EMERGENT GROUP INC, S-1/A, 1996-04-09

EMERGENT GROUP INC
S-1/A, 1996-04-09
PERSONAL CREDIT INSTITUTIONS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 9, 1996.

REGISTRATION NO. 333-01393

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

EMERGENT GROUP, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
SOUTH CAROLINA 6162 57-0513287
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

15 SOUTH MAIN STREET, SUITE 750

GREENVILLE, SOUTH CAROLINA 29601

(864) 235-8056
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOHN M. STERLING, JR., CHIEF EXECUTIVE OFFICER

EMERGENT GROUP, INC.

15 SOUTH MAIN STREET, SUITE 750

GREENVILLE, SOUTH CAROLINA 29601

(864) 235-8056
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:

<TABLE>
<S> <C>
JAMES M. SHOEMAKER, JR., ESQ. GLENN W. STURM, ESQ.
WILLIAM P. CRAWFORD, JR., ESQ. JEFFREY A. ALLRED, ESQ.
WYCHE, BURGESS, FREEMAN & PARHAM, P.A. NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
POST OFFICE BOX 728 1201 PEACHTREE STREET, SUITE 2200
GREENVILLE, SOUTH CAROLINA 29602-0728 ATLANTA, GEORGIA 30361
(864) 242-8200 (TELEPHONE) (404) 817-6106 (TELEPHONE)
(864) 235-8900 (FACSIMILE) (404) 817-6050 (FACSIMILE)
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(1) FEE(2)(3)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock............................ 3,253,350 $14.00 $45,546,900 $15,705.83
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes 413,850 shares subject to the Underwriters' over-allotment option.

(2) Determined pursuant to Rule 457(a) under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee.

(3) Of this amount, $7,112 was paid with the initial filing of this Registration
Statement.

---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

EMERGENT GROUP, INC.

CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(B) OF REGULATION S-K)

<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION LOCATION IN PROSPECTUS
- ------ ----------------------------------------- -----------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus............................. Outside Front Cover Page; Inside Front
and Outside Back Cover Pages; Cross
Reference Sheet
2. Inside Front and Outside Back Cover Pages
of Prospectus.......................... Available Information; Inside Front and
Outside Back Cover Pages; Additional
Information
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges..... Prospectus Summary; Risk Factors;
Selected Consolidated Financial and
Operating Data
4. Use of Proceeds.......................... Use of Proceeds
5. Determination of Offering Price.......... Underwriting
6. Dilution................................. Dilution
7. Selling Security Holders................. Principal and Selling Shareholders
8. Plan of Distribution..................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered............................. Description of Securities
10. Interests of Named Experts and Counsel... Experts; Legal Matters
11. Information With Respect to the
Registrant............................. Prospectus Summary; Price Range of Common
Stock; Dividends; Capitalization;
Selected Consolidated Financial and
Operating Data; The Company;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Consolidated Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................ Not Applicable
</TABLE>
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED APRIL 9, 1996

PROSPECTUS

2,829,000 SHARES

EMERGENT GROUP, INC.

COMMON STOCK

Of the 2,829,000 shares of common stock, $.05 par value per share (the
"Common Stock"), offered hereby (the "Offering"), 2,000,000 shares are being
sold by Emergent Group, Inc. (the "Company") and 829,000 shares are being sold
by certain shareholders of the Company (the "Selling Shareholders"). See
"Principal and Selling Shareholders." The Company will not receive any of the
proceeds from the sale of the shares by the Selling Shareholders.

Prior to this Offering, there has been limited trading of the Common Stock
on the over-the-counter Bulletin Board under the market symbol "EMGG." Bid and
ask quotations are obtained from the National Daily Quotation Service. It is
currently anticipated that the public offering price will be between $12.00 and
$14.00 per share. See "Underwriting" for a discussion of the factors to be
considered in determining the public offering price. In connection with this
Offering, the Company has applied for quotation of the Common Stock on the
Nasdaq National Market under the trading symbol "EMER."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS
OF THE COMMON STOCK OFFERED HEREBY.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
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Total(3).......................... $ $ $ $
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</TABLE>

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $500,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
413,850 additional shares of Common Stock solely to cover over-allotments,
if any. If the option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale, and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares will be
available for delivery on or about , 1996.

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

J.C. Bradford & Co.
Raymond James & Associates, Inc.
Wheat First Butcher Singer

, 1996.

<PAGE> 4
[MAP]
Map of United States showing cities in which the Company has locations

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: New York
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048 and
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon the payment of fees at prescribed rates.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere herein. Unless otherwise indicated, all information in this
Prospectus has been adjusted to reflect a one-for-three reverse stock split of
the Common Stock and Class A Common Stock, $.05 par value per share (the "Class
A Common Stock"), effective June 9, 1995 and a two-for-one stock split effected
in the form of a 100% stock dividend on the Common Stock and Class A Common
Stock effective March 1, 1996. Unless otherwise indicated, the information in
this Prospectus assumes that the Underwriters' over-allotment option is not
exercised. Unless the context requires otherwise, all references to Common Stock
shall include Common Stock and the Class A Common Stock and all references to
the Company shall include the Company and all of its subsidiaries. Prospective
investors should carefully consider the information set forth under the heading
"Risk Factors."

THE COMPANY

Emergent Group, Inc. is a diversified financial services company
headquartered in Greenville, South Carolina which originates, services and sells
residential mortgage loans ("Mortgage Loans"), small business loans ("SBA
Loans") and used automobile loans ("Auto Loans"). The Company makes
substantially all of its loans to borrowers who may have limited access to
credit or who may be considered credit-impaired by conventional lending
standards ("non-prime borrowers"). The Company commenced its lending operations
in 1991 and has experienced significant loan growth over the past several years.
During 1993, 1994 and 1995, the Company originated $63.6 million, $150.0 million
and $249.5 million in loans, respectively. Of the Company's loan originations in
1995, $192.8 million were Mortgage Loans, $39.6 million were SBA Loans and $17.1
million were Auto Loans. For the years ended December 31, 1993, 1994 and 1995,
the Company's pre-tax income from continuing operations was $663,000, $2.4
million and $4.9 million, respectively.

The Company's Mortgage Loan operation (the "Mortgage Loan Division") makes
Mortgage Loans primarily to owners of single family residences who use the loan
proceeds for such purposes as debt consolidation, home improvements and
educational expenditures. Approximately 93% of the Company's Mortgage Loans are
secured by first mortgages, with the balance being secured by second mortgages.
The Mortgage Loans generally have initial principal balances ranging from
$25,000 to $100,000 (with an average initial principal balance in 1995 of
approximately $46,000) and fixed rates of interest ranging from 9% to 16% per
annum (with an average interest rate earned in 1995 of 12.10%). Substantially
all of the Mortgage Loans are originated on a wholesale basis by the Company
through independent mortgage brokers and mortgage bankers (collectively, the
"Mortgage Bankers") and are funded by the Company at closing in either the
Company's name or the Mortgage Banker's name (in the latter case with the
Company taking an assignment of the Mortgage Banker's interest). During 1995,
the Company originated Mortgage Loans in connection with approximately 120
Mortgage Bankers. The Company has established strategic alliance agreements with
three Mortgage Bankers (the "Principal Mortgage Bankers"), which require that
the Principal Mortgage Bankers refer to the Company all of the loans they
originate which meet the Company's underwriting criteria. In 1995, the Principal
Mortgage Bankers originated 75% of the Company's Mortgage Loans by principal
amount. The Mortgage Loan Division has experienced significant growth over the
past several years. During 1993, 1994 and 1995, Mortgage Loan originations
totaled $20.5 million, $99.4 million and $192.8 million, respectively. A
majority of the Mortgage Loans are sold on a non-recourse basis to institutional
investors.

The Company's SBA Loan operation (the "SBA Loan Division") makes SBA Loans
to small businesses primarily for the acquisition or refinancing of property,
plant and equipment, working capital or debt consolidation. The SBA Loans are
secured by real or personal property and have initial principal balances ranging
from $100,000 to $1.2 million (with an average initial principal balance in 1995
of $363,000) and variable interest rates limited to a maximum of 2.75% over the
lowest prime lending rate published in The Wall Street Journal. The U.S. Small
Business Administration (the "SBA") guarantees approximately 75% of the original
principal amount of the SBA Loans, up to a maximum guarantee amount of $750,000.
The Company sells participations representing the SBA-guaranteed portion of all
of its SBA Loans (the "SBA Loan Participations") in the secondary market. In
connection with such sales, the Company receives, in

3
<PAGE> 6

addition to excess servicing revenue, cash premiums of approximately 10% of the
guaranteed portion being sold. SBA Loans are originated directly by the
Company's loan officers in its 11 branch offices and are primarily generated
through referral sources such as commercial loan and real estate brokers
("Commercial Loan Brokers") located in its market areas. Approximately 75% of
the SBA Loans originated in 1995 were originated through Commercial Loan
Brokers. During 1993, 1994 and 1995, SBA Loan originations totaled $37.9
million, $43.1 million and $39.6 million, respectively. The Company believes
that it was among the ten largest SBA Loan lenders in the United States, by
principal amount of SBA Loans approved, for the SBA's fiscal year ended
September 30, 1995.

The Company's Auto Loan operation (the "Auto Loan Division") makes loans to
non-prime borrowers for the purchase of used automobiles. Substantially all of
the Auto Loans are made directly by the Company to purchasers of automobiles who
are referred to the Company by automobile dealers ("Dealers"). Less than 10% of
the Auto Loans made in 1995 were indirect loans purchased from Dealers. The Auto
Loans generally have initial principal balances ranging from $3,000 to $10,000
(with an average initial principal balance in 1995 of approximately $5,000),
terms generally ranging from 24 to 48 months, and fixed interest rates generally
ranging from 18% to 36% per annum (with an average yield in 1995 of 27.40%). The
Auto Loan Division operates through seven locations and in 1995 originated Auto
Loans in connection with approximately 200 Dealers. During 1993, 1994 and 1995,
Auto Loan originations totaled $5.2 million, $7.5 million and $17.1 million,
respectively.

In June 1995, the Company securitized approximately $17 million of loans,
which consisted of the unguaranteed portions of SBA Loans. The Company is
currently engaged in the securitization of approximately $15 million in Auto
Loans which is expected to be completed by April 30, 1996. The Company expects
to continue to pursue securitization transactions in the future as a means of
providing a lower cost of funds and reducing interest rate risk.

The Company's business strategy is to be a diversified financial services
company that meets the credit needs of borrowers in what the Company believes to
be under-served credit markets. Key elements of the Company's business strategy
are to:

-- Maintain a "high velocity" capital strategy whereby loans are generally
sold within 10 to 40 days of origination, thereby enabling the Company to
recognize gain on the sale of its loans and quickly redeploy its capital,
as well as reduce its interest rate risk, default risk and borrowing
costs.

-- Respond quickly to customer credit requests by utilizing a decentralized
loan approval process, while ensuring consistent credit quality through
uniform underwriting guidelines and procedures.

-- Utilize a proactive underwriting process whereby the Company may
restructure credit requests in order to cause them to meet the Company's
underwriting criteria.

-- Achieve profitability goals by maximizing interest margins and
emphasizing effective monitoring and collection of loans.

The Company's growth strategy is to continue to expand all areas of its
lending operations, emphasizing profitability and return on equity, rather than
asset growth. Key elements of the Company's growth strategy are to:

-- Increase loan originations from the Principal Mortgage Bankers and enter
into additional strategic alliances with other Mortgage Bankers, as well
as increase the number of relationships with other referral sources such
as Commercial Loan Brokers and Dealers.

-- Expand its SBA Loan operations by utilizing its "Preferred Lender"
status to minimize response time and maximize SBA Loan production.

-- Increase its penetration in existing markets and expand geographically
by opening additional locations, particularly in the SBA Loan Division
and the Auto Loan Division.

-- Pursue the acquisition of businesses in the financial services industry.

4
<PAGE> 7

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,000,000 shares
Common Stock offered by the
Selling Shareholders....................... 829,000 shares
Common Stock to be outstanding after
the Offering............................... 8,510,168 shares(1)
Use of proceeds.............................. To repay indebtedness of approximately $22
million and for general corporate purposes,
including the funding of loan demand. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol....... EMER
</TABLE>

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

(1) Includes 6,387,142 shares of Class A Common Stock but excludes (i) 339,000
shares of Common Stock issuable upon the exercise of options granted
pursuant to the Company's existing stock option plans, (ii) 121,742 shares
of Common Stock issuable upon the exercise of outstanding warrants and
(iii) 10,500 shares of Common Stock issuable pursuant to stock grants made
pursuant to the Company's restricted stock plan. See "Management."

5
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Interest and servicing revenue.... $ 4,064 $ 6,980 $ 7,983 $ 10,903 $ 15,639
Gain on sale of loans(1).......... -- 1,686 3,605 6,450 9,169
Other revenues.................... 96 342 458 842 1,470
-------- -------- --------- --------- ---------
Total revenues............... 4,160 9,008 12,046 18,195 26,278
Expenses:
Interest expense.................. 2,399 4,315 5,073 5,879 8,527
Provision for credit losses(2).... 83 349 686 2,510 2,480
General and administrative
expenses........................ 2,265 4,698 5,624 7,359 10,419
-------- -------- --------- --------- ---------
Total expenses............... 4,747 9,362 11,383 15,748 21,426
Income (loss) from continuing
operations(3)(4)................ (595) (249) 937 1,792 4,581
Income (loss) from discontinued
operations(3)................... 344 685 260 546 (3,924)
Net income (loss)(3).............. (251) 436 1,197 2,338 657
======== ======== ========= ========= =========
Income (loss) per share from
continuing operations(3)(4)..... (0.11) (0.04) 0.14 0.27 0.69
Income (loss) per share from
discontinued operations(3)...... 0.06 0.12 0.04 0.08 (0.59)
-------- -------- --------- --------- ---------
Net income (loss) per share(3).... $ (0.05) $ 0.08 $ 0.18 $ 0.35 $ 0.10
======== ======== ========= ========= =========
Weighted average outstanding
equivalent shares (in
thousands)...................... 5,660 5,639 6,552 6,689 6,668
Supplemental earnings per share:(5)
Income per share from continuing
operations...................... -- -- -- -- $ 0.55
Income (loss) from discontinuing
operations...................... -- -- -- -- (0.47)
---------
Net income per share.............. -- -- -- -- $ 0.08
=========
OPERATING DATA:
Total loans originated or
purchased......................... $ 18,361 $ 57,282 $ 63,633 $ 150,044 $ 249,507
Total loans sold..................... -- 10,827 31,052 85,772 153,055
Total loans securitized.............. -- -- -- -- 17,063
Total loans serviced (period end).... 41,250 68,489 106,898 156,524 213,851
Total loans receivable (period
end).............................. 39,870 56,785 66,279 94,479 125,775
Weighted average interest rate
earned............................ 14.23% 14.19% 12.83% 13.51% 14.04%
Weighted average interest rate
paid.............................. 7.69 7.74 7.24 6.94 7.57
Allowance for credit losses as a % of
average serviced loans(6)......... 4.69 2.15 1.72 2.37 2.45
Net charge-offs as a % of average
serviced loans(2)(6).............. 0.83 0.68 1.29 2.37 1.44
General and administrative expenses
as a % of average serviced
loans............................. 8.24 8.56 6.41 5.59 5.63
</TABLE>

6
<PAGE> 9

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
-------------------------
ACTUAL AS ADJUSTED(7)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Loans receivable................................................... $103,865 $103,865
Mortgage loans held for sale....................................... 22,593 22,593
Total assets....................................................... 144,931 146,854
Total indebtedness................................................. 129,950 107,950
Total stockholders' equity......................................... 9,885 33,808
</TABLE>

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

(1) These amounts represent gains recorded on the sale of SBA Loan
Participations and on the sale of Mortgage Loans.
(2) Approximately 90% of the amount in 1994 relates to the writedown to market
of certain foreclosed properties associated with speculative construction
loans made by the Mortgage Loan Division prior to its acquisition by the
Company. Speculative construction loans are no longer being made by the
Company.
(3) Includes the impact of the utilization of the Company's net operating loss
carryforward, which totaled approximately $23 million at December 31, 1995.
(4) The amount set forth with respect to the year ended December 31, 1993
includes $113,000 ($0.01 per share) which reflects the cumulative effect of
a change in the method of accounting for income taxes.

(5) Supplemental earnings per share (as adjusted) reflects the issuance of
1,692,000 shares of Common Stock, the proceeds of which are to be used to
repay $22 million in Company debt. These amounts were calculated based on
total weighted average shares of 8,360,000.

(6) Average serviced loans includes all portfolio Mortgage Loans and Auto Loans,
all securitized loans, and the unguaranteed portion of SBA Loans, but
excludes the guaranteed portion of the SBA Loans.

(7) Adjusted to reflect the sale by the Company of 2,000,000 shares at an
assumed public offering price of $13.00 and the application of the
estimated net proceeds thereof as described under "Use of Proceeds."

7
<PAGE> 10

RISK FACTORS

Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following risk factors in
evaluating an investment in the Common Stock offered hereby.

CREDITWORTHINESS OF BORROWERS

Substantially all of the Company's loans are made in the non-prime credit
market, which is comprised of borrowers who are deemed to be credit-impaired due
to various factors. These factors include, among others, the manner in which
they have managed previous credit, the absence or limited extent of their prior
credit history or their limited financial resources. Consequently, the Company's
loans, relative to consumer, commercial and mortgage loans to prime borrowers,
involve a significantly higher probability of default and greater servicing and
collection costs. The Company's profitability depends upon its ability to
properly evaluate the creditworthiness of non-prime borrowers and to efficiently
service and collect its loan portfolio. There can be no assurance that the
performance of the Company's loan portfolio will be maintained, that the
Company's systems and controls will continue to be adequate or that the rate of
future defaults and/or losses will be consistent with prior experience or at
levels that will maintain the Company's profitability. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Allowance for Credit Losses and Credit Loss Experience."

The Company is exposed to the risk of loan delinquencies and defaults,
particularly with respect to loans retained in its portfolio. With respect to
loans to be sold on a non-recourse basis, the Company is at risk for loan
delinquencies and defaults on such loans while they are held by the Company
pending such sale. Following the sale of such loans, the Company's loan
delinquency and default risk with respect to such loan is limited to those
circumstances in which it is required to repurchase such loan due to a breach of
a representation or warranty in connection with the whole loan sale. This risk
with respect to breaches of representations or warranties also exists for loans
sold through securitization. In addition, in securitization transactions, the
subordinate and/or residual certificates bear the risk of default for the entire
pool of securitized loans to the extent of such certificates' value.
Accordingly, the value of the subordinate and/or residual certificates retained
by the Company would be impaired to the extent of losses on the securitized
loans. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Allowance for Credit Losses and Credit Loss
Experience."

ECONOMIC CONDITIONS

The Company's business may be adversely affected by periods of economic
slowdown or recession which may be accompanied by decreased demand for consumer
credit and declining collateral values. Any material decline in real estate
values reduces the ability of borrowers to use home equity to support borrowings
and increases the loan-to-value ratios of Mortgage Loans previously made by the
Company, thereby weakening collateral coverage and increasing the possibility of
a loss in the event of default. Furthermore, delinquencies, foreclosures and
losses generally increase during economic slowdowns or recessions. Because of
the Company's focus on borrowers who are unable or unwilling to obtain financing
from conventional lending sources, the actual rates of delinquencies,
foreclosures and losses on such loans could be higher under adverse economic
conditions than those experienced in the lending industry in general. In
addition, any sustained period of such increased delinquencies, foreclosures or
losses could adversely affect the pricing of the Company's loan sales, whether
through whole loan sales or securitizations. In the event that pools of loans
sold and serviced by the Company experience higher delinquencies, foreclosures
or losses than anticipated, the Company's operations, profitability or financial
condition could be adversely affected.

GEOGRAPHIC CONCENTRATION

A significant majority of the Mortgage Loans are made to borrowers in North
Carolina and South Carolina, and substantially all of the Auto Loans are made to
borrowers in South Carolina. In the event of an economic slowdown in either or
both of these states, the Company's operations, profitability or financial

8
<PAGE> 11

condition could be materially and adversely affected. See "Business -- Mortgage
Loan Division -- Mortgage Loan Origination."

RELATIONSHIPS WITH MORTGAGE BANKERS

The Company's business of originating Mortgage Loans depends in large part
upon its ability to establish and maintain relationships with Mortgage Bankers.
For the year ended December 31, 1995, substantially all of the Company's
Mortgage Loans were originated in connection with Mortgage Bankers. Of the
approximately 120 Mortgage Bankers that were responsible for the origination of
Mortgage Loans during 1995, First Greensboro Home Equity, Inc. (and its
affiliates) ("First Greensboro"), Prime Investors, Inc. ("Prime") and AmeriFund
Group, Inc. ("AmeriFund"), which constituted the Principal Mortgage Bankers,
accounted for approximately $143 million, or 75%, of the Mortgage Loans. First
Greensboro accounted for approximately 87% of the Mortgage Loans originated
during 1995, while AmeriFund and Prime accounted for 12% and 1%, respectively,
in 1995. The Company expects that the percentage of Mortgage Loans in 1996 which
are originated in connection with the Principal Mortgage Bankers will equal or
exceed the corresponding percentage in 1995. The Company has strategic alliance
agreements in place with the Principal Mortgage Bankers which provide that the
Principal Mortgage Bankers must first offer to the Company the right to fund all
of their loans which meet the Company's underwriting criteria before offering
such loans to other parties. These agreements have terms ranging from two to
five years and are scheduled to terminate beginning in December 1997. However,
each agreement may be terminated prior to its scheduled termination by the
Mortgage Banker upon payment to the Company of certain termination fees.
Although the Company will seek to renew these agreements at the end of their
terms, there can be no assurance that such agreements will be renewed or that
loan volumes will be maintained. In the event of the termination of the
Company's relationship with one or more Mortgage Bankers associated with a
material amount of the Company's Mortgage Loans, including the Principal
Mortgage Bankers, the Company's operations, profitability or financial condition
could be materially and adversely affected. See "Business -- Mortgage Loan
Division -- Mortgage Loan Origination."

NO AGREEMENTS WITH CERTAIN MORTGAGE BANKERS

Except for the agreements with the Principal Mortgage Bankers, there are no
contractual arrangements between the Company and its Mortgage Bankers with
respect to the Mortgage Banker's referrals of Mortgage Loans to the Company.
Accordingly, any such Mortgage Banker could decline to utilize the Company to
originate and fund its loans. In the event that a large number of Mortgage
Bankers representing a material amount of Mortgage Loans were to determine not
to utilize the Company, the Company's operations, profitability or financial
condition could be materially and adversely affected.

ADEQUACY OF ALLOWANCE FOR CREDIT LOSSES

There are certain risks inherent in making all loans, including risks with
respect to the period of time over which loans may be repaid, risks resulting
from changes in economic and industry conditions, risks inherent in dealing with
individual borrowers and, in the case of a collateralized loan, risks resulting
from uncertainties as to the future value of the collateral. The Company
maintains an allowance for credit losses based on, among other things,
historical experience, an evaluation of economic conditions and regular reviews
of delinquencies and loan portfolio quality. Although management considers the
allowance appropriate and adequate to cover possible losses in the loan
portfolio, management's judgment is based upon a number of assumptions about
future events, which are believed to be reasonable, but which may or may not
prove valid. Thus, there can be no assurance that charge-offs in future periods
will not exceed the allowance for credit losses or that additional increases in
the allowance for credit losses will not be required. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operation -- Allowance for Credit Losses and Credit Loss Experience."

AVAILABILITY OF FUNDING SOURCES

The Company, like most financial service companies, has a constant need for
capital to finance its lending activities. Historically, the Company has funded
the majority of its lending activities from the cash flow generated from
operations and through borrowing pursuant to its existing credit facilities (the
"Credit

9
<PAGE> 12

Facilities"), by selling senior notes and subordinated debentures bearing fixed
rates of interest ("Debentures"), and by selling a substantial portion of the
loans it originates. In the event that the Company were unable to sell its loans
in the secondary markets, its Credit Facilities were terminated, the Company
were unable to sell Debentures, or holders of Debentures were unwilling to renew
their Debentures, the Company's operations, profitability or financial condition
could be materially and adversely affected. In particular, the Credit Facilities
contain a number of financial covenants, including, but not limited to,
covenants with respect to debt to net worth ratios, delinquent loans, and
minimum adjusted tangible net worth. In the event that the Company's financial
performance were to deteriorate materially, the Company's ability to borrow
under the Credit Facilities or renew the Credit Facilities could be impaired.
Furthermore, there can be no assurance that the Company's existing lenders will
agree to refinance such debt, that other lenders will be willing to extend lines
of credit to the Company or that funds otherwise generated from operations will
be sufficient to satisfy such obligations. Future financing may involve the
issuance of additional Common Stock or other securities, including securities
convertible into or exercisable for Common Stock, and any such issuance may
dilute the equity interest of purchasers of the Common Stock offered hereby. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

As of December 31, 1995, the Company had aggregate unused borrowing
availability under the Credit Facilities of approximately $14.2 million. The
Company may increase borrowings under the lines up to a maximum of $148 million,
depending upon the total amount of loans outstanding. In the event that the
Company is unable to sell loans or increase its borrowing capacity, its
operations, profitability or financial condition would be materially and
adversely affected.

After completion of this Offering, the Company will have only a minimal
amount of authorized shares which are available for issuance. The Company
intends to propose at its next annual meeting of shareholders an increase in the
Company's authorized Common Stock. Although the Company believes that it will
obtain the necessary shareholder approval to increase its authorized Common
Stock, no assurance of such fact may be given. In the event that such approval
is not received, the Company would not have sufficient authorized shares to
issue in connection with acquisitions or to raise additional capital by issuing
additional stock.

LOSS OF ABILITY TO SELL LOANS

A significant portion of the Company's profits are generated through the
sale of loans. To the extent that the Company is unable to sell its loans, the
Company's operations, profitability or financial condition could be materially
and adversely affected.

GENERAL LENDING RISKS

The lending business is subject to various business risks, including, but
not limited to, the following: (1) the risk that borrowers will not satisfy
their debt service payments, including interest charges and principal
amortization obligations; (2) the risk that appraisals of properties securing
loans originated or purchased by the Company will not reflect the property's
actual value, either due to valuation errors or fluctuations in the value of
real estate and that, upon liquidation of real estate owned or other collateral
securing loans, the Company may suffer a loss; and (3) the risk that
environmentally hazardous substances could be discovered on real properties
acquired by the Company in foreclosure and that the Company might be required to
remove such substances from the affected properties at its sole cost or that the
value of the properties would otherwise be impaired. Also, increases in interest
rates after the origination of fixed rate loans and prior to the sale of such
loans may cause such loans to decrease in value. A decrease in interest rates
also could cause an increase in the rate at which outstanding fixed rate loans
are prepaid, reducing the period of time during which the Company receives its
net interest margin and servicing revenue with respect to such prepaid loans.
With respect to SBA Loans, unanticipated prepayments and/or defaults also have
the effect of reducing servicing revenue associated with the excess servicing
receivables created at the time the SBA Loan Participations are sold.

10
<PAGE> 13

DEPENDENCE ON FEDERAL PROGRAMS AND RELATED AGREEMENTS

A portion of the Company's business is dependent upon the continuation of
various federally funded programs, such as the SBA loan program. Of the total
loans originated by the Company during the year ended December 31, 1995,
approximately 16% by principal amount were SBA Loans. The discontinuation,
elimination or significant reduction of guarantee levels or any modification of
the qualification criteria or the permissible loan purposes under any of these
federal programs could have a material adverse effect on the Company's
operations or financial condition. In addition, in the event that the Company
were to lose its status as a "Preferred Lender," the SBA Loan Division could be
materially and adversely affected. See "Business -- SBA Loan Division."

During 1995, the SBA reviewed the funding available for the guarantee of
SBA Loans under the government's SBA lending program and in connection with such
review instituted a number of changes, which included the implementation of
$500,000 as the maximum loan amount that could be made under the SBA program,
and the preclusion of the use of SBA Loans for purposes of refinancing most
forms of existing debt. These two major changes were ultimately rescinded in
connection with certain other changes in the SBA program instituted in October
1995. However, these temporary changes had a material adverse effect on the SBA
Loan Division's loan volume for 1995. Although the permanent changes instituted
with respect to SBA Loans in October 1995 are not expected to have a material
adverse effect on the SBA Loan Division in the future, the SBA's actions in 1995
illustrate the potential for governmental regulation having a material effect on
the Company's operations. The agreement pursuant to which the SBA has agreed to
guarantee SBA loans made by the Company may be terminated by either the Company
or the SBA on 10 days prior written notice to the other party. The termination
or non-renewal of this agreement or any change in the SBA program could have a
material adverse effect on the Company's operations, profitability or financial
condition. See "Business -- SBA Loan Division" and "Business -- Regulation."

LOSS OF NET OPERATING LOSS CARRYFORWARD

As a result of operating losses incurred by the Company under prior
management, the Company generated significant net operating loss carryforwards
(the "NOL"). At December 31, 1995, the amount of the NOL remaining and available
to the Company was approximately $23 million. The NOL expires, to the extent
that it is not utilized to offset income, in varying amounts annually through
2001. Federal tax laws provide that net operating loss carryforwards are
restricted or eliminated upon certain changes of control. In the future, it is
possible that a change of control could occur and that the Company could lose
the benefits of the NOL. In the event that the Company lost the NOL, the
Company's earnings would be materially and adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Tax
Considerations -- The NOL."

INTEREST RATE SENSITIVITY

The Company is subject to certain interest rate risks, particularly with
respect to its Mortgage Loans and Auto Loans, which bear fixed rates of interest
and are principally funded with variable rate debt. In the event that interest
rates change dramatically in a relatively short period of time, the Company's
interest spread and certain premiums received upon the sale of loans would
decrease, which could materially and adversely affect the Company's operations,
profitability or financial condition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

COMPETITION

The non-prime market is very fragmented and highly competitive. The Company
believes that there are numerous traditional sources of credit providing, or
capable of providing, financing which are not currently serving the Company's
market segment. Historically, commercial banks, savings and loans, credit
unions, financing subsidiaries of automobile manufacturers and other lenders
providing traditional financing (many of which are larger, have significantly
greater financial resources and have relationships with established captive
transaction networks) have not consistently served the Company's market segment.
If one or more of such

11
<PAGE> 14

traditional sources of credit were to enter the Company's market segment, the
Company's operations, profitability or financial condition could be materially
adversely affected. In addition, if the Company were to experience increased
competition from other traditional or non-traditional sources of credit, such
increased competition may result in a reduction in the interest rates charged
borrowers or a reduction in the volume of originated loans. A reduction in such
interest rates or loan volume could materially adversely affect the Company's
operations, profitability or financial condition. See "Business -- Competition."

REGULATION OF LENDING ACTIVITIES AND CHANGING REGULATORY ENVIRONMENT

The operations of the Company are subject to extensive regulation by
federal, state and local governmental authorities and are subject to various
laws and judicial and administrative decisions imposing various requirements and
restrictions, including among other things, regulating credit granting
activities, establishing maximum interest rates, insurance coverages and
charges, requiring disclosures to customers, governing secured transactions and
setting collection, repossession and claims handling procedures and other trade
practices. Furthermore, there can be no assurance that more restrictive laws,
rules and regulations will not be adopted in the future which could make
compliance much more difficult or expensive, restrict the Company's ability to
originate or purchase loans, or otherwise adversely affect the operations,
profitability or financial condition of the Company. See
"Business -- Regulation."

CONCENTRATION OF VOTING CONTROL IN MANAGEMENT

After completion of the Offering, the Company's Board of Directors and
executive officers ("Company Management") will beneficially own or otherwise
control an aggregate of approximately 19% of the outstanding Common Stock
(approximately 18% if the Underwriters' over-allotment option is exercised in
full). Therefore, Company Management, if they were to act in concert, would be
able to exercise significant influence with respect to the election of the Board
of Directors of the Company and all matters submitted to shareholders. See
"Principal and Selling Shareholders."

DEPENDENCE UPON KEY EXECUTIVES

The Company's growth and development to date have been dependent upon the
services of certain members of its senior management. The loss of the services
of one or more of such members of senior management could have a material
adverse effect on the Company. See "Management."

ABSENCE OF PRIOR MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Although the Company's Common Stock and Class A Common Stock have been
traded on the over-the-counter Bulletin Board under the market symbols "EMGG"
and "EMGGA," there has generally been no liquid public market for the Common
Stock or the Class A Common Stock in the several years prior to the Offering.
The Company has filed an application seeking to have the Common Stock listed for
quotation on the Nasdaq National Market. However, there can be no assurance that
an active trading market will develop or, if developed, will be sustained
following the Offering. Because of the relatively illiquid market for the Common
Stock prior to the Offering, the price of the Common Stock offered hereby will
be determined solely by negotiations among the Company, the Selling
Shareholders, and J.C. Bradford & Co., Raymond James & Associates, Inc. and
Wheat, First Securities, Inc., as representatives (the "Representatives") of the
several underwriters named in this prospectus (the "Underwriters") and may bear
no relationship to the market price of the Common Stock after the Offering. See
"Underwriting."

From time to time after this Offering, there may be significant volatility
in the market price for the Common Stock. Quarterly operating results of the
Company or of other similar companies, changes in general conditions in the
economy, consumer delinquency and default rates generally, the financial markets
or the industry in which the Company operates, natural disasters, litigation
developments or other developments affecting the Company or its competitors
could cause the market price of the Common Stock to fluctuate substantially. In
addition, in recent years the stock market has experienced extreme price and
volume fluctuations. This volatility has had a significant effect on the market
prices of securities issued by many companies for reasons unrelated to their
operating performance.

12
<PAGE> 15

SHARES AVAILABLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have 8,510,168 shares of
Common Stock outstanding, of which the 2,829,000 shares offered hereby will be
freely tradeable. In addition, 2,479,462 shares of Common Stock not subject to
the lock-up described below are freely tradeable.

Directors and executive officers of the Company and certain shareholders of
the Company's Common Stock holding an aggregate of 3,271,706 million shares have
agreed not to sell or otherwise dispose of their Common Stock for a period of
180 days following the closing date of this Offering without the prior written
consent of the Representatives of the Underwriters and the Company. When such
lock-up restrictions lapse, such shares of Common Stock may be sold in the
public market or otherwise disposed of, subject to compliance with applicable
securities laws. Sales of a substantial number of shares of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock.

DILUTION

Investors in the Offering will experience immediate and substantial
dilution of $9.43 per share (based on an assumed public offering price of $13.00
per share), and current shareholders will receive a material increase in the net
tangible book value of their shares of Common Stock. See "Dilution."

13
<PAGE> 16

THE COMPANY

The Company is a diversified financial services company headquartered in
Greenville, South Carolina which originates, services and sells Mortgage Loans,
SBA Loans, and Auto Loans. The Company makes substantially all of its loans to
non-prime borrowers. The Company also serves as investment manager for Reedy
River Ventures, L.P. and Palmetto Seed Capital Fund, L.P. (collectively, the
"Venture Funds").

The Company was incorporated in South Carolina in 1968 under the name
Golden Tye Corporation and conducted operations related to the railroad
transportation industry (the "Transportation Segment"). During the period from
1980 through 1990, the Company's business suffered significant operating losses.
In December 1990, approximately 40% of the Company's equity was acquired by a
small group of investors, including the Company's current Chairman and Chief
Executive Officer. In connection with such acquisition, a substantially new
Board of Directors was elected and new executive officers were appointed. In
1991, the Company changed its name to Emergent Group, Inc. and began operating
its financial services business (the "Financial Services Segment").

The Company began its transformation to a financial services company with
its acquisition of Carolina Investors, Inc. ("CII") in May 1991. At the time of
acquisition, CII had approximately $32 million in Mortgage Loans, and did not
sell any loans in the secondary market. Since the Company acquired CII, it has
expanded its Mortgage Loan Division significantly. In particular, the Mortgage
Loan Division has significantly increased its loan originations, principally
through establishing relationships with Mortgage Bankers. During 1993, 1994 and
1995, Mortgage Loan originations totaled $20.5 million, $99.4 million, and
$192.8 million, respectively. Furthermore, in 1994 the Mortgage Loan Division
began selling a majority of its loans originated in connection with Mortgage
Bankers. During 1994 and 1995, the Mortgage Loan Division sold $54.6 million and
$127.6 million, respectively, in Mortgage Loans.

The Company formed Emergent Business Capital, Inc. ("EBC") in December 1991
for the purpose of acquiring substantially all of the assets, including the SBA
license, of an inactive SBA lender. Immediately following this acquisition, EBC
operated through one location and had $1.6 million in serviced loans receivable
of which $1.4 million had been sold in the secondary markets. Since the
Company's acquisition of EBC in 1991, its SBA Loan Division has expanded its
operations such that it now operates through 11 locations. In addition to
selling the SBA Loan Participations, the SBA Loan Division recently securitized
approximately $17 million in loans receivable consisting of the unguaranteed
portions of SBA Loans. During 1994 and 1995, the SBA Loan Division originated
$43.1 million and $39.6 million, respectively, in SBA Loans. At December 31,
1994 and 1995, the SBA Loan Division serviced $87.9 million and $108.0 million,
respectively, in SBA Loans.

