previously served as Chief
Financial Officer on a part-time basis since February 1999. From 1997 until he
was employed by the Bank, he operated his own public accounting and financial
institutions consulting firm (which was retained by the Bank to provide it with
financial consulting services) and, from 1994 to 1997, was employed as Senior
Vice President of Bank of Mecklenburg, Charlotte, North Carolina. Mr. Gibson is
a certified public accountant and has 21 years of experience in the banking
industry, having served as an executive officer of six community banks and bank
holding companies.

Executive Compensation

Cash Compensation. The following table shows the cash and certain other
compensation received or deferred by the Bank's Chief Executive Officer and
Executive Vice President for the years indicated. MFC's executive officers are
compensated by the Bank for their services as its officers and employees, and
they will receive no additional compensation from MFC.

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

Annual Compensation
--------------------------------------
Name and Other annual All other
principal position(s) Year Salary (1) Bonus compensation (2) compensation
--------------------- ---- ---------- ----- ---------------- ------------

J. W. Davis (3) 2000 $144,000 $75,000 -0- $5,500 (4)
President and
Chief Executive Officer 1999 128,000 25,000 -0- 4,100

1998 113,989 15,000 -0- 3,467

Vincent K. Rees 2000 78,333 35,000 -0- 1,961 (4)
Executive Vice President
and Chief Lending 1999 65,625 11,500 -0- 1,640
Officer
1998 59,519 10,000 -0- 1,488

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

(1) Includes amounts deferred at each officer's election pursuant to the
Bank's Section 401(k) plan.
(2) In addition to compensation paid in cash, the Bank's executive officers
receive certain personal benefits. The value of non-cash benefits received
by each named officer during 2000 did not exceed 10% of his cash
compensation.
(3) Mr. Davis serves as President and Chief Executive Officer of the Bank
pursuant to an employment agreement which provides for a term of three
years (which, absent notice of non-renewal from either party, will be
extended by one additional year on each anniversary date of the
agreement), annual base salary, an annual bonus, and certain other
benefits. In the event there is a "change in control" (as defined in the
agreement) of the Bank which is not approved by at least two-thirds of
directors who are not affiliated with the acquiring person, or if,
following any approved change in control, and without his consent, Mr.
Davis is required to move his residence or principal job location more
than 50 miles from Hendersonville, his salary or benefits are reduced, or
his responsibilities or authority are reduced below the level associated
with his current position, then he may terminate his employment and be
entitled to continue to receive salary, bonuses and employee benefits for
a period of three years. The agreement may be terminated by the Bank for
"just cause" (as defined in the agreement).
(4) For 2000, consists of, for Mr. Davis, the Bank's $3,100 contribution to
the Section 401(k) plan for his account and $2,400 in directors' fees,
and, for Mr. Rees, the Bank's contribution to the Section 401(k) plan for
his account.

Employee Stock Options. Since the incorporation of the Bank during 1997,
options have been granted to the Bank's executive officers pursuant to the
Bank's 1997 Employee Stock Option Plan which was approved by the Bank's
shareholders during 1998. The following tables contains information regarding
stock options granted by the Bank during 2000 to the executive officers named
above in the Summary Compensation Table, and all options held by them at
December 31, 2000, under that Plan. At the time the Reorganization became
effective, all outstanding options and the Plan were assumed by MFC and the
options were converted into options to purchase MFC's Common Stock.

OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------
Potential realizable
value at assumed
annual rates of stock
price appreciation
Individual grants for option term
- ------------------------------------------------------------------------------ ---------------------
% of total
No. of securities options/SARs
underlying granted to Exercise or
options/SARs employees in base price Expiration
Name granted (#) (1) fiscal year ($/share) (1) date 5% ($) 10% ($)
- ------------- ---------------- ------------- -------------- ---------- ------ -------

J. W. Davis 12,500 21.0% $16.00 10/15/10 $125,779 $318,748

V. K. Rees 7,500 12.6% 16.00 10/15/10 75,467 191,249

(1) The options were granted on October 16, 2000, and become exercisable as to
one-fifth of the covered shares on October 16 of each year, beginning in
2001, and they expire ten years following the date of grant. The numbers
of shares and exercise prices have been adjusted to reflect the
five-for-four split in the Bank's common stock which became effective on
March 30, 2001.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
- --------------------------------------------------------------------------------------------------------
Number of securities Value of unexercised
underlying unexercised in-the-money options
options at fiscal year-end (1) at fiscal year-end (1) (2)
------------------------------ --------------------------
Shares acquired Value
Name on exercise realized Exercisable Unexercisable Exercisable Unexercisable
- ------------ --------------- -------- ----------- ------------- ----------- -------------

J. W. Davis (3) - 21,600 26,900 $310,824 $263,466

V. K. Rees (3) - 10,800 14,700 155,412 137,358

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

(1) All share and dollar amounts have been adjusted, or calculated based on a
market value or exercise price that has been adjusted, for the
five-for-four split in the Bank's common stock which became effective on
March 30, 2001.
(2) Represents the aggregate fair market value at December 31, 2000, of shares
underlying unexercised options held on that date, minus the aggregate
exercise or purchase price of those shares.
(3) No options were exercised during 2000.