The Company acquired Premier Financial Services, Inc. ("Premier") in May
1991 and The Loan Pro$, Inc. ("Loan Pro$") in July 1991. At the time of
acquisition, Loan Pro$ had $1.8 million in loans receivable and operated through
one location, and Premier had approximately $3 million in loans receivable and
operated through three locations. Since the Company acquired Premier and Loan
Pro$, it has expanded its Auto Loan Division significantly. During 1994 and
1995, the Auto Loan Division originated $7.5 million and $17.1 million,
respectively, in Auto Loans. The Auto Loan Division currently operates through a
total of seven locations.

In January 1993, as part of the Company's strategy of acquiring businesses
to utilize the NOL, the Company acquired Young Generations, Inc., a North
Carolina corporation ("YGI"), which was engaged in the design, manufacture and
marketing of children's apparel (the "Apparel Segment"). Subsequent to 1993, the
Company decided to focus Company resources and attention solely on its core
financial services operations. In accordance with such strategy, in 1995, the
Company discontinued its Transportation Segment and Apparel Segment operations
through the sale of Transportation Segment assets and the sale of YGI to YGI's
management team. The Company does not anticipate making any acquisitions not
related to the financial services industry.

The Company's principal executive offices are located at 15 South Main
Street, Suite 750, Greenville, South Carolina 29601, and its telephone number is
(864) 235-8056.

14
<PAGE> 17

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company are estimated to be approximately $23.9
million (2,413,850 shares and $28.9 million if the Underwriters' over-allotment
option is exercised in full), after deducting the underwriting discount and
estimated Offering expenses, based upon an assumed public offering price of
$13.00 a share. Of the net proceeds of this Offering, approximately $22 million
will be used to repay outstanding indebtedness under the Credit Facilities and
the balance will be used for general corporate purposes, including the funding
of the Company's loan demand. The indebtedness expected to be repaid with the
proceeds of this Offering had a weighted average interest rate at December 31,
1995 of 8.73% and maturity dates ranging from March 1996 to December 1998.

As part of its growth strategy, the Company may use a portion of the net
proceeds for acquisitions of businesses in the financial services industry.
Although the Company is engaged from time to time in discussions relating to
possible acquisitions, no agreements or understandings relating to any
acquisitions are presently pending.

In connection with the repayment of indebtedness referenced above, the
Company is not terminating the relevant Credit Facilities and, accordingly,
would expect, in the future, to borrow under such Credit Facilities in order to
fund additional loan demand. The amount of such additional borrowing will
depend, among other things, upon the Company's loan demand and profitability.

The Company will receive no proceeds from the sale of the shares sold by
the Selling Shareholders.

DIVIDEND POLICY

The Company has not paid cash dividends on any shares of capital stock
since 1990, and after the Offering intends to retain its earnings to support the
growth and development of its business. Accordingly, it does not anticipate
paying any cash dividends in the foreseeable future. Any future dividend
payments would also depend upon the financial condition, funding requirements
and earnings of the Company, as well as other factors that the Board of
Directors may deem relevant. In addition, the ability of the Company to pay
dividends depends substantially upon its ability to receive dividends from its
subsidiaries. The Credit Facilities prohibit the Company's subsidiaries from
paying dividends to the Company (although management fees may be paid).
Accordingly, the Company's access to funds for the purpose of paying dividends
may be limited.

15
<PAGE> 18

PRICE RANGE OF COMMON STOCK

The Company's Common Stock and the Class A Common Stock are traded on the
over-the-counter Bulletin Board under the market symbols "EMGG" and "EMGGA."
However, for significant periods of time over the past several years, there has
been no established public trading market for the Common Stock or the Class A
Common Stock. As a result, prices reported for the Common Stock and the Class A
Common Stock reflect the relative lack of liquidity and may not be reliable
indicators of market value.

The following table sets forth, for the periods indicated, the high and low
bid prices for the Company's Common Stock and the Class A Common Stock as
reported by National Daily Quotation Service. The prices given may represent
quotations between dealers which do not include retail mark-ups, mark-downs or
commissions and do not necessarily represent actual transactions.

<TABLE>
<CAPTION>
CLASS A COMMON
COMMON STOCK STOCK
------------- --------------
CALENDAR YEAR HIGH LOW HIGH LOW
- ----------------------------------------------------------------- ----- ----- ------ -----
<S> <C> <C> <C> <C>
1994
First Quarter.................................................. $0.75 $0.75 $ 0.75 $0.63
Second Quarter................................................. 0.75 0.63.. 0.97 0.63
Third Quarter.................................................. 0.75 0.63 1.41 0.63
Fourth Quarter................................................. 1.13 0.63 1.68 0.95
1995
First Quarter.................................................. $1.13 $0.56 $ 1.31 $0.94
Second Quarter................................................. 1.88 0.75 2.07 0.94
Third Quarter.................................................. 5.50 1.75 6.00 1.75
Fourth Quarter................................................. 6.50 2.00 9.50 3.00
1996
First Quarter.................................................. $9.00 $4.00 $10.00 $8.00
</TABLE>

Bid and ask quotations with respect to the Common Stock and the Class A
Common Stock may be obtained from the National Daily Quotation Service. On March
29, 1996, the last reported sales price of the Common Stock, as obtained from
the Bloomberg quotation service, was $10.00. On March 29, 1996, there were 464
holders of record of Common Stock and 123,026 shares of Common Stock
outstanding. In connection with this Offering, the Company has applied for
quotation of the Common Stock on the Nasdaq National Market under the trading
symbol "EMER."

On March 29, 1996, the last reported sales price of the Class A Common
Stock, as obtained from the Bloomberg quotation service, was $9.75. On March 29,
1996, there were 832 holders of record of Class A Common Stock and 6,387,142
shares of Class A Common Stock outstanding.

16
<PAGE> 19

DILUTION

The net tangible book value of the Company at December 31, 1995 was
$6,420,823, or $1.00 per share of Common Stock. Net tangible book value per
share represents the amount of the Company's total tangible assets less total
liabilities, divided by the number of shares of Common Stock outstanding. Net
tangible book value dilution per share to new investors represents the
difference between the amount per share paid by purchasers of shares of Common
Stock in the Offering and the pro forma net tangible book value per share of
Common Stock immediately after completion of the Offering.

After giving effect to the sale of 2,000,000 shares of Common Stock offered
by the Company hereby (at an assumed public offering price of $13.00 per share),
and after deducting the underwriting discount and other estimated expenses to be
paid by the Company in connection with this Offering, and after the application
of the estimated net proceeds therefrom, the pro forma net tangible book value
of the Company as of December 31, 1995 would have been $30,343,252, or $3.57 per
share of Common Stock. This represents an immediate increase in net tangible
book value of $2.57 to existing shareholders and an immediate dilution in net
tangible book value of $9.43 per share to purchasers of Common Stock in this
Offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price per share............................... $13.00
Net tangible book value per share before the Offering............... $1.00
Increase in net tangible book value per share attributable to new
investors........................................................ 2.57
Pro forma net tangible book value per share after the Offering........ 3.57
------
Dilution per share to new investors................................... $ 9.43
======
</TABLE>

Assuming the Underwriters' over-allotment option is exercised in full, pro
forma net tangible book value per share after the Offering would be $4.01 per
share, the increase in pro forma net tangible book value of shares owned by
existing shareholders would be $3.01 per share, and the dilution per share to
new investors after the Offering would be $8.99 per share.

The foregoing assumes no exercise of outstanding stock options or warrants.
At December 31, 1995, a total of 699,664 shares are authorized for issuance
under the Company's stock option plans. At December 31, 1995, options to
purchase an aggregate of 83,532 shares with a weighted average exercise price of
$4.26 were outstanding and exercisable under such stock option plans. At
December 31, 1995, options to purchase an additional 255,468 shares were
outstanding but were not exercisable. At December 31, 1995, the Company also had
warrants outstanding which entitled the holders thereof to purchase an aggregate
of 121,742 shares. On January 29, 1996, the Company adopted the Restricted Stock
Agreement Plan which provides for the grant of up to 100,000 shares of
restricted stock to non-employee directors. To the extent outstanding options
and warrants are exercised, or shares reserved for future issuance are issued,
there will be further dilution to new investors. See "Management."

17
<PAGE> 20

CAPITALIZATION

The following table sets forth the capitalization of the Company at
December 31, 1995 (i) on a historical basis and (ii) as adjusted to reflect the
sale by the Company of the 2,000,000 shares of Common Stock offered hereby at an
assumed public offering price of $13.00 per share and the application of the
estimated net proceeds therefrom as described in "Use of Proceeds." This table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and the Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------
AS
ACTUAL ADJUSTED
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Indebtedness:
Debentures(1).......................................................... $ 98,317 $ 98,317
Notes payable to banks, including under the Credit Facilities(2)....... 31,633 9,633
-------- --------
Total indebtedness............................................. 129,950 107,950
-------- --------
Shareholders' equity:
Common Stock, $.05 par value; 4,000,000 authorized shares; 121,000
shares issued and outstanding; 2,121,000 shares issued and
outstanding as adjusted............................................. 6 111
Class A Common Stock, $.05 par value; 6,666,667 authorized shares;
6,276,474 shares issued and outstanding(3).......................... 314 314
Additional paid-in capital............................................. 6,632 30,450
Retained earnings...................................................... 2,933 2,933
-------- --------
Total shareholders' equity..................................... 9,885 33,808
-------- --------
Total capitalization........................................... $139,835 $141,758
======== ========
</TABLE>

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

(1) The Debentures are comprised of senior notes and subordinated debentures
bearing fixed rates of interest which are sold by CII only to South
Carolina residents. At December 31, 1995, there were $82.1 million of
senior notes and $16.2 million of subordinated debentures outstanding
bearing aggregate weighted average interest rates of 8% and 6%,
respectively. Both senior notes and subordinated debentures are subordinate
in priority to the Credit Facilities. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
(2) The Company's Credit Facilities provide for aggregate borrowings of up to
$148.0 million, subject to certain borrowing base limitations which at
December 31, 1995, would have allowed additional borrowing of $14.2
million. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
(3) The Class A Common Stock is identical in all respects to the Common Stock
except that the Class A Common Stock is subject to certain transfer
restrictions applicable only to holders of more than 4.5% of the total
number of shares of Class A Common Stock and Common Stock outstanding. See
"Description of Securities."

18
<PAGE> 21

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following unaudited selected consolidated financial and operating data
at and for the five years ended December 31, 1995 are derived from the audited
financial statements of the Company. The data set forth below is qualified by
reference to, and should be read in conjunction with, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements and Notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------
1991 1992 1993 1994 1995
------- ------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest and servicing revenue....................................... $ 4,064 $ 6,980 $ 7,983 $ 10,903 $ 15,639
Gain on sale of loans (1)............................................ -- 1,686 3,605 6,450 9,169
Other revenues....................................................... 96 342 458 842 1,470
------- ------- -------- -------- --------
Total revenues............................................... 4,160 9,008 12,046 18,195 26,278
Interest expense:
Interest on notes payable.......................................... 41 218 419 848 2,303
Interest on Debentures............................................. 2,358 4,097 4,654 5,031 6,224
------- ------- -------- -------- --------
Total interest expense....................................... 2,399 4,315 5,073 5,879 8,527
Provision for credit losses(2)....................................... 83 349 686 2,510 2,480
General and administrative expenses.................................. 2,265 4,698 5,624 7,359 10,419
Income (loss) from continuing operations before minority interest,
income taxes and cumulative effect of change in accounting
principle.......................................................... (587) (354) 663 2,447 4,852
Income taxes......................................................... (2) (130) (186) 609 190
------- ------- -------- -------- --------
Income (loss) from continuing operations before minority interest and
cumulative effect of change in accounting principle(3)............. (585) (224) 849 1,838 4,662
Minority interest.................................................... (10) (25) (25) (46) (81)
------- ------- -------- -------- --------
Income from continuing operations before cumulative effect of change
in accounting principle(3)......................................... (595) (249) 824 1,792 4,581
Income (loss) from discontinued operations........................... 344 685 260 546 (3,924)
Cumulative effect of change in accounting principle.................. -- -- 113 -- --
------- ------- -------- -------- --------
Net income (loss)............................................ $ (251) $ 436 $ 1,197 $ 2,338 $ 657
======= ======= ======== ======== ========
Income per share from continuing operations.......................... (0.11) (0.04) 0.13 0.27 0.69
Income per share from discontinued operations........................ 0.06 0.12 0.04 0.08 (0.59)
Cumulative effect per share of change in accounting principle........ -- -- 0.01 -- --
------- ------- -------- -------- --------
Net income (loss) per share(4)............................... $ (0.05) $ 0.08 $ 0.18 $ 0.35 $ 0.10
======= ======= ======== ======== ========
Weighted average outstanding equivalent shares (in thousands)........ 5,660 5,639 6,552 6,689 6,668
OPERATING DATA:
Total loans originated or purchased.................................. $18,361 $57,282 $ 63,633 $150,044 $249,507
Total loans sold................................................... -- 10,827 31,052 85,772 153,055
Total loans securitized............................................ -- -- -- -- 17,063
Total loans serviced (period end).................................. 41,250 68,489 106,898 156,524 213,851
Total loans receivable (period end)................................ 39,870 56,785 66,279 94,479 125,775
Weighted average interest rate earned.............................. 14.23% 14.19% 12.83% 13.51% 14.04%
Weighted average interest rate paid................................ 7.69 7.74 7.24 6.94 7.57
Allowance for credit losses as a % of average serviced loans(5).... 4.69 2.15 1.72 2.37 2.45
Net charge-offs as a % of average serviced loans(2)(5)............. 0.83 0.68 1.29 2.37 1.44
General and administrative expenses as a % of average serviced
loans............................................................ 8.24 8.56 6.41 5.59 5.63
BALANCE SHEET DATA (PERIOD END):
Loans receivable..................................................... $39,870 $56,785 $ 66,279 $ 91,736 $103,865
Mortgage loans held for sale......................................... -- -- -- 3,662 22,593
Total assets......................................................... 53,562 70,359 84,279 109,448 144,931
Total indebtedness................................................... 48,492 64,840 76,195 99,012 134,850
Shareholders' equity................................................. 4,635 5,057 7,362 9,700 9,885
</TABLE>

19
<PAGE> 22

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

(1) These amounts represent gains on the sale of SBA Loan Participations and on
the sale of Mortgage Loans.
(2) Approximately 90% of the amount in 1994 relates to the writedown to market
of certain foreclosed properties associated with speculative construction
loans made by the Mortgage Loan Division prior to its acquisition by the
Company. Speculative construction loans are no longer being made by the
Company.
(3) The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," effective January 1, 1993. The adoption
of SFAS No. 109 had the cumulative effect of (i) increasing the Company's
net income in 1993 by $113,000 and (ii) reducing the Company's effective
tax rate from approximately 45% to approximately 22%. The Company
recognized no deferred tax benefits of operating loss carryforwards as a
result of the adoption of SFAS No. 109.

(4) See "Supplemental Earnings Per Share" in the Summary Consolidated Financial
and Operating Data on page 5.

(5) Average serviced loans includes all portfolio Mortgage Loans and Auto Loans,
all securitized loans, and the unguaranteed portion of SBA Loans, but
excludes the guaranteed portion of the SBA Loans.

20
<PAGE> 23

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

The following discussion should be read in conjunction with the preceding
"Selected Consolidated Financial and Operating Data" and the other historical
and pro forma financial statements of the Company, including the notes thereto,
appearing elsewhere herein. As used herein, "Discontinued Operations" refers to
the Company's Transportation Segment and Apparel Segment. Unless otherwise
noted, the discussion contained herein relates to the continuing operations of
the Company, which consist of its Financial Services Segment operations.

GENERAL

The Company is a diversified financial services company headquartered in
Greenville, South Carolina which makes Mortgage Loans, SBA Loans and Auto Loans.
Prior to current management's acquisition of control of the Company in December
1990, the Company was primarily engaged in its Transportation Segment
operations. Under previous management, the Company incurred significant losses
which resulted in the NOL. In 1991, current management implemented a strategic
plan to acquire profitable businesses which could utilize the NOL. Pursuant to
such strategy, the Company acquired CII, Premier, EBC and Loan Pro$ in 1991 and
YGI in 1993. In 1994, the Company made a strategic decision to divest all
nonfinancial operations and to focus exclusively on the financial services
industry. In accordance with such strategy, the Company completed its
divestiture of its Apparel Segment and Transportation Segment operations in
1995.

The Company's total serviced loans receivable increased from $106.9 million
at December 31, 1993 to $156.5 million at December 31, 1994 and to $213.9
million at December 31, 1995. Mortgage Loans increased during both 1994 and 1995
principally as a result of an increase in the number of Mortgage Bankers
originating loans through the Mortgage Loan Division, as well as increased loan
volume from existing Mortgage Bankers. SBA Loans increased during 1994 due to
the opening of additional offices, as well as a result of an increase in the
number of Commercial Loan Brokers which refer SBA Loans to the SBA Loan
Division. In 1995, the SBA adopted certain policies, such as the temporary
implementation of a maximum SBA Loan amount of $500,000 and the temporary
prohibition of the use of SBA Loan proceeds for certain refinancings (which
temporary limitations were removed in October 1995). Consequently, SBA Loan
volume in 1995 was relatively unchanged from the 1994 level. Auto Loans
increased during both 1994 and 1995 principally as a result of an increase in
number of loan production offices and successful efforts at establishing
additional dealer relationships.

The following table sets forth certain data relating to the Company's loans
at and for the years indicated:

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED DECEMBER
31,
----------------------------------
1993 1994 1995
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
MORTGAGE LOANS:
Mortgage Loans originated........................ $ 20,536 $ 99,373 $192,800
Total Mortgage Loans (period end)................ 42,335 60,151 88,165
Total serviced Mortgage Loans (period end)....... 42,335 60,151 88,165
Average Mortgage Loans........................... 42,397 51,243 74,158
Average serviced Mortgage Loans.................. 42,397 51,243 74,158
Average interest rate earned(1).................. 11.96% 12.37% 12.10%
SBA LOANS:
SBA Loans originated............................. $ 37,867 $ 43,123 $ 39,560
Total SBA Loans (period end)..................... 17,933 25,845 19,937
Total serviced SBA Loans (period end)............ 58,552 87,890 108,013
Average SBA Loans................................ 13,956 21,889 22,891
Average serviced SBA Loans....................... 40,117 73,221 97,952
Average interest rate earned(1).................. 9.73% 11.29% 12.70%
</TABLE>

21
<PAGE> 24

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED DECEMBER
31,
----------------------------------
1993 1994 1995
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
AUTO LOANS:
Auto Loans originated............................ $ 5,230 $ 7,547 $ 17,148
Total Auto Loans (period end).................... 6,011 8,483 17,673
Total serviced Auto Loans (period end)........... 6,011 8,483 17,673
Average Auto Loans............................... 5,179 7,247 13,078
Average serviced Auto Loans...................... 5,179 7,247 13,078
Average interest rate earned(1).................. 28.33% 28.28% 27.40%
TOTAL LOANS:
Total loans receivable (period end).............. $ 66,279 $ 94,479 $125,775
Total serviced loans receivable (period end)..... 106,898 156,524 213,851
</TABLE>

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

(1) Averages are computed using beginning and ending balances for the period
presented.

PROFITABILITY

The principal components of the Company's profitability are (1) the net
interest and servicing revenue associated with the Company's loans receivable
and serviced loans, which is the excess of interest and fees earned on its
serviced loans receivable over interest expense paid on borrowed funds
associated with such serviced loans receivable, (2) gain resulting from the sale
of its Mortgage Loans and (3) the premium received in connection with the sale
of the SBA Loan Participations and the related servicing revenue.

The following table sets forth, for the periods indicated, certain
information derived from the Company's Consolidated Financial Statements
expressed as a percentage of total revenues.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Interest and servicing revenue...................................... 66.3% 59.9% 59.5%
Gain on sale of loans............................................... 30.0 35.4 34.9
Other revenues...................................................... 3.7 4.7 5.6
----- ----- -----
Total revenues............................................ 100.0 100.0 100.0
===== ===== =====
Interest expense.................................................... 42.1 32.3 32.5
General and administrative expenses................................. 46.7 40.4 39.6
Provision for credit losses......................................... 5.7 13.8 9.4
----- ----- -----
Income from continuing operations before income taxes............... 5.5 13.5 18.5
Income taxes........................................................ (1.6) 2.9 0.8
Minority interest................................................... (0.2) (0.3) (0.3)
Discontinued operations............................................. 2.1 2.6 (14.9)
Cumulative effect of change in accounting principle................. 0.9 -- --
----- ----- -----
Net income................................................ 9.9% 12.9% 2.5%
===== ===== =====
</TABLE>

RESULTS OF OPERATIONS

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Total revenues increased $8.1 million, or 44%, from $18.2 million in 1994
to $26.3 in 1995. The increase in revenues resulted principally from increases
in interest and servicing revenue and gain on sale of loans.

Interest and servicing revenue increased $4.7 million, or 43%, from $10.9
million in 1994 to $15.6 million in 1995. This increase was due principally to
the growth in the serviced loan portfolio of the Mortgage Loan Division.
Interest and servicing revenue earned by the Mortgage Loan Division increased
$2.4 million, or 38%, from $6.3 million in 1994 to $8.7 million in 1995.
Interest and servicing revenue earned by the SBA Loan

22
<PAGE> 25

Division increased $382,000, or 15%, from $2.5 million in 1994 to $2.9 million
in 1995. This increase resulted from continued growth in serviced SBA Loans,
despite the temporary changes in the SBA policies which negatively impacted the
Company's SBA Loan originations. Interest and servicing revenue earned by the
Auto Loan Division increased $1.5 million, or 71%, from $2.1 million in 1994 to
$3.6 million in 1995. The increase in interest and servicing revenue for the
Auto Loan Division was due to the growth of its loan portfolio.

Gain on sale of loans increased $2.7 million, or 42%, from $6.5 million in
1994 to $9.2 million in 1995. Gain on sale of loans was generated by the sale of
Mortgage Loans and SBA Loan Participations. The increase resulted principally
from increased sales of Mortgage Loans associated with the increased loan
originations of the Mortgage Loan Division.

Other revenues increased $627,000, or 74%, from $842,000 in 1994 to $1.5
million in 1995. Other revenues is comprised principally of origination and
processing fees, insurance commissions and management fees paid in connection
with the management of the Venture Funds. The increase in other revenues
resulted principally from the increase in the Company's loan originations, as
well as from increased management fees paid by the Venture Funds.

Total expenses increased $5.6 million, or 36%, from $15.8 million in 1994
to $21.4 million in 1995. Total expenses are comprised of interest expense,
provision for credit losses and general and administrative expenses.

Interest expense increased $2.6 million, or 44%, from $5.9 million in 1994
to $8.5 million in 1995. The increase was due principally to increased
borrowings by the Mortgage and Auto Loan Divisions associated with increased
loan originations. Total borrowings attributable to the Mortgage Loan Division,
both under the Credit Facilities and in connection with the sale of Debentures,
increased $27.7 million, or 36%, from $77.5 million at December 31, 1994 to
$105.2 million at December 31, 1995. Interest expense in the Mortgage Loan
Division increased $1.6 million, or 31% from $5.1 million in 1994 to $6.7
million in 1995. Total borrowings attributable to the SBA Loan Division
increased $456,000, or 3%, from $14.4 million at December 31, 1994 to $14.8
million at December 31, 1995. This increase in debt resulted principally from
current year loan origination activity, partially offset by a reduction to
outstanding debt due to the securitization transaction completed in June 1995.
Interest expense in the SBA Loan Division increased $553,000, or 117% from
$471,000 in 1994 to $1.02 million in 1995. Total borrowings attributable to the
Auto Loan Division increased $7.0 million, or 241%, from $2.9 million at
December 31, 1994 to $9.9 million at December 31, 1995. Interest expense in the
Auto Loan Division increased $500,000, or 189% from $264,000 in 1994 to $764,000
in 1995.

Provision for credit losses remained stable at $2.5 million in 1994 and in
1995. The provision was made to maintain the general reserves for credit losses
associated with loan growth, as well as to fund specific reserves for possible
losses associated with particular loans. In 1994, the majority of the provision
resulted from the writedown to market value of certain foreclosed properties in
the amount of $1.7 million. These foreclosed properties related principally to
speculative construction loans made by CII prior to its acquisition by the
Company. Speculative construction loans are no longer being made by the Company.

General and administrative expense increased $3.0 million, or 40%, from
$7.4 million in 1994 to $10.4 million in 1995 principally as a result of
increased personnel costs of $1.7 million due primarily to the continued
expansion in the servicing and underwriting areas, increased legal, audit and
professional fees of $504,000 associated with the Company's stock tender offer
in February 1995 and other corporate transactions, and increased expenses of
$477,000 associated with the opening of three new loan production offices by the
Auto Loan Division. General and administrative expense increased from 5.59% of
average serviced loans in 1994 to 5.63% in 1995, principally as a result of the
increase in the Mortgage Loan Division's servicing operations in anticipation of
increased originations of Mortgage Loans, including Mortgage Loans which may be
sold servicing retained.

Income from continuing operations increased $2.8 million, or 155%, from
$1.8 million in 1994 to $4.6 million in 1995. The improvement in income was due
principally to increased growth and profitability of the Mortgage Loan Division.

23
<PAGE> 26

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Total revenues increased $6.2 million, or 52%, from $12.0 million in 1993
to $18.2 million in 1994. The increase in revenues resulted principally from
increases in interest and servicing revenue and gain on sale of loans.

Interest and servicing revenue increased $2.9 million, or 36%, from $8.0
million in 1993 to $10.9 million in 1994. This increase was due principally to
growth in serviced loans receivable in the Mortgage and SBA Loan Divisions.
Interest and servicing revenue earned by the Mortgage Loan Division increased
$1.2 million, or 24%, from $5.1 million in 1993 to $6.3 million in 1994.
Interest and servicing revenue earned by the SBA Loan Division increased $1.1
million, or 79%, from $1.4 million in 1993 to $2.5 million in 1994.

Gain on sale of loans increased $2.9 million, or 81%, from $3.6 million in
1993 to $6.5 million in 1994. Gain on sale of loans resulted from the sale of
Mortgage Loans and SBA Loan Participations. The increase resulted principally
from increased sales associated with the increased loan originations of the
Mortgage and SBA Loan Divisions.

Other revenues increased $384,000, or 84%, from $458,000 in 1993 to
$842,000 in 1994. Other revenues were comprised principally of management fees
paid in connection with origination and processing fees, insurance commissions
and the management of the Venture Funds. The increase in other revenues resulted
principally from the increase in the Company's loan originations.

Total expenses increased $4.3 million, or 38%, from $11.4 million in 1993
to $15.7 million in 1994. Total expenses are comprised of interest expense,
provision for credit losses, and general and administrative expenses. This
increase was due in part to the increase in interest expense as a result of
increased borrowing to fund increases in loan volume at the Mortgage and SBA
Loan Divisions. The increase in total expenses also resulted from an increase in
the provision for credit losses, which was associated with the writedown to
market value of certain foreclosed properties.

Interest expense increased $806,000, or 16%, from $5.1 million in 1993 to
$5.9 million in 1994. The increase was due principally to increased borrowings
by the Mortgage Loan Division and the SBA Loan Division which were associated
with increased loan originations. Total borrowings attributable to the Mortgage
Loan Division, both under the Credit Facilities and in connection with the sale
of Debentures, increased $7.6 million, or 11%, from $69.9 million at December
31, 1993 to $77.5 million at December 31, 1994. Interest expense in the Mortgage
Loan Division increased $456,000, or 10% from $4.7 million in 1993 to $5.1
million in 1994. Total borrowings attributable to the SBA Loan Division
increased $12.7 million, or 747%, from $1.7 million at December 31, 1993 to
$14.4 million at December 31, 1994. Interest expense in the SBA Loan Division
increased $359,000, or 321% from $112,000 in 1993 to $471,000 in 1994.

Provision for credit losses increased $1.8 million, or 262%, from $686,000
in 1993 to $2.5 million in 1994. This increase resulted from growth in the
Company's loan portfolio and the $1.7 million writedown to market of certain
foreclosed properties included in the Company's real estate held for sale. This
unusually high writedown related principally to speculative construction loans
made by CII prior to its acquisition by the Company. Speculative construction
loans are no longer being made by the Company.

General and administrative expense increased $1.7 million, or 30%, from
$5.7 million in 1993 to $7.4 million in 1994, principally as a result of
increased expenses of $251,000 associated with the opening of a new loan
production office by the Auto Loan Division and $800,000 associated with the
general expansion of the Mortgage and SBA Loan Divisions' operations. General
and administrative expense decreased from 6.41% of average serviced loans in
1993 to 5.59% in 1994, principally as a result of the increase in the volume of
loan originations, principally in the Mortgage Loan and SBA Loan Divisions.

Income from continuing operations increased $968,000, or 117%, from
$824,000 in 1993 to $1.8 million in 1994. The improvement in income was due
principally to increased growth and profitability of the Mortgage Loan Division.

24
<PAGE> 27

DISCONTINUED OPERATIONS

Transportation Segment

In connection with the Company's strategic plan to focus its business
efforts on the Financial Services Segment, the Company divested its
Transportation Segment operations during 1994 and 1995. As a result, the
Transportation Segment has been classified as discontinued operations, and,
accordingly, the Consolidated Financial Statements and the related Notes of the
Company segregate continuing and discontinued operations. The Transportation
Segment had pre-tax income of $422,000 in 1993 and $2.8 million in 1994, and a
loss of $333,000 in 1995. The profits in 1993 and 1994 resulted principally from
gains on the sale of boxcars and other assets. Operating revenues for the
Transportation Segment were $1.7 million in 1993, $1.4 million in 1994, and
$390,000 in 1995. These decreases in revenues were due principally to the
progressive sale of assets associated with the Transportation Segment. The
Company does not believe that there are material liabilities, contingent or
otherwise, with respect to its Transportation Segment.

Apparel Segment

In connection with the Company's strategic plan to focus its business
efforts on the Financial Services Segment, the Company sold all of the
outstanding stock of YGI in exchange for a non-recourse note in September 1995,
thereby divesting its Apparel Segment operations. In connection with the sale of
YGI, the Company wrote off all amounts due the Company from YGI as intercompany
debt and amounts due to the Company from the purchasers of the YGI stock, which
amounts totaled $3.9 million, net of income taxes of $156,000. The Company wrote
off these amounts due to its concern over a decline in YGI's operating profits
and the related impact on YGI's and the purchasers' ability to repay these
obligations. As a result of the sale of YGI, the operating results of the
Apparel Segment have been classified as discontinued operations. The Company
remains contingently liable for its guaranty of certain bank loans and trade
accounts payable which existed prior to the sale of YGI and which at December
31, 1995 totaled $715,000 and were secured by substantially all of YGI's assets.
Management does not anticipate any significant charges to future earnings as a
result of these guarantees.

The Apparel Segment had net losses of $163,000 in 1993, $31,000 in 1994 and
$1.3 million in 1995. The net loss in 1994 was decreased by the receipt of $1.25
million in life insurance proceeds due to the death of YGI's President. The
Apparel Segment had revenues of $11.5 million in 1993, $12.2 million in 1994,
and $7.3 million in 1995.

ALLOWANCE FOR CREDIT LOSSES AND CREDIT LOSS EXPERIENCE

To provide for credit losses, the Company charges against current earnings
an amount necessary to maintain the allowance for credit losses at levels
expected to cover future losses of principal. At December 31, 1995 the total
allowance for credit losses for the Company was $2.6 million, including $773,000
reserved for potential losses relating to the Company's securitized SBA Loans.
This compares to an allowance for credit losses at December 31, 1993 and 1994 of
$952,000 and $1.7 million, respectively. The increase in the allowance resulted
from corresponding increases in the Company's serviced loans receivable, rather
than in connection with specific loans or circumstances.

The allowance for credit losses is a composite of the allowance for credit
losses of the Mortgage Loan Division, the SBA Loan Division and the Auto Loan
Division. The Mortgage Loan Division currently maintains an allowance for credit
losses equal to approximately 0.75% of its loan portfolio, the SBA Loan Division
currently maintains an allowance for credit losses equal to approximately 3.0%
of the unguaranteed portion of its loan portfolio, and the Auto Loan Division
currently maintains an allowance for credit losses equal to approximately 4.0%
of its loan portfolio. In addition, each subsidiary may establish a specific
reserve for a particular loan that is deemed by management to be a potential
problem loan where full recovery is questionable.

25
<PAGE> 28

The table below summarizes certain information with respect to the
Company's allowance for credit losses and the composition of charge-offs and
recoveries for each of the last three years.

SUMMARY OF ALLOWANCE FOR CREDIT LOSSES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31,
-----------------------------
1993 1994 1995
----- ------- -------
<S> <C> <C> <C>
Allowance for credit losses at beginning of period.............. $ 976 $ 952 $ 1,730
Total loans charged-off......................................... (787) (1,808) (1,718)
Total loans recovered........................................... 77 76 155
----- ------- -------
Net charge-offs....................................... (710) (1,732) (1,563)
Provision charged to expense.................................... 686 2,510 2,480
----- ------- -------
Allowance for credit losses at end of period.................... 952 1,730 1,874
Allowance for losses on asset-backed securities................. -- -- (773)
----- ------- -------
Allowance for credit losses at end of period, net of allowance
for losses on asset-backed securities......................... $ 952 $ 1,730 $ 1,874
===== ======= =======
</TABLE>

The Company considers its allowance for credit losses to be adequate in
view of the Company's loss experience and the secured nature of most of the
Company's outstanding loans. Although management considers the allowance
appropriate and adequate to cover possible losses in the loan portfolio,
management's judgment is based upon a number of assumptions about future events,
which are believed to be reasonable, but which may or may not prove valid. Thus,
there can be no assurance that charge-offs in future periods will not exceed the
allowance for possible credit losses or that additional increases in the
allowance for possible credit losses will not be required.

Management closely monitors portfolio delinquency to measure the quality of
its loan portfolio and the potential for credit losses. The Company's policy is
to place a loan on non-accrual status after it becomes 90 days past due, or
sooner if the interest is deemed uncollectible. Collection efforts on
charged-off loans continue until the obligation is satisfied or until it is
determined such obligation is not collectible or the cost of continued
collection efforts will exceed the potential recovery. Recoveries of previously
charged-off loans are credited to the allowance for credit losses.

26
<PAGE> 29

The following table sets forth the Company's allowance for credit losses at
the end of the fiscal years ended December 31, 1993, 1994 and 1995, the credit
loss experience over the indicated periods, and delinquent loan information at
the dates indicated for loans receivable at least 90 days past due.

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES AS A % OF LOANS RECEIVABLE:
Mortgage Loan Division............................................ 0.70% 1.23% 0.93%
SBA Loan Division(1).............................................. 4.26 4.11 4.62
Auto Loan Division................................................ 2.92 3.00 4.03
Total allowance for credit losses as a % of total loans
receivable.............................................. 1.60 2.00 2.04
NET CHARGE-OFFS AS A % OF AVERAGE LOANS RECEIVABLE(2):
Mortgage Loan Division(3)......................................... 1.05% 2.96% 1.04%
SBA Loan Division(1).............................................. 0.05 0.21 1.48
Auto Loan Division................................................ 5.03 2.53 3.68
Total net charge-offs as a % of total average loans
receivable.............................................. 1.29 2.37 1.44
LOANS RECEIVABLE PAST DUE 90 DAYS OR MORE AS A % OF LOANS
RECEIVABLE:
Mortgage Loan Division............................................ 7.08% 2.96% 3.67%
SBA Loan Division(1).............................................. 0.09 -- 0.99
Auto Loan Division(4)............................................. 5.69 0.64 0.77
Total loans receivable past due 90 days or more as a % of
total loans receivable.................................. 5.62 2.12 2.78
TOTAL ALLOWANCE FOR CREDIT LOSSES AS A % OF LOANS RECEIVABLE PAST
DUE 90 DAYS OR MORE:.............................................. 28.44% 94.20% 73.21%
</TABLE>

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

(1) The percentage is based on the total serviced unguaranteed SBA Loans
outstanding.
(2) Average loans receivable have been determined by using beginning and ending
balances for the period presented.
(3) Approximately 90% of the amount in 1994 relates to the writedown to market
of certain foreclosed properties associated with speculative construction
loans made by the Mortgage Loan Division prior to its acquisition by the
Company. Speculative construction loans are no longer being made by the
Company.
(4) The amount in 1993 relates primarily to consumer loans on personal property
made prior to the Company's acquisition of Premier.