Transactions with Management

The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of business with certain of its directors, nominees for
director, executive officers, and their associates. All loans included in those
transactions were made on substantially the same terms, including interest

rates, repayment terms and collateral, as those prevailing at the time the loans
were made for comparable transactions with other persons, and those loans do not
involve more than the normal risk of collectibility or present other unfavorable
features.

During 1997, and in connection with the Bank's initial organization, the
Bank's Chairman, Boyd L. Hyder, constructed and leased to the Bank its main
banking and executive offices in Hendersonville, North Carolina. The Bank's
lease agreement calls for an initial term of 20 years (with two five-year
renewal options) and current rental payments of $6,700 per month (with rent
adjustments each five years based on the consumer price index). Before entering
into the lease arrangement, the Bank's Board of Directors obtained an
independent estimate of the rental value of the building and compared the terms
of the lease to lease terms on comparable properties. Additionally, during 1998,
the Bank entered into a lease agreement with Mr. Hyder for approximately 2,400
square feet of space in Four Seasons Shopping Center that is used as the Bank's
administration/operations facility. During 2000, the space leased from Mr. Hyder
was increased to approximately 4,800 square feet. The lease calls for an initial
term of five years (with one five-year renewal option) and current rental
payments are $2,650 per month. The Bank is once again expanding the amount of
space leased from Mr. Hyder for its administration/operations facility to
approximately 6,800 square feet. Although modifications to the Bank's lease
agreement have not yet been completed, it is expected that the Bank's rental
payments will increase to approximately $3,800 per month. The Board of Directors
believes the terms of each of these lease arrangements with Mr. Hyder are
comparable to those it could have obtained in a lease of similar facilities from
an unrelated lessor.

Performance Graph

MFC was first incorporated on January 10, 2001, and its Common Stock was
issued on March 30 in connection with the Reorganization. The following graph
compares the cumulative total shareholder return (the "CTSR") on the Bank's
common stock for the three full fiscal years in which it conducted operations
following its organization and prior to the Reorganization (1998 through 2000)
with the CTSR over the same measurement period of the Nasdaq-US index and the
Nasdaq Banks index. Each line graph assumes that $100 was invested on December
31, 1997, and that dividends were reinvested in additional shares (although the
Bank did not pay any cash dividends during that period).

Comparison of Five-Year Cumulative Total Shareholder Return among
the Bank's Common Stock, the Nasdaq-US Index and the Nasdaq Banks Index

[BAR CHART APPEARS HERE WITH THE FOLLOWING PLOT POINTS]

Year The Bank Nasdaq-US Nasdaq Banks
---- -------- --------- ------------

1997 $100 $100 $100

1998 155 162 99

1999 240 344 90

2000 336 187 120

PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

Subject to ratification by shareholders, the Board of Directors has
appointed the firm of Larrowe & Company, PLLC as MFC's independent accountants
for 2001, and a proposal to ratify that appointment will be presented for action
by shareholders at the Annual Meeting. Representatives of Larrowe & Company,
PLLC are expected to attend the Annual Meeting and be available to respond to
appropriate questions, and they will have the opportunity to make a statement if
they desire to do so.

The Board of Directors recommends that shareholders vote "FOR" Proposal 2.
To be approved, the number of votes cast in person and by proxy at the Annual
Meeting in favor of the proposal must exceed the number of votes cast against
it.

Services and Fees During 2000

As the Bank's independent accountants for 2000, Larrowe & Company, PLLC
provided various audit and non-audit services for which the Bank was billed for
fees as further described below. The Bank's Audit Committee has considered
whether Larrowe & Company, PLLC's provision of non-audit services is compatible
with maintaining its independence.

Audit Fees. Larrowe & Company, PLLC audited the Bank's annual financial
statements for the year ended December 31, 2000, included in its 2000 Annual
Report on Form 10-KSB and, during 2000, it reviewed the financial statements
included in the Bank's Quarterly Reports on Form 10-QSB. The aggregate amount of
fees billed to the Bank for those services was $35,618.