The following table illustrates the Company's delinquency and charge-off
experience with respect to Mortgage Loans, SBA Loans and Auto Loans:

MORTGAGE LOAN DELINQUENCIES AND CHARGE-OFFS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Serviced Mortgage Loan delinquencies:
30-59 days past due............................................. 8.09% 7.96% 7.75%
60-89 days past due............................................. 2.05 2.87 1.80
Over 90 days past due........................................... 7.08 2.96 3.67
In-substance foreclosure.......................................... 6.32 3.87 1.26
Mortgage Loans charged-off, net, as a % of average Mortgage
Loans........................................................... 1.05% 2.96% 1.04%
Mortgage Loans charged-off, net................................... $ 446 $ 1,518 $ 771
Mortgage Loans (period end)....................................... 42,335 60,151 88,165
Average Mortgage Loans............................................ 42,397 51,243 74,158
</TABLE>

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<PAGE> 30

SBA LOAN DELINQUENCIES AND CHARGE-OFFS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Serviced unguaranteed SBA Loan delinquencies:
30-59 days past due............................................. 1.10% 1.17% 2.97%
60-89 days past due............................................. -- -- 4.47
Over 90 days past due........................................... 0.09 -- 0.99
SBA Loans charged-off, net, as a % of average serviced
unguaranteed SBA Loans.......................................... 0.05% 0.21% 1.48%
SBA Loans charged-off, net........................................ $ 4 $ 31 $ 311
Average serviced unguaranteed SBA Loans........................... 7,635 14,545 21,018
Serviced SBA Loans (period end)................................... 58,552 87,890 108,013
Serviced unguaranteed SBA Loans (period end)...................... 11,238 17,852 24,184
</TABLE>

AUTO LOAN DELINQUENCIES AND CHARGE-OFFS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1993 1994 1995(2)
------ ------ -------
<S> <C> <C> <C>
Serviced Auto Loan delinquencies:
30-59 days past due............................................ 2.80% 2.29% 9.39%
60-89 days past due............................................ 1.02 0.79 2.68
Over 90 days past due.......................................... 5.69(1) 0.64 0.77
Auto Loans charged-off, net, as a % of average Auto Loans........ 5.03% 2.53% 3.68%
Auto Loans charged-off, net...................................... $ 260 $ 183 $ 481
Auto Loans (period end).......................................... 6,011 8,483 17,673
Average Auto Loans............................................... 5,179 7,247 13,078
</TABLE>

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

(1) Relates primarily to consumer loans on personal property made prior to the
Company's acquisition of Premier.
(2) In September 1995, the Company modified its financial reporting software
package for the Auto Loan Division. Prior to that time, the Company's
software did not report a loan as past due until the first day of the month
after the loan became 30 days past due. The modified software package
records loans past due during the month the loan becomes past due.
Therefore, after modification of its software, the Company's loans that
were past due shifted one past-due category (e.g., from current to 30 days
past due, or from 60 to 90 days past due.)

LIQUIDITY AND CAPITAL RESOURCES

The Company's business requires continued access to short- and long-term
sources of debt financing and equity capital. The Company's cash requirements
arise from loan originations and purchases, repayments of debt upon maturity,
payments of operating and interest expenses, expansion activities and capital
expenditures. The Company's primary sources of liquidity are cash flow from
operations, sales of the loans it originates and purchases, proceeds from the
sale of Debentures, borrowings under the Credit Facilities and proceeds from
securitizations of loans. While the Company believes that such sources of funds
will be adequate to meet its liquidity requirements, no assurance of such fact
may be given. The Offering proceeds will result in an increase in shareholders'
equity, which management believes will facilitate the Company's ability to
obtain additional borrowings to fund future loan demand.

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<PAGE> 31

Shareholders' equity increased from $7.4 million at December 31, 1993 to
$9.7 million at December 31, 1994 and to $9.9 million at December 31, 1995. Each
of these increases resulted principally from the retention of income by the
Company.

Cash and cash equivalents increased from $278,000 at December 31, 1994 to
$1.6 million at December 31, 1995. Cash provided by (used in) operating
activities decreased from $16.7 million in 1994 to $(3.1) million in 1995; cash
used in investing activities decreased from $41.4 million in 1994 to $30.0
million in 1995; and cash provided by financing activities increased from $20.0
million in 1994 to $34.4 million in 1995. The decrease in cash provided by
operations was due principally to loans held for sale which were originated but
not yet sold as of December 31, 1995. Cash used in investing activities was
principally for the net increase in loans originated with the expectation of
holding the loans until maturity. Cash provided by financing activities was due
principally to the increase in borrowing, both under the Credit Facilities and
through the sale of the Debentures.

Cash and cash equivalents decreased from $5.0 million at December 31, 1993
to $278,000 at December 31, 1994. Cash provided by operating activities
increased from $1.6 million in 1993 to $16.7 million in 1994; cash used in
investing activities increased from $11.8 million in 1993 to $41.4 million in
1994; and cash provided by financing activities increased from $10.9 million in
1993 to $20.0 million in 1994. The increase in cash provided by operations was
due primarily to an increase in loans sold. Cash used in investing activities
was principally for the net increase in loans originated with the expectation of
holding the loans until maturity. Cash provided by financing activities was due
principally to the increase in borrowing, both under the Credit Facilities and
through the sale of the Debentures.

At December 31, 1995, the Company's Credit Facilities were comprised of
credit facilities of $20 million for the Mortgage Loan Division which had
aggregate unused borrowing availability of $9 million, credit facilities of $32
million for the SBA Loan Division which had aggregate unused borrowing
availability of $933,000 (the "SBA Loan Division Facility"), and credit
facilities of $26 million for the Auto Loan Division which had aggregate unused
borrowing availability of $4.3 million (the "Auto Loan Division Facility"). In
March 1996, the Company entered into a $70 million credit facility having a one
year term with First Union National Bank of North Carolina, which together with
the $20 million credit facility referenced above, comprise the credit facilities
for the Mortgage Loan Division (collectively, the "Mortgage Loan Division
Facility"). At December 31, 1995, $6.9 million bearing interest at the lender's
prime rate was outstanding under the Mortgage Loan Division Facility, $14.8
million bearing interest at the lender's prime rate was outstanding under the
SBA Loan Division Facility, and $9.9 million bearing interest at 0.75% over the
lender's prime rate was outstanding under the Auto Loan Division Facilities. The
Credit Facilities have terms ranging from one to three years and are otherwise
terminable in the event of uncured defaults. However, such Credit Facilities are
renewable upon the mutual agreement of the Company and the respective lender.

Each of the Credit Facilities contain a number of financial covenants,
including, but not limited to, covenants with respect to certain debt to equity
ratios, delinquent loans, and minimum adjusted tangible net worth. The Credit
Facilities also contain certain other covenants, including, but not limited to,
covenants that impose limitations on the Company with respect to declaring or
paying dividends, making payments with respect to certain subordinated debt, and
making certain changes to its equity capital structure. The Company believes
that it is currently in material compliance with these covenants.

The Company sells substantially all of its Mortgage Loans originated
through the Principal Mortgage Bankers and the SBA Loan Participations. During
1994 and 1995, the Company sold $54.6 million and $127.6 million, respectively,
of Mortgage Loans and $31.2 million and $25.4 million, respectively, of SBA Loan
Participations.

In June 1995, the Company securitized approximately $17 million of loans
representing the unguaranteed portions of the SBA Loans. Although
securitizations provide liquidity, the Company has utilized securitizations
principally to provide a lower cost of funds and reduce interest rate risk.
Additional liquidity is not a material factor in the Company's determination to
pursue securitizations. The Company expects to complete a securitization of
approximately $15 million in Auto Loans by April 30, 1996. In connection with
its SBA Loan securitization, the Company has retained subordinated certificates
representing interests in the transferred

29
<PAGE> 32

loans equal to approximately 10% of the loans transferred. See "Business -- SBA
Loan Division -- Securitization of SBA Loans."

CII engages in the sale of the Debentures. The Debentures are comprised of
senior notes and subordinated debentures bearing fixed rates of interest which
are sold by CII only to South Carolina residents. The offering of the Debentures
is registered under South Carolina securities law and exempt from federal
registration under the federal intrastate exemption. CII conducts its operations
so as to qualify for the safe harbor provisions of Rule 147 promulgated pursuant
to the Securities Act of 1933, as amended, (the "Securities Act") which requires
that, among other things, at least 80% of the proceeds from the Debentures must
be loaned by CII to South Carolina borrowers. At December 31, 1995, CII had an
aggregate of $82.1 million of senior notes outstanding bearing a weighted
average interest rate of 8%, and an aggregate of $16.2 million of subordinated
debentures bearing a weighted average interest rate of 6%. Both senior notes and
subordinated debentures are subordinate in priority to the Mortgage Loan
Division Credit Facility. Substantially all of the Debentures have one year
maturities. The Company expects that after the Offering, it will continue the
offering of the Debentures for the immediate future.

TAX CONSIDERATIONS -- THE NOL

As a result of the operating losses incurred by the Company under prior
management, the Company generated the NOL. At December 31, 1995, the amount of
the NOL remaining and available to the Company was approximately $23 million.
The NOL expires, to the extent that it is not utilized to offset income, in
varying amounts annually through 2001.

Because federal tax laws provide that net operating loss carryforwards are
restricted or eliminated upon certain changes of control, the Company, in 1991,
effected a reverse split of 1-for-50 with respect to its Common Stock, and
authorized and issued the Class A Common Stock to all of its then existing
shareholders on a basis of 49 shares of Class A Common Stock for each share of
Common Stock outstanding (post-reverse split). The Class A Common Stock is
identical to the Common Stock except that the Class A Common Stock is subject to
certain transfer restrictions which apply only to holders of more than 4.5% of
the total number of shares of Class A Common Stock and Common Stock outstanding.
These transfer restrictions are designed to reduce the likelihood that a change
of control, causing the elimination of the NOL, would occur. Applicable federal
tax laws provide that a 50% "change of control," which is calculated over a
rolling three year period, would cause the loss of substantially all of the NOL.
Although the calculation of the "change of control" is factually difficult to
determine, upon the consummation of this Offering, the Company believes that it
will have had a maximum cumulative change of control of 33% during the relevant
three year period.

At its 1996 Annual Meeting of Shareholders, the Company expects to propose
an amendment to its Articles of Incorporation which will retire the Class A
Common Stock by exchanging Common Stock for the Class A Common Stock. The
Company expects to propose such amendment because it believes that it is
unlikely that the Common Stock will become concentrated in certain holders such
that the Company would lose its NOL. In order to trigger the "change of
control," at a minimum, an additional 17% of the Common Stock would have to be
held by certain qualified 5% or greater shareholders. Furthermore, shares held
by most mutual funds and corporations, as a corporate entity, would not be
counted toward such change of control, but rather the ownership by such mutual
funds and corporations would flow through to their underlying shareholders. The
Company believes that the benefits of eliminating two classes of common stock
and the increased liquidity associated therewith, outweigh the increased
potential risk of losing the NOL.

No net deferred tax asset was recognized with respect to the NOL for the
years ended December 31, 1993, 1994 and 1995. A valuation allowance equal to the
NOL was applied to the NOL in each of the years ended December 31, 1993, 1994
and 1995. A valuation allowance of approximately $7.7 million was applied to the
tax effect of the NOL for the year ended December 31, 1995.

30
<PAGE> 33

ACCOUNTING CONSIDERATIONS

In connection with the Company's sale of SBA Loan Participations, the
Company accounts for the servicing revenue in excess of that defined as "normal"
servicing revenue in accordance with Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("SFAS") No. 65 as excess
servicing receivable. This asset is amortized against servicing revenue over the
life of the loan to which it relates. In the event that the related loan is
prepaid or the related borrower defaults on such loan, the balance of the excess
servicing receivable is charged against servicing revenue in the period in which
the prepayment or default occurs.

The Company has engaged in securitizations of loans. The net interest rate
spread received by the Company is recorded as excess servicing fees when
received over the life of the transaction.

The Company complies with the provisions of Emerging Issues Task Force
("EITF") 88-11 dealing with income recognition on the sales of loans. EITF 88-11
requires that the amount of gain or loss recognized on the sale of a portion of
a loan be based on the relative fair values of the loan portion sold and the
loan portion retained. For the Company, EITF 88-11 primarily impacts the amount
of gain recognized by the Company on the sale of the SBA Loan Participations. As
a result of the Company's accounting treatment described above, a portion of the
cash premiums received are deferred and recognized as income over the remaining
term of the retained unguaranteed portion of the loan.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS AND REGULATORY POLICIES

In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The statement
requires that long-lived assets and certain identified intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The statement is effective for the Company for the fiscal year
ending December 31, 1996, although earlier application is encouraged. Based on
the Company's present assets, this statement is not expected to have a
significant impact on the Company's financial statements.

In May 1995, the FASB issued SFAS 122, "Accounting For Mortgage Servicing
Rights," which amends SFAS No. 65, "Accounting For Mortgage Banking Activities."
This statement allows the capitalization of servicing-related costs associated
with mortgage loans that are originated for sale, and to create servicing assets
for such loans. Prior to this statement, originated mortgage servicing rights
were generally accorded off-balance sheet treatment. The statement is effective
for the Company for the fiscal year ending December 31, 1996. The adoption will
not have a material effect on the Company's financial condition or results of
operations.

The FASB issued SFAS No. 123, "Accounting For Stock-based Compensation," in
October 1995. This statement supersedes APB Opinion No. 25, "Accounting For
Stock Issued To Employees" and establishes financial accounting and reporting
standards for stock-based employee compensation plans. Those plans include all
arrangements by which employees receive shares of stock or other equity
instruments of the employer or the employer incurs liabilities to employees in
amounts based on the price of the employer's stock. The statement also applies
to transactions in which an entity issues its equity instruments to acquire
goods or services from nonemployees.

A new method of accounting for stock-based compensation arrangements with
employees is established by SFAS 123. The new method is a fair value based
method rather than the intrinsic value based method that is contained in APB
Opinion 25. However, SFAS 123 does not require an entity to adopt the new fair
value based method for purposes of preparing its basic financial statements.
Entities are allowed (1) to continue to use the APB Opinion 25 method or (2) to
adopt the SFAS 123 fair value based method. The selected method would apply to
all of the entity's compensation plans and transactions.

31
<PAGE> 34

SFAS 123 requires that an employer's financial statements include certain
disclosures about stock-based employee compensation arrangements regardless of
the method used to account for them. The accounting requirements of this
statement are effective for transactions entered into in fiscal years that begin
after December 15, 1995, though they may be adopted at issuance. The disclosure
requirements are effective for financial statements for fiscal years beginning
after December 15, 1995, or for an earlier fiscal year for which this statement
is initially adopted for recognizing compensation cost. The Company has not
determined the impact of adopting SFAS 123 but believes the impact, if any will
be immaterial.

The FASB issued on October 24, 1995 a proposed statement of financial
accounting standards "Accounting For Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities." FASB's objective is to develop consistent
accounting standards for such transactions, including determining when financial
assets should be considered sold and removed from the statement of financial
position and when related revenues and expenses should be recognized. This
approach focuses on analyzing the components of financial asset transfers and
requires each party to a transfer to recognize the financial assets it controls
and liabilities it has incurred and remove such assets from the statement of
financial position when control over them has been relinquished. In its present
form the statement will have minimal impact on the accounting practices of the
Company.

INFLATION

Unlike most industrial companies, the assets and liabilities of financial
services companies such as the Company are primarily monetary in nature.
Therefore, interest rates have a more significant effect on the Company's
performance than do the general levels of inflation in the price of goods and
services. While the Company's noninterest income and expense and the interest
rates earned and paid are affected by the rate of inflation, the Company
believes that the effects of inflation are generally manageable through
asset/liability management. See "-- Liquidity and Capital Resources" and
"-- Interest Rate Sensitivity."

INTEREST RATE SENSITIVITY

Asset/liability management is the process by which the Company monitors and
controls the mix and maturities of its assets and liabilities. The essential
purpose of asset/liability management is to ensure adequate liquidity and to
maintain an appropriate balance between interest sensitive assets and
liabilities.

The Company's asset/liability management varies by division. In general,
with respect to the Mortgage Division, the Company sells substantially all of
its Mortgage Loans on a monthly basis. Furthermore, commitments to a prospective
borrower for a Mortgage Loan do not extend beyond 45 days. In the event that
economic conditions necessitate a change in rate, such rate change is
communicated to potential borrowers and the Company's published rates are
adjusted. In addition, the Company may from time to time enter into forward
commitments to sell residential first mortgage loans to reduce risk associated
with originating and holding loans for sale.

With respect to the SBA Loans, the Company only originates variable rate
loans, which adjust on the first day of each calendar quarter. Therefore,
interest rate risk exists for a maximum period of 60 days, due to the SBA Loan
Division Credit Facility having a variable rate which adjusts monthly.

With respect to the Auto Loans, the Company's rate spread is in excess of
20% and is fixed. The Company believes that this interest rate spread provides
adequate margin to allow for any potential increase in interest rates.

The Company's average interest rate earned for the year ended December 31,
1995 was 15.33% computed on a simple average monthly basis. The Company's
average interest rate paid for the year ended December 31, 1995 was 8.05%, which
results in an average interest rate spread of 7.28%.

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<PAGE> 35

BUSINESS

GENERAL

Emergent Group, Inc. is a diversified financial services company
headquartered in Greenville, South Carolina which originates, services and sells
Mortgage Loans, SBA Loans, and Auto Loans. The Company also serves as investment
manager for the Venture Funds. Substantially all of the Company's loans are made
to non-prime borrowers. The Company commenced its lending operations in 1991 and
has experienced significant loan growth over the past several years. During
1993, 1994 and 1995, the Company originated $63.6 million, $150.0 million and
$249.5 million in loans, respectively. Of the Company's loan originations in
1995, $192.8 million were Mortgage Loans, $39.6 million were SBA Loans and $17.1
million were Auto Loans. For the years ended December 31, 1993, 1994 and 1995,
the Company's pre-tax income from continuing operations was $663,000, $2.4
million and $4.9 million, respectively.

BUSINESS STRATEGY

The Company's business strategy is to be a diversified financial services
company that meets the credit needs of borrowers in what the Company believes to
be under-served credit markets. The key elements of the Company's business
strategy are as follows:

-- Emphasis on Profitability Rather than Asset Growth. The Company will
continue to focus on increasing earnings and equity, rather than
increasing total assets. The Company believes that it can maximize its
return on assets and equity by maintaining a "high velocity" capital
strategy, whereby loans are made and sold within a 10 to 40 days of
origination. Recycling its capital in this manner enables the Company to
recognize gains on the sale of its loans and quickly redeploy its
capital, as well as reduce its interest rate risk, default risk and
borrowing costs. In addition, the Company plans to continue to focus its
operations in high-margin loan products, while maintaining a low-cost
operation.

-- Decentralized Loan Approval. The Company believes that one of the most
important factors to customers is the length of time between the lender's
initial contact with the customer and the disbursement of loan proceeds.
Accordingly, the Company emphasizes minimizing the length of time
involved in the lending process, without sacrificing credit quality. It
attempts to accomplish this goal, in part, by fostering an
entrepreneurial, decentralized management culture and by maintaining
up-to-date MIS systems for loan production, asset quality management and
servicing. In the Mortgage Loan Division, the Company has an expedited
review process with respect to loans submitted by the Principal Mortgage
Bankers, which results in a final credit determination generally within
two business days. Also, in the SBA Loan Division, the Company uses its
"Preferred Lender" status, as well as specially-trained officers who
handle only SBA Loans, to shorten the loan approval process. Furthermore,
the SBA Loan Division maintains relatively autonomous regional offices
which have significant underwriting capabilities and credit authority.

-- Proactive Underwriting Process. The Company takes a proactive approach
to its loan underwriting process. Because the Company's borrowers are
generally non-prime borrowers, standardized credit scoring and
underwriting criteria are not always meaningful in assessing a credit.
Consequently, the Company attempts to employ experienced, trained
underwriters who analyze each application independently and have the
ability to craft a loan package which, where possible, meets the needs of
the borrower but provides the Company with adequate security.
Underwriting adjustments often suggested by Company underwriters include
requiring a guarantor or co-borrower with better credit history and/or
additional disposable income, lowering the loan-to-value ratio,
increasing the interest rate, securing additional collateral and lowering
the loan amount.

-- Uniform Credit Guidelines and Procedures. The Company attempts to
mitigate the risks associated with non-prime borrowers by utilizing
uniform guidelines and procedures for evaluating credit applications in
connection with its loan originations. This is designed to complement the
Company's decentralized management strategy by ensuring consistent credit
quality. The Company's guidelines and procedures relate to such matters
as the borrower's stability of residence, employment history,

33
<PAGE> 36

credit history, capacity to pay, total income, discretionary income and
debt ratios, as well as the value of the collateral. With respect to its
SBA Loans, the Company's guidelines and procedures also emphasize factors
pertaining to the business of the borrower, such as business plans,
historical and projected financial statements and strength of management.

-- Corporate Monitoring and Supervision of Operations. The Company has in
place corporate policies designed to monitor and ensure continued quality
of credit underwriting and servicing and to evaluate management in each
of the Mortgage, SBA and Auto Loan Divisions. Such policies include
on-site audits of loan files and underwriting and servicing procedures at
each branch office as well as continuous evaluation of general portfolio
credit and performance quality, the effectiveness of business development
efforts and branch office profitability. The Company's MIS systems
provide management with reports on a continuous basis which contain
operational information from each of the Mortgage, SBA and Auto Loan
Divisions, including the volume of loan originations, delinquency
experience and foreclosure and repossession activities.

GROWTH STRATEGY

The Company's growth strategy is to continue to expand all areas of its
lending operations, while emphasizing profitability and return on equity, rather
than asset growth. The key elements in the Company's growth strategy are as
follows:

-- New Strategic Alliances in the Mortgage Loan Division. The Company will
attempt to continue to increase the number of Mortgage Bankers with whom
it has a business relationship and to identify and establish additional
strategic alliances with Mortgage Bankers. The Company offers additional
services to these strategic alliance Mortgage Bankers, such as providing
capital through arrangements similar to warehouse lending and additional
MIS and accounting services, which are designed to increase their loan
originations. The Company expects to establish two to three additional
strategic alliances per year over the next three years.

-- Increase in SBA Lending. The Company plans to expand its SBA Loan
operations by utilizing its "Preferred Lender" status to minimize its
response time and maximize its loan production. The Company has been
designated as a "Preferred Lender" by the SBA, which gives the Company
the authority to approve a loan and to obligate the SBA to guarantee the
loan without submitting an application to the SBA for credit review.
Preferred Lender status also enables the Company to enter more easily
additional SBA districts in 1996 and future years.

-- Additional Offices and Locations. The Company plans to increase its
penetration of existing markets and expand geographically by opening
additional locations. In 1996, the Company anticipates opening two
additional locations in each of the Mortgage Loan and Auto Loan Divisions
and three additional locations, including a regional office, in the SBA
Loan Division. The Company expects that one additional office in each
Division will be opened by June 30, 1996 and the balance of the offices
will be opened in the second half of 1996. The Company does not expect
that these additional offices, in the aggregate, will have a significant
impact on loan volume until 1997. In the future, the Company will
continue to target for expansion areas which have favorable demographics
or where the Company has identified qualified individuals who are
available to effectively manage additional locations.

-- Selected Acquisitions. The Company intends to pursue the acquisition of
businesses in the financial services industry. The Company believes that
each of the non-prime Mortgage Loan, SBA Loan and Auto Loan areas will
present significant opportunities for growth and expansion through
acquisitions.

-- New Mortgage Loan Products. The Company will consider new loan products
and sources of loans. The Company began offering FHA Title I home
improvement loans ("FHA Title I Loans") in late 1995. Although the
Company has originated a relatively small amount of these loans to date,
the Company believes that such loans represent significant potential for
growth. The Company will continue to explore new loan products that offer
earnings potential in the non-prime Mortgage Loan area.

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<PAGE> 37

ANTICIPATED GROWTH IN 1996

The Company expects to experience significant growth in 1996. Apart from
general expansion of its lending operations, the Company expects its Mortgage
Loan originations to increase in 1996 because it will have strategic alliance
agreements in place with all three Principal Mortgage Bankers during the entire
year. The Company did not enter into strategic alliance agreements with two of
the Principal Mortgage Bankers until the third and fourth quarters of 1995,
respectively. Consequently, the Company did not have the benefit of all
Principal Mortgage Bankers (under strategic alliance agreements) during the
entire 12 months of 1995.

The Company also expects that its SBA Loan originations will increase in
1996 because of the removal of certain temporary SBA regulations in place for a
substantial part of 1995, which materially impaired the Company's 1995 SBA Loan
origination levels. These temporary regulations limited the maximum SBA Loan
amount to $500,000 and prohibited the use of SBA Loan proceeds for certain
refinancings.

MORTGAGE LOAN DIVISION

Overview

The Company's mortgage lending activities consist primarily of originating,
selling and servicing Mortgage Loans which are secured by owner-occupied,
single-family residential properties. Substantially all of the Company's
Mortgage Loans are made to refinance existing mortgages and for debt
consolidation, home improvements, educational expenses and a variety of other
purposes. The Mortgage Loans generally are secured by a first lien, have
principal balances ranging from $25,000 to $100,000, and bear fixed interest
rates generally ranging in 1995 from 9% to 16% per annum. Most Mortgage Loans
provide for equal monthly payments over their terms, which generally range from
15 to 30 years.

Substantially all of the Mortgage Loans are made to non-prime borrowers.
These borrowers generally have limited access to credit or are considered to be
credit-impaired by conventional lenders such as thrift institutions and
commercial banks. These conventional lending sources generally impose stringent
and inflexible loan underwriting guidelines and generally require a longer
period of time, as compared to the Company, to approve and fund loans. The
Company believes that its customers require or seek a high degree of
personalized service and swift response to their loan applications. Furthermore,
the Company believes that its customers generally focus more on the amount of
the monthly payment, rather than the interest rate charged.

The Mortgage Loan Division has experienced significant growth over the past
several years. For the years ended December 31, 1993, 1994 and 1995, Mortgage
Loan originations totaled $20.5 million, $99.4 million and $192.8 million,
respectively.

In 1995, the Company diversified its Mortgage Loan products to include FHA
Title I Loans and second mortgage primary-financing-only loans made to finance
closing costs associated with first Mortgage Loans made by the Company ("PFO
Loans"). The Company's FHA Title I Loans have principal amounts up to $25,000,
provide for equal monthly payments over terms ranging from 5 to 15 years, bear
fixed interest rates generally ranging in 1995 from 15% to 18% per annum, and
are 90% guaranteed by the Department of Housing and Urban Development. PFO Loans
have principal amounts ranging from $5,000 to $15,000 and, in 1995, had a
weighted average interest rate of 16% per annum. All of the Company's PFO Loans
are sold on a nonrecourse basis in the secondary market. During 1995, the
Company originated an immaterial amount of FHA Title I Loans and $9.0 million of
PFO Loans.

The Company originates Mortgage Loans through Mortgage Bankers primarily
located in South Carolina, North Carolina and Florida and through three Company
locations in South Carolina which make Mortgage Loans directly to borrowers.
Officers in the Mortgage Loan Division headquarters in Pickens, South Carolina
are responsible for maintaining relationships with the Mortgage Bankers.

The Mortgage Loan Division is managed by a Chief Operating Officer who
oversees other senior division officers who are responsible for the various
aspects of the operations of the Mortgage Loan Division such as underwriting,
servicing, loan origination and sale of Debentures. The Chief Operating Officer
reports to the

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Chief Executive Officer of the Mortgage Loan Division, who oversees the
operations of the Mortgage Loan Division but is generally not involved in the
division's day to day operations. The Chief Executive Officer of the Mortgage
Loan Division also serves as the Chief Operating Officer of the Company.

Industry

Although there exist no official estimates of the size of the non-prime
mortgage industry, the Company believes that the potential non-prime home equity
market is approximately $240 billion. The Company believes that the non-prime
mortgage industry is highly fragmented, with no single lender having a
significant portion of the market. However, many of the providers of financing
to the non-prime mortgage industry are publicly-traded specialty financial
companies.

Non-prime borrowers may be generally considered "credit-impaired" because
their loan application is characterized by one or more of the following: (1)
inadequate collateral, (2) insufficient debt coverage, (3) problems with
employment history, (4) a limited or unfavorable credit history, or (5)
self-employment. Certain lenders in the non-prime market may internally classify
borrowers (generally with letters from A to D) according to the perceived credit
quality of the loan. However, the Company does not believe that there are
uniform guidelines among various non-prime lenders with respect to the
classification of borrowers. The majority of the Company's borrowers do not fit
into one category. Rather, such borrowers generally have some characteristics of
one or more classifications. Accordingly, there is a significant degree of
subjectivity in determining which rates and other loan terms will be offered.

Mortgage Loan Origination

Substantially all of the Mortgage Loans are originated on a wholesale basis
by the Company through Mortgage Bankers with whom the Company has a
relationship. As a wholesale originator of Mortgage Loans, the Company funds the
Mortgage Loans at closing, although the Mortgage Loans may be closed in either
the Company's name or in the name of the Mortgage Banker with the Company taking
an assignment of the Mortgage Banker's interest. During 1994 and 1995, the
Company originated loans through approximately 65 and 120 Mortgage Bankers,
respectively, which are located principally in North Carolina and South
Carolina. Of the approximately 120 Mortgage Bankers who were responsible for
origination of Mortgage Loans in 1995, the Principal Mortgage Bankers accounted
for approximately $145 million, or 75%, of the Company's Mortgage Loans
originated in 1995.

In 1994, the Company began seeking to enter into "strategic alliance"
agreements with Mortgage Bankers that were believed by the Company to be able to
consistently generate large volumes of quality mortgage loans. These strategic
alliance agreements require that the Principal Mortgage Bankers must first offer
to the Company the right to fund all of their loans which meet the Company's
underwriting criteria before offering such loans to other parties. The Principal
Mortgage Bankers are accorded additional services, information and authority by
the Company, including the provision of capital through arrangements similar to
warehouse lending and the provision of additional MIS and accounting services.
These strategic alliance agreements have terms ranging from two to five years
and are scheduled to terminate beginning in December 1997. The Company believes
that these strategic alliances are an important factor in providing a higher
level of customer service. To date, the Company has entered into strategic
alliances with the three Principal Mortgage Bankers. The first strategic
alliance was established in the first quarter of 1994 and the second and third
strategic alliances were established in the third and fourth quarters of 1995,
respectively.

The Company believes that its relationships with its Mortgage Bankers,
including the Principal Mortgage Bankers, are good. However, except for the
agreements with the Principal Mortgage Bankers, there are no contractual
arrangements between the Company and its Mortgage Bankers with respect to the
Mortgage Banker's referrals of Mortgage Loans to the Company.

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<PAGE> 39

The Company plans to increase the number of Mortgage Bankers with which it
is affiliated. The Company also seeks to identify specific Mortgage Bankers
either from its group of affiliated Mortgage Bankers or from unaffiliated
Mortgage Bankers and enter into strategic alliance agreements with these
parties.

During 1994 and 1995, Mortgage Loan originations by state were as follows:

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF MORTGAGE LOANS
ORIGINATED DURING THE YEAR ENDED
DECEMBER 31,
----------------------------------------
STATE 1994 % 1995 %
- ------------------------------------------------------- ------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
North Carolina......................................... $49,100 49.4% $ 97,400 50.5%
South Carolina......................................... 42,600 42.8 37,600 19.5
Florida................................................ -- 0.0 16,200 8.4
Arkansas............................................... 3,600 3.6 9,700 5.0
Virginia............................................... 400 0.4 9,600 5.0
Tennessee.............................................. 1,900 1.9 8,800 4.6
All other states (13 states)........................... 1,800 1.8 13,500 7.0
------- ----- -------- -----
Total........................................ $99,400 100.0% $192,800 100.0%
======= ===== ======== =====
</TABLE>

Application and Approval Process

The application and approval process for Mortgage Loans depends upon the
specific Mortgage Bankers involved in the origination process. Loans originated
through the Principal Mortgage Bankers are initially evaluated and underwritten
by the officers of the Principal Mortgage Bankers, who are required to follow
the Company's underwriting procedures. After the Principal Mortgage Bankers have
gathered the necessary underwriting information and evaluated and approved the
application, summary information regarding the loan and a funding request is
forwarded to the Company for review on an expedited basis, which review is
generally completed within two business days. After approval by the Company, the
loan package is forwarded to an attorney or title company for closing. In the
origination process, the Principal Mortgage Banker makes standard
representations and warranties with respect to the Mortgage Loan, as well as a
representation that the Mortgage Loan meets the Company's underwriting criteria.
With respect to loans originated through Mortgage Bankers other than the
Principal Mortgage Bankers, the necessary underwriting information is gathered
by both the Mortgage Banker and the Mortgage Loan Division's credit department.
After review and evaluation, an officer in the credit department makes the final
credit decision.

The Company attempts to grant approvals of loans quickly to borrowers
meeting the Company's underwriting criteria. Loan officers are trained to
structure loans that meet the applicant's needs, while satisfying the Company's
lending criteria. If an applicant does not meet the lending criteria, the loan
officer may offer to make a smaller loan, request additional collateral, or
request that the borrower obtain a co-borrower or guarantor.

Mortgage Loans are generally made in amounts ranging from $25,000 to
$100,000, with the maximum amount generally being $200,000. In limited
instances, Mortgage Loans are made in excess of this limit. However, such loans
must be approved by a senior officer and have two independent appraisals. The
maximum amount that the Company will lend to a particular borrower is determined
by a number of factors including the applicant's creditworthiness, the value of
the borrower's equity in the real estate and the ratio of such equity to the
home's appraised value.

Creditworthiness is assessed through a variety of means, including
calculating standard debt to income ratios, examining the applicant's credit
history through standard credit reporting bureaus, verifying an applicant's
employment status and income, and checking the applicant's payment history with
respect to the first mortgage, if any, on the property. The Company uses several
procedures to verify information obtained from an applicant. The applicant's
outstanding balance and payment history on any senior mortgage is verified by
calling the senior mortgage lender. In order to verify an applicant's employment
status and income, the Company generally obtains a written statement from the
applicant's employer.

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<PAGE> 40

In the case of owner-occupied property, the loan amount generally may not
exceed 80% of the appraised value of the property, less any balance outstanding
on any existing mortgages. In non-owner-occupied properties, the loan amount
generally may not exceed 75% of the appraised value of the property, less any
balance outstanding on any existing mortgages. In limited instances, the Company
makes loans which have loan-to-value ratios greater than 80%. However, such
loans are generally made only to borrowers deemed by the Company to have a
higher degree of creditworthiness (i.e., superior credit history, stable,
high-income employment and low gross debt ratios), when compared to its typical
borrowers. It is the Company's current policy that such loans do not exceed
$250,000. Approximately 90% of the Company's Mortgage Loans are secured by
owner-occupied property.

The Company generally requires a physical inspection of collateral by a
Company officer if the loan is under $15,000 or an independent appraisal if the
loan is greater than $15,000. Loans in excess of $200,000 require two
independent appraisals. The Company generally requires title insurance for real
estate loans in excess of $15,000. For real estate loans less than $15,000, the
Company generally requires an insured certificate of title from a title abstract
company. The Company generally requires real estate improvements to be fully
insured as to fire and other commonly insured-against risks and regularly
monitors its loans to ensure that insurance is maintained for the period of the
loan.

In connection with Mortgage Loans, the Company collects nonrefundable
underwriting fees, late charges and various other fees, depending on state law.
Other fees charged, where allowable, include those related to credit reports,
lien searches, title insurance and recordings, prepayment fees and appraisal
fees.

Sale of Mortgage Loans

The Company began selling Mortgage Loans in 1994 and for the years ended
December 31, 1994 and 1995, the Company sold $54.6 million and $127.6 million of
Mortgage Loans, respectively. The Mortgage Loans to be sold are generally
packaged in pools of approximately $10 million and offered to several potential
purchasers for the purpose of obtaining bids. After obtaining bids, the pool is
generally sold to the highest bidder. Historically, the Mortgage Loans have been
sold servicing released and on a non-recourse basis, with customary
representations and warranties.

In connection with the sale of Mortgage Loans, the Mortgage Loan Division
receives premiums generally ranging from 4% to 8% of the principal amount of the
Mortgage Loan being sold, depending on prevailing interest rates and the term of
the loan. During 1994 and 1995, the weighted average premiums on the Mortgage
Loans sold were 5.91% and 7.04%, respectively. For the years ended December 31,
1994 and 1995, premiums recognized by the Company in connection with the sale of
Mortgage Loans were $2.4 million and $6.0 million, respectively. Purchasers of
Mortgage Loan pools are typically large financial institutions, many of which
purchase the Mortgage Loans for inclusion in larger pools of loans which, in
turn, are sold to institutional investors.

Mortgage Loan Servicing

The Company services the Mortgage Loans that are not sold, but historically
has not retained the servicing on Mortgage Loans sold. However, in the future,
the Company may retain servicing on Mortgage Loans sold. Servicing includes
collecting payments from borrowers, accounting for principal and interest,
contacting delinquent borrowers, ensuring that insurance is in place, monitoring
payment of real estate property taxes, and supervising foreclosures and
bankruptcies in the event of unremedied defaults.

Delinquencies and Collections

Collection efforts generally begin when an account is over seven days past
due. At that time, the Company attempts to contact the borrower to determine the
reason for the delinquency and cause the account to become current. After an
account becomes 15 days past due, weekly letters are sent to the borrower. In
general, at 30 days past due, a right to cure letter is sent; at 61 days a
five-day demand letter is sent; and at 68 days, the account is turned over to an
attorney. If the status of the account continues to deteriorate, the Company
undertakes an analysis to determine the appropriate action. In limited
circumstances, when a

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<PAGE> 41

borrower is experiencing difficulty in making timely payments, the Company may
temporarily adjust the borrower's payment schedule without changing the loan's
delinquency status. The determination of how to work out a delinquent loan is
based upon a number of factors, including the borrower's payment history and the
reason for the current inability to make timely payments.

When a loan is 90 days past due in accordance with its original terms, it
is placed on non-accrual status and foreclosure proceedings are generally
initiated. In connection with such foreclosure, the loan and the facts
surrounding its delinquency are reviewed, and the underlying property may be
reappraised. Regulations and practices regarding foreclosure and the rights of
the mortgagor in default vary greatly from state to state. If deemed
appropriate, the Company will bid in its loan amount at the foreclosure sale or
accept a deed in lieu of foreclosure. The real estate owned portfolio, which is
carried at the lower of carrying value or appraised fair market value less
estimated cost to sell, totaled $3.7 million at December 31, 1995.

SBA LOAN DIVISION

Overview

The Company formed EBC in December 1991 for the purpose of acquiring
substantially all of the assets, including the SBA license, of an inactive SBA
lender. EBC is one of approximately 12 non-bank entities in the United States
possessing a license to make SBA Loans. Substantially all of the Company's SBA
Loans are made under Section 7(a) ("Section 7(a) Loans") of the Small Business
Act of 1953, as amended (the "Small Business Act"). However, the Company,
through a subsidiary, began making loans in 1995 pursuant to Section 504
("Section 504 Loans") of the Small Business Act (the "Section 504 Loan
Program").

During 1993, 1994 and 1995, the Company originated $37.9 million, $43.1
million and $39.6 million, respectively, in Section 7(a) Loans. Management
believes that during the SBA's fiscal year ended September 30, 1995, the Company
was among the ten largest SBA Loan lenders in the nation based on principal
amount of Section 7(a) Loans approved by the SBA.

During 1995, the Company made approximately $3 million in Section 504
Loans. The Company expects that it will continue to focus its SBA lending
efforts on Section 7(a) Loans, although future regulatory changes could alter
such decision.

The SBA Loan Division operates through a total of 11 offices, seven of
which are staffed by Company employees and four of which are staffed by
independent loan representatives. The Company's SBA operations are divided into
four regions: (1) the Southeastern Region, which is headquartered in Greenville,
South Carolina, (2) the Gulf Coast Region, which is headquartered in Panama
City, Florida, (3) the Central States Region, which is headquartered in Wichita,
Kansas, and (4) the Rocky Mountain Region, which is headquartered in Denver,
Colorado.

The SBA Loan Division is managed by a President who oversees the four
regional vice presidents. These regional vice presidents are responsible for the
day-to-day operations within their respective regions, including loan
origination and underwriting activities. The President is also responsible for
the servicing operations of the SBA Loan Division. The President reports to the
Chief Executive Officer of the SBA Loan Division, who oversees the operations of
the SBA Loan Division but is generally not involved in the division's day to day
operations. The Chief Executive Officer of the SBA Loan Division also serves as
the Chief Operating Officer of the Company.

SBA Loan Customers

The Company's SBA Loan customers are commercial businesses which may
generally be considered to be non-prime borrowers insofar as they generally do
not have access to traditional bank financing. Such financing may be unavailable
because of a variety of factors, including inadequate collateral, insufficient
debt coverage, lack of management experience or an unfavorable credit history.

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<PAGE> 42

SBA Loan Program Participation

Section 7(a) Loan Program. Section 7(a) Loans are term loans made to
commercial businesses which qualify under SBA regulations as "small businesses."
These loans are primarily for the acquisition or refinancing of property, plant
and equipment, working capital or debt consolidation.

The SBA administers three levels of lender participation in its Section
7(a) Loan program. Under the first level of lender participation, known as the
Guaranteed Participant Program, the lender gathers and processes data from
applicants and forwards it, along with its request for the SBA's guaranty, to
the local SBA office. The SBA then completes an independent analysis and makes
its decision on the loan application. SBA turnaround time on such applications
can vary greatly, depending on its backlog of loan applications. Under the
second level of lender participation, known as the Certified Lender Program, the
lender (the "Certified Lender") gathers and processes the application and makes
its request to the SBA, as in the Guaranteed Participant Program procedure. The
SBA then performs a review of the lender's credit analysis on an expedited
basis, which review is generally completed within three working days. The SBA
requires that lenders originate loans meeting certain portfolio quality and
volume criteria before authorizing lenders to participate as Certified Lenders.
Authorization is granted by the SBA on a district-by-district basis. Under the
third level of lender participation, known as the Preferred Lender Program, the
lender has the authority to approve a loan and to obligate the SBA to guarantee
the loan without submitting an application to the SBA for credit review.
However, the lender (the "Preferred Lender") is required to secure confirmation
from the SBA that the applicant qualifies as a small business. Such confirmation
generally takes less than 24 hours. The standards established for participants
in the Preferred Lender Program, the SBA's highest designation, are more
stringent than those for participants in the Certified Lender Program and
involve meeting additional portfolio quality and volume requirements.

The Company has been designated a Preferred Lender by the SBA in 27 of the
65 SBA districts. These districts are all of the SBA districts in which the
Company is deemed to be an "active" lender by the SBA. Virtually all of the
Company's SBA Loans are made in these districts. The determination of whether a
lender attains Preferred Lender status is determined by the Associate
Administrator for Financial Assistance (the "AA/FA"). In making its decision,
the SBA considers whether the lender (1) has the required ability to process,
close, service and liquidate loans; (2) has the ability to develop and analyze
complete loan packages; and (3) has a satisfactory performance history with the
SBA. The AA/FA may suspend or revoke Preferred Lender status for reasons such as
loan performance unacceptable to the SBA, failure to make the required number of
loans under the expedited procedures, or violations of applicable statutes,
regulations or published SBA policies and procedures.

Section 504 Program. The Section 504 Program differs from the Section 7(a)
Loan program in both structure and size of loans. Section 504 loans generally
range in principal amount from $1 million to $2.25 million and are made in
connection with a state chartered certified development corporation. Section 504
Loans are generally commercial development-related loans which, in the case of
construction loans, are initially funded entirely by the SBA-licensed lender
(such as the Company). Upon completion of the construction phase of the project,
a significant portion of the total loan (generally approximately 55%) is repaid
by the certified development corporation. This repayment is funded by the SBA
through the purchase of a fixed rate debenture issued by the certified
development corporation. This purchased portion of the loan is subordinated to
the first mortgage loan (held by the SBA-licensed lender). Consequently, the
SBA-licensed lender has a loan which has a very favorable loan-to-value ratio.
The acquisition of existing properties is generally funded 50% by the
SBA-licensed lender (in a first mortgage position), 40% by the certified
development corporation (in a subordinate lien position), with the remaining 10%
provided by the borrower. The approval process for Section 504 Loans is similar
to the first level of lender participation with respect to Section 7(a) Loan
program except that the certified development company presents the loan to the
SBA (after it has been approved by the SBA-licensed lender and the certified
development company). Upon presentation, the SBA completes its independent
analysis of the loan and makes its credit decision. SBA turnaround time on such
applications can vary greatly, depending on its backlog of loan applications.

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<PAGE> 43

SBA Guarantees

Under the Preferred Lender Program, the SBA guarantees up to 80% on loans
of $100,000 or less, and up to 75% on loans in excess of $100,000. However, the
SBA's maximum guaranty per borrower under any SBA Loan is $750,000.

In the event of a default by a borrower on an SBA Loan, if the SBA
establishes that any resulting loss is attributable to a failure by the Company
to comply with SBA policies and procedures in connection with the origination,
documentation or funding of the loan, the SBA may seek recovery of funds from
the Company. With respect to SBA Loan Participations which have been sold, the
SBA first will honor its guarantee and then seek compensation from the Company
in the event that a loss is deemed to be attributable to such failure to comply
with SBA policies and procedures. To date, the SBA has not sought recovery from
the Company on any of its SBA Loans.

SBA Loan Origination and Approval

In the past five years, the Company's SBA Loan origination offices have
made loans in 23 states and the District of Columbia. The Company's SBA Loans
generally range in size from $100,000 to $1.2 million. Average loan size for
originations during 1995 was $332,000. The SBA Loans generally have a variable
rate of interest which is limited to a maximum of 275 basis points over the
lowest prime lending rate published in The Wall Street Journal adjusted on the
first day of each calendar quarter.

Although the Company originates SBA Loans through direct contact between
its loan officers and potential borrowers, a substantial portion of the
Company's SBA Loans are generated by Commercial Loan Brokers who generally are
paid referral fees. The Company does not have any contractual agreements with
any of these brokers obligating them to refer loans to the Company. In 1995, the
Company originated SBA Loans in connection with approximately 35 Commercial Loan
Brokers, and no Commercial Loan Broker accounted for more than 15% of the
Company's SBA Loans. The Company also attempts to maintain strong relationships
with commercial banks, attorneys, accountants and other potential loan referral
sources.

The majority of the Company's SBA Loan originations have been for the
acquisition or refinance of property, plant and equipment, working capital or
debt consolidation. A number of SBA Loans were made to business franchisees in
connection with the acquisition of national franchises. All SBA Loans are
secured, generally by all assets of the borrower, including any real property.
In connection with the SBA Loans, the Company generally obtains the guarantee of
the principals involved in the business, which is often secured by real
property.

All SBA Loans originated by the Company are evidenced by variable rate
notes which adjust quarterly, require payment monthly and are scheduled to
amortize fully over their stated term. SBA Loans originated by the Company have
terms ranging from seven to 25 years depending upon the use of proceeds, with a
weighted average term of approximately 16 years. Generally, seven-year loans are
made for working capital, 10-year loans for equipment and 25-year loans for real
estate.

Applicants for SBA Loans are generally required to provide historical
financial statements for three years and/or projected statements of operations
for two years. They are also generally required to provide proof of equity,
personal guarantees and assignments of affiliated leases and life insurance.
Credit reports are generally obtained from independent credit reporting agencies
for all applicants. These reports are reviewed by SBA Loan Division's credit
officers. Independent appraisals are generally required on real estate pledged
as collateral.

All loans made by the SBA Loan Division must be approved by the regional
vice president and one other loan officer. All loans in excess of $1 million
must also be approved by either the President or Executive Vice President of the
SBA Loan Division. After approval by such officers, the loan application is
produced and forwarded to the SBA office servicing the location of the
applicant. If the loan is being made in a district where the SBA Loan Division
is certified as a Preferred Lender, no prior credit approval of the SBA is
required before the loan transaction can be consummated. However, if the loan is
being made in a district

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where the SBA Loan Division is not certified as a Preferred Lender, the loan
cannot be made until the SBA office approves the loan, issues an authorization
letter and assigns a loan number.

Multiple Disbursements of SBA Loans

The Company funds certain of its SBA Loans on a multiple disbursement
basis. In particular, when part of the use of proceeds of a loan is for the
construction or improvement of real property, the loan may require multiple
disbursements over a lengthy period of time. At December 31, 1995, the Company
had $10.6 million of outstanding SBA Loans in various stages of multiple
disbursements, of which $6.3 million had been disbursed. The length of time
necessary to complete the disbursement process for multiple disbursement loans
is generally six to twelve months.

SBA Loan Sales

Upon final disbursement of the proceeds of each SBA Loan, the Company
obtains bids in the secondary market for the SBA Loan Participation associated
with that SBA Loan. The SBA Loan Participation is generally sold to the highest
bidder. The Company retains the unguaranteed portion of the loan and the
servicing rights to the entire loan. The SBA Loan Division sells the SBA Loan
Participations generally to financial institutions or other institutional
investors. Purchasers of the SBA Loan Participations share ratably with the SBA
Loan Division (holding the unguaranteed portion) with respect to all principal
collected from the borrowers with respect to the SBA Loans. SBA lenders are
required to pay a fee of 50 basis points per annum to the SBA on the outstanding
balance of the guaranteed portion of all loans.

In connection with the sale of SBA Loan Participations, the SBA Loan
Division receives, in addition to additional servicing revenue, cash premiums of
approximately 10% of the guaranteed portion being sold. During 1993, 1994 and
1995, the weighted average premiums on the SBA Loan Participations sold,
together with the additional servicing revenue, aggregated 13.75%, 11.79% and
13.75%, respectively, of the SBA Loan Participations sold. For the years ended
December 31, 1993, 1994 and 1995, premiums recognized by the Company in
connection with the sale of SBA Loan Participations were $3.6 million, $4.0
million and $3.9 million, respectively.

The SBA has contracted with Colson Services Corp. ("Colson Services") to
serve as the exclusive fiscal and transfer agent for the SBA Loan Participations
sold in the secondary market. The Company collects payments from borrowers and
remits to Colson Services amounts due to investors. Colson Services then remits
such amounts to the investors and administers the transfer of SBA Loan
Participations from one investor to another.

Securitization of SBA Loans

Historically, the Company retained the unguaranteed portions of its SBA
Loans. However, in 1995, the Company securitized approximately $17 million of
the unguaranteed portions of its SBA Loans. The securitization was effected
through a grantor trust (the "Trust"), the ownership of which was represented by
Class A and Class B certificates. The Class A certificates were purchased by
investors, while the Company retained the Class B certificates. These
certificates give the holders thereof the right to receive payments and other
recoveries attributable to unguaranteed portion of the SBA Loans held by the
Trust. The Class B Certificates represent approximately 10% of the principal
amount of the SBA Loans transferred in the securitization and are subordinate in
payment and all other respects to the Class A Certificates. Accordingly, in the
event that payments received by the Trust are not sufficient to pay certain
expenses of the Trust and the required principal and interest payments due on
the Class A Certificates, the Company, as holder of the Class B Certificates,
would not be entitled to receive principal or interest payments due thereon.

The Company serves as master servicer for the Trust and, accordingly,
forwards payments received on account of the SBA Loans held by the Trust to the
trustee of the Trust, which, in turn, pays the holders of the certificates in
accordance with the terms of and priorities set forth in the securitization
documents. Because the transfer of the SBA Loans to the Trust constitutes a sale
of the underlying SBA loans, no liability is created on the Company's
Consolidated Financial Statements. However, the Company has the obligation to

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repurchase the SBA Loans from the Trust in the event that certain
representations made with respect to the transferred SBA Loans are breached or
in the event of certain defaults by the Company, as master servicer. The Class A
certificates received a rating of Aaa from Moody's Investors Service, Inc. The
Class B Certificates were not rated. In connection with the securitization, the
SBA Loan Division received funds substantially equal to the Class A
certificates' percentage of the total principal amount of the SBA Loans
transferred to the Trust.

If available, the Company intends to continue to pursue securitization
transactions in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

Loan Servicing

The Company services substantially all the SBA Loans it originates.
Servicing includes collecting payments from borrowers and remitting payments
with respect to the SBA Loan Participations to Colson Services, accounting for
principal and interest, contacting delinquent borrowers and supervising
foreclosures. The Company initially reviews loan files to confirm that the loans
were originated in accordance with SBA regulations. Thereafter, the Company
conducts periodic reviews of the borrower's financial condition and typically
conducts field visits to the borrower's place of business at least once a year.

Delinquency and Collection

When an SBA Loan becomes delinquent, the Company contacts the borrower to
determine the circumstances of the delinquency and attempts to maintain close
contact with the borrower until the loan is brought current or is liquidated.
When an SBA Loan becomes 60 days past due, the Company is required to notify the
SBA of such delinquency. Generally, after a loan becomes 90 days delinquent, the
Company places the loan on non-accrual status, delivers a default notice and
begins the legal process of foreclosure and liquidation, upon notification to
and approval by the SBA. Foreclosure proceedings are generally conducted by the
lender, although where the SBA Loan was not made by a Preferred Lender, the SBA
has the right to conduct the foreclosure. Any loss after foreclosure and
liquidation is allocated pro rata between the guaranteed and the unguaranteed
portions of the SBA Loan. Generally, after an SBA Loan becomes 60 to 90 days
past due, the SBA, upon the request of the servicer of the SBA Loan, repurchases
the guaranteed portion of the principal balance of the SBA Loan from the holder,
together with accrued interest covering a period of up to 120 days.

AUTO LOAN DIVISION

Overview

The Company's Auto Loan Division makes loans directly to non-prime
borrowers for the purchase of used automobiles. Substantially all of the Auto
Loans are made directly by the Company through referrals from Dealers located in
South Carolina. Less than 10% of the Auto Loans originated in 1995 were
"indirect" loans purchased from Dealers, all of which were located in South
Carolina. Of the Dealers which referred loans to the Company in 1995, the
Company estimates that half of such Dealers were franchised Dealers and half
were independent Dealers.

The non-prime consumer automobile market is comprised of borrowers who
generally do not have access to other conventional sources of automobile credit
because they do not meet the credit standards imposed by other lenders. As a
result of its borrowers' credit status, the Company charges relatively high
rates of interest to such consumers, which, in 1995, generally ranged from 18%
to 36%. By contrast, banks, thrift institutions, and financing subsidiaries of
manufacturers and retailers generally impose more stringent, objective credit
requirements and generally charge lower interest rates based on the prevailing
interest rate environments at the time of origination.

The Company began making Auto Loans with its acquisition of 80% of the
common stock of Loan Pro$ in 1991. At the time of acquisition, Loan Pro$ had
$1.8 million in loans and operated through one location.

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The Company also acquired Premier in 1991. At the time of acquisition, Premier
had approximately $3 million in loans, which were principally personal property
loans, and operated through three locations. During 1993, the Company decided to
terminate Premier's unsecured personal property loan operation and focus its
lending efforts on secured automobile lending. The Company currently operates
its Auto Loan Division through seven locations, and at December 31, 1995, had a
total of $18 million of serviced Auto Loans, substantially all of which were
made in connection with the purchase of automobiles. The Company's long-term
strategy is to grow the Auto Loan Division, and in connection with such
strategy, expects to open two new offices during 1996. During 1993, 1994 and
1995, the Auto Loan originations totaled $5.2 million, $7.5 million and $17.1
million, respectively.

The Auto Loan Division is managed by the presidents of Loan Pro$ and
Premier. These individuals oversee the branch managers of each loan production
office and are generally responsible for the performance of their respective
companies. These individuals report to the Chief Executive Officer of the Auto
Loan Division, who is also the Chief Operating Officer of the Company.

Although Premier and Loan Pro$ have substantially similar operations, the
Company has maintained their separate existence because Loan Pro$ is not a
wholly-owned subsidiary. The president of Loan Pro$ retained a 20% equity
interest in Loan Pro$ at the time of its acquisition by the Company.

Industry

The automobile finance industry is the second largest consumer finance
market in the United States, estimated by the Federal Reserve Board to have been
a $325 billion market in terms of outstanding automobile installment credit at
the end of 1994. The non-prime portion of the automobile finance market is
estimated to be between $30 billion and $50 billion and is highly fragmented.
Many large financial service entities, such as commercial banks, savings and
loans, credit unions and captive finance companies do not consistently provide
financing to the non-prime market. In many cases, those organizations electing
to remain in the automobile finance business have migrated toward higher credit
quality customers in order to reduce collection and processing costs and to
maintain higher levels of credit quality. Many of the largest providers of
financing to the non-prime automobile finance market are the publicly-traded
specialty automobile finance companies. The Company estimates that these
companies collectively have less than a 15% market share. The remainder is
primarily comprised of privately-held finance companies and Dealers who provide
financing programs directly to the consumer.

Non-prime borrowers in the automobile finance market may be generally
considered "credit-impaired" because their loan application is characterized by
one or more of the following: (1) inadequate collateral, (2) insufficient debt
coverage, (3) problems with employment history, (4) a limited or unfavorable
credit history or (5) self-employment. Certain lenders in the non-prime market
may internally classify borrowers (generally with letters from A to D) according
to the perceived credit quality of the loan. However, the Company does not
believe that there are uniform guidelines among various non-prime lenders with
respect to the classification of borrowers. The majority of the Company's
borrowers do not fit into one category. Rather, such borrowers generally have
some characteristics of one or more classifications. Accordingly, there is a
significant degree of subjectivity in determining which rates and other loan
terms will be offered.

Direct Auto Loans and Related Products

Substantially all of the Company's Auto Loans are made directly by the
Company to consumers in connection with purchases of used automobiles. This is
in contrast to "indirect lending," where lenders purchase loans from Dealers
that have already been originated by such Dealers.

The Auto Loans are generally fixed rate loans, with interest rates ranging
from 18% to 36% per annum, depending on the model year of the automobile being
financed and the creditworthiness of the borrower. At

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<PAGE> 47

December 31, 1995, the Auto Loans had a weighted average interest rate earned of
27.4%. The amount financed on Auto Loans generally ranges from $3,000 to $10,000
(with an average initial principal balance in 1995 of approximately $5,000), and
the repayment terms generally range from 24 to 48 months, depending upon the
amount financed. The interest rate which may be charged by the Company is
regulated by state law. See "-- Regulation." The age of the vehicles financed
generally ranges from four to six years. The Company's underwriting guidelines
generally provide that the amount of the Auto Loan may not exceed 105% of
National Auto Dealers Association wholesale value of the vehicle being financed.

In connection with its Auto Loans, the Company offers credit life and
accident and health insurance products for which it receives commissions. These
insurance products are sold by branch managers who are licensed representatives
of an unaffiliated insurance company. During 1995, insurance was sold in
connection with approximately 50% of the total number of Auto Loans originated.
During 1995, the Company recognized $140,000 in commissions in connection with
the sale of insurance products.

Relationships with Dealers

Substantially all of the Company's Auto Loans are originated by referrals
from Dealers located in or around the localities served by the Company. In a
typical situation, the dealer will bring a customer who wishes to purchase an
automobile, along with the automobile, to an Auto Loan Division branch location.
At the branch location, the branch manager (or a person designated by the branch
manager) will examine the automobile and make a final credit determination with
respect to the customer. In dealing with the Company, Dealers become familiar
with the Company's lending policies and procedures and develop the ability to
screen potential applicants for credit who are unlikely to be approved by the
Company. The Company attempts to establish and maintain its relationships with
Dealers by making prompt credit determinations and by offering quality,
consistent and dependable service. New dealer relationships are secured
principally through personal contact by branch managers.

During 1995, the Company originated Auto Loans in connection with
approximately 200 Dealers. In 1995, no single dealer accounted for a material
portion of the Company's Auto Loans. The Company has no formal agreements with
any Dealers under its direct lending program.

Direct Auto Lending Procedures

The initial credit screening on potential Auto Loan customers is performed
by the Dealers based on the Company's lending policies and procedures. Final
credit decisions involving less than $10,000 are made by the branch managers,
who interview borrowers in person, examine the automobile and perform other
verification procedures. Auto Loans in amounts greater than $10,000 require the
approval of the branch manager and one other member of the Auto Loan Division's
senior management.

The Company's credit review process requires the completion of a
standardized credit application with information on the applicant's background,
employment and credit history. The Company obtains a credit report on the
applicant from an independent reporting service and obtains verification of the
applicant's employment and wages from his or her employer. Branch managers are
encouraged to apply their knowledge of local conditions and collateral values
and their personal experience in making credit decisions. The Company does not
use a "scoring" system or other inflexible, standardized credit criteria.
Nevertheless, the Company estimates that approximately 50% of all applicants are
denied credit by the Company, generally because of their credit histories or
because their income levels will not, in the Company's judgment, support the
amount of credit sought. If the credit is approved, standardized financing
documents are executed between the customer and the Company. In connection with
all Auto Loans, the automobile is pledged as collateral and the Company obtains
the certificate of title to the automobile, on which its lien is recorded. The
Company generally retains keys on the financed automobiles. The customer
receives a payment coupon book and instructions on remitting monthly payments to
the Company.

The Company considers refinancing of its existing loans on a case-by-case
basis. The Company generally does not refinance delinquent loans unless it
determines that refinancing is not likely to increase the credit risk.

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Indirect Lending Operations

In 1995, the Company began an indirect automobile lending program. Under
this program, certain approved dealerships are provided underwriting criteria
and guidelines by the Company. The dealerships close and fund the loans to the
borrowers. The manager of the Company's local office is then given an
opportunity to purchase the loan from the dealer based on the office managers'
credit decision and verification procedures. Loans are purchased from the Dealer
at a discount from the principal amount of the loan. This discount, which is not
refundable to the Dealer, averaged 7% in 1995. Less than 10% of the Auto Loans
originated in 1995 were generated under this indirect lending program.

Servicing, Collection and Delinquencies

The Company's borrowers are expected to remit their monthly payments using
the payment coupon book provided to them at the time the credit is extended.
Consequently, the Company does not issue monthly statements to borrowers. If a
payment is not received within five days after its due date, the Company
telephones the borrower, and attempts to maintain weekly contact thereafter
until the loan is brought current. If a payment is not received within 11 days
after its due date, the borrower is sent a right to cure letter. In certain
instances, the automobile is picked up and stored by the Company after the right
to cure letter has been received. After 30 days, the branch manager contacts the
borrower. After 45 to 60 days, at the discretion of the branch manager, the
Company generally repossesses the automobile. In certain instances, borrowers
are permitted to recover their repossessed vehicles if they cure defaults under
their loan.

Repossessed automobiles are usually offered for sale by the Company through
independent Dealers. If such efforts are unsuccessful, the automobiles are sold
at public auction. The time between repossession and public sale generally
ranges from one to three months.

COMPETITION

The financial services industry, including the markets in which the Company
operates, is highly competitive. Competition is based on the type of loan,
interest rates, and service. Traditional competitors in the financial services
industry include commercial banks, credit unions, thrift institutions, credit
card issuers, consumer and commercial finance companies, and leasing companies,
many of which have considerably greater financial and marketing resources than
the Company. Moreover, substantial national financial services networks have
been formed by major brokerage firms, insurance companies, retailers and bank
holding companies. The Company believes that it competes effectively by
providing competitive rates, and efficient, complete services.

The Company faces significant competition in connection with its Mortgage
Loan operations, principally from national companies which focus their efforts
on making mortgage loans to non-prime borrowers. These competitors include The
Money Store, Ford Consumer Finance Company, The Associates, and ContiFinancial
Corporation. Each of these companies has considerably greater financial and
marketing resources than the Company. Although these large national companies
compete in the mortgage loan industry, the industry, as a whole, is highly
fragmented and no one company has a large percentage of the total mortgage loan
market. The Company attempts to maintain its competitiveness by establishing
strong relationships with Mortgage Bankers. Although the Company believes that
it has been successful in this regard, in the event that the Company's
competitors are able to weaken the relationships between the Company and its
Mortgage Bankers, including the Principal Mortgage Bankers, the Company's
operations would be materially and adversely affected. Conventional lenders,
such as banks and thrifts, are not believed to be significant competitors of the
Company because they are generally reluctant to make loans to non-prime
borrowers. See "Business -- Mortgage Loans -- Mortgage Loan Origination."

The Company faces significant competition in all markets in which it makes
SBA Loans. The Company's major competitors vary from region to region. However,
its primary competitors are small independent banks and large companies such as
The Money Store, AT&T Capital Corp. and Heller First Capital. Because SBA Loan
interest rates and terms offered by lenders are relatively uniform, the Company
believes that the principal source of competition in making SBA Loans relates to
the quality of service provided by the lender

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and the relationships established with the borrower. In addition, the Company
believes that it is important that it maintain good relations with the
Commercial Loan Brokers which are a significant source of SBA Loan originations.

The consumer finance business, and the Auto Loan business in particular, is
highly competitive. Because the Company's Auto Loan business is limited to a
particular area of the consumer finance industry and because the Company's
customer base consists of individuals who generally do not have access to other
traditional sources of consumer credit, the Company usually does not compete
directly with banks, savings and loans, financing subsidiaries of manufacturers
and retailers of automobiles, and other traditional consumer financing sources
with respect to Auto Loans. However, in each market where the Company operates,
there are generally a number of other non-prime lenders that compete for the
Auto Loans, including local finance companies. Certain of these non-prime
lenders are larger and have greater resources than the Company. These companies
include Mercury Finance Company, First Merchants Acceptance Corporation and
Regional Acceptance Corporation. Furthermore, the Company believes that
conventional lenders are increasingly seeking to operate in the non-prime
consumer market. Such additional competition could have a material adverse
effect on the Company and its ability to attract customers. The Company believes
that the principal bases for competition in the Auto Loan business are the
monthly payment amount, the speed of the credit determination process and the
general level of service provided to the Dealers. Accordingly, the Company
believes that it is important that it maintain good relationships with its
associated Dealers.

REGULATION

General

The Company's operations are subject to extensive local, state and federal
regulations including, but not limited to, the following federal statutes and
regulations promulgated thereunder: the Small Business Act, the Small Business
Investment Act of 1958, as amended (the "SBIA"), Title 1 of the Consumer Credit
Protection Act of 1968, as amended (including certain provisions thereof
commonly known as the "Truth-in-Lending Act" or "TILA"), the Equal Credit
Opportunity Act of 1974, as amended (the "ECOA"), the Fair Credit Reporting Act
of 1970, as amended (the "FCRA"), the Fair Debt Collection Practices Act, as
amended, the Real Estate Settlement Procedures Act (the "RESPA") and the
National Housing Act, as amended. In addition, the Company is subject to state
laws and regulations with respect to the amount of interest and other charges
which lenders can collect on loans (e.g., usury laws).

Although most states do not regulate commercial loans, a few states do
require licensing of lenders, limitations on interest rates and other charges,
adequate disclosure of certain contract terms and limitations on certain
collection practices and creditor remedies. Authorities in those states that
regulate the Company's SBA Loan activities may conduct audits of the books,
records and practices of the Company. The Company is licensed to do business in
each state in which it does business and in which such licensing is required and
believes it is in compliance in all material respects with these regulations.
The Company is also required to comply with certain portions of the ECOA which
are applicable to commercial loans, including SBA Loans. The Company must comply
with ECOA's prohibition against discrimination on the basis of race, color, sex,
age or marital status and with the portion of Regulation B under the ECOA that
requires lenders to advise loan applicants of the reasons their credit request
was declined or subject to other adverse action.

In the judgment of management, existing statutes and regulations have not
had a materially adverse effect on the business done by the Company. However, it
is not possible to forecast the nature of future legislation, regulations,
judicial decisions, orders or interpretations, nor their impact upon the future
business, financial condition or prospects of the Company.

The Company believes that it is in substantial compliance with state and
federal laws and regulations governing its lending activities. However, there
can be no assurance that the Company will not inadvertently violate one or more
of such laws and regulations. Such violations may result in actions for damages,
claims for refunds of payments made, certain fines and penalties, injunctions
against certain practices, and the potential forfeiture of rights to repayment
of loans. Further, adverse changes in the laws or regulations to which the

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Company's business is subject, or in the interpretation thereof, could have a
material adverse effect on the Company's business.

Mortgage Loans

Mortgage lending laws generally require licensing of the lender,
limitations on the amount, duration and charges for various categories of loans,
adequate disclosure of certain contract terms and limitations on certain
collection practices and creditor remedies. Many states have usury laws which
limit interest rates, although the limits generally are considerably higher than
current interest rates. State regulatory authorities may conduct audits of the
books, records and practices of the Company's operations. The Company is
licensed to do business in each state in which it does business and in which
such licensing is required and believes it is in compliance in all material
respects with these regulations.

The Company's Mortgage Loan and FHA Title I Loan origination activities are
subject to TILA. TILA contains disclosure requirements designed to provide
consumers with uniform, understandable information with respect to the terms and
conditions of loans and credit transactions in order to give them the ability to
compare credit terms. TILA also guarantees consumers a three-day right to cancel
certain credit transactions, including any refinanced mortgage or junior
mortgage loan on a consumer's primary residence. The Company believes that it is
in substantial compliance in all material respects with TILA.

The Company is also required to comply with the ECOA, which, in part,
prohibits creditors from discriminating against applicants on the basis of race,
color, sex, age or marital status. ECOA restricts creditors from obtaining
certain types of information from loan applicants. It also requires certain
disclosures by the lender regarding consumer rights and requires lenders to
advise applicants who are turned down for credit of the reasons therefor. In
instances where a loan applicant is denied credit or the rate or charge for a
loan is increased as a result of information obtained from a consumer credit
agency, another statute, the FCRA, requires the lender to supply the applicant
with the name and address of the reporting agency. Under RESPA, disclosures to
certain borrowers are required to be made within prescribed time frames. Good
faith estimates of applicable closing costs are also required.

The Company's involvement in FHA Title I guaranteed lending activities
requires compliance with the regulatory and reporting requirements of the FHA.
The FHA only guarantees loans that comply with certain stated standards.

SBA Loans

The SBA Loans made by the SBA Loan Division are governed by federal
statutes (the Small Business Act and SBIA) and may be subject to regulation by
certain states. These federal statutes and regulations specify the types of
loans and loan amounts which are eligible for the SBA's guaranty as well as the
servicing requirements imposed on the lender to maintain SBA guarantees.

Auto Loans

The Company's Auto Loan business is subject to extensive supervision and
regulation under state and federal laws and regulations, which, among other
things, require that the Company obtain and maintain certain licenses and
qualifications, regulate the interest rates, fees and other charges the Company
is allowed to charge, limit or prescribe certain other terms of the Company's
loans, require specified disclosures to consumers, govern the sale and terms of
insurance products offered by the Company and the insurers for which it acts as
agent, and define the Company's rights to repossess and sell collateral.

The Company's Auto Loan business is currently limited to South Carolina and
is therefore subject to certain South Carolina laws and regulations, including
the South Carolina Consumer Protection Code (the "SC Code"). With respect to
their direct lending activities, Premier and Loan Pro$ are each licensed under
the SC Code as a "supervised lender" (a lender making consumer loans at interest
rates in excess of 12% per annum), subject to regulation by the Consumer Finance
Division of the State Board of Financial Institutions and by the South Carolina
Department of Consumer Affairs. These state regulatory agencies audit the

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<PAGE> 51

Company's local offices from time to time, and each state agency performs an
annual compliance audit of the Company's operations.

The SC Code and the regulations thereunder generally do not limit the
finance charges that may be contracted for with respect to loans having a cash
advance exceeding $600, but require supervised lenders to file schedules showing
maximum finance charges for each category and amount of supervised loans. Such
schedules must express finance charges in terms of annual percentage rates
determined in accordance with TILA, and must be conspicuously posted in each
location where loans are originated in the format and with certain notices set
forth in regulations promulgated under the SC Code. The SC Code and regulations
thereunder also, among other things, limit or regulate closing costs, insurance
premiums, delinquency, deferral, refinancing, consolidation and conversion fees
and other additional charges which may be assessed in connection with consumer
loans, prescribe certain disclosures and notices to borrowers and cosigners,
prescribe maximum repayment terms for loans of $1,000 or less, define and limit
creditors' remedies on default, and prescribe certain record-keeping and
reporting procedures and requirements, and regulate other aspects of consumer
finance transactions, including permitted collateral, application of payments,
limits on scheduled balloon payments, rebates on prepayments, certain terms,
disclosures and formalities in the loan contract, and other matters.

The SC Code contains provisions similar to the foregoing which are
applicable to consumer credit sale transactions in which a consumer's purchase
of goods or services is financed by the seller or by the seller's assignment of
the retail installment sale contract to another lender. These provisions are
applicable to the Company's indirect financing of automobile purchases. The SC
Code provides that the seller effecting the credit sale is responsible for
licensing and compliance with respect to loans originated in connection with
credit sales, and does not impose on the assignee any obligation of the seller
with respect to events occurring before the assignment. However, upon the
assignment, the Company is subject to the provisions governing credit sales. The
Company believes that it and the dealers from which it accepts assignment of
consumer loans are in substantial compliance with the provisions of the SC Code
governing credit sales.

The Company's Auto Loan business is also subject to extensive federal
regulation in connection with its consumer loans, including TILA, ECOA and FCRA
and the regulations thereunder, and certain rules of the Federal Trade
Commission. These laws and regulations are referenced above under
"--Regulation -- Mortgage Loans." The Company's Auto Loan business is also
subject to the rules of the Federal Trade Commission, which limit the types of
property a creditor may accept as collateral to secure a consumer loan and
provide for the preservation of the consumer's claims and defenses when a
consumer obligation is assigned to a subsequent holder.

EMPLOYEES

At December 31, 1995, the Company employed a total of 143 full-time
equivalent employees. The Company believes that its relations with its employees
are good.