Financial Information Systems Design and Implementation Fees. During 2000,
Larrowe & Company, PLLC did not provide any services related to financial
information systems design and implementation.

All Other Fees. In addition to the services listed above, during 2000,
Larrowe & Company, PLLC provided certain other services for which the aggregate
amount of fees billed to the Bank was $37,229.

PROPOSALS FOR 2002 ANNUAL MEETING

Any proposal (other than nominations for director) of a shareholder which
is intended to be presented for action at the 2002 Annual Meeting must be
received by MFC in writing at its main office in Hendersonville, North Carolina,
no later than December 28, 2001, to be considered timely received for inclusion
in the proxy statement and form of appointment of proxy distributed by MFC in
connection with that meeting. In order for a proposal to be included in MFC's
proxy materials for a particular meeting, the person submitting the proposal
must own, beneficially or of record, at least 1% or $2,000 in market value of
shares of MFC's Common Stock entitled to be voted on that proposal at the
meeting and must have held those shares for a period of at least one year and
continue to hold them through the date

of the meeting. Also, the proposal and the shareholder submitting it must comply
with certain other eligibility and procedural requirements contained in rules of
the Securities and Exchange Commission.

Written notice of a shareholder proposal intended to be presented at the
2002 Annual Meeting, but which is not intended to be included in MFC's proxy
statement and form of appointment of proxy, must be received by MFC at its main
office in Hendersonville, North Carolina, no later than March 13, 2002, in order
for that proposal to be considered timely received for purposes of the Proxies'
discretionary authority to vote on other matters presented for action by
shareholders at that meeting.

ADDITIONAL INFORMATION

Prior to the Reorganization, the Bank was subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and
filed reports and other information, including proxy statements, annual reports
and quarterly reports, with the Federal Deposit Insurance Corporation. As a
result of the Reorganization, MFC has become subject to those reporting
requirements as a successor registrant to the Bank and, in the future, MFC will
file reports under the Exchange Act with the Securities and Exchange Commission.

A copy of the Bank's 2000 Annual Report on Form 10-KSB as filed with the
Federal Insurance Deposit Corporation will be provided without charge upon the
written request of any shareholder entitled to vote at the Annual Meeting.
Requests for copies should be directed to Gregory L. Gibson, Chief Financial
Officer, MountainBank Financial Corporation, 201 Wren Drive, Hendersonville,
North Carolina 28792.

April 27, 2001

Appendix A

MountainBank Financial Corporation

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS

April 16, 2001

I. PURPOSE

The primary purpose of the Audit Committee of the Board of Directors of
MountainBank Financial Corporation is to provide independent and objective
oversight of the accounting functions and internal controls of the corporation,
its subsidiaries and affiliates (referred to herein, as applicable, as
"MountainBank"), and to ensure the objectivity of their financial statements.
The Committee and the Board shall have the ultimate authority and responsibility
to select, evaluate and, where appropriate, replace the independent accountants
and the senior internal audit officer. The Committee shall also review and
advise the Board with respect to MountainBank's risk management policies, and
tax policies.

II. FUNCTIONS

The Audit Committee shall perform the following functions:

1. Independent Accountants. Recommend to the Board the firm to be employed by
MountainBank as its independent accountants, which firm shall be ultimately
accountable to the Board and the Committee as representatives of
shareholders.

2. Plan of Audit. Consult with the independent accountants regarding the plan
of audit. The Committee also shall review with the independent accountants
their report on the audit and review with management the independent
accountants' suggested changes or improvements in MountainBank's accounting
practices or controls.

3. Accounting Principles and Disclosure. Review significant developments in
accounting rules. The Committee shall review with management recommended
changes in MountainBank's methods of accounting or financial statements.
The Committee also shall review with the independent accountants any
significant proposed changes in accounting principles and financial
statements.

4. Internal Accounting Controls. Consult with the independent accountants
regarding the adequacy of internal accounting controls. Where appropriate,
consultation with the independent accountants regarding internal controls
shall be conducted out of management's presence. In connection with this
function, the Committee may require MountainBank's counsel to circulate a
questionnaire to evaluate MountainBank's compliance with banking, financial
disclosure and accounting laws.