PROPERTIES

The Company's headquarters are located at 15 South Main Street, Suite 750,
Greenville, South Carolina and are leased. The Company owns three locations and
leases 10 locations. None of the leases or properties owned is believed to be
material to the Company's operations. The Company believes that its leased and
owned locations are suitable and adequate for their intended purposes. The
Company would expect to lease or purchase any properties necessary for any
expansion.

LEGAL PROCEEDINGS

The Company and its subsidiaries are, from time to time, parties to various
legal actions arising in the normal course of business. Management believes that
there is no proceeding threatened or pending against the Company or any of its
subsidiaries that, if determined adversely, would have a materially adverse
effect on the operations, profitability or financial condition of the Company or
any of its subsidiaries.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the names and ages of the Company's
executive officers and directors, the positions and offices with the Company
held by each such person, and the period that each such person has served as an
executive officer or director of the Company.

<TABLE>
<CAPTION>
DIRECTOR OR
NAME AGE POSITION WITH THE COMPANY OFFICER SINCE
- ----------------------------------------- --- ----------------------------------- -------------
<S> <C> <C> <C>
John M. Sterling, Jr. ................... 57 Chief Executive Officer, President 1991
and Chairman of the Board
Keith B. Giddens......................... 41 Executive Vice President, Chief 1992
Operating Officer and Director
Robert S. Davis.......................... 49 Vice President, Chief Financial 1990
Officer and Director
Kevin J. Mast............................ 35 Treasurer 1995
Clarence B. Bauknight(1)(2).............. 59 Director 1995
Tecumseh Hooper, Jr.(2).................. 48 Director 1991
Jacob H. Martin(1)....................... 77 Director 1991
Buck Mickel(1)........................... 70 Director 1991
Porter B. Rose(2)........................ 53 Director 1991
</TABLE>

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

(1) Members of the Compensation Committee.
(2) Members of the Audit Committee.

John M. Sterling, Jr. was elected President, CEO and Chairman of the Board
of the Company in January 1991. Mr. Sterling was Chairman of the Board and CEO
of Modern Office Machines, Inc. ("MOM") from 1981 through August 1992. Since
November 1993, Mr. Sterling has served as President of the corporate general
partner of Palmetto Seed Capital Fund, L.P. ("PSC"), which invests primarily in
early stage South Carolina companies. Mr. Sterling has served as General Partner
and Manager of Reedy River Ventures, L.P. ("RRV"), which is a SBIC licensed by
the SBA. PSC and RRV are currently managed by the Company. Mr. Sterling also
serves on the Board of Directors of Datastream Systems, Inc. and several private
companies.

Keith B. Giddens has served as Executive Vice President and Chief Operating
Officer of the Company since November 1995, and CEO of CII, Premier, Loan Pro$
and EBC since the date of their respective acquisitions by the Company in 1991.
Mr. Giddens was a partner in the public accounting firm of Ernst & Young from
October 1988 through April 1991 and a Senior Manager at such firm from October
1984 through September 1988.

Robert S. Davis has served as Vice President and Chief Financial Officer of
the Company since January 1991, as Treasurer from 1992 to 1995, as Vice
President of Finance from November 1989 through June 1990, as President and
Treasurer from June through December 1990, and as Corporate Controller from 1986
through November 1989. Prior to 1986, Mr. Davis was Chief Financial Officer of
Alexander's Wholesale Distributors, Inc., a catalog retailer of consumer goods.

Kevin J. Mast has served as Treasurer of the Company since November 1995,
Executive Vice President and Chief Financial Officer of EBC since April 1992,
Chief Financial Officer of Loan Pro$ and Premier since April 1995 and Treasurer
of CII since April 1995. From June 1991 to October 1992, Mr. Mast served as
Executive Vice President and Chief Financial Officer of Citizens Bank & Trust
Co. and its parent company Business Banc of America. Prior to that time, Mr.
Mast was an audit manager at Ernst & Young where he specialized in the audits of
financial institutions.

Clarence B. Bauknight has been Chairman of the Board and CEO of Builderway,
Inc. since 1976. Builderway, Inc. is engaged in the business of distribution and
retail sale of building supplies and appliances.

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Mr. Bauknight has also served since 1978 as Chairman of the Board and CEO of
Enterprise Computer Systems, Inc. which is engaged in the development of
computer software for the building supply industry. Mr. Bauknight also serves on
the Board of Directors of Builder Marts of America, Inc., a building supply
company. Mr. Bauknight was a founder of all three of these companies.

Tecumseh Hooper, Jr. served as Treasurer of the Company from January 1991
through 1992. Mr. Hooper has served as President of MOM, which is engaged in the
sale of office equipment and supplies, since 1982. Since October 1994, Mr.
Hooper has also been the Southeast Regional Director for Alco Office Products,
MOM's parent company.

Jacob H. Martin was Chairman of Standard Car Truck Company from January
1989 until May 1, 1995, when he retired from this position. Standard Car Truck
Company is engaged in the business of designing, manufacturing and selling
railroad equipment. Mr. Martin also served as Chairman of the Board of
Enterprise Finance Company ("EFC") and as Chairman of the Board of Freight Car
Building and Supply Company ("FCBSC") until May 1995, when he retired from these
positions. EFC and FCBSC are engaged in the finance business and railway
equipment accessories business, respectively. Prior to 1989, Mr. Martin was a
partner of the law firm of Martin, Craig, Chester & Sonnenschein in Chicago,
Illinois. Mr. Martin is presently of-counsel to that firm.

Buck Mickel has served since 1989 as Chairman of the Board and Chief
Executive Officer of RSI Holdings, Inc., which, since 1989 has engaged in the
distribution of outdoor power and turf care equipment and in the office supply
business. Mr. Mickel has served in various executive positions, including Vice
Chairman of the Board of Fluor Corporation, a construction firm, from which he
resigned in 1987, and Chairman of the Board of Daniel International Corporation,
a construction firm and a subsidiary of Fluor Corporation, from which he
resigned in 1987. Mr. Mickel also serves on the Board of Directors of Fluor
Corporation, Monsanto Company, NationsBank Corporation, Liberty Corporation,
Duke Power Company, Delta Woodside Industries, Inc. and Insignia Financial
Group, Inc.

Porter B. Rose has been President of Liberty Insurance Services, Inc.
("Liberty Services") since January 1995, President of Liberty Investment Group,
Inc. ("Liberty Group") since April 1992, and Chairman of Liberty Capital
Advisors, Inc. ("Liberty Capital") and Liberty Properties Group, Inc. ("Liberty
Properties") since January 1987 (collectively, the "Liberty Subsidiaries"). Mr.
Rose served as President of Liberty Capital from January 1987 to April 1992 and
as Executive Vice President of Investments for Liberty Life Insurance Company
from 1983 through 1987. The Liberty Subsidiaries are engaged in property
development and the management of investment portfolios for Liberty Corporation,
its subsidiaries and other clients.

All directors of the Company serve one year terms and until the election
and qualification of their respective successors. The Company's executive
officers are appointed by the Board of Directors and serve at the discretion of
the Board.

Meetings, Committees and Compensation of the Board of Directors

During fiscal 1995, the Company's Board of Directors met four times. Each
director attended more than 75% of the total number of meetings of the Board of
Directors and all committees on which he served.

The Board of Directors has an Executive Committee, the function of which is
to make decisions between meetings of the Board of Directors pursuant to
authority delegated by the Board of Directors. The current members of the
Executive Committee are Mr. Sterling, Mr. Rose and Mr. Mickel. The Executive
Committee met twice during 1995.

The Board of Directors also has an Audit Committee, which is responsible
for reviewing and making recommendations regarding the Company's engagement of
independent auditors, the annual audit of the Company's financial statements and
the Company's internal accounting practices and policies. The current members of
the Audit Committee are Mr. Hooper, Mr. Bauknight and Mr. Rose. The Audit
Committee met once during 1995.

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The Board of Directors also has a Compensation Committee, the function of
which is to make recommendations to the Board of Directors as to the salaries
and bonuses of the officers of the Company. The current members of the
Compensation Committee are Mr. Bauknight, Mr. Mickel and Mr. Martin. The
Compensation Committee met once during 1995.

The Board of Directors has a Risk Oversight Committee, the function of
which is to review the operations of the Company with a view toward assessing
various Company risks, including asset/liability risk, interest rate risk,
credit risk and liquidity risk. The current members of the Risk Oversight
Committee are Mr. Bauknight, Mr. Rose and Mr. Hooper. This Committee, which was
formed in November 1995, has met once since inception.

The Board of Directors does not have a Nominating Committee. The functions
of a nominating committee are performed by the Board of Directors as a whole.

Non-management Board members receive a director's fee of $24,000 per year,
half of which is payable in cash and half of which is payable in restricted
stock. The directors also automatically receive annual grants of options to
purchase 666 shares of Common Stock under the Company's 1995 Director Stock
Option Plan.

EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

The following table shows the cash compensation paid by the Company, as
well as certain other compensation paid or accrued, to the Company's Chief
Executive Officer and to the executive officers of the Company who earned in
excess of $100,000 per year in compensation (in all capacities) for the years
ending December 31, 1995, 1994 and 1993 (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION -----------------------
------------------------------------- SECURITIES PAYOUTS
OTHER RESTRICTED UNDERLYING ------- ALL OTHER
NAME AND SALARY BONUS ANNUAL STOCK OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION YEAR (1)($) ($) COMPENSATION(2) AWARDS SARS(#) PAYOUTS (3)($)
- ------------------------ ---- --------- ------- --------------- ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John M. Sterling, Jr.... 1995 186,992 110,000 -- -- 30,000 -- 3,234
Chairman, CEO and 1994 178,437 70,000 -- -- -- -- 3,234
President 1993 170,303 50,000 -- -- 33,334 -- 3,148
Keith B. Giddens........ 1995 173,923 100,000 -- -- 74,000 -- 2,835
Executive Vice 1994 165,900 65,000 -- -- 20,000 -- 2,572
President and COO 1993 157,698 45,000 -- -- 33,334 -- 1,470
Robert S. Davis......... 1995 93,796 43,000 -- -- 33,334 -- 2,663
Vice President and 1994 88,137 33,000 -- -- 20,000 -- 2,168
Chief Financial 1993 83,793 25,000 -- -- 33,334 -- 2,285
Officer
Kevin J. Mast........... 1995 93,461 25,000 -- -- 22,668 -- 2,698
Treasurer 1994 82,978 10,000 -- -- -- -- 2,005
1993 75,972 12,513 -- -- -- -- 808
</TABLE>

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

(1) A portion of total salary may have been deferred, at the option of the
employee, pursuant to the Company's 401(k) plan.
(2) Certain amounts may have been expended by the Company which may have had
value as a personal benefit to the executive officer. However, the total
value of such benefits did not exceed the lesser of $50,000 or 10% of the
annual salary and bonus of such executive officer.
(3) Amounts shown under "All Other Compensation" consist of contributions during
fiscal year 1995, 1994, and 1993 to the Company's 401(k) plan in the amount
shown to match pre-tax elective deferral contributions (included under
salary) made by the executive officers to the plan.

52
<PAGE> 55

Restricted Stock Agreement and Stock Option Plans

The Company has in place the Emergent Group, Inc. Stock Option Plan, the
1995 Officer and Employee Stock Option Plan, the 1995 Director Stock Option Plan
and the Restricted Stock Agreement Plan. At December 31, 1995, a total of
699,664 shares were authorized for issuance under these stock plans. At
December 31, 1995, options to purchase an aggregate of 83,532 shares with a
weighted average exercise price of $4.26 were outstanding and exercisable under
such stock option plans. At December 31, 1995, options to purchase an additional
255,468 shares were outstanding but were not exercisable. The Restricted Stock
Plan Agreement was adopted in January 1996 and provides for the grant of up to
100,000 shares of restricted stock to non-employee directors. Since its
adoption, restricted stock agreements with respect to a total of 10,500 shares
have been granted.

Option Grants in Last Fiscal Year

The following table sets forth certain information with respect to options
to purchase Common Stock granted to the Named Executive Officers during fiscal
1995.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES
PERCENT OF OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERM
UNDERLYING EMPLOYEES EXERCISE PRICE EXPIRATION ----------------
NAME OPTIONS GRANTED IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------- --------------- -------------- -------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
John M. Sterling, Jr......... 30,000 12.7% 5.09 10-31-05 73,309 207,181
Keith B. Giddens............. 50,000 21.2 1.32 1-13-05 41,507 105,187
24,000 10.2 4.63 10-31-05 69,807 176,905
Robert S. Davis.............. 13,334 5.6 1.32 1-13-05 11,069 28,051
20,000 8.5 4.63 10-31-05 58,173 147,421
Kevin J. Mast................ 6,668 2.8 1.32 1-13-05 5,535 14,028
16,000 6.8 4.63 10-31-05 46,538 117,937
</TABLE>

53
<PAGE> 56

Fiscal Year End Option Values

The following table sets forth certain information with respect to options
to purchase Common Stock held by the Named Executive Officers as to the number
of shares covered by both exercisable and unexercisable stock options exercised
in 1995. Also reported are the values for the "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock option and the year-end fair market value of the Common Stock.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR- END AT FISCAL
(#) YEAR-END
------------------ ------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- ------------ ------------------ ------------
<S> <C> <C> <C> <C>
John M. Sterling, Jr................... 26,000 167,670 -- / -- /
37,334 $ 177,567(1)
Keith B. Giddens....................... 5,400 39,812 37,400 / $ 256,427 /
84,534 $ 546,007(1)
Robert S. Davis........................ 4,400 32,439 30,266 / $ 208,381 /
52,002 $ 324,290(1)
Kevin J. Mast.......................... 4,536 21,811 -- / -- /
18,132 $ 87,158(1)
</TABLE>

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

(1) The indicated value is based on exercise prices ranging from $1.09 to $5.09
per share and a per share value at December 31, 1995 of $8.46.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Over the past several years, the Company has provided management services
to RRV. Certain of the Company's officers and directors, namely John M.
Sterling, Jr., Buck Mickel, Tecumseh Hooper, Jr. and Clarence B. Bauknight, are
partners of RRV. During 1994 and 1995, RRV paid the Company $35,000 and
$250,000, respectively, in management fees. The Company expects that fees paid
by RRV to the Company in 1996 will be approximately $125,000. In October 1995,
the Company became an investor in RRV, with an investment of $1 million, and
became its general partner.

Certain officers, directors and employees of the Company held Debentures
which at December 31, 1995 aggregated approximately $1.1 million. These
Debentures were purchased on terms which were the same as those available to
purchasers not affiliated with the Company.

54
<PAGE> 57

PRINCIPAL AND SELLING SHAREHOLDERS

The information set forth below is furnished as of April 3, 1996, with
respect to Common Stock owned beneficially or of record by (i) persons known to
the Company to be the beneficial owner of more than 5% of the Common Stock as of
that date, (ii) each of the Directors individually, (iii) each of the Named
Executive Officers, (iv) the Selling Shareholders and (v) all Directors and
executive officers as a group. Unless otherwise noted, each person has sole
voting and investment power with respect to such person's shares owned. All
share amounts in the table include shares which are not outstanding but which
are the subject of options exercisable in the 60 days following the date hereof.
All percentages are calculated based on the total number of outstanding shares,
plus the number of shares for the particular person or group which are not
outstanding but which are the subject of options or other convertible securities
exercisable or convertible in the 60 days following the date hereof. For
purposes of this table, the term "Common Stock" includes Common Stock, as well
as any shares of the Company's Class A Common Stock held by the referenced
person(s) or entity(ies).

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING AFTER OFFERING
------------------------- -------------------------
PERCENT OF SHARES PERCENT OF
NAME AND ADDRESS OF COMMON SHARES BEING COMMON SHARES
BENEFICIAL OWNER NUMBER OUTSTANDING OFFERED NUMBER OUTSTANDING
- ------------------------------------- --------- ------------- ------- --------- -------------
<S> <C> <C> <C> <C> <C>
John M. Sterling, Jr.(1)............. 900,622 13.8% 80,000 820,622 9.6%
C. Thomas Wyche (2).................. 587,002 9.0% 58,700 528,302 6.2%
John Hancock Mutual Life Ins.
Co.(3)............................. 550,970 8.3% 321,300 229,670 2.7%
Enterprise Finance Company(4)........ 327,996 5.0% 180,000 77,996 0.9%
Charles C. Mickel.................... 300,510 4.6% 40,000 260,510 3.1%
Minor M. Shaw........................ 265,086 4.1% 20,000 245,086 2.9%
Buck Mickel(5)....................... 248,358 3.8% 20,000 228,358 2.7%
Buck A. Mickel....................... 248,490 3.8% 20,000 228,490 2.7%
Keith B. Giddens(6).................. 175,368 2.7% -- 175,368 2.1%
Tecumseh Hooper, Jr.(7).............. 171,562 2.6% 11,000 160,562 1.9%
Clarence B. Bauknight(8)............. 156,048 2.4% -- 156,048 1.8%
Robert S. Davis(9)................... 64,666 1.0% -- 64,666 0.8%
Porter B. Rose(7).................... 17,332 0.3% -- 17,332 0.2%
Kevin J. Mast........................ 8,700 0.1% 8,000 700 --
Jacob H. Martin(7)................... 666 -- -- 666 --
All Directors and Executive Officers
as a group (9 persons)............. 1,740,654 26.3% 119,000 1,621,654 18.8%
</TABLE>

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

(1) The address of John M. Sterling, Jr. is P.O. Box 17526, Greenville, SC
29606. Includes 32,688 shares owned by Mr. Sterling directly. Also includes
797,168 shares owned by a partnership whose partners are Mr. Sterling, his
spouse and his three adult children. Includes 70,786 shares of Common Stock
owned by a trust of which Mr. Sterling is the sole trustee, as to which Mr.
Sterling disclaims beneficial ownership.
(2) The address of C. Thomas Wyche is P.O. Box 728, Greenville, SC 29602.
Includes 85,042 shares owned by Mr. Wyche directly, and 501,960 shares
owned by a partnership, of which Mr. Wyche's spouse and three adult
children are partners, as to which shares Mr. Wyche disclaims beneficial
ownership. Also includes the right to acquire 400 shares at $5.09 pursuant
to currently exercisable stock options.
(3) The address of John Hancock Mutual Life Insurance Co. is P.O. Box 111,
Boston, MA 02118. Includes the right to acquire 92,354 shares of Common at
$2.63 per share pursuant to currently exercisable stock purchase warrants.
(4) The address of Enterprise Finance Company is 865 Busse Highway, Park Ridge,
IL 60068.

(5) Includes 11,998 shares owned by Mr. Mickel directly. Also includes 236,360
shares owned by Mr. Mickel's spouse, as to which shares he disclaims
beneficial ownership. Also includes the right to acquire 666 shares at
$10.38 per share pursuant to currently exercisable stock options.

(6) Includes 138,368 shares owned by Mr. Giddens directly. Also includes 21,004
shares owned by Mr. Giddens' spouse, as to which shares he disclaims
beneficial ownership. Also includes 15,996 shares owned by a trust
administered by Mr. Giddens' spouse for his three children.

55
<PAGE> 58

(7) Includes the right to acquire 666 shares at $9.43 per share pursuant to
currently exercisable stock options.

(8) Includes 155,382 shares owned by a partnership whose partners are Mr.
Bauknight, his spouse and his two adult children. Also includes the right
to acquire 666 shares at $9.43 pursuant to currently exercisable stock
options.

(9) Includes the right to acquire 2,842 shares at $4.82 per share pursuant to
currently exercisable stock options.

56
<PAGE> 59

DESCRIPTION OF SECURITIES

COMMON STOCK

The authorized capital stock of the Company consists of 4,000,000 shares of
Common Stock, of which 120,040 were issued and outstanding as of the date
hereof, and 6,666,667 shares of Class A Common Stock, of which 6,276,474 were
issued and outstanding as of the date hereof (the Class A Common Stock and the
Common Stock being collectively referred to in this section as the "Common
Shares").

The Company expects to propose an amendment to its Articles of
Incorporation at its next annual meeting of shareholders which would increase
the authorized number of shares of Common Stock to 30,000,000.

Shares of Common Stock and Class A Common Stock vote together as a class
and are identical in all respects, except that the Class A Common Stock is
subject to transfer restrictions designed to avoid a "change of control" which
would eliminate the Company's NOL. Subject to certain limited exceptions, and
until the NOL has been used or expires, shares of the Class A Common Stock may
not be transferred or assigned in any respect to any transferee who by
application of applicable constructive ownership rules or otherwise owns, prior
to or as a result of the transfer an aggregate number of shares of the
outstanding Common Stock and Class A Common Stock having a fair market value
equal to or greater than 4.5% percent of the total number of shares of Common
Stock and Class A Common Stock outstanding. Any transaction effected in
violation of such provision, is deemed to be void ab initio.

Only shares of the Common Stock are offered hereby. The Company expects to
propose at its 1996 Annual Meeting of Shareholders an amendment to its Articles
of Incorporation, which will retire the Class A Common Stock by exchanging
Common Stock for the Class A Common Stock. See "Risk Factors -- Loss of NOL."

All Common Shares currently outstanding are fully paid and nonassessable,
not subject to redemption and without preemptive or other rights to subscribe
for or purchase any proportionate part of any new or additional issues of any
class or of securities convertible into stock of any class. Holders of Common
Shares are entitled to one vote per share in all matters to be voted on by
shareholders and have cumulative voting rights. The holders of Common Shares are
entitled to receive cash dividends equally on a per share basis if and when such
dividends are declared from time to time by the Board of Directors of the
Company in its discretion from funds legally available therefor. In the event of
a liquidation, dissolution or winding up of the Company, holders of Common
Shares are entitled to share with each other on a ratable basis as a single
class in the net assets of the Company available for distribution after payment
of liabilities and satisfaction of any preferential rights of holders of
preferred stock and have no rights to convert their Common Shares into any other
securities.

The Company's Articles of Incorporation provide that shareholders may
cumulate votes for the election of directors.

CERTAIN PROVISIONS OF BYLAWS AND ARTICLES OF INCORPORATION

The Company's Bylaws provide that the Board of Directors shall be at least
three and not more than nine persons. The Board of Directors is currently
comprised of eight persons.

The Company's Board of Directors are exempt under the Company's Articles of
Incorporation from personal monetary liability to the extent permitted by
Section 33-2-102(e) of the South Carolina Business Corporation Act of 1988, as
amended (the "South Carolina Corporation Act"). This statutory provision
provides that a director of the corporation shall not be personally liable to
the corporation or any of its shareholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision shall not be deemed
to eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its shareholders, (ii) for acts
or omissions not in good faith or which involved gross negligence, intentional
misconduct, or a knowing violation of law, (iii) imposed under Section 33-8-330
of the

57
<PAGE> 60

South Carolina Corporation Act (improper distribution to shareholder), or (iv)
for any transaction from which the director derived an improper personal
benefit.

As noted above, the Company's Articles of Incorporation provide that
shareholders may cumulate votes for the election of directors.

SOUTH CAROLINA ANTITAKEOVER STATUTES

Business Combinations Act. Generally, the South Carolina Corporation Act
prohibits certain South Carolina corporations, including those whose securities
are listed on the Nasdaq system, from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder unless (i)
prior to the date of the business combination, the transaction is approved by
the board of directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock, or (iii) on or after such date the business combination is
approved by the board and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years did own) 15% or more of the corporation's voting stock. A South Carolina
corporation may "opt out" from the application of these Code provisions through
a provision in its articles of incorporation or by-laws. The Company has not
"opted out" from the application of these Code provisions.

Control Share Acquisition Act. The South Carolina Control Share
Acquisition Act provides that upon the acquisition by a person of certain
threshold percentages of stock (20%, 33% and 50%), a shareholders' meeting must
be held in order to determine whether or not to confer voting rights upon such
acquiring person's shares. An affirmative vote of holders of a majority of all
outstanding company's stock (excluding shares held by the acquiring person,
company officers and company employees who are also directors of the company) is
required to confer voting rights upon such acquiring person's shares.

TRANSFER AGENT

The transfer agent for the Common Shares is First Union National Bank.

58
<PAGE> 61

UNDERWRITING

Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below, acting through the
Representatives, have agreed, severally, to purchase from the Company and the
Selling Shareholders the number of shares of Common Stock set forth below
opposite their respective names.

<TABLE>
<CAPTION>
NAME OF UNDERWRITER NUMBER OF SHARES
- ----------------------------------------------------------------------------- ----------------
<S> <C>
J.C. Bradford & Co...........................................................
Wheat, First Securities, Inc.................................................
Raymond James & Associates, Inc..............................................

----------------
Total.............................................................. 2,829,000
=============
</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the shares of Common
Stock offered hereby (other than those subject to the over-allotment option
described below) if any of such shares are purchased. In the event of a default
by any Underwriter, the Underwriting Agreement provides that, if the number of
shares of Common Stock any defaulting Underwriter agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of shares of
Common Stock offered hereby, the purchase commitments of the non-defaulting
Underwriters may be increased. If the non-defaulting Underwriters do not agree
to purchase the shares allocated to such defaulting Underwriter, the
Underwriting Agreement may be terminated.

The Representatives have advised the Company and the Selling Shareholders
that the several Underwriters propose initially to offer the shares of Common
Stock to the public at the public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers. After the Offering, the public offering price and such concessions may
be changed. The Representatives have informed the Company that the Underwriters
do not intend to confirm sales to accounts over which they exercise
discretionary authority.

The Offering of the Common Stock is made for delivery when, as and if
accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of shares.

The Company has granted the Underwriters an option, exercisable not later
than 30 days from the date of the effectiveness of the Offering, to purchase up
to an aggregate of 413,850 additional shares of Common Stock to cover
over-allotments, if any. To the extent that the Underwriters exercise such
option, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the table above
bears to the total number of shares in such table and the Company will be
obligated, pursuant to the

59
<PAGE> 62

option, to sell such shares to the Underwriters. If purchased, the Underwriters
will sell these additional shares on the same terms as those on which the
2,829,000 shares are being offered.

Although traded on the over-the-counter Bulletin Board, the market for the
Common Stock prior to the Offering has not been liquid. Consequently, the public
offering price will be determined by negotiation among the Company, the Selling
Shareholders and the Representatives. In determining such price, consideration
will be given to, among other things, the trading prices for the Common Stock on
the Bulletin Board, the financial and operating history and trends of the
Company, the experience of its management, the position of the Company in its
industry, the Company's prospects and the Company's financial results. In
addition, consideration will be given to the status of the securities markets,
market conditions for new offerings of securities and the prices of similar
securities of comparable companies.

The Company, its directors and executive officers and certain Shareholders
of the Company have each agreed with the Underwriters that they will not offer,
sell or contract to sell, or otherwise dispose of directly or indirectly, or
announce the offering of, or exercise any registration rights with respect to,
or register, cause to be registered or announce the registration or intended
registration of, any shares of Common Stock, or any stock option or other
security or agreement convertible with or exchangeable for, any shares of Common
Stock for a period of 180 days from the date of this Prospectus, without the
prior written consent of the Representatives, except for (a) the Common Stock
offered hereby; (b) in the case of the Company, (i) Common Stock issued pursuant
to any employee or director benefit plan or (ii) issuances of Common Stock upon
the conversion of securities or the exercise of warrants outstanding on the date
the Underwriting Agreement is executed; (c) in the case of directors, executive
officers and certain shareholders of the Company, the exercise of stock options
pursuant to benefit plans described herein and shares of Common Stock disposed
of as bona fide gifts, and (d) in the case of certain shareholders, registered
shares of Common Stock acquired in the public market after the Offering.

The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters and controlling persons, if any,
against certain civil liabilities, including liabilities under the Securities
Act, or will contribute to payments the Underwriters or any such controlling
persons may be required to make in respect thereof.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company and the Selling Shareholders by Wyche, Burgess, Freeman & Parham, P.A.,
Greenville, South Carolina. At April 1, 1996, members of Wyche, Burgess, Freeman
& Parham, P.A. beneficially owned an aggregate of 404,115 shares of Common Stock
and Class A Common Stock. Counsel for the Underwriters is Nelson Mullins Riley &
Scarborough, L.L.P., Atlanta, Georgia.

EXPERTS

The Consolidated Financial Statements of the Company as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995 included in this Prospectus and elsewhere in the Registration Statement,
have been audited by Elliott, Davis & Company, L.L.P., independent certified
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement (which
term shall encompass any amendments thereto) on Form S-1 under the Securities
Act (the "Registration Statement") with respect to the Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, to which reference is hereby made.
Certain items were omitted in accordance with the rules and

60
<PAGE> 63

regulations of the Commission. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to herein are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.

The Registration Statement, including the exhibits and schedules thereto,
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, its New
York Regional Office, 7 World Trade Center, New York, New York 10048 and its
Chicago Regional Office, Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can be obtained
by mail at prescribed rates. Requests should be directed to the SEC's Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549.

61
<PAGE> 64

INDEX TO FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS:

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995.......................... F-3
Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and
1995................................................................................ F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1993,
1994 and 1995....................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994
and 1995............................................................................ F-6
Notes To Consolidated Financial Statements............................................ F-8
</TABLE>

F-1
<PAGE> 65

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders and Board of Directors
EMERGENT GROUP, INC. AND SUBSIDIARIES
Greenville, South Carolina

We have audited the accompanying consolidated balance sheets of EMERGENT
GROUP, INC. AND SUBSIDIARIES as of December 31, 1994 and 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial position of
EMERGENT GROUP, INC. AND SUBSIDIARIES as of December 31, 1994 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.

ELLIOTT, DAVIS & COMPANY, L.L.P.
Greenville, South Carolina
January 31, 1996

F-2
<PAGE> 66

EMERGENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents (Note 2)............................................... $ 278 $ 1,560
Short-term investments (Note 2).................................................. 597 --
Receivables
Loans receivable (Notes 3 and 8)............................................... 91,736 103,865
Mortgage loans held for sale................................................... 3,662 22,593
Excess servicing receivable (Note 4)........................................... 1,872 2,054
Accrued interest receivable (Note 3)........................................... 927 1,571
Other receivables.............................................................. 701 1,626
-------- --------
98,898 131,709
Less allowance for credit losses (Note 3)...................................... (1,730) (1,874)
Less unearned discount......................................................... (1,359) (610)
-------- --------
95,809 129,225
Investment in asset-backed securities, net of allowance for loss of
$773,000 (1995) (Note 5)....................................................... -- 1,477
Property and equipment (Note 6).................................................. 2,670 4,327
Less accumulated depreciation.................................................. (608) (957)
-------- --------
2,062 3,370
Excess of cost over net assets of acquired businesses, net of accumulated
amortization of $419,000 (1994) and $597,000 (1995)............................ 2,991 2,865
Real estate and personal property acquired through foreclosure (Note 7).......... 3,603 3,742
Deposit base intangibles, net of accumulated amortization of $412,000 (1994) and
$525,000 (1995)................................................................ 712 600
Net assets of discontinued operations (Note 15).................................. 2,505 77
Other assets (Note 12)........................................................... 891 2,015
-------- --------
Total assets............................................................ $109,448 $144,931
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Notes payable to banks and other, including $100,000 in 1994 to related parties
(Note 8)..................................................................... $ 17,520 $ 31,633
Investor Savings: (Note 9)
Notes payable to investors, including $722,000 in 1994 and $820,000 in 1995
to related parties.......................................................... 56,497 82,132
Subordinated debentures, including $69,000 in 1994 and $53,000 in 1995 to
related parties............................................................. 20,998 16,185
-------- --------
Total investor savings.................................................. 77,495 98,317
Accrued liabilities (Note 12).................................................. 2,843 3,090
Remittance due to loan participants............................................ 683 1,188
Accrued interest payable....................................................... 471 622
-------- --------
3,997 4,900
-------- --------
Total liabilities....................................................... 99,012 134,850
Minority interest................................................................ 736 196
Commitments and contingencies (Note 21)
Shareholders' equity (Note 13)
Common stock, par value $.05 a share -- authorized 400,000 shares in 1994 and
4,000,000 shares in 1995, issued 200,575 in 1994 and 121,000 in 1995......... 10 6
Class A common stock, par value $.05 a share -- authorized 20,000,000 shares in
1994 and 6,666,667 shares in 1995; issued 9,803,438 shares in 1994 and
6,276,474 shares in 1995..................................................... 490 314
Capital in excess of par value................................................. 6,924 6,632
Retained earnings.............................................................. 2,276 2,933
-------- --------
Total shareholders' equity.............................................. 9,700 9,885
-------- --------
Total liabilities and shareholders' equity.............................. $109,448 $144,931
========= =========
</TABLE>

See Notes to Consolidated Financial Statements which are
an integral part of these statements.

F-3
<PAGE> 67

EMERGENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------------
1993 1994 1995
---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
REVENUES
Interest, servicing and finance charges.................. $ 7,983 $ 10,903 $ 15,639
Gain on sale of loans.................................... 3,605 6,450 9,169
Management fees.......................................... 81 320 570
Other revenues........................................... 377 522 900
---------- ---------- ----------
Total revenues........................................ 12,046 18,195 26,278
---------- ---------- ----------
EXPENSE
Interest................................................. 5,073 5,879 8,527
Provision for credit losses.............................. 686 2,510 2,480
Salaries and fringe benefits............................. 3,106 4,001 5,691
Business development..................................... 515 626 653
General and administrative expense....................... 2,003 2,732 4,075
---------- ---------- ----------
Total expenses........................................ 11,383 15,748 21,426
---------- ---------- ----------
Income from continuing operations before income taxes,
minority interest and cumulative effect of change in
accounting principle................................ 663 2,447 4,852
Provision (benefit) for income taxes (Note 16)
Current.................................................. 59 266 149
Deferred................................................. (245) 343 41
---------- ---------- ----------
(186) 609 190
---------- ---------- ----------
Income from continuing operations before minority
interest and cumulative effect of change in
accounting principle................................ 849 1,838 4,662
Minority interest in earnings of subsidiary................ (25) (46) (81)
---------- ---------- ----------
Income from continuing operations before cumulative
effect of change in accounting principle............ 824 1,792 4,581
Discontinued transportation and apparel manufacturing
segments (Notes 14, 15 and 17)
Gain (loss) from operations, net of income tax........... 257 (2,022) (1,573)
Gain (loss) on disposal of segments, net of income tax... 3 2,568 (2,351)
---------- ---------- ----------
260 546 (3,924)
---------- ---------- ----------
Cumulative effect of change in method of accounting for
income taxes............................................. 113 -- --
---------- ---------- ----------
Net income............................................ $ 1,197 $ 2,338 $ 657
========= ========= =========
Income (loss) per share of common stock
Continuing operations.................................... $ 0.13 $ 0.27 $ 0.69
Discontinued operations.................................. 0.04 0.08 (0.59)
Cumulative effect of change in accounting method......... 0.01 -- --
---------- ---------- ----------
$ 0.18 $ 0.35 $ 0.10
---------- ---------- ----------
Computed on the weighted average number of shares, options
and warrants outstanding................................. 6,551,508 6,688,734 6,668,192
========= ========= =========
</TABLE>

See Notes to Consolidated Financial Statements which are
an integral part of these statements.

F-4
<PAGE> 68

EMERGENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
CLASS A
COMMON STOCK COMMON STOCK
----------------- ------------------- CAPITAL
SHARES SHARES EXCESS OF RETAINED
ISSUED AMOUNT ISSUED AMOUNT PAR VALUE EARNINGS
-------- ------ ---------- ------ --------- --------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992........... 169,664 $ 8 8,288,814 $ 415 $ 5,893 $ (1,259)
Issuance of shares in exchange for
minority interest in
subsidiaries...................... 4,218 1 206,667 10 133 --
Redemption of stock purchase
warrants.......................... -- -- -- -- (3) --
Issuance of shares as payment for
purchase of a subsidiary.......... 26,693 1 1,307,957 65 901 --
Net income............................. -- -- -- -- -- 1,197
-------- ------ ---------- ------ --------- --------
Balance at December 31, 1993........... 200,575 10 9,803,438 490 6,924 (62)
Net income............................. -- -- -- -- -- 2,338
-------- ------ ---------- ------ --------- --------
Balance at December 31, 1994........... 200,575 10 9,803,438 490 6,924 2,276
Shares issued, formerly held by
subsidiary........................ -- -- 24,700 1 15 --
Shares purchased through Tender
Offer............................. (19,377) (1) (467,288) (23 ) (535) --
Shares retired through reverse stock
split............................. (121,204) (6) (6,242,275) (312 ) 309 --
Shares issued on exercise of stock
options........................... 506 -- 19,662 1 79 --
Two for one stock split in the form
of a stock dividend............... 60,500 3 3,138,237 157 (160) --
Net income............................. -- -- -- -- -- 657
-------- ------ ---------- ------ --------- --------
Balance at December 31, 1995........... 121,000 $ 6 6,276,474 $ 314 $ 6,632 $ 2,933
======== ====== ========= ====== ======= =======
</TABLE>

See Notes to Consolidated Financial Statements which are
an integral part of these statements.

F-5
<PAGE> 69

EMERGENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1993 1994 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................... $ 1,197 $ 2,338 $ 657
Adjustments to reconcile net income to net cash provided by
(used in) operating activities
Depreciation and amortization............................. 558 783 938
Provision for credit losses............................... 686 2,510 2,480
Loss on sale of investments............................... -- 66 --
Loss on disposal of property and equipment................ 4 5 44
Net increase in deferred loan costs....................... -- -- (171)
Net increase (decrease) in deferred gain on sale.......... 744 453 (853)
Loans originated -- held for sale......................... (31,882) (73,709) (173,985)
Principal proceeds from loans sold........................ 31,052 85,693 144,861
Proceeds from securitization of loans..................... -- -- 15,357
Minority interest in earnings of subsidiary............... 19 7 81
Changes in operating assets and liabilities increasing
(decreasing) cash
Excess servicing receivable............................. (411) (1,460) (183)
Remittance due loan participants........................ 304 295 505
Accrued interest payable................................ 35 30 103
Accrued liabilities..................................... (58) 913 877
Accrued interest receivable............................. 23 (193) (644)
Other assets............................................ (577) 242 (923)
Net cash provided by (used in) operating activities of
discontinued operations.............................. (100) (1,253) 1,592
-------- -------- --------
Net cash provided by (used in) operating activities..... 1,594 16,720 (9,264)
-------- -------- --------
INVESTING ACTIVITIES
Loans originated -- held for investment................... (36,460) (74,937) (74,363)
Principal payments received on loans not sold............. 26,094 31,786 50,329
Payments to securitization trustee for cash reserve....... -- -- (612)
Principal payments received on asset-backed securities.... -- -- 177
</TABLE>

F-6
<PAGE> 70

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1993 1994 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Additional investment in subsidiary....................... -- -- (359)
Purchase of investment in partnership..................... -- -- (1,000)
Increase in note receivable from former subsidiary........ -- -- (200)
Cash paid for acquisition, net of cash purchased.......... (830) -- --
Reduction in goodwill of subsidiary....................... -- 85 --
Purchase of short-term investments........................ (947) -- --
Proceeds from sale of short-term investments.............. 1,000 581 614
Proceeds from sale of real estate and personal property
acquired through foreclosure............................ 557 1,128 3,401
Proceeds from sale of property and equipment.............. 8 -- --
Purchase of property and equipment........................ (227) (479) (1,732)
Rent received on real estate acquired through
foreclosure............................................. 36 87 85
Improvements and related costs incurred on real estate
acquired through foreclosure............................ (286) (477) (205)
Net cash provided by (used in) investing activities of
discontinued operations................................. (743) 806 31
-------- -------- --------
Net cash used in investing activities..................... (11,798) (41,420) (23,834)
-------- -------- --------
FINANCING ACTIVITIES
Advances under bank lines of credit....................... 19,583 104,622 179,381
Payments on bank lines of credit.......................... (23,869) (91,839) (164,989)
Net increase in notes payable to investors................ 10,971 13,496 25,635
Net (decrease) increase in subordinated debentures........ 3,637 (5,826) (4,812)
Payments on long-term debt and capital leases............. -- (280) (279)
Cash paid for stock purchased in tender offer............. -- -- (568)
Proceeds from exercise of stock options................... -- -- 52
Cash paid for redemption of stock purchase warrant........ (3) -- --
Increase (decrease) in note payable to minority
shareholder............................................. 2 (50) --
Payments on mortgage payable.............................. -- (80) --
Net cash provided by (used in) financing activities of
discontinued operations................................. 610 (25) (40)
-------- -------- --------
Net cash provided by financing activities................. 10,931 20,018 34,380
-------- -------- --------
Net increase (decrease) in cash and cash equivalents...... 727 (4,682) 1,282
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................... 4,233 4,960 278
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR......................... $ 4,960 $ 278 1,560
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements which are
an integral part of these statements.

F-7
<PAGE> 71

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries, each of which is wholly-owned except The Loan Pro$, Inc.
("Loan Pro$") which is 80% owned. All significant intercompany items and
transactions have been eliminated in consolidation.

The Company and its subsidiaries are primarily engaged in the business of
originating, selling and servicing first and second residential mortgage loans,
commercial loans partially guaranteed by the United States Small Business
Administration ("SBA") and loans collateralized by pre-owned automobiles. The
funds for these loans are obtained principally through the issuance of notes
payable and subordinated debentures to investors, and utilization of various
lines of credit with banks.

Substantially all of the Company's mortgage and automobile loans are made
to non-prime borrowers. These borrowers generally have limited access to credit
or are otherwise considered to be credit impaired by conventional lenders.

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
balance sheet and revenues and expenses for the period. Actual results could
differ from those estimates. These estimates include, among other things,
anticipated prepayments on loans sold with servicing retained, valuation of real
estate owned, and determination of the allowance for credit losses.

Minority interest represents minority shareholders' proportionate share of
the equity and earnings of Loan Pro$.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed
principally using the straight-line method over the estimated useful lives of
the assets. Estimated lives are 15 to 40 years for buildings and improvements
and 3 to 7 years for furniture, fixtures and equipment. Additions to property
and equipment and major replacements or improvements are capitalized at cost.
Maintenance, repairs and minor replacements are expensed when incurred.

AMORTIZATION

The excess of cost over related net assets of businesses acquired is
amortized using the straight-line method principally over 25 years. On a
periodic basis, the Company reviews goodwill for events or changes in
circumstances that may indicate that the carrying amount of goodwill may not be
recoverable.

Deposit base intangibles associated with the acquisition of certain
subsidiaries are amortized using the straight-line method over 10 years, based
on the estimated remaining life of the existing deposit base assumed, as
calculated from a core deposit base study performed by a third party at the time
of acquisition of the subsidiary. On a periodic basis, management assesses the
recoverability of the deposit base intangible. Such assessments encompass a
projection of future earnings from the deposit base as compared to original
expectations, based upon a discounted cash flow analysis. If an assessment of
the deposit base intangible indicates that its recoverability is impaired, a
charge to the statement of income for the most recent period is recorded for the
amount of such impairment.

F-8
<PAGE> 72

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

The Company and its subsidiaries file a consolidated Federal income tax
return. Deferred income taxes arise principally from depreciation, unrealized
gains on loans held for sale, amortization of deposit base intangibles and
allowances for credit losses.

STATEMENT OF CASH FLOWS

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.

The Company foreclosed on or repossessed property used to collateralize
loans receivable in the amount of $5,345,000 in 1993, $3,362,000 in 1994 and
$3,955,000 in 1995.

The Company sold real estate held for sale by issuing loans to the buyers
in the amount of $1,050,000 in 1993, $611,000 in 1994 and $689,000 in 1995.

The Company paid income taxes of $60,000 in 1993, $214,000 in 1994 and
$267,000 in 1995. The Company paid interest of $5,271,000 in 1993, $5,967,000 in
1994 and $8,397,000 in 1995.

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is based on management's ongoing evaluation
of the serviced loan portfolio and reflects an amount that, in management's
opinion, is adequate to absorb losses in the existing portfolio. In evaluating
the portfolio, management takes into consideration numerous factors, including
current economic conditions, prior loan loss experience, the composition of the
serviced loan portfolio, and management's estimate of anticipated credit losses.
Loans are charged against the allowance at such time as they are determined to
be losses. Subsequent recoveries are credited to the allowance.

Management considers the year-end allowance appropriate and adequate to
cover possible losses in the serviced loan portfolio; however, management's
judgment is based upon a number of assumptions about future events, which are
believed to be reasonable, but which may or may not prove to be valid. Thus,
there can be no assurance that charge-offs in future periods will not exceed the
allowance for credit losses or that additional increases in the allowance for
credit losses will not be required.

ACCOUNTING FOR IMPAIRED LOANS

The allowance for credit losses is a composite of the allowance for credit
losses of the Mortgage Loan Division, the Small Business Division and the Auto
Loan Division. The Company currently maintains an allowance for credit losses on
its mortgage loans equal to approximately 0.75%, approximately 3.0% on the
unguaranteed portion of its SBA loans and approximately 4.0% of its auto loans.
In addition, each subsidiary may establish a specific reserve for a particular
loan that is deemed by management to be a potential problem loan where full
recovery is questionable.

When an impaired loan is identified by the portfolio management department
of the Company to have risk characteristics that are unique to an individual
borrower, the Company assesses a specific allowance on a loan-by-loan basis each
month. The general allowance is calculated on a monthly basis using historical
statistics.

Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") 114 (Accounting by Creditors for Impairment of a
Loan). SFAS 114 requires that the allowance for credit losses for impaired loans
(as defined) be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. SFAS 114 also changed the

F-9
<PAGE> 73

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

treatment of "in-substance foreclosed" properties to require that properties
should be included as other real estate owned when legal possession of the
property has been obtained. Accordingly, the Company transferred $2,674,000 and
$2,327,000 (net of allowance of $297,000) of in-substance foreclosed properties
from other real estate owned to loans receivable at December 31, 1993 and 1994,
respectively. The adoption of SFAS 114 had no effect on net income or
shareholders' equity.

The Company's policy is to evaluate impaired loans based on the fair value
of the collateral. Interest income from impaired loans is recorded using the
cash method.

REAL ESTATE AND PERSONAL PROPERTY ACQUIRED THROUGH FORECLOSURE

Real estate and personal property acquired through foreclosure represent
properties foreclosed upon or repossessed in the normal course of business and
is valued at the lower of cost or net realizable value. Costs related to the
development and improvement of the properties are capitalized whereas those
costs relating to holding the properties are charged to expense.

INTEREST INCOME

Interest income on loans receivable is recognized using the interest
method. Accrual of interest is discontinued when a loan is over 90 days past due
and the collateral is determined to be inadequate or when foreclosure
proceedings begin. Loan fees and issuance commissions are amortized into income
over the life of the loan, using the interest method.

GAIN ON SALE OF LOANS

The Company sells participations representing the SBA-guaranteed portion of
all of its SBA Loans (the "SBA Loan Participations") in the secondary market. In
connection with such sales, the Company receives excess servicing revenue and
typically receives a cash premium of approximately 10% related to the guaranteed
portion being sold. A portion of the cash premium received is deferred as an
unearned discount against the remaining unguaranteed portion of the loan based
on the relative fair values of those portions to the total loan and the
remainder is recognized as income at the time of the sale. The resulting
unearned discount is accreted into interest income over the life of the loan
using the interest method. The weighted average interest rate inherent in the
carrying value of the excess servicing receivable is 10% at December 31, 1995.

Mortgage loans consist principally of first and second residential
mortgages originated principally throughout North Carolina, South Carolina and
the remaining southeastern United States, and are stated at the principal amount
outstanding if held for investment purposes. Non-refundable loan fees and direct
costs associated with the origination or purchase of loans are deferred and
netted against outstanding loan balances. Mortgage loans held for sale are
carried at the lower of aggregate cost or market. Origination fees on mortgage
loans held for sale are deferred until the time of sale and are included in the
computation of the gain on, or loss from, the sale of the related loans. The
cost of mortgage loans held for sale is the face value of the mortgage notes
adjusted for the net deferred fees and costs that are recognized upon sale.
Mortgage loans are sold servicing released and on a non-recourse basis, with
customary representations and warranties. In connection with the sale of
mortgage loans, the Company receives cash premiums generally ranging from 4% to
8% of the principal amount of the mortgage loan being sold.

Loans sold through securitizations with servicing retained are sold at or
near par with the Company retaining a participation in the cash flows. Excess
servicing receivable is calculated using prepayments, default, and interest rate
assumptions that market participants would use for similar instruments. The
excess servicing receivable recognized at the time of sale does not exceed that
amount which would be received if it were sold in the marketplace. The excess
servicing receivable is written down to the present value of the remaining
estimated future cash flows exceeding normal servicing fees at each balance
sheet date using the same

F-10
<PAGE> 74

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

discount rate used in the original calculation. The Company's excess servicing
fees from its securitization transactions are recognized over the life of the
related transactions.

REMITTANCE DUE LOAN PARTICIPANTS AND SERVICING FEE INCOME

The Company retains the servicing rights on SBA guaranteed loan
participations sold on the secondary market, for which it receives monthly a
minimum of 1% of the outstanding principal balance. The Company receives the
payments from the borrowers and records the portion relating to the sold
participation as a liability. The participation portion is remitted to Colson
Services Corp., the exclusive Fiscal and Transfer Agent for the guaranteed
portion of SBA loans sold in the secondary market, by the 3rd business day of
the following month.

MANAGEMENT FEES

The Company serves as investment manager for two Venture Funds for which it
receives management fees. The Company recognizes the management fees on the
accrual basis.

EXCESS SERVICING RECEIVABLE

An excess servicing receivable is recognized on SBA guaranteed loan
participation sales in which a servicing fee in excess of the normal servicing
fee is retained. The amount is determined based on the difference between the
actual sales price and the estimated sales price that would have been obtained
if a normal servicing fee rate had been specified. The excess servicing
receivable is amortized on a loan by loan basis against servicing income over
the life of the loan using the interest method. The Company monthly assesses its
excess servicing receivable for any impairment on a disaggregated basis based on
predominate risk factors such as prepayment, default, and the discount rate.
(Note 4)

BORROWER COMMITMENT DEPOSITS

The Company generally receives a commitment deposit from its applicants for
SBA loans prior to closing. The commitment deposits are recorded as a liability
when received, and are reduced for any direct expenses paid to a third party
incurred in making the loan. Any deposit in excess of these direct expenses is
refunded to the borrower at the time of, or subsequent to, the loan closing.
Borrower commitment deposits are included in accrued liabilities.

NET INCOME PER SHARE OF COMMON STOCK

The Company's shareholders approved a one-for-three reverse split of the
Company's Common and Class A Common Stock in June 1995. Effective January 29,
1996, the Company declared a two for one stock split effected in the form of a
100% stock dividend on the Common Stock and Class A Common Stock. The weighted
average number of shares of Common and Class A Common Stock have been restated
for all periods presented to reflect these stock splits.

Net income per share is computed on the weighted average number of shares
of Common Stock and Common Stock equivalents outstanding during each year,
6,551,508 shares (1993), 6,688,734 shares (1994), 6,668,192 shares (1995),
consisting of Common and Class A Common shares.

RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to
current year presentation. Such reclassifications had no effect on net income or
shareholders' equity.

F-11
<PAGE> 75

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The Company maintains its primary checking accounts with three principal
banks and maintains overnight investments in reverse repurchase agreements with
those same banks. The amounts maintained in the checking accounts are insured by
the Federal Deposit Insurance Corporation ("FDIC") up to $100,000. At December
31, 1995, the amounts maintained in the overnight investments in reverse
repurchase agreements, which are not insured by the FDIC, totaled $791,000.
These investments were collateralized by U.S. Government securities held by the
banks. At December 31, 1994, the amount maintained in the overnight investments
in reverse repurchase agreements totaled $378,000. These investments were also
collateralized by U. S. Government securities held by the banks.

3. LOANS RECEIVABLE

The following is a summary of loans receivable by type of loan:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
------- --------
(IN THOUSANDS)
<S> <C> <C>
Mortgage Loans:
Real estate loans on personal residences...................... $46,961 $ 56,722
Real estate loans on rental property.......................... 2,415 3,867
Construction loans............................................ 5,639 2,934
Notes receivable from related parties......................... 169 363
------- --------
55,184 63,886
SBA loans....................................................... 25,845 19,937
Automobile loans................................................ 8,483 17,673
Other loans..................................................... 2,224 2,369
------- --------
$91,736 $103,865
======= ========
</TABLE>

Notes receivable from related parties included advances of $54,000 (1994)
and $261,000 (1995) and repayments of $8,000 (1994) and $67,000 (1995).

Real estate loans generally have contractual maturities of 12 to 360 months
with an average interest rate at December 31, 1994 and 1995 of approximately
12%. Construction loans generally have contractual maturities of 12 months with
an average interest rate at December 31, 1994 and 1995 of approximately 12%. SBA
loans range in maturity from 7 years to 25 years depending on the use of
proceeds. Interest rates on SBA loans are variable, adjusted on the first day of
each calendar quarter and are generally prime plus 2.75%. The average interest
rate at December 31, 1994 and 1995 for SBA loans was 11.5% and 10%,
respectively. Automobile loans have maturities generally not exceeding 60 months
with fixed interest rates averaging 28% in 1994 and 1995. At December 31, 1994
and 1995, approximately $3,145,000 (net of an allowance for impaired loans of
$297,000) and $3,950,000 (net of an allowance for impaired loans of $73,000),
respectively, of loans receivable were impaired.

Loans sold and serviced for others at December 31, 1994 and 1995 were
approximately $62,046,000 and $88,077,000, respectively, and are not included in
assets in the accompanying balance sheets.

The Company's portfolio of SBA loans receivable is diversified by industry
type. At December 31, 1995, the largest concentration of SBA loans was to
servicing and manufacturing companies, which comprised approximately 23% and
17%, respectively, of the SBA serviced portfolio. Approximately 23%, 16%, 16%
and 13% of the serviced SBA loan portfolio at December 31, 1995 consisted of
loans to borrowers located in Florida, Kansas, South Carolina and Colorado,
respectively. The majority of the Company's other types of loans were to
borrowers located in South Carolina. In addition, during 1995 the Company
originated mortgage

F-12
<PAGE> 76

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

loans principally in the southeastern United States, with 51% of originations in
South Carolina, 20% in North Carolina and the remainder distributed through the
remaining southeastern states.

An analysis of the allowance for credit losses is as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1994 1995
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year................................ $ 976 $ 952 $ 1,730
Provision for credit losses................................. 686 2,510 2,480
Net charge offs............................................. (710) (1,732) (1,563)
----- ------- -------
Balance at end of year...................................... 952 1,730 2,647
Less allowance for loss on asset-backed securities.......... -- -- (773)
----- ------- -------
Balance at end of year...................................... $ 952 $ 1,730 $ 1,874
===== ======= =======
</TABLE>

As of December 31, loans totaling $2,110,000 (1993), $1,433,000 (1994) and
$5,145,000 (1995) were on non-accrual status. The associated interest income not
recognized on these non-accrual loans was approximately $146,000 during 1993,
$45,000 during 1994 and $164,000 during 1995.

4. EXCESS SERVICING RECEIVABLE

The activity in the excess servicing receivable is summarized as follows:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Balance, beginning of year........................................... $ 412 $1,872
Additional gain on sale of loans..................................... 1,942 1,095
Amortization against servicing revenues.............................. (482) (913)
------ ------
Balance, end of year................................................. $1,872 $2,054
====== ======
</TABLE>

The weighted average interest rate inherent in the carrying value of the
excess servicing receivable is 10% at December 31, 1995. During 1994, the
Company changed its estimated normal servicing rate to more closely reflect the
industry standard in accordance with Emerging Issues Task Force Consensus 94-9.
The effect of this change was to increase 1994 income by approximately $490,000.

The carrying value of the excess servicing receivable approximates fair
value.

5. INVESTMENT IN ASSET-BACKED SECURITIES

In 1995, the Company securitized $17,063,000 of the unguaranteed portions
of its SBA loans. The securitization was effected through a grantor trust (the
"Trust"), the ownership of which was represented by Class A and Class B
certificates. The Class A certificates were purchased by investors, while the
Company retained the Class B certificates. Since the Company has the positive
intent and ability to hold its Class B certificates to maturity, these
certificates are classified as held to maturity securities under SFAS 115.
Securities classified as held to maturity are carried at cost. These
certificates are carried on the balance sheet as asset-backed securities in the
net amount of $1,477,000. This amount is net of $773,000 allowance for loss and
includes a cash reserve of $612,000 held in the Trust account. These
certificates give the holders thereof the right to receive payments and other
recoveries attributable to the unguaranteed portion of SBA loans held by the
Trust. The Class B certificates represent approximately 10% of the principal
amount of the SBA loans transferred in the securitization and are subordinate in
payment and all other respects to the Class A

F-13
<PAGE> 77

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

certificates. Accordingly, in the event that payments received by the Trust are
not sufficient to pay certain expenses of the Trust and the required principal
and interest payments due on the Class A certificates, the Company, as holder of
the Class B certificates, would not be entitled to receive principal or interest
payments due thereon. Although securitizations provide liquidity, the Company
has utilized securitizations principally to provide a lower cost of funds and to
reduce interest rate risk. The Company's excess servicing fees from the
transaction are recognized over the life of the transaction.

The Company serves as master servicer for the Trust and, accordingly,
forwards payments received on account of the SBA loans held by the Trust to the
trustee, which, in turn, pays the holders of the certificates in accordance with
the terms of and priorities set forth in the securitization documents. Because
the transfer of the SBA loans to the Trust constitutes a sale of the underlying
SBA loans, no liability is created on the Company's Consolidated Financial
Statements. However, the Company has the obligation to repurchase the SBA Loans
from the Trust in the event that certain representations made with respect to
the transferred SBA loans are breached or in the event of certain defaults by
the Company, as master servicer. The Class A certificates received a rating of
Aaa from Moody's Investors Service, Inc. The Class B certificates were not
rated. In connection with the securitization, the Company received a cash
payment of $15,357,000.

6. PROPERTY AND EQUIPMENT

The following is a summary of property and equipment:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Land............................................................... $ 228 $ 228
Buildings and leasehold improvements............................... 1,063 1,162
Equipment.......................................................... 105 264
Furniture and fixtures............................................. 1,274 2,673
------ ------
$2,670 $4,327
====== ======
</TABLE>

Depreciation expense was $678,000, $694,000, and $769,000 in 1993, 1994 and
1995, respectively.

7. REAL ESTATE AND PERSONAL PROPERTY ACQUIRED THROUGH FORECLOSURE

An analysis of real estate and personal property acquired through
foreclosure is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year..................................... $ 2,848 $ 3,603
Loan foreclosures and improvements............................... 3,889 4,160
Dispositions, net................................................ (3,134) (4,021)
------- -------
Balance at end of year........................................... $ 3,603 $ 3,742
======= =======
</TABLE>

F-14
<PAGE> 78

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. NOTES PAYABLE

Notes payable are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
A. $ 2,865 $ 6,892
Notes payable under revolving credit agreements, with
interest at the bank's prime rate (8.5% at December 31, 1995)
maturing March 31, 1996......................................
B. -- 9,911
Notes payable under lines of credit, with interest at the
bank's prime rate plus 3/4% (9.25% at December 31, 1995)
maturing in December 1997....................................
C. 14,376 14,830
Notes payable under lines of credit, with interest at the
bank's prime rate (8.5% at December 31, 1995) maturing
December 29, 1998............................................
279 --
Note payable in equal annual principal installments plus 8%
interest.....................................................
------- -------
$17,520 $31,633
======= =======
</TABLE>

- ----

<TABLE>
<S> <C>
A. Under the terms of revolving credit agreements, the mortgage lending
subsidiaries of the Company may borrow up to a maximum of $20,000,000 with
interest at the bank's prime rate payable monthly. The note is collateralized by
loans receivable. The agreements, among other matters, require the total unpaid
balance of such pledged loans receivable to be a maximum of $25,000,000, a
specified debt to net worth ratio, minimum tangible net worth and restrictions
on the payment of dividends. The Company is in compliance with such restrictive
covenants. The revolving credit agreements mature on March 31, 1996. At December
31, 1995, $8,958,000 was available under these lines of credit.
B. Under the terms of the lines of credit, the automobile lending subsidiaries of
the Company may borrow up to a maximum of $26,000,000 with interest at the
bank's prime rate plus three-quarters of one percent payable monthly. The notes
are collateralized by loans receivable. The terms of the agreements state that
advances under the lines of credit cannot exceed 85% of the aggregate unpaid
principal balance of outstanding notes receivable which are no more than sixty
days past due. The agreements, among other matters, require minimum debt to
tangible net worth ratios, minimum interest coverage ratios, minimum loss
reserves, maximum debt to borrowing base restrictions, and restrictions on the
payment of dividends. At December 31, 1995, the automobile lending subsidiaries
were in compliance with such restrictive covenants and $4,308,000 was available
under these lines of credit. These agreements mature in December, 1997.
C. Under the terms of the lines of credit, the commercial lending subsidiaries of
the Company may borrow up to a maximum of $32,000,000 with interest at the
bank's prime rate. The lines are limited to 100% of the outstanding balance of
the guaranteed portion of SBA 7(a) loans, 80% of the outstanding balance of the
unguaranteed portion of SBA 7(a) loans, and 50% of SBA 504 loans as defined in
the loan agreements. The agreements, among other matters, require minimum
tangible net worth ratios, maximum ratios of total liabilities to tangible net
worth, minimum interest coverage ratios, limitations on the amount of capital
expenditures in any fiscal year, and restrictions on the payment of dividends.
At December 31, 1995, these subsidiaries were in compliance with such
restrictive covenants and $933,000 was available under these lines of credit.
These agreements mature in December, 1998.
</TABLE>

F-15
<PAGE> 79

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Annual aggregate maturities of notes payable at December 31, 1995 are as
follows (in thousands):

The Company currently has a commitment from a lender with respect to a new
credit facility in the amount of $70,000,000. It is expected that this facility
will be in place by the end of February, 1996.

9. INVESTOR SAVINGS

Investor savings are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
A. Notes payable to investors.................................. $56,497 $82,132
B. Subordinated debentures..................................... 20,998 16,185
------- -------
$77,495 $98,317
======= =======
- ----
A. Notes payable to investors are issued in any denomination greater than $10,000
and are registered under the South Carolina Uniform Securities Act. The notes
mature from three months to three years from date of issuance. Interest is
payable monthly, quarterly or at maturity at the option of the investors.
Interest rates on the notes are fixed until maturity and range from 6% to 10% at
December 31, 1994 and 7% to 9% at December 31, 1995. The notes are subordinated
to all bank debt, and are senior to subordinated debentures.
B. Subordinated debentures are issued in any denomination greater than $100 and are
registered under the South Carolina Uniform Securities Act. The subordinated
debentures normally mature in one year from date of issuance and have an interest
rate ranging from 5% to 6% quarterly. The debentures are subordinated to all bank
debt and notes payable to investors.
</TABLE>

At December 31, 1994 and 1995, notes payable to investors and subordinated
debentures include an aggregate of approximately $11,043,000 and $17,080,000,
respectively, of individual investments exceeding $100,000.

The investor savings at December 31, 1995 mature as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996............................................... $ 91,833
1997............................................... 2,993
1998............................................... 3,491
--------------
$ 98,317
===========
</TABLE>

10. LEASES

The Company leases various property and equipment, office space and
automobiles under operating leases.

F-16
<PAGE> 80

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a schedule by year of future minimum rental payments for
all operating leases that have initial or remaining noncancellable terms in
excess of one year (in thousands):

Total rental expense was approximately $974,000 in 1994 and $901,000 in
1995.

11. MANAGEMENT AGREEMENTS

The Company manages two Venture Funds. The Company receives management fees
equal to two and one-half percent of the total assets under management in each
Venture Fund with an aggregate minimum management fee of $445,000 annually. The
Company received management fees of $570,000 from the Venture Funds during 1995.
The Company may also receive incentive management fees of 15% and 20%,
respectively, from the two Venture Funds, of the net portfolio profits of each
Venture Fund, as defined.

The Company is a General Partner of one of the Venture Funds and, during
1995, made a $1,000,000 investment into the partnership. This partnership has
significant common principals with the Company.

12. OTHER ASSETS AND ACCRUED LIABILITIES

Other assets include the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1995
---- ------
(IN THOUSANDS)
<S> <C> <C>
Debt issuance costs, net............................................ $ 68 $ 666
Investments, at cost................................................ 12 1,012
Deferred tax benefits............................................... 172 196
Other............................................................... 639 141
---- ------
$891 $2,015
==== ======
</TABLE>

Accumulated amortization for other assets was approximately $1,083,000 in
1994 and $1,253,000 in 1995.

Accrued liabilities include the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Taxes accrued and withheld......................................... $ 177 $ --
Income taxes....................................................... 159 302
Deferred fees income............................................... 483 13
Accrued professional fees.......................................... 20 141
Accounts payable................................................... 278 208
Borrower commitment deposits....................................... 402 356
Accrued salaries and wages......................................... 186 289
Other.............................................................. 1,138 1,781
------ ------
$2,843 $3,090
====== ======
</TABLE>

F-17
<PAGE> 81

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. SHAREHOLDERS' EQUITY

The Company has two classes of capital stock, Common Stock and Class A
Common Stock. The two classes have identical rights except for certain
restrictions on the transferability of the Class A Common Stock to holders of
4.5% or more of the Company's outstanding capital stock (Common and Class A
Common Stock).

On May 21, 1981, the shareholders approved a stock option plan and on May
22, 1984, the shareholders approved an increase in the number of shares of
Common Stock which may be granted from 250,000 to 500,000. Under the terms of
the plan, the Company may grant options to key employees and directors to
purchase up to a total of 500,000 shares of its $.05 par value Common Stock. The
option price is the fair market value at date of grant. The options expire five
years from date of grant, are not transferable other than on death, and are
exercisable 20% on the date of grant and 20% per year on a cumulative basis for
each year subsequent to the date of grant. No shares are available for grant
under this stock option plan.

On June 9, 1995, the shareholders approved a stock option plan under which
the Board of Directors may issue 11,334 shares of Common Stock and 555,354
shares of Class A Common Stock. Under the terms of the plan, the Company may
grant options to key employees to purchase up to a total of 566,668 shares of
its $.05 par value Common and Class A Common Stock. The option price is the fair
market value at date of grant. The options expire five years from date of grant,
are not transferable other than on death, and are exercisable 20% on the date of
grant and 20% per year on a cumulative basis for each year subsequent to the
date of grant. The options available for grant under the plan consist of 6,612
Common Stock options and 324,048 Class A Common Stock options at December 31,
1995.

Also on June 9, 1995, the shareholders approved a stock option plan under
which each nonemployee member of the Board of Directors receives options to
purchase 14 shares of Common Stock and 652 shares of Class A Common Stock each
December 31 beginning in 1995 through 1999. The terms of the plan are identical
to the employee stock option plan approved on June 9, 1995. The options
available for grant under this plan consist of 597 Common Stock options and
29,407 Class A Common Stock options at December 31, 1995.

On June 9, 1995 the shareholders of the Company approved a one-for-three
reverse split of the Common and Class A Common Stock. The certificates for
previously issued Common and Class A Common Stock were canceled and were
forfeited by the holder in order for the holder to receive replacement
certificates for the after reverse split shares. The shareholders also
authorized the increase of post reverse split authorized shares of Common Stock
to 4,000,000 shares. The Company issued to all shareholders certificates for
one-third of their Common and Class A Common shares as of June 9, 1995 upon the
shareholder presenting their existing shares. No fractional shares were issued
as a result of the one-for-three reverse stock split. All fractional shares were
redeemed at an equivalent price of $1.25 per share.

The Company offered to buy from the shareholders up to 20,000 shares of
Common Stock and up to 980,000 shares of Class A Common Stock for the period
March 31, through May 8, 1995 at a price of $1.15 per share. As a result of this
offer, the Company purchased 19,377.38 shares of Common Stock and 467,287.96
shares of Class A Common Stock at an aggregate cost of approximately $560,000.

F-18
<PAGE> 82

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Activity in stock options is as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Options outstanding, beginning of year 1.09 per share)......... 133,333 140,000
Issued at:
$1.09 per share.............................................. 40,000 --
$1.32 per share.............................................. -- 80,006
$4.625 per share............................................. -- 124,000
$5.09 per share.............................................. -- 32,000
$9.44 per share.............................................. -- 2,664
$10.39 per share............................................. -- 666
Expired or canceled.......................................... (33,333) --
Exercised:
$1.09 per share.............................................. -- (29,800)
$1.32 per share.............................................. -- (1,336)
$4.625 per share............................................. -- (3,200)
$5.09 per share.............................................. -- (6,000)
-------- --------
Options outstanding, end of year............................. 140,000 339,000
======== ========
Exercisable, end of year....................................... 56,000 83,532
======== ========
Available for grant, end of year............................... 82,667 330,660
======== ========
</TABLE>

Warrants have been issued and are outstanding at December 31 as follows:

<TABLE>
<CAPTION>
1994 1995
---------------- ----------------
COMMON CLASS A COMMON CLASS A
------ ------- ------ -------
<S> <C> <C> <C> <C>
$2.625 per share................................ 4,870 238,618 2,434 119,308
====== ======= ====== =======
</TABLE>

These warrants are 100% exercisable at December 31, 1995. Fifty percent of
the 1994 warrants outstanding expired on December 31, 1995. The 1995 outstanding
warrants expire on December 31, 1996. No warrants were exercised or issued in
1994 or 1995.

14. SALE OF SUBSIDIARY

In connection with the Company's strategic plan to focus its business
efforts on financial services, the Company divested its apparel segment
operations, which was comprised solely of the operations of Young Generations,
Inc. ("YGI"). On September 30, 1995, the Company sold all of the outstanding
stock (the "stock sale") of YGI to fifteen individuals (the "Buyers"), who were
members of YGI's management team. As a result, the loss on the sale of the stock
and operating results of the apparel segment have been classified as
discontinued operations. The results of operations have been restated to exclude
the Apparel Manufacturing segment from continuing operations.

The Company sold the stock for $600,000 under a non-recourse promissory
note from the buyers. As a result of the sale, the Company wrote-off all amounts
due from YGI resulting in a charge of $3,580,300, net of income taxes of
$67,700, reported as a loss from discontinued operations and have valued the
note receivable at $1 due to concern over a decline in operating profits and the
related impact on the buyers' source of cash to pay the note. The Company
remains contingently liable for the guaranty of certain bank loans and trade
accounts payable which existed prior to the stock sale which do not exceed
$715,000. Management does not anticipate any significant charges to future
earnings as a result of these guarantees.

F-19
<PAGE> 83

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The apparel segment, which consists solely of the operations of YGI, had
net losses of $163,000 in 1993, $31,000 in 1994 and $1.3 million for the nine
months ended September 30, 1995. The net loss in 1994 was decreased by the
receipt of $1.25 million in life insurance proceeds due to the death of YGI's
president. YGI had revenues of $11.5 million in 1993, $12.2 million in 1994 and
$7.3 million for the nine months ended September 30, 1995.

15. DISCONTINUED OPERATIONS

The Company's operations in the Apparel and Transportation segments were
discontinued during 1995. The sale of the apparel segment is discussed further
in Note 14. In July 1994 the Company sold an operating railroad for $940,000. In
connection with this sale, the Company received $20,000 cash, and a note
receivable of $920,000 payable in semi-annual payments over five years, with an
interest rate of 10%. In November 1994, the Company assigned the rights to
boxcars in a lease with a Class I railroad for $1,174,000 cash. The Company sold
additional railcars in June 1995 for $111,000 cash.

At December 31, 1995, the Company had remaining net assets in the
transportation segment of $77,000, which the Company anticipates will be sold
during 1996 at or above their carrying value.

The results of operations have been restated to exclude these segments from
continuing operations.

Revenues applicable to the discontinued operations were:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1993 1994 1995
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Apparel manufacturing.................................. $11,456 $12,140 $7,263
Transportation......................................... 1,712 1,407 390
</TABLE>

Income from operations and gain (loss) on disposal attributable to the
discontinued segments is reported net of income tax expense of:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1993 1994 1995
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Apparel manufacturing.................................. $ 18 $ (158) $ (22)
Transportation......................................... 23 306 (53)
</TABLE>

F-20
<PAGE> 84

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net assets of discontinued operations were comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents...................................... $ 106 $ --
Accounts receivable, net....................................... 196 --
Inventories, net............................................... 2,738 --
Property and equipment, net.................................... 1,332 153
Other assets................................................... 398 80
------ ------
4,770 233
LIABILITIES
Notes payable.................................................. 918 --
Other liabilities.............................................. 1,347 156
------ ------
2,265 156
------ ------
Net assets of discontinued operations....................... $2,505 $ 77
====== ======
</TABLE>

Gain (loss) from operations, net of income tax, consists of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1994 1995
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Apparel manufacturing segment............................. $(163) $(1,949) $(1,253)
Transportation segment.................................... 420 (73) (320)
----- ------- -------
$ 257 $(2,022) $(1,573)
===== ======= =======
</TABLE>

Gain (loss) on disposal of segments, net of income taxes, consists of the
following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1994 1995
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Apparel manufacturing segment............................. $ -- $ -- $(2,324)
Transportation segment.................................... 3 2,568 (27)
----- ------- -------
$ 3 $ 2,568 $(2,351)
===== ======= =======
</TABLE>

F-21
<PAGE> 85

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. INCOME TAXES

A reconciliation of the provision for Federal and state income taxes and
the amount computed by applying the statutory Federal income tax rate to income
before income taxes, minority interest and cumulative effect of change in
accounting principle is as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1994 1995
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory Federal rate applied to pre-tax income from
continuing operations................................... $ 225 $ 832 $ 1,650
State income taxes, net................................... 51 311 3
Alternative Minimum Tax on proceeds from life insurance... -- 25 --
Nondeductible expenses.................................... -- 3 5
Benefit of operating loss carryforward.................... (453) (630) (1,566)
Amortization of excess cost over net assets of acquired
businesses.............................................. 63 69 62
Other..................................................... (72) (1) 36
----- ------- -------
$(186) $ 609 $ 190
===== ======= =======
</TABLE>

The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes", effective January 1, 1993. This
statement supersedes Accounting Principles Board Statement No. 11, under which
the Company has previously been recognizing income tax expense. The cumulative
effect of adopting SFAS No. 109 had the effect of increasing the Company's 1993
net income by approximately $113,000. The Company's effective tax rate was
reduced from approximately 45% to approximately 22% as a result of the adoption
of SFAS No. 109. The Company recognized no deferred tax benefits of operating
loss carryforwards as a result of the adoption of SFAS No. 109.