5. Financial Disclosure Documents. Review with management and the independent
accountants MountainBank's financial disclosure documents, including all
financial statements and reports filed with the Securities and Exchange
Commission, or sent to stockholders and following the satisfactory
completion of each year-end review recommend to the Board the inclusion of
the audited financial statements in MountainBank's filing on Form 10-K (or
Form 10-KSB). The review shall include any significant problems and
material disputes between management and the independent accountants and a
discussion with the independent accountants out of management's presence of
the quality of

A - 1

MountainBank's accounting principles as applied in its financial reporting,
the clarity of MountainBank's financial disclosures and degree of
aggressiveness or conservatism of MountainBank's accounting principles and
underlying estimates, and a frank and open discussion of other significant
decisions made by management in preparing the financial disclosure.

6. Internal Control Systems. Review with management and internal auditors
MountainBank's internal control systems intended to ensure the reliability
of financial reporting and compliance with applicable codes of conduct,
laws, and regulations. The review shall include any significant problems
and regulatory concerns. The Committee also shall review internal audit
plans in significant compliance areas.

7. Ethical Environment. Consult with management on the establishment and
maintenance of an environment that promotes ethical behavior, including the
establishment, communication, and enforcement of codes of conduct to guard
against dishonest, unethical, or illegal activities.

8. Oversight of Executive Officers and Directors and Conflicts of Interest.
Review significant conflicts of interest involving directors or executive
officers. The Committee shall review compliance with MountainBank policies
and procedures with respect to officers' expense accounts and perquisites,
including their use of corporate assets, and consider the results of any
review of these areas by the internal auditor or the independent
accountant. The Committee shall review executive officers' and directors'
loan and deposit relationships and consider the results of any review of
these areas by the internal auditor or the independent accountant. The
Committee also shall review significant questionable or illegal payments.

9. Oversight of Independent Accountants. Evaluate the independent accountants
on an annual basis and where appropriate recommend a replacement for the
independent accountants. In such evaluation, the Committee shall ensure
that the independent accountants deliver to the Committee a formal written
statement delineating all relationships between the accountants and
MountainBank. The Committee also shall engage in a dialogue with the
accountants with respect to any disclosed relationships or services that
may impact the objectivity and independence of the independent accountants
and in response to the independent accountant's report take, or recommend
that the Board take, appropriate action to satisfy itself of the
independent accountant's independence.

10. Adequacy of Personnel. Review periodically the adequacy of MountainBank's
accounting, financial, and auditing personnel resources.

11. Risk Management. Review and evaluate risk management policies in light of
MountainBank's business strategy, capital strength, and overall risk
tolerance. The Committee also shall evaluate on a periodic basis
MountainBank's investment and derivatives risk management policies,
including the internal system to review operational risks, credit risks,
interest rate risks, procedures for derivatives investment and trading, and
safeguards to ensure compliance with procedures.

12. Tax Policies. Review periodically MountainBank's tax policies and any
pending audits or assessments.

13. Offerings of Securities. Perform appropriate due diligence on behalf of the
Board of Directors with respect to MountainBank's offerings of securities.

14. Charter Amendments. Review this Charter annually, assess its adequacy and
propose appropriate amendments to the Board.

A - 2

The Committee's function is one of oversight and review, and it is not expected
to audit MountainBank, to define the scope of the audit, to control
MountainBank's accounting practices, or to define the standards to be used in
preparation of MountainBank's financial statements.

III. COMPOSITION & INDEPENDENCE

The Committee shall consist of not less than three independent members, who
shall be appointed by the Board of Directors. Members of the Committee shall be
financially literate or become financially literate within a reasonable period
of time after appointment to the Committee and at least one member of the
committee shall have accounting, related financial management expertise, or any
other comparable experience or background that results in the individual's
financial sophistication. No member of the Committee shall be employed or
otherwise affiliated with MountainBank's independent accountants.

In the event that a Committee member faces a potential or actual conflict
of interest with respect to a matter before the Committee, that Committee member
shall be responsible for alerting the committee Chairman, and in the case where
the Committee chairman faces a potential or actual conflict of interest, the
Committee Chairman shall advise the chairman of the Board of Directors. In the
event that the Committee Chairman, or the Chairman of the Board of Directors,
concurs that a potential or actual conflict of interest exists, and independent
substitute Director shall be appointed as a Committee member until the matter,
posing the potential or actual conflict of interest, is resolved.

IV. QUORUM AND MEETINGS

A quorum of the committee shall be declared when a majority of the
appointed members of the Committee are in attendance, except for receiving the
quarterly review report of the independent accountants relating to the interim
financial statements included in MountainBank's Form 10-Q (or Form 10-QSB). This
report may be received on behalf of the Committee by the Committee Chair (as
permitted by SEC regulations) and reported to the full Committee at its next
scheduled meeting. The Committee shall meet on a quarterly basis. Meetings shall
be scheduled at the direction of the Chairman. Except in emergency situations,
notice of the meetings shall be provided at least ten days in advance. The
Committee may ask members of management or others to attend the meeting and
provide pertinent information as necessary.