Provision (benefit) for income taxes is comprised of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1993 1994 1995
----- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal................................................ $ 46 $117 $100
State.................................................. 13 149 49
----- ---- ----
59 266 149
Deferred
Federal................................................ (191) 242 27
State.................................................. (54) 101 14
----- ---- ----
(245) 343 41
Total
Federal................................................ (145) 359 127
State.................................................. (41) 250 63
----- ---- ----
$(186) $609 $190
===== ==== ====
</TABLE>

F-22
<PAGE> 86

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating loss carryforwards. The tax effects of significant items comprising
the Company's net deferred tax asset are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Differences between book and tax basis of property........... $ (108) $ (269)
Other........................................................ (3) --
Deferred tax assets:
Differences between book and tax basis of deposit base
intangibles............................................... 130 165
Allowance for credit losses.................................. 737 1,202
Write-off of notes receivable................................ -- 1,386
Unrealized gain on loans to be sold.......................... 152 382
Deferred tax asset related to discontinued operations........ 707 --
Operating loss carryforward (net of valuation allowance)..... (1,443) (2,670)
------- -------
Net deferred tax asset......................................... $ 172 $ 196
======= =======
</TABLE>

No net deferred tax asset was recognized as to the capital loss
carryforwards for the years ended December 31, 1994 and 1995. A valuation
allowance equal to these loss carryforwards was applied to each such
carryforward as of December 31, 1994 and 1995. A valuation allowance of
approximately $7,700,000 was applied to the tax effect of the net operating loss
carryforward for the year ended December 31, 1995.

As of December 31, 1995, the Company has available Federal net operating
loss carryforwards of approximately $23,000,000 expiring in 1996 through 2001.

17. OPERATIONS AND INDUSTRY SEGMENTS

The Financial Services segment was active in 1993, 1994 and 1995 in making
first and second mortgage loans, small business loans, construction loans and
pre-owned automobile loans.

The Apparel Manufacturing segment was active in 1993 and 1994 in the
design, manufacture and marketing of dresses for children. The Company sold YGI,
the sole component of the segment as of September 30, 1995 and as a result, the
Apparel Manufacturing segment is shown on the statements of income as
discontinued operations.

The Transportation segment was active in 1993 and 1994 in boxcar leasing,
short-line railroad operations and railcar repair shop operations. The Company
sold Peninsula Terminal Company in July 1994 and assigned the rights to boxcars
in the lease with a Class I railroad in November 1994. The Company sold
additional railcars in 1995 and as a result, the Transportation segment is shown
on the statements of income as discontinued operations.

The Company's customers include investors within the State of South
Carolina, first and second residential mortgage borrowers principally in South
Carolina and North Carolina commercial borrowers throughout the United States
and preowned automobile borrowers principally in South Carolina.

18. TRANSACTIONS WITH RELATED PARTIES

The Company engaged in the following related party transactions:

The Company obtains legal services from a firm, certain members of which,
when considered in the aggregate, own 824,928 shares of the Company's capital
stock. One member of the firm may be deemed to

F-23
<PAGE> 87

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

share investment and voting power with respect to 501,960 shares of the
Company's capital stock owned by a South Carolina partnership, of which his
spouse and three adult children are partners and 70,788 shares of the Company's
capital stock owned by a Trust, of which he is the Grantor. Total charges for
these services were $82,000 (1993), $118,000 (1994), and $234,000 (1995).
Approximately $17,000 (1994) and $0 (1995) of accounts payable are payable to
this law firm.

The Company provided management services to a company with significant
common shareholders for which it received fees of $35,000 in 1993 and 1994 and
$250,000 in 1995.

Notes payable to investors and subordinated debentures include amounts due
to officers, directors and key employees of approximately $1,124,000, $791,000
and $873,000 at December 31, 1993, 1994 and 1995, respectively. The Company also
has notes receivable from related parties. (Note 3)

19. EMPLOYEE RETIREMENT PLAN

The Company has a matched savings plan under Section 401(k) of the Internal
Revenue Code covering employees meeting certain eligibility requirements. The
plan provides for employee and Company contributions, subject to certain
limitations. Company matching contributions are 35% of employee contributions to
a maximum of 6% of compensation for each employee. The Company's contributions
under the plan totaled approximately $52,000 in 1993, $95,000 in 1994 and
$76,000 in 1995.

20. RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." The statement requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The statement is effective
for the Company for the fiscal year ending December 31, 1996, although earlier
application is encouraged. Based on the Company's present assets, this statement
is not expected to have a significant impact on the Company's financial
statements.

In May 1995, the FASB issued SFAS 122, "Accounting for Mortgage Servicing
Rights," which amends SFAS No. 65, "Accounting for Mortgage Banking Activities."
This statement allows the capitalization of servicing-related costs associated
with mortgage loans that are originated for sale, and to create servicing assets
for such loans. Prior to this statement, originated mortgage servicing rights
were generally accorded off-balance sheet treatment. The statement is effective
for the company for the fiscal year ending December 31, 1996. The adoption is
not expected to have a material effect on the company's financial condition or
results of operations.

The FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation," in
October 1995. This statement supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS 123 requires that an
employer's financial statements include certain disclosures about stock-based
employee compensation arrangements regardless of the method used to account for
them. The accounting requirements of this statement are effective for
transactions entered into in fiscal years that begin after December 15, 1995.
Though they may be adopted at issuance, the disclosure requirements are
effective for financial statements for fiscal years beginning after December 15,
1995, or for an earlier fiscal year for which this statement is initially
adopted for recognizing compensation cost. The Company has not determined the
impact of adopting SFAS 123 but believes the impact, if any, will be immaterial.

The FASB issued on October 24, 1995, a proposed statement of financial
accounting standard "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities." FASB's objective is to develop consistent
accounting standards for those transactions, including determining when

F-24
<PAGE> 88

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

financial assets should be considered sold and derecognized from the statement
of financial position and when related revenues and expenses should be
recognized. The approach focuses on analyzing the components of financial asset
transfers and requires each party to a transfer to recognize the financial
assets it controls and liabilities it has incurred and derecognize assets when
control over them has been relinquished. In its present form the statement will
have minimal impact on the accounting practices of the Company, as this proposed
statement does not mandate a change from the Company's current method of
accounting for securitization transactions.

21. CONTINGENCIES AND LOAN COMMITMENTS

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.
These instruments expose the Company to credit risk in excess of the amount
recognized in the balance sheet.

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 and conditional obligations as it
does for on-balance-sheet instruments. Total credit exposure at December 31,
1995 related to these items is summarized below:

<TABLE>
<CAPTION>
CONTRACT
AMOUNTS
--------------
(IN THOUSANDS)
<S> <C>
Loan commitments:
Approved loan commitments........................................... $ 79,906
Unadvanced portion of loans......................................... 4,251
--------------
Total loan commitments...................................... $ 84,157
===========
</TABLE>

Loan 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. Loan
commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained upon
extension of credit is based on management's credit evaluation of the
counterparty. Collateral held is primarily residential property. Interest rates
on loan commitments are a combination of fixed and variable.

Commitments outstanding at December 31, 1995 consist of adjustable and
fixed rate loans of $38,866,000 and $45,291,000 respectively, at rates ranging
from 10% to 13%. Commitments to originate loans generally expire within 30 days
to 60 days.

There is also a contingent purchase price agreement in place amounting to 2
and 1/2% of net income of a subsidiary not to exceed $125,000 through 1996. Any
payments of the contingent purchase price will increase the excess of cost over
net assets of acquired businesses. The amount paid or accrued under this
arrangement was $23,000, $47,000 and $9,000 in 1993, 1994 and 1995,
respectively.

From time to time, the Company or its subsidiaries are defendants in legal
actions involving claims arising in the normal course of its business. The
Company believes that, as a result of its legal defenses and insurance
arrangements, none of these actions, if decided adversely, would have a material
effect on the business, financial condition, results of operations or cash flows
of the Company taken as a whole.

The Company may from time to time enter into forward commitments to sell
residential first mortgage loans to reduce risk associated with originating and
holding loans for sale. At December 31, 1995, the Company had no outstanding
forward commitment contracts.

F-25
<PAGE> 89

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has accrued $164,000 for two former operating locations to
record the potential liability for environmental contamination at these two
sites. The Company believes that the total cost for this environmental liability
will not exceed the amount accrued.

22. FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS 107, "Disclosures about Fair Value of Financial Instruments" requires
disclosure of fair value information whether or not recognized in the balance
sheet, when it is practicable to estimate the fair value. SFAS 107 defines a
financial instrument as cash, evidence of an ownership interest in an entity or
contractual obligations which require the exchange of cash or financial
instruments. Certain items are specifically excluded from the disclosure
requirements, including the Company's common stock, property and equipment and
other assets and liabilities.

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

Cash and Cash Equivalents and Short-Term Investments

For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.

Receivables

For residential mortgages loans, SBA loans and automobile loans fair value
is estimated using the market prices received on recent sales or securitizations
of these loans in the secondary market.

Mortgage Loans Held for Sale

Fair value for mortgage loans held for sale is determined using the
anticipated premium to be derived from the sale of the mortgage loans in the
secondary market.

Excess Servicing Receivable

Fair value of the excess servicing receivable is determined based on the
discounted present value of the remaining excess estimated future cash flows
using estimated prepayment and default rates and discount rates anticipated in
similar instruments.

Investment in Asset-Backed Securities

Fair value of the investment in asset-backed securities approximates the
carrying amount. Fair value is determined based on the discounted present value
of the remaining estimated future cash flows attributable to the related
investment in asset-backed securities using estimated prepayment and default
rates and discount rates anticipated in similar instruments.

Investor Savings

Due to their short-term maturity, usually one year, the fair value of the
notes due investors and subordinated debentures is the current carrying amount.

Notes Payable to Banks and Other

The fair value of notes payable to banks and other approximates the
carrying amount. Rates with similar terms and maturities currently available to
the Company are used to estimate fair value of existing debt.

F-26
<PAGE> 90

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Commitments to Extend Credit

The fair value of commitments to extend credit is determined by using the
anticipated market prices that the loans will generate in the secondary market.

The estimated fair values of the Company's financial instruments at
December 31, were as follows:

<TABLE>
<CAPTION>
1995
-------------------
CARRYING FAIR
AMOUNT VALUE
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Financial Assets:
Cash and cash equivalents.................................... $ 1,560 $ 1,560
Loans receivable -- net...................................... 103,865 107,520
Mortgage loans held for sale................................. 22,593 23,526
Excess servicing receivable.................................. 2,054 2,054
Investment in asset-backed securities........................ 1,477 1,477
Financial Liabilities
Investor savings:
Notes due to investors.................................... $ 82,132 $ 82,132
Subordinated debentures................................... 16,185 16,185
Notes payable to banks and other............................. 31,633 31,633
Commitments to extend credit................................. 84,157 89,711
</TABLE>

23. PARENT COMPANY FINANCIAL INFORMATION

The following is condensed financial information of Emergent Group, Inc.
(parent company only):

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents........................................ $ 110 $ 363
Short-term investments........................................... 597 --
Receivable from subsidiaries..................................... 4,016 --
Property and equipment, net...................................... 180 139
Investment in subsidiaries, net of allowance of $2,100 in 1994... 5,215 9,195
Notes receivable, net............................................ 920 683
Other investments................................................ -- 1,000
Other assets..................................................... 255 234
------- -------
$11,293 $11,614
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses and other liabilities........................... $ 1,593 $ 1,729
Shareholders' equity............................................. 9,700 9,885
------- -------
$11,293 $11,614
======= =======
</TABLE>

F-27
<PAGE> 91

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
----------------------------
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Interest......................................................... $ 103 $ 158 $ 313
Gain on disposal of assets....................................... 4 -- 66
Management fees.................................................. 216 455 570
Other............................................................ 22 6 42
------ ------ ------
345 619 991
EXPENSES
Interest......................................................... 369 255 152
General and administrative....................................... 801 1,537 862
Other............................................................ 40 231 --
------ ------ ------
1,210 2,023 1,014
------ ------ ------
Loss from continuing operations before income taxes.............. (865) (1,404) (23)
Income tax expense (benefit)..................................... (556) 468 (23)
Discontinued operations
Income from operations, net of income tax...................... 625 467 12
Gain (loss) on disposal........................................ -- 672 (2,391)
------ ------ ------
625 1,139 (2,379)
Equity in income of subsidiaries................................. 768 3,071 3,036
Cumulative effect of change in method of accounting for income
taxes.......................................................... 113 -- --
------ ------ ------
Net income....................................................... $1,197 $2,338 $ 657
====== ====== ======
</TABLE>

F-28
<PAGE> 92

EMERGENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1993 1994 1995
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income..................................................... $1,197 $ 2,338 $ 657
Adjustments to reconcile net income to net cash provided by
(used in) operating activities
Depreciation and amortization................................ 358 367 26
Gain on sale of property and equipment....................... (4) (2,187) (66)
Reserve for devaluation of subsidiary........................ -- 2,100 --
Gain on sale of subsidiary................................... -- (585) (1,257)
Decrease (increase) in due from subsidiaries................. (97) (813) 306
Increase in investment in subsidiaries....................... (904) (2,358) (3,323)
Write-off of notes receivable from discontinued operations... -- -- 3,648
Revenues recorded under an assigned operating lease.......... (789) (657) --
Interest expense from assignment of an operating lease....... 297 207 --
Decrease (increase) in other assets.......................... 435 (83) 59
(Decrease) increase in other liabilities..................... (311) 1,186 (272)
------ ------- -------
Cash provided by (used in) operating activities................ 182 (485) (222)
------ ------- -------
INVESTING ACTIVITIES
Cash received in advances from subsidiaries.................... 700 250 3,891
Loans advanced to subsidiary................................... (400) (907) (2,041)
Payments to subsidiary on loans................................ -- -- (300)
Payments received from subsidiaries............................ 100 -- --
Proceeds from sale of short-term investments................... 1,000 350 597
Purchase of short-term investments............................. (947) -- --
Cash paid for purchase of subsidiary........................... (836) -- --
Purchase of property and equipment............................. (8) (21) (25)
Proceeds from sale of property and equipment................... 4 1,201 112
Proceeds from sale of subsidiary............................... -- 20 --
Loan advance to former subsidiary.............................. -- -- (200)
Payments received on notes receivable.......................... -- -- 236
Purchase of investment in partnership.......................... -- -- (1,000)
------ ------- -------
Cash provided by (used in) investing activities................ (387) 893 1,270
------ ------- -------
FINANCING ACTIVITIES
Payments made on notes payable................................. (279) (279) (279)
Purchase of stock purchase warrants............................ (3) -- --
Purchase of stock under Tender Offer........................... -- -- (568)
Proceeds from exercise of stock options........................ -- -- 52
------ ------- -------
Cash used in financing activities.............................. (282) (279) (795)
------ ------- -------
Net increase (decrease) in cash and cash equivalents........... (487) 129 253
Cash at the beginning of the year.............................. 468 (19) 110
------ ------- -------
Cash at the end of the year.................................... $ (19) $ 110 $ 363
====== ======= =======
</TABLE>

F-29
<PAGE> 93

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

NO DEALER, SALESPERSON, OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY,
ANY SELLING SHAREHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON OR IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 14
Use of Proceeds....................... 15
Dividend Policy....................... 15
Price Range of Common Stock........... 16
Dilution.............................. 17
Capitalization........................ 18
Selected Consolidated Financial and
Operating Data...................... 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 33
Management............................ 50
Principal and Selling Shareholders.... 55
Description of Securities............. 57
Underwriting.......................... 59
Legal Matters......................... 60
Experts............................... 60
Additional Information................ 60
Index to Financial Statements......... F-1
</TABLE>

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

2,829,000 SHARES

EMERGENT GROUP, INC.

COMMON STOCK

-------------------------
PROSPECTUS
-------------------------

J.C. Bradford & Co.
Raymond James & Associates, Inc.
Wheat First Butcher Singer

, 1996

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE> 94

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table itemizes the expenses incurred by the Company in
connection with the registration, issuance and distribution of the Common Stock
offered hereby, other than the underwriting discount. All the amounts shown are
estimates except the Securities and Exchange Commission registration fee, the
National Association of Securities Dealers, Inc. fee and the Nasdaq listing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 7,112
National Association of Securities Dealers, Inc. filing fee....................... 4,942
Nasdaq listing fee................................................................ 17,500
Printing and engraving............................................................ 60,000
Legal fees and expenses........................................................... 90,000
Accounting fees and expenses...................................................... 45,000
Blue Sky qualifications, related legal fees and expenses.......................... 30,000
Transfer Agent and Registrar's fees............................................... 20,000
Miscellaneous expenses............................................................ 225,446
--------
Total................................................................... $500,000
========
</TABLE>

ITEM 14: INDEMNIFICATION OF DIRECTORS AND OFFICERS

Reference is made to other sections in Chapter 8, Article 5 of Title 33 of
the 1976 Code of Laws of South Carolina, as amended (the "South Carolina Code"),
which provides as follows:

Section 33-8-510. Authority to Indemnify. (a) Except as provided in
subsection (d), a corporation may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in
the proceeding if: (1) he conducted himself in good faith; and (2) he
reasonably believed: (i) in the case of conduct in his official capacity
with the corporation, that his conduct was in its best interest; and (ii)
in all other cases, that his conduct was at least not opposed to its best
interest; and (3) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.

(b) A director's conduct with respect to an employee benefit plan for
a purpose he reasonably believed to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement
of subsection (a)(2)(ii).

(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of
conduct described in this section.

(d) A corporation may not indemnify a director under this section: (1)
in connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or (2) in
connection with any other proceeding charging improper personal benefit to
him, whether or not involving action in his official capacity, in which he
was adjudged liable on the basis that personal benefit was improperly
received by him.

(e) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.

Section 33-8-520. Mandatory Indemnification. Unless limited by its
articles of incorporation, a corporation shall indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with
the proceeding.

II-1
<PAGE> 95

Section 33-8-530. Advance for Expenses. (a) A corporation may pay
for or reimburse the reasonable expenses incurred by a director who is a
party to a proceeding in advance of final disposition of the proceeding if:
(1) the director furnishes the corporation a written affirmation of his
good faith belief that he has met the standard of conduct described in
Section 33-8-510; (2) the director furnishes the corporation a written
undertaking, executed personally or on his behalf, to repay the advance if
it is ultimately determined that he did not meet the standard of conduct;
and (3) a determination is made that the facts then known to those making
the determination would not preclude indemnification under this subchapter.

(b) The undertaking required by subsection (a)(2) must be an unlimited
general obligation of the director but need not be secured and may be
accepted without reference to financial ability to make repayment.

(c) Determinations and authorizations of payments under this section
must be made in the manner specified in Section 33-8-550.

Section 33-8-540. Court-Ordered Indemnification. Unless a
corporation's articles of incorporation provide otherwise, a director of
the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court
of competent jurisdiction. On receipt of an application, the court after
giving any notice the court considers necessary may order indemnification
if it determines: (1) the director is entitled to mandatory indemnification
under Section 33-8-520, in which case the court also shall order the
corporation to pay the director's reasonable expenses incurred to obtain
court-ordered indemnification; or (2) the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not he met the standard of conduct set forth in Section 33-8-510
or was adjudged liable as described in Section 33-8-510(d), but if he was
adjudged so liable his indemnification is limited to reasonable expenses
incurred.

Section 33-8-550. Determination and Authorization of
Indemnification. (a) A corporation may not indemnify a director under
Section 33-8-510 unless authorized in the specific case after a
determination has been made that indemnification of the director is
permissible in the circumstances because he has met the standard of conduct
set forth in Section 33-8-510.

(b) The determination must be made: (1) by the board of directors by
majority vote of a quorum consisting of directors not at the time parties
to the proceeding; (2) if a quorum cannot be obtained under subdivision
(1), by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding; (3) by special legal counsel: (i) selected by the board of
directors or its committee in the manner prescribed in item (1) or (2); or
(ii) if a quorum of the board of directors cannot be obtained under
subdivision (1) and a committee cannot be designated under subdivision (2),
selected by majority vote of the full board of directors (in which
selection directors who are parties may participate); or (4) by the
shareholders, but shares owned by or voted under the control of directors
who are at the time parties to the proceeding may not be voted on the
determination.

(c) Authorization of indemnification and evaluation as to
reasonableness of expenses must be made in the same manner as the
determination that indemnification is permissible, except that, if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to the reasonableness of expenses must be
made by those entitled under subsection (b)(3) to select counsel.

Section 33-8-560. Indemnification of officers, employees, and
agents. Unless a corporation's articles of incorporation provide
otherwise: (1) an officer of the corporation who is not a director is
entitled to mandatory indemnification under Section 33-8-520, and is
entitled to apply for court-ordered indemnification under Section 33-8-540,
in each case to the same extent as a director; (2) the corporation may
indemnify and advance expenses under this subchapter to an officer,
employee, or agent of the corporation who is not a director to the same
extent as to a director; and (3) a corporation also may indemnify and
advance expenses to an officer, employee, or agent who is not a director to
the extent,

II-2
<PAGE> 96

consistent with public policy that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of
directors, or contract.

Section 33-8-570. Insurance. A corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the corporation, or who while a director, officer,
employee, or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise, trust, employee
benefit plan, or other enterprise, against liability asserted against or
incurred by him in that capacity or arising from his status as a director,
officer, employee, or agent, whether or not the corporation would have
power to indemnify him against the same liability under Section 33-8-510 or
33-8-520.

Chapter 8, Article 5 of the South Carolina Code also permits a corporation
to purchase and maintain insurance on behalf of a person who is or was an
officer or director. The Company maintains directors' and officers' liability
insurance.

The Company's Bylaws provide that the Company shall, to the fullest extent
permitted by Section 33-13-180 of the South Carolina Code from time to time,
indemnify all persons whom it may indemnify pursuant thereto. The Company's
Bylaws further provide that the Company may purchase insurance to effect such
indemnification.

Reference is made to Chapter 2 of Title 33 of the 1976 Code of Laws of
South Carolina, as amended, respecting the limitation in a corporation's
articles of incorporation of the personal liability of a director for breach of
the director's fiduciary duty. Reference is made to the Company's Articles of
Amendment filed with the South Carolina Secretary of State on May 26, 1989 which
state:

A director of the corporation shall not be personally liable to the
corporation or any of its shareholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision shall not be
deemed to eliminate or limit the liability of a director (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involved gross
negligence, intentional misconduct, or a knowing violation of law, (iii)
imposed under Section 33-8-330 of the South Carolina Business Corporation
Act of 1988 (improper distribution to shareholder), or (iv) for any
transaction from which the director derived an improper personal benefit.

ITEM 15: RECENT SALES OF UNREGISTERED SECURITIES

For the three years immediately preceding the date hereof, Emergent Group,
Inc. has not sold any securities that were not registered under the Securities
Act of 1933, as amended, except as follows:

In the past three years, the Company has issued options to purchase an
aggregate of 378,536 shares of Common Stock and Class A Common Stock to a
total of 16 Company officers and, upon exercise of certain of these
options, issued Common Stock and Class A Common Stock in accordance with
the terms thereof. These options were issued pursuant to Company stock
option plans. These securities were exempt from federal registration under
Section 4(2) of the Securities Act.

In 1996, the Company issued 10,500 shares of restricted stock to
certain of its directors under the Company's Restricted Stock Plan. These
securities were exempt from federal registration under Section 4(2) of the
Securities Act.

II-3
<PAGE> 97

ITEM 16: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) Exhibits ("*" indicates previously filed exhibits)

<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Articles of Incorporation dated September 20, 1978:
Incorporated by reference to Exhibit 3.1 of the Company's Registration Statement
on Form S-1, Commission File No. 2-62723 (the "1978 Registration Statement").
3.2 -- Articles of Amendment as filed with the Secretary of State of South Carolina on
June 5, 1984: Incorporated by reference to Item 6(a) of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1984, Commission File No.
0-8909.
3.3 -- Articles of Amendment as filed with the Secretary of State of South Carolina on
December 27, 1985: Incorporated by reference to Current Report on Form 8-K dated
January 2, 1986, Commission File No. 0-8909.
3.4 -- Articles of Amendment as filed with the Secretary of State of South Carolina on
August 23, 1991: Incorporated herein by reference to Quarterly Report on Form
10-Q for the quarter ended September 30, 1991, Commission File No. 0-8909.
3.5 -- Restated By-Laws: Incorporated by reference to Exhibit 3.2 of the 1978
Registration Statement.
3.6 -- Amendment to Bylaws: Incorporated by reference to Quarterly Report on Form 10-Q
for the quarter ended September 30, 1991, Commission File No. 0-8909.
3.7 -- Form of Warrant: Incorporated herein by reference to the Company's Report on Form
10-K for the year ended December 31, 1985, File No. 0-8909.
4.1 -- See Exhibits 3.1 through 3.7.
5.1 -- Opinion of Wyche, Burgess, Freeman & Parham, P.A. regarding legality of shares of
the Company.*
10.1 -- Emergent Group, Inc. Stock Option Plan.*
10.2 -- 1995 Officer and Employee Stock Option Plan: Incorporated by reference to an
exhibit filed with the Company's 1995 Notice of Annual Meeting and Proxy
Statement, Commission File No. 0-8909.
10.3 -- 1995 Director Stock Option Plan: Incorporated by reference to an exhibit filed
with the Company's 1995 Notice of Annual Meeting and Proxy Statement.
10.4 -- 1995 Restricted Stock Agreement Plan.*
10.5 -- Agreement between Carolina Investors, Inc. and First Greensboro Home Equity, Inc.
(subject to pending application under Rule 406 of Regulation C).
10.6 -- Agreement between Carolina Investors, Inc. and Prime Investors, Inc. (subject to
pending application under Rule 406 of Regulation C).
10.7 -- Agreement between Carolina Investors, Inc. and AmeriFund Group, Inc. (subject to
pending application under Rule 406 of Regulation C).
10.8 -- Loan and Security Agreement dated December 19, 1993 between BankAmerica Business
Credit, Inc. and The Loan Pro$, Inc.*
10.9 -- Loan and Security Agreement dated April 10, 1995 between BankAmerica Business
Credit, Inc. and Premier Financial Services, Inc.*
10.10 -- Loan and Security Agreement dated December 29, 1993 between NationsBank of
Georgia and Emergent Business Capital, as amended.*
10.11 -- Loan and Security Agreement dated October 10, 1995 between NationsBank of Georgia
and Emergent Commercial Mortgage.*
10.12 -- Mortgage Loan Warehousing Agreement dated November 22, 1994 between First Union
National Bank of North Carolina and Carolina Investors, Inc.*
</TABLE>

II-4
<PAGE> 98

<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <C> <S>
10.13 -- Mortgage Loan Warehousing Agreement dated March 6, 1996 between First Union
National Bank of North Carolina and Emergent Mortgage Corporation, as amended.
Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995. Commission File No. 0-8909.
10.14 -- The Pooling and Servicing Agreement dated as of June 29, 1995 between Emergent
Business Capital, Inc., as Seller and Servicer, and First Union National Bank of
North Carolina, as Trustee: Incorporated by reference to Exhibit 28.1 to the
Company's Current Report on Form 8-K dated June 29, 1995, Commission File No.
0-8909.
10.15 -- Certificate Purchase Agreement between the Placement Agent, as initial purchaser,
and the Company: Incorporated by reference to Exhibit 28.1 to the Company's
Current Report on Form 8-K dated June 29, 1995, Commission File No. 0-8909.
21.1 -- Listing of subsidiaries.*
24.1 -- Consent of Wyche, Burgess, Freeman & Parham, P.A.: Contained in Exhibit 5.1.
24.2 -- Consent of Elliott, Davis & Company, L.L.P.: Contained in Part II at II-7.
25.1 -- The Power of Attorney*
</TABLE>

(B) Financial Statement Schedules. Not applicable

ITEM 17: UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(b) The undersigned Registrant hereby undertakes that:

(1) for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 99

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Greenville, State
of South Carolina, on April 9, 1996.

EMERGENT GROUP, INC.

By: /s/ JOHN M. STERLING, JR.
------------------------------------
John M. Sterling, Jr.,
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and as of the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ----------------------------- ------------------
<C> <S> <C>
/s/ JOHN M. STERLING, JR. Chairman of the Board of April 9, 1996
- --------------------------------------------- Directors; CEO (principal
John M. Sterling, Jr. executive officer)

/s/ KEITH B. GIDDENS * Director; Executive Vice April 9, 1996
- --------------------------------------------- President; Chief Operating
Keith B. Giddens Officer

/s/ ROBERT M. DAVIS * Director; Chief Financial April 9, 1996
- --------------------------------------------- Officer (principal
Robert M. Davis financial and accounting
officer)

/s/ CLARENCE B. BAUKNIGHT * Director April 9, 1996
- ---------------------------------------------
Clarence B. Bauknight

/s/ JACOB H. MARTIN * Director April 9, 1996
- ---------------------------------------------
Jacob H. Martin

/s/ PORTER B. ROSE * Director April 9, 1996
- ---------------------------------------------
Porter B. Rose

/s/ BUCK MICKEL * Director April 9, 1996
- ---------------------------------------------
Buck Mickel

/s/ TECUMSEH HOOPER, JR. * Director April 9, 1996
- ---------------------------------------------
Tecumseh Hooper, Jr.

*By: /s/ JACK M. STERLING, JR.
- ---------------------------------------------
Jack M. Sterling, Jr.,
Attorney-in-fact
</TABLE>

II-6
<PAGE> 100

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 31, 1996, in the Amendment No. 1 to
Registration Statement (Form S-1) and related Prospectus of Emergent Group, Inc.
for the registration of 2,829,000 shares of its Common Stock.

ELLIOTT, DAVIS & COMPANY, L.L.P.

Greenville, South Carolina

April 9, 1996

<PAGE> 101

EXHIBIT INDEX

<PAGE> 102

<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <C> <S>
10.12 -- Mortgage Loan Warehousing Agreement dated November 22, 1994 between First Union
National Bank of North Carolina and Carolina Investors, Inc.*
10.13 -- Mortgage Loan Warehousing Agreement dated March 6, 1996 between First Union
National Bank of North Carolina and Emergent Mortgage Corporation, as amended.
Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995. Commission File No. 0-8909.
10.14 -- The Pooling and Servicing Agreement dated as of June 29, 1995 between Emergent
Business Capital, Inc., as Seller and Servicer, and First Union National Bank of
North Carolina, as Trustee: Incorporated by reference to Exhibit 28.1 to the
Company's Current Report on Form 8-K dated June 29, 1995, Commission File No.
0-8909.
10.15 -- Certificate Purchase Agreement between the Placement Agent, as initial purchaser,
and the Company: Incorporated by reference to Exhibit 28.1 to the Company's
Current Report on Form 8-K dated June 29, 1995, Commission File No. 0-8909.
21.1 -- Listing of subsidiaries.*
24.1 -- Consent of Wyche, Burgess, Freeman & Parham, P.A.: Contained in Exhibit 5.1.
24.2 -- Consent of Elliott, Davis & Company, L.L.P.: Contained in Part II at II-7.
25.1 -- The Power of Attorney*
</TABLE>

* Previously filed

<PAGE> 1
EXHIBIT 1.1

EMERGENT GROUP, INC.

2,829,000 SHARES OF COMMON STOCK

FORM OF UNDERWRITING AGREEMENT

________________, 1996

J.C. BRADFORD & CO.
RAYMOND JAMES & ASSOCIATES, INC.
WHEAT, FIRST SECURITIES, INC.
As Representatives of the several Underwriters
c/o J.C. Bradford & Co.
J.C. Bradford Financial Center
330 Commerce Street
Nashville, Tennessee 37201

Ladies and Gentlemen:

Emergent Group, Inc., a South Carolina corporation (the
"Company"), and certain shareholders of the Company identified on Schedule II
hereto (collectively, the "Selling Shareholders") propose to sell to the
several underwriters named in Schedule I hereto (the "Underwriters") for whom
you are acting as the representatives (the "Representatives") with respect to
the sale by the Company and the Selling Shareholders of 2,000,000 and 829,000
shares respectively (collectively, the "Firm Shares") of the Company's common
stock, $0.05 par value per share (the "Common Stock"). The Company has also
agreed to grant to you an option (the "Option") to purchase up to 413,850
additional shares of Common Stock (the "Option Shares") on the terms and for
the purposes set forth in Section 1(b) hereof. The Firm Shares and the Option
Shares are hereinafter collectively referred to as the "Shares."

The Company and the Selling Shareholders confirm as follows
their agreements with you.

1. AGREEMENT TO SELL AND PURCHASE; PUBLIC OFFERING.

(a) On the basis of the representations, warranties and
covenants herein contained, and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriters an aggregate of
2,829,000 Firm Shares and each of the Selling Shareholders agrees to sell to
the Underwriters the aggregate number of Firm Shares set forth opposite such
Selling Shareholder's name in Schedule II hereto, and each of the Underwriters,
severally and not jointly, agrees to purchase at the purchase price of $______
per share, the number of Firm Shares set forth opposite such Underwriter's name
in Schedule I hereto.

(b) Subject to all the terms and conditions of this
Agreement, the Company also grants the Underwriters an Option to purchase,
severally and not jointly, up to 413,850 Option Shares from the Company, each
at the same price per share as you shall pay for the Firm Shares. The Option
may be exercised only to cover over-allotments in the sale of the Firm
<PAGE> 2

Shares and may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the Prospectus (as defined
below) upon written or telegraphic notice (the "Option Shares Notice") by you
to the Company no later than 12:00 noon, Nashville, Tennessee time at least two
and no more than ten business days before the date and time specified for
closing in the Option Shares Notice (the "Option Closing Date") setting forth
the aggregate number of Option Shares to be purchased. On the Option Closing
Date, the Company will issue and sell to the Underwriters the number of Option
Shares set forth in the Option Shares Notice, and unless otherwise adjusted by
the Representatives, each of the Underwriters will purchase such percentage of
the Option Shares as is equal to the percentage of Firm Shares that such
Underwriter is purchasing.

(c) After the Registration Statement becomes effective,
upon the authorization by you of the release of the Shares, the several
Underwriters propose to offer the Firm Shares and the Option Shares purchased
by the Underwriters for sale initially at the price per share set forth in the
Prospectus (the initial offering price) and upon the terms set forth therein.

2. DELIVERY AND PAYMENT.

Delivery of the Firm Shares shall be made to you by or on
behalf of the Company and the Selling Shareholders against payment of the
purchase price by certified or official bank check payable in next day funds to
the order of the Company at the offices of J.C. Bradford & Co., J.C. Bradford
Financial Center, 330 Commerce Street, Nashville, Tennessee 37201, or at such
other place as may be agreed upon by the Representatives and the Company, at
10:00 a.m., Nashville, Tennessee time, on the third full business day following
the date of this Agreement (the "Closing Date"), or at such other time on such
date, or at such other place, as may be agreed upon by the Company and the
Representatives.

To the extent the Option is exercised, delivery of the Option
Shares against payment therefor (in the manner specified above) will take place
at the offices specified above at the Option Closing Date (which, subject to
the requirements set forth above for the Option Shares Notice, may be the
Closing Date).

Certificates evidencing the Shares shall be in definitive form
and shall be registered in such names and in such denominations as you shall
request not less than 48 hours prior to the Closing Date or the Option Closing
Date, as the case may be, by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to make such certificates available for inspection at least 24
hours prior to the Closing Date or the Option Closing Date, as the case may be,
at a location to be designated by you, which may be in New York, New York, or
elsewhere.

The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Firm Shares and Option Shares by the
Company to the Underwriters shall be borne by the Company. The Company will
pay and save each of the Underwriters and any subsequent holder of the Shares
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying Federal and state stamp and other transfer taxes, if
any,

2
<PAGE> 3

which may be payable or determined to be payable in connection with the
original issuance or sale to such Underwriter of the Firm Shares and Option
Shares.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents, warrants and covenants to each of the
Underwriters that:

(a) The Company has prepared and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(Registration No. 333-1393) on Form S-1 relating to the Shares, including a
preliminary prospectus and such amendments to such registration statement as
may have been required to the date of this Agreement, under the provisions of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (collectively referred to as the "Rules and Regulations") of the
Commission thereunder. The term "preliminary prospectus" as used herein means
a preliminary prospectus as contemplated by Rule 430 or Rule 430A of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to you. If such registration
statement has not become effective, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective, will be filed promptly by the
Company with the Commission. If such registration statement has become
effective, a final prospectus containing information permitted to be omitted at
the time of effectiveness by Rule 430A of the Rules and Regulations will be
filed promptly by the Company with the Commission in accordance with Rule
424(b) of the Rules and Regulations. The term "Registration Statement" means
the registration statement as amended at the time it becomes or became
effective (the "Effective Date"), including financial statements and all
exhibits and any information deemed to be included by Rule 430A. The term
"Prospectus" means the prospectus as first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations or, if no such filing is required,
the form of final prospectus included in the Registration Statement at the
Effective Date.