V. REPORTS

The Committee will report to the Board from time to time with respect to
its activities and its recommendations. When presenting any recommendation or
advice to the Board, the Committee will provide such background and supporting
information as may be necessary for the Board to make an informed decision. The
Committee will keep minutes of its meetings and will make such minutes available
to the full Board for its review.

The Committee shall report to shareholders in MountainBank's proxy
statement for its annual meeting whether the Committee has satisfied its
responsibilities under this Charter.

VI. OTHER AUTHORITY

The Committee is authorized to confer with MountainBank management and
other employees to the extent it may deem necessary or appropriate to fulfill
its duties. The Committee is authorized to conduct or authorize investigations
into any matters within the Committee's scope of responsibilities. The committee
also is authorized to seek outside legal or other advice to the extent it deems
necessary or appropriate, provided it shall keep the Board advised as to the
nature and extent of such outside advice.

The Committee will perform such other functions as are authorized for this
Committee by the Board of Directors.

A - 3

MountainBank Financial Corporation
201 Wren Drive
Hendersonville, North Carolina 28792

APPOINTMENT OF PROXY SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints Peggy H. Denny, Gregory L. Gibson, and Dan
T. Marchesoni (the "Proxies"), or any substitute appointed by them, as the
undersigned's attorneys and proxies, and authorizes each of them, jointly and
severally, to represent and vote as directed below all shares of the common
stock of MountainBank Financial Corporation ("MFC") held of record by the
undersigned on April 20, 2001, at the Annual Meeting of MFC's shareholders (the
"Annual Meeting") to be held at The Kellogg Center, 11 Broyles Road,
Hendersonville, North Carolina, at 10:00 a.m. on Monday, May 21, 2001, and at
any adjournment thereof. The undersigned hereby directs that the shares
represented by this appointment of proxy be voted as follows on the proposals
listed below:

1. ELECTION OF DIRECTORS: Proposal to elect three directors of MFC for three
year terms or until their successors are duly elected and qualified.

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as indicated otherwise on the line below) all nominees listed below

Nominees: J. W. Davis; Danny L. Ford; and William B. Taylor

INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write the nominee's name(s) on the line below.

- --------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS. Proposal to ratify
the appointment of Larrowe & Company, PLLC, as MFC's independent accountants
for 2001.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. OTHER BUSINESS: On such other matters as may properly be presented for
action at the Annual Meeting, the Proxies are authorized to vote the shares
represented by this appointment of proxy in accordance with their best
judgment.

PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY ON THE REVERSE
SIDE AND RETURN IT IN THE ENCLOSED PREPAID ENVELOPE.

THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION, SUCH SHARES WILL BE VOTED "FOR" THE
ELECTION OF EACH OF THE THREE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1, AND
"FOR" PROPOSAL 2. IF, AT OR BEFORE THE TIME OF THE ANNUAL MEETING, ANY NOMINEE
LISTED IN PROPOSAL 1 HAS BECOME UNABLE OR UNWILLING TO SERVE AS A DIRECTOR FOR
ANY REASON, THE PROXIES ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE NAMED BY
THE BOARD OF DIRECTORS. THIS APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER
OF THE SHARES TO WHICH IT RELATES AT ANY TIME BEFORE THE VOTING TAKES PLACE AT
THE ANNUAL MEETING BY FILING WITH THE SECRETARY OF MFC A WRITTEN INSTRUMENT
REVOKING IT OR A DULY EXECUTED APPOINTMENT OF PROXY BEARING A LATER DATE, OR BY
ATTENDING THE ANNUAL MEETING AND ANNOUNCING AN INTENTION TO VOTE IN PERSON.

Dated:___________________________ , 2001

________________________________________
Signature

________________________________________
Joint Signature (if shares held jointly)

Instruction: Please sign above exactly as
your name appears on this appointment of
proxy. Joint owners of shares should both
sign. Fiduciaries or other persons signing
in a representative capacity should indicate
the capacity in which they are signing.

IMPORTANT: TO ENSURE THAT A QUORUM IS PRESENT AT THE ANNUAL MEETING, PLEASE SIGN
AND RETURN YOUR APPOINTMENT OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. RETURNING A SIGNED APPOINTMENT OF PROXY WILL NOT AFFECT YOUR RIGHT TO
REVOKE IT OR TO ATTEND THE MEETING AND VOTE IN PERSON.