(b) On the Effective Date, the date the Prospectus is
first filed with the Commission pursuant to Rule 424(b) (if required), at all
times subsequent thereto up to and including the Closing Date and, if later,
the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did or will comply with all applicable
provisions of the Act and the Rules and Regulations and did or will contain all
statements required to be stated therein in accordance with the Act and the
Rules and Regulations. On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no part of the
Registration Statement, the Prospectus or any such amendment or supplement did
or will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the

3
<PAGE> 4

Closing Date and, if later, the Option Closing Date, the Prospectus did not or
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with information
relating to the Underwriters furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company acknowledges
that the statements set forth under the heading "Underwriting" in the
Prospectus constitute the only information relating to the Underwriters
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement.

(c) The only active subsidiaries (as defined in the Rules
and Regulations) of the Company are Emergent Financial Corporation, The Loan
Pro$, Inc., Premier Financial Services, Inc., Emergent Commercial Mortgage,
Inc., Emergent Business Capital Holdings Corporation, Emergent Business
Capital, Inc. and Carolina Investors, Inc. (individually, a "Subsidiary" and
collectively, the "Subsidiaries"). The Company and each of the Subsidiaries
is, and at the Closing Date will be, a corporation duly organized, validly
existing and in good standing under the laws of the respective jurisdictions of
their organization or incorporation, as the case may be. The Company and each
of the Subsidiaries has, and at the Closing Date will have, full power and
authority to conduct all the activities conducted by it, to own or lease all
the assets owned or leased by it and to conduct its business as described in
the Registration Statement and the Prospectus. The Company and each Subsidiary
is, and at the Closing Date will be, duly licensed or qualified to do business
and in good standing as a foreign corporation in all jurisdictions in which the
nature of the activities conducted by it or the character of the assets owned
or leased by it makes such licensing or qualification necessary. Except for
the stock of the Subsidiaries or as disclosed in the Registration Statement,
the Company does not own, and at the Closing Date will not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and correct
copies of the Articles of Incorporation and the Bylaws of the Company and each
Subsidiary, and all amendments thereto, have been delivered to you, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date or, if later, the Option Closing Date, except [describe conversion
of Class A common stock and authorization of additional Common Stock, if
necessary].

(d) The outstanding shares of the Company's Common Stock
and Class A Common Stock have been, and the Shares to be issued and sold by the
Company upon such issuance will be, duly authorized, validly issued, fully paid
and nonassessable and will not be subject to any preemptive or similar right.
The description of the Common Stock and Class A Common Stock in the
Registration Statement and the Prospectus is, and at the Closing Date will be,
complete and accurate in all respects. Except as set forth in the Prospectus,
the Company does not have outstanding, and at the Closing Date will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell any shares of Common Stock or Class A Common Stock
or any such warrants, convertible securities or obligations. On or prior to
the Closing Date, all steps necessary to complete a 2-for-1 stock split of the
Common Stock and

4
<PAGE> 5

Class A Common Stock shall have been taken, and such stock split shall have
been consummated.

(e) The financial statements and schedules included in
the Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire
period involved, except as otherwise disclosed in the Prospectus. The
financial and statistical data set forth in the Prospectus under the captions
"Prospectus Summary," "Summary Financial and Operating Data," "Use of
Proceeds," "Capitalization," "Selected Financial and Operating Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," "Management" and "Principal and Selling Shareholders"
fairly presents the information set forth therein on the basis stated in the
Prospectus. No other financial statements or schedules of the Company are
required by the Act, the Exchange Act (as hereinafter defined) or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Elliott, Davis & Co. L.L.P. (the "Accountants"), who have reported on such
financial statements and schedules, are independent auditors with respect to
the Company as required by the Act and the Rules and Regulations.

(f) The Company's system of internal accounting controls
taken as a whole is sufficient to meet the broad objectives of internal
accounting control insofar as those objectives pertain to the prevention or
detection of errors or irregularities in amounts that would be material in
relation to the Company's financial statements; and, except as disclosed in the
Prospectus, neither the Company nor any of its Subsidiaries, nor any employee
or agent of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds in violation of any
law, rule or regulation, the receipt or payment of which could have a material
adverse effect on the Company.

(g) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date, except as set forth in the Registration Statement and the
Prospectus, (i) there has not been and will not have been any material adverse
change in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries,
arising for any reason whatsoever, (ii) neither the Company nor its
Subsidiaries has incurred nor will it incur any material liabilities or
obligations, direct or contingent, except in the ordinary course of business,
(iii) the Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock, other than
as described in the last sentence of Section 3(d), above, and (iv) there has
not been and will not have been any change in the capitalization of the Company
other than (x) pursuant to the exercise of employee stock options and (y) as
described in the last sentence of Section 3(d), above.

(h) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.

5
<PAGE> 6

(i) Except as set forth in the Registration Statement and
the Prospectus, there are no actions, suits or proceedings pending or
threatened against or affecting the Company or any Subsidiary or any of their
respective officers in their capacity as such, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially and adversely affect the Company or its
Subsidiaries or its business, properties, business prospects, condition
(financial or otherwise) or results of operations or prevent or materially
hinder the consummation of this Agreement.

(j) The Company and each Subsidiary has, and at the
Closing Date will have, (i) all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to carry on its business
as contemplated in the Prospectus, (ii) complied in all material respects with
all laws, regulations and orders applicable to it or its business and (iii)
performed all obligations required to be performed by it, and is not, and at
the Closing Date will not be, in default, under any contract or other
instrument material to it to which it is a party or by which its property is
bound or affected. To the best knowledge of the Company and each Subsidiary,
no other party under any contract or other instrument to which it is a party is
in default in any respect thereunder. Neither the Company nor any Subsidiary
is, nor at the Closing Date will any of them be, in violation of any provision
of its Articles of Incorporation.

(k) No consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental agency or body is
required for the consummation by the Company of the transactions on its part
herein contemplated, except such as have been obtained under the Act or the
Rules and Regulations and such as may be required under state securities or
Blue Sky laws or the bylaws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and distribution by
the Underwriters of the Shares.

(l) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding agreement of
the Company and is enforceable against the Company in accordance with the terms
hereof subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law). The performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any material lien, charge or encumbrance upon any of
the assets of the Company or any Subsidiary pursuant to the terms or provisions
of, or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation under,
the Articles of Incorporation or Bylaws of the Company or its Subsidiaries, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of its
or their properties are bound or affected, or violate or conflict with any
judgment, ruling, decree, order,

6
<PAGE> 7

statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Company or any Subsidiary.

(m) The Company and each Subsidiary has good and
marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company or its Subsidiaries. The Company and
each Subsidiary has valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by it, with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such properties by the Company and such Subsidiaries. The Company and
each of its Subsidiaries owns or leases all such properties as are necessary to
its operations as now conducted.

(n) There is no document or contract of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that is not described or
filed as required. All such contracts to which the Company or any Subsidiary
is a party have been duly authorized, executed and delivered by the Company or
such Subsidiary constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law.)

(o) No statement, representation, warranty or covenant
made by the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to you was or will be, when made,
inaccurate, untrue or incorrect in any material respect.

(p) Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in, or which has constituted, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares or the Common Stock.

(q) Other than the Selling Shareholders, no holder of
securities of the Company has rights to the registration of any securities of
the Company because of the filing of the Registration Statement.

(r) The Company has taken such action as necessary to
have the Shares authorized for quotation on the National Association of
Securities Dealers Automated Quotation National Market System (the "Nasdaq
National Market").

(s) Other than as contemplated by this Agreement, there
is no broker, finder or other party that is entitled to receive from the
Company or any Subsidiary any brokerage or finder's fee or other fee or
commission as a result of any of the transactions contemplated by this
Agreement.

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<PAGE> 8

4. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.

Each of the Selling Shareholders, severally and not jointly,
represents, warrants and covenants to each Underwriter that:

(a) Such Selling Shareholder at the Closing Date will
have valid and marketable title to the Shares set forth in Schedule II to be
sold by such Selling Shareholder, free and clear of any liens, encumbrances,
equities and claims (other than as imposed by the Act or this Agreement), and
full right, power and authority to effect the sale and delivery of such Shares;
and upon the delivery of and payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, valid and marketable title thereto,
free and clear of any liens, encumbrances, equities and claims, will be
transferred to the Underwriters.

(b) Such Selling Shareholder has duly executed and
delivered the Selling Shareholders' Custody Agreement (the "Custody Agreement")
and the Selling Shareholders' Power of Attorney (the "Power of Attorney") in
the forms previously delivered to the Representatives, appointing John M.
Sterling, Jr., Keith B. Giddens and Robert S. Davis, and each of them as such
Selling Shareholder's attorney-in-fact (the "Attorney-in-Fact") and Wyche,
Burgess, Freeman & Parham, P.A., as custodian (the "Custodian"). The
Attorney-in-Fact is authorized to execute, deliver and perform this Agreement
on behalf of such Selling Shareholder, to deliver the Shares to be sold by such
Selling Shareholder hereunder, to accept payment therefor and otherwise to act
on behalf of such Selling Shareholder in connection with this Agreement.
Certificates, in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank, representing the
Shares to be sold by such Selling Shareholder hereunder have been deposited
with the Custodian pursuant to the Custody Agreement for the purpose of
delivery pursuant to this Agreement. Such Selling Shareholder agrees that the
shares of Common Stock represented by the certificates on deposit with the
Custodian are subject to the interest of the Underwriters hereunder, that the
arrangements made for such custody and the appointment of the Attorney-in-Fact
are to that extent irrevocable, and that the obligations of such Selling
Shareholder hereunder shall not be terminated except as provided in this
Agreement and the Custody Agreement. If such Selling Shareholder should
dissolve, or if any other event should occur before the delivery of the Shares
of such Selling Shareholder hereunder, the certificates for such Shares
deposited with the Custodian shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such dissolution or other
event had not occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.

(c) Such Selling Shareholder, acting through its duly
authorized Attorney-in-Fact, has duly executed and delivered this Agreement,
the Custody Agreement and the Power of Attorney; this Agreement constitutes a
legal valid and binding obligation of such Selling Shareholder; all
authorizations and consents necessary for the execution and delivery of this
Agreement, the Custody Agreement and the Power of Attorney on behalf of such
Selling Shareholder and for the sale and delivery of the Shares to be sold by
such Selling Shareholder hereunder have been given, except as may be required
by the Act or state securities laws or the NASD; and such Selling Shareholder
has the legal capacity and full right, power and authority to execute this
Agreement, the Custody Agreement and the Power of Attorney.

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<PAGE> 9

(d) The performance of this Agreement, the Custody
Agreement and the Power of Attorney and the consummation of the transactions
contemplated hereby and thereby by each of the Selling Shareholders will not
result in a material breach or violation of, or material conflict with, any of
the terms or provisions of, or constitute a material default by such Selling
Shareholder under, any indenture, mortgage, deed of trust (constructive or
other), loan agreement, lease, franchise, license or other agreement or
instrument to which such Selling Shareholder or any of its properties is bound,
any statute, or any judgment, decree, order, rule or regulation or any court or
governmental agency or body applicable to such Selling Shareholder or any of
its properties.

(e) Such Selling Shareholder has not distributed and will
not distribute any prospectus or other offering material in connection with the
offer and sale of the Shares other than any preliminary prospectus filed with
the Commission or the Prospectus or other material permitted by the Act.

(f) For a period of 180 days from the Effective Date of
the Registration Statement, such Selling Shareholder will not, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any shares of Common Stock, other than to the Underwriters pursuant
to this Agreement, without the prior written consent of J. C. Bradford & Co.;
provided, however, that the undersigned may give or pledge any such securities
without the prior written consent of J.C. Bradford & Co. if the donee or
pledgee, as the case may be, agrees in writing prior to such gift or pledge to
be bound by the terms of this agreement and such writing is delivered to J.C.
Bradford & Co. within five days after said gift or pledge.

(g) To the knowledge of such Selling Shareholder, the
representations and warranties of the Company contained in Section 3 of this
Agreement are true and correct; such Selling Shareholder has reviewed and is
familiar with the Registration Statement as originally filed with the
Commission and the preliminary prospectus contained therein. To the knowledge
of such Selling Shareholder, the preliminary prospectus does not include an
untrue statement of a material fact, or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; other than as disclosed to the
Underwriters, such Selling Shareholder is not prompted to sell the Shares to be
sold by such Selling Shareholder by any information concerning the Company that
is not set forth in the preliminary prospectus or the Prospectus.

(h) At the time the Registration Statement becomes
effective (i) such parts of the Registration Statement and any amendments and
supplements thereto as specifically refer to such Selling Shareholder will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (ii) such parts of the Prospectus as specifically refer to such
Selling Shareholder will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

(i) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory body,
administrative or other governmental body is necessary

9
<PAGE> 10

in connection with the execution and delivery of this Agreement by such Selling
Shareholder, and the consummation by it of the transaction herein contemplated
(other than as required by the Act, state securities laws and the NASD).

(j) Any certificates signed by or on behalf of such
Selling Shareholder as such and delivered to the Representatives or to counsel
for the Representatives shall be deemed a representation and warranty by such
Selling Shareholder to each Underwriter as to the matters covered thereby.

(k) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein contemplated
such Selling Shareholder agrees to deliver to you prior to or at the Closing
Date a properly completed and executed United States Treasury Department Form
W-9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).

(l) Such Selling Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or which might
constitute or be expected to constitute, stabilization or manipulation of the
price of the Common Stock.

5. COVENANTS OF THE COMPANY.

The Company covenants and agrees with each of the Underwriters
as follows:

(a) The Company will not, either prior to the Effective
Date or thereafter during such period as the Prospectus is required by law to
be delivered in connection with sales of the Shares by an underwriter or
dealer, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to you within
a reasonable period of time prior to the filing thereof and you shall not have
objected thereto in good faith.

(b) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify you promptly, and
will confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (iv) of the happening of
any event during the period mentioned in the second sentence of Section 5(e)
that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances in which they are made,
not misleading, and (v) of receipt by the Company or any representatives or
attorney of the Company of any other communication from the Commission relating
to the Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration

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<PAGE> 11

Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement pursuant to Rule 430A
of the Rules and Regulations, the Company will use its best efforts to comply
with the provisions of and make all requisite filings with the Commission
pursuant to said Rule 430A and to notify the Representatives promptly of all
such filings.

(c) The Company will furnish to you, without charge,
three signed copies of the Registration Statement and of any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto.

(d) The Company will comply with all the provisions of
any undertakings contained in the Registration Statement. The Company will,
from time to time, after the effective date of the Registration Statement file
with the Commission such reports as are required by the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the rules and
regulations thereunder (the "Exchange Act Rules and Regulations") and the Rules
and Regulations, and shall also file with state securities commissions in
states where the Shares have been sold by you (as you shall have advised us in
writing) such reports as are required to be filed by the securities acts and
the regulations of those states.

(e) On the Effective Date, and thereafter from time to
time until expiration of the period mentioned in the second sentence of this
Section 5(e), the Company will deliver to each of you, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as you may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by you and by all dealers to whom the Shares
may be sold, both in connection with the offering or sale of the Shares and for
any period of time thereafter during which the Prospectus is required by law to
be delivered in connection therewith. If during such period of time any event
shall occur which in the judgment of the Company or your counsel should be set
forth in the Prospectus in order to make any statement therein, in light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to each of you, without charge, such
number of copies thereof as you may reasonably request.

(f) Prior to any public offering of the Shares by you,
the Company will cooperate with you and your counsel in connection with the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you may request; provided,
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action which
would subject it to general service of process in any jurisdiction where it is
not now so subject.

(g) During the period of three years commencing on the
Effective Date, the Company will furnish to the Representatives copies of such
financial statements and other periodic and special reports as the Company may
from time to time distribute generally to the holders of any class of its
capital stock, and will furnish to you a copy of each annual or other

11
<PAGE> 12

report it shall be required to file with the Commission. During such period,
the Company will promptly notify you in writing if it appears to the Company
that it is likely that the Company will not in a timely manner furnish to its
shareholders an annual report containing audited financial statements or a
quarterly report for one of the first three quarters of the fiscal year
containing unaudited financial information.

(h) The Company will make generally available to holders
of its securities as soon as may be practicable but in no event later than the
last day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).

(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will
pay, or reimburse if paid by the Underwriters, all costs and expenses incident
to the performance of the obligations of the Company under this Agreement,
including but not limited to costs and expenses of or relating to (i) the
preparation, printing, and filing of the Registration Statement and exhibits to
it, each preliminary prospectus, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Shares, (iii) the printing of this
Agreement and other underwriting documents, including Underwriter's
Questionnaires, Underwriter's Powers of Attorney, Blue Sky Memorandum, Master
Agreement Among Underwriters and Master Selected Dealer Agreements, (iv)
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (v) the quotation of the Shares on the Nasdaq National
Market, (vi) any filings required to be made by you with the NASD, and the
fees, disbursements and other charges of your counsel in connection therewith,
(vii) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions designated pursuant to
Section 5(f), including the fees, disbursements and other charges of your
counsel in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda (subject to a maximum
fee of $30,000, assuming no unusual circumstances), and (ix) the transfer agent
for the Shares.

(j) If this Agreement shall be terminated by the Company
or if for any reason the Company shall be unable to perform its obligations
hereunder, the Company will reimburse you for all out-of-pocket expenses
(including the fees, disbursements and other charges of your counsel)
reasonably incurred by them in connection herewith. If this Agreement shall be
terminated by the Underwriters based upon an Act of God or other circumstances
not involving a matter within the control of the Company or any fault of the
Company, the Company shall have no obligation to reimburse you for any
out-of-pocket expenses.

(k) The Company will not at any time, directly or
indirectly, take any action designed, or which might reasonably be expected, to
cause or result in, or which will constitute,

12
<PAGE> 13

stabilization of the price of the shares of Common Stock to facilitate the sale
or resale of any of the Shares.

(l) The Company will apply the net proceeds from the
offering and sale of the Shares to be sold by the Company in the manner set
forth in the Prospectus under "Use of Proceeds."

(m) During the period of 180 days commencing at the
Closing Date, the Company will not, without your prior written consent, grant
options to purchase shares of Common Stock or Class A Common Stock except under
stock option plans previously approved by the Company's shareholders, and
except at prices equal to or greater than "fair market value", as defined in
the Company's 1995 Employee and Officer Stock Option Plan and in the Company's
1995 Director Stock Option Plan.

(n) The Company will not, and will cause each of its
executive officers, directors and each beneficial owner or more than 1% of the
outstanding shares of Common Stock or Class A Common Stock (if any) to enter
into agreements with you to the effect that they will not, for a period of 180
days after the commencement of the public offering of the Shares, without your
prior written consent (which shall not be unreasonably withheld), sell,
contract to sell or otherwise dispose of any shares of Common Stock or Class A
Common Stock or rights to acquire such shares (other than pursuant to stock
option plans for employees or directors or in connection with other employee
incentive compensation arrangements and other than as otherwise set forth in
such agreements).

(o) If at any time during the 25 day period after the
Registration Statement is declared effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which, in your
opinion, the market price for the Shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising it as to the effect set forth above, prepare, consult
with you concerning the substance of and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or commenting
on such rumor, publication or event.

6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.

The respective obligations of the Underwriters to purchase and
pay for the Shares shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company and the Selling Shareholders
herein as of the date here of and as of the Closing Date as if made on and as
of the Closing Date, to the accuracy of the statements of the Company's
officers made pursuant to the provisions hereof, to the performance by the
Company and the Selling Shareholders of all of their covenants and agreements
hereunder and to the following additional conditions:

(a) Notification that the Registration Statement has
become effective shall be received by you not later than 5:30 p.m., Nashville,
Tennessee time, on the date of this

13
<PAGE> 14

Agreement or at such later date and time as shall be consented to in writing by
you and all filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made.

(b) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities and to the satisfaction of the Representatives,
(iv) after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to you and you did not object thereto in good faith, (v) the
NASD, upon review of the terms of the public offering of the Shares, shall not
have objected to such offering, such terms or the Underwriters' participation
in the same, and (vi) and you shall have received certificates, dated the
Closing Date and the Option Closing Date and signed by the Chief Executive
Officer or the Chairman of the Board of Directors of the Company and the Chief
Financial Officer of the Company (who may, as to proceedings threatened, rely
upon the best of their information and belief), to the effect of clauses (i),
(ii) and (iii).

(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not
have been a material adverse change, or any development involving a prospective
material adverse change, in the general affairs, business, business prospects,
properties, management, key personnel, condition (financial or otherwise) or
results of operations of the Company or any Subsidiary, whether or not arising
from transactions in the ordinary course of business, in each case other than
as set forth in the Registration Statement and the Prospectus (or, in the case
of a prospective change, other than as contemplated by the Registration
Statement and the Prospectus), and (ii) the Company shall not have sustained
any material loss or interference with its business or properties from fire,
explosion, flood, hurricane or other casualty or calamity, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in your reasonable judgment any
such development makes it impracticable or inadvisable to consummate the sale
and delivery of the Shares by you at the public offering price.

(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been
no litigation or other proceeding instituted against the Company or any of its
officers or directors in their capacities as such, before or by any Federal,
state, or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding would materially and adversely
affect the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company.

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<PAGE> 15

(e) Each of the representations and warranties of the
Company and the Selling Shareholders contained herein shall be true and correct
in all material respects at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, as if made at the Closing Date, and all
covenants and agreements herein contained to be performed on the part of the
Company or the Selling Shareholders and all conditions herein contained to be
fulfilled or complied with by the Company or the Selling Shareholder at or
prior to the Closing Date and, with respect to the Option Shares, at or prior
to the Option Closing Date, shall have been duly performed, fulfilled or
complied with.

(f) The Underwriters shall have received an opinion,
dated the Closing Date and, with respect to the Option Shares, the Option
Closing Date, and satisfactory in form and substance to your counsel, from
Wyche, Burgess, Freeman & Parham, P.A., counsel to the Company, to the effect
that:

(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of South Carolina, with corporate power and authority to
own its properties and conduct its business as described in
the Prospectus.

(ii) Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the
laws of its state of incorporation or organization, as the
case may be; each Subsidiary has the corporate power and
authority to own its properties and conduct its business as
described in the Prospectus; and each Subsidiary is qualified
to do business as a foreign corporation in good standing in
all other jurisdictions when the failure to so qualify would
have a material adverse effect upon the Company and its
Subsidiaries taken as a whole.

(iii) As of the dates specified therein, the Company
had authorized and issued capital stock as set forth under the
caption "Capitalization" in the Prospectus. All the
outstanding shares of capital stock of each Subsidiary have
been duly and validly authorized and issued and are fully paid
and nonassessable, and except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of each of
the Subsidiaries (except directors' qualifying shares) are
owned by the Company free and clear of any perfected security
interest and any other security interests, claims, liens or
encumbrances.

(iv) The Shares delivered on such Closing Date have
been duly authorized, validly issued and are fully paid and
nonassessable, and conform to the description thereof
contained in the Prospectus.

(v) The outstanding shares of Common Stock and Class
A Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus; and the
shareholders of the Company have no preemptive or similar
rights with respect to the Shares, the Common Stock or the
Class A Common Stock. All offers and sales of the Company's
securities during the past three years were at all relevant

15
<PAGE> 16

times duly registered or exempt from the registration
requirements of the Act and were duly registered or the
subject of an exemption from the registration requirements of
applicable state securities or Blue Sky laws.

(vi) There are no contracts, agreements or
understandings known to such counsel between the Company and
any person other than the Selling Shareholders granting such
person the right to require the Company to file a registration
statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the
Company to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.

(vii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required for the issuance or sale of the Shares or
the consummation of the other transactions contemplated by
this Agreement, except such as have been obtained and made
under the Act, the Exchange Act and such as may be required
under state securities or Blue Sky laws.

(viii) The execution, delivery and performance of
this Agreement and the consummation of the transactions herein
contemplated, including the issuance and sale of the Shares
and compliance with the provisions thereof, will not result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, (A) any statute, rule, regulation
or, to the knowledge of such counsel, order of any
governmental agency or body or any court having jurisdiction
over the Company or the Subsidiaries or any of its properties,
or (B) any material obligation, agreement, covenant or
condition contained in any agreement or instrument to the
knowledge of such counsel to which the Company or the
Subsidiaries is a party or by which the Company or the
Subsidiaries is bound or to which any of the properties of the
Company or the Subsidiaries is subject, or (C) the Articles of
Incorporation as amended, of the Company, or the Bylaws of the
Company or the Articles of Incorporation or Bylaws of the
Subsidiaries, and the Company has full power and authority to
authorize, issue and sell the Shares as contemplated by this
Agreement.

(ix) The Registration Statement was declared
effective under the Act as of the date and time specified in
such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was
included in the Registration Statement (as the case may be),
and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act; the Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates,
complied as to form in all material

16
<PAGE> 17

respects with the requirements of the Act and the Rules
and Regulations (except that such counsel need express no
opinion as to financial statements, schedules and other
financial or statistical information included therein); the
descriptions in the Registration Statement and Prospectus of
statutes, legal and governmental proceedings and contracts and
other documents are accurate in all material respects and
fairly present the information required to be shown; and such
counsel does not know of any statutes or regulations or any
pending or threatened legal or governmental proceedings,
required to be described in the Prospectus which are not
described as required nor of any contracts or documents of a
character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required; it being understood that such counsel need express
no opinion as to the financial statements, schedules or other
financial or statistical data contained in the Registration
Statement or the Prospectus or as to the section of the
Prospectus entitled "Underwriting."

(x) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid
and legally binding obligation of the Company enforceable in
accordance with its terms, except (A) as such enforceability
may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or similar laws now or hereafter in
effect relating to creditors' rights or debtors' obligations
generally; (B) that the remedies of specific performance and
injunctive and other forms of relief are subject to general
equitable principles, whether enforcement is sought at law or
in equity, and that such enforcement may be subject to the
discretion of the court before which any proceedings therefor
may be brought; and (C) as rights to indemnity and
contribution may be limited by state or Federal laws relating
to securities or the policies underlying such laws.

Such opinion shall also contain a statement by counsel to the
effect that such counsel have no reason to believe that the Registration
Statement, or any amendment thereto, as of its effective date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, as of its issue
date, included any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statement of a material fact or
omitted to state any material fact necessary in order to make the statements,
in light of the circumstances under which they were made, not misleading.

In rendering such opinion, such counsel may rely as to matters
of fact, to the extent proper, on certificates of responsible officers of the
Company.

(g) The Underwriters shall have received an opinion,
dated the Closing Date, and satisfactory in form and substance to your counsel,
from [Wyche, Burgess, Freeman & Parham, P.A.], counsel for the Selling
Shareholders, to the effect that:

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<PAGE> 18

(i) This Agreement, the Custody Agreement and the
Power of Attorney have been duly executed and delivered by or
on behalf of each of the Selling Shareholders and constitute
valid and binding agreements of such Selling Shareholders in
accordance with their terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy,
insolvency, moratorium, reorganization or similar laws from
time to time in effect affecting the enforcement of creditors'
rights and except that the enforceability of the rights to
indemnity and contribution contained herein may be limited by
federal or state laws and public policy underlying such laws.

(ii) To the knowledge of such counsel, the sale of
the Shares to be sold by each Selling Shareholder hereunder
and the compliance by such Selling Shareholder with all of the
provisions of this Agreement, the Custody Agreement and the
Power of Attorney and the consummation of the transactions
herein and therein contemplated will not conflict with or
result in a breach or violation of any terms or provisions of,
or constitute a default under any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which such Selling
Shareholder is a party or by which such Selling Shareholder is
bound or to which any of the property or assets of such
Selling Shareholder is subject, or any statute, order, rule or
regulation of any court or governmental agency or body known
to such counsel to be applicable to such Selling Shareholder
or the property of such Selling Shareholder.

(iii) To the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental
agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with
the Shares to be sold by each Selling Shareholder hereunder,
except which have been duly obtained and in full force and
effect, such as have been obtained under the Act and such as
may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of such Shares
by the Underwriters, as to which such counsel need express no
opinion.

(iv) Assuming that the Underwriters will take
delivery of the Shares for value in good faith and without
notice of any adverse claim and that the Underwriters are not
parties themselves to any fraud or illegality affecting the
Shares, and by delivery of a certificate or certificates
therefor, the Selling Shareholders will transfer to the
Underwriters good and marketable title to such shares, free
and clear of any pledge, lien, security interest, charge,
claim, equity, or encumbrance of any kind.

In rendering such opinion, such counsel may rely as to matters
of fact, to the extent proper, on certificates of the Selling Shareholders and
the representations and warranties contained in the Power of Attorney and
Custody Agreement executed by each of them. Such counsel also may rely as to
matters of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.

18
<PAGE> 19

(h) You shall have received an opinion, dated the Closing
Date and the Option Closing Date, from Nelson Mullins Riley & Scarborough,
L.L.P., as your counsel, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to you, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.

(i) The Representative shall have received from the
Accountants a letter dated the date hereof, and at the Closing Date a second
letter dated the Closing Date, in form and substance satisfactory to the
Representatives, stating that they are independent auditors with respect to the
Company and its Subsidiaries within the meaning of the Act and the applicable
Rules and Regulations, and to the effect that:

(i) In their opinion, the financial statements
and schedules examined by them and included in the
Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
Act and the Rules and Regulations and are presented in
accordance with generally accepted accounting principles; and
they have made a review in accordance with standards
established by the American Institute of Certified Public
Accountants of the interim financial statements, selected
financial and operating data, and/or condensed financial
statements derived from audited financial statements of the
Company.

(ii) The selected financial and operating
information included in the Preliminary Prospectus and the
Prospectus under the captions "Prospectus Summary" and
"Selected Financial and Operating Date" for each of the fiscal
years ended December 31, 1991, 1992, 1993, 1994 and 1995
agrees with the corresponding amounts in the audited financial
statements included in the Prospectus or previously reported
on by them.

(iii) On the basis of a reading of the latest
available interim financial statements (unaudited) of the
Company and its Subsidiaries, a reading of the minute books of
the Company and its Subsidiaries, inquiries of officials of
the Company responsible for financial and accounting matters
and other specified procedures, all of which have been agreed
to by the Representatives, nothing came to their attention
that caused them to believe that:

a. the unaudited financial statements
included in the Registration Statement do not comply
as to form in all material respects with the
accounting requirements of the federal securities
laws and the related published rules and regulations
thereunder or are not in conformity with generally
accepted accounting principles applied on a basis
consistent with the basis for the audited financial
statements contained in the Registration Statement;

b. any other unaudited financial
statement data included in the Prospectus do not
agree with the corresponding items in the unaudited

19
<PAGE> 20

consolidated financial statements from which data was
derived and any such unaudited data were not
determined on a basis consistent with the basis for
the corresponding amounts in the audited financial
statements included in the Prospectus;

c. at a specified date not more than
five days prior to the date of delivery of such
respective letter, there was any change in the
consolidated capital stock, decline in stockholders'
equity or increase in long-term debt of the Company
and its Subsidiaries, or other items specified by the
Underwriters, in each case as compared with amounts
shown in the latest balance sheets included in the
Prospectus, except in each case for changes,
decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in
such letters; and

d. for the period from the closing date
of the latest statements of income included in the
Prospectus to a specified date not more than five
days prior to the date of delivery of such respective
letter, there were any decreases in net revenues or
net income of the Company, or other items appearing
on the face of the statement of operations specified
by the Representatives, or any increases in any items
appearing on the face of the statement of operations
specified by the Representatives, in each case as
compared with the corresponding period of the
preceding year, except in each case for decreases
which the Prospectus discloses have occurred or may
occur or which are described in such letter.

(iv) They have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information specified by
you which are derived from the general accounting records of
the Company and its Subsidiaries, which appear in the
Prospectus and have compared and agreed such amounts,
percentages and financial information with the accounting
records of the Company and its Subsidiaries or to analyses and
schedules prepared by the Company and its Subsidiaries from
its detailed accounting records.

In the event that the letters to be delivered referred to
above set forth any such changes, decreases or increases, it shall be a further
condition to the obligations of the Underwriters that the Underwriters shall
have reasonably determined, after discussions with officers of the Company
responsible for financial and accounting matters and with the Accountants, that
such changes, decreases or increases as are set forth in such letters do not
reflect a material adverse change in the stockholders' equity or long-term debt
of the Company as compared with the amounts shown in the latest balance sheet
of the Company included in the Prospectus, or a material adverse change in
total net revenues or net income of the Company, in each case as compared with
the corresponding period of the prior year.

20
<PAGE> 21

(j) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to you a certificate, dated the
date of its delivery, signed by each of the Chief Executive Officer and Chief
Financial Officer of the Company, in form and substance satisfactory to you, to
the effect that:

(i) Each of the representations and warranties of
the Company contained in Section 3 of this Agreement were,
when originally made, and are, at the time such certificate is
delivered, true and correct in all material respects;

(ii) Each of the covenants required herein to be
performed by the Company on or prior to the delivery of such
certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company
on or prior to the date of such certificate has been duly,
timely and fully complied with.

(k) On or prior to the Closing Date, you shall have
received the executed agreements referred to in Section 5(n).

(l) The Shares shall be qualified for sale in such states
as you may reasonably request, each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing Date or the
Option Closing Date.

(m) The Shares shall have been duly authorized for
quotation on the Nasdaq National Market upon official notice of issuance.

(n) No Underwriter shall have advised the Company that
the Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or any supplement thereto, contains an untrue statement of fact
which, in your reasonable judgment, is material, or omits to state a fact
which, in your reasonable judgment, is material and is required to be stated
therein or necessary to make the statements therein not misleading and the
Company shall not have cured such untrue statement of fact or stated a
statement of fact required to be stated therein.

(o) The Company shall have furnished to you such
certificates, in addition to those specifically mentioned herein, as you may
have reasonably requested as to the accuracy and completeness at the Closing
Date and the Option Closing Date of any statement in the Registration Statement
or the Prospectus, as to the accuracy at the Closing Date and the Option
Closing Date of the representations and warranties of the Company herein, as to
the performance by the Company of its obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to your obligations
hereunder.

(p) The Selling Shareholders or the Attorney-in-Fact
shall deliver to the Underwriters a certificate dated the Closing Date and
executed by each Selling Shareholder or the Attorney-in-Fact to the effect that
the representations and warranties of the Selling Shareholders shall be true
and correct as of the Closing Date.

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<PAGE> 22

7. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, liabilities, expenses and damages (including any and
all investigative, legal and other expenses reasonably incurred in connection
with,and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject under
the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based in whole or in part
upon (i) any inaccuracy in the representations and warranties of the Company
contained herein, (ii) any failure of the Company to perform its obligations
hereunder or under law or (iii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or in any documents filed under the
Exchange Act or any blue sky application or filing, or the omission or alleged
omission to state in such document a material fact required to be stated in it
or necessary to make the statements in it not misleading; provided, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus or the Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability; and further
provided, that the Company will not be liable to the extent that such loss,
claim, liability, expense or damage arises from the sale of the Shares in the
public offering to any person by an Underwriter and is based on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to an Underwriter furnished in
writing to the Company by an Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus. The
Company acknowledges that the statements set forth under the heading
"Underwriting" in any preliminary prospectus and the Prospectus constitute the
only information relating to any Underwriter furnished in writing to the
Company by you expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the Company might otherwise have.

(b) Each Selling Shareholder agrees, severally and not
jointly, to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act, and the Company, its directors, its
officers who sign the Registration Statement and each person, if any who
controls the Company within the meaning of either such Section, provided,
however, that the indemnification obligation of each Selling Shareholder shall
be limited to the aggregate public offering price of the Shares sold by such
Selling Shareholder, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue

22
<PAGE> 23

statement of a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendment or supplement thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Selling Shareholder
furnished in writing by or on behalf of such Selling Shareholder expressly for
use in the Registration Statement or the Prospectus or in any preliminary
prospectus; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus or the Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation of
the sale of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.

(c) Each Underwriter will indemnify and hold harmless the
Company, the Selling Shareholders, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company and each officer of the Company who
signs the Registration Statement to the same extent as the foregoing indemnity
from the Company to the Underwriters, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to you furnished in writing to
the Company by you expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus. The Company acknowledges that the
statements set forth under the heading "Underwriting" in any preliminary
prospectus and the Prospectus constitute the only information relating to the
Underwriters furnished in writing to the Company by the Underwriters expressly
for inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus. This indemnity will be in addition to any liability that the
Underwriters might otherwise have.

(d) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party will not relieve it from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 7 unless, and
only to the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party, and after notice from the indemnifying
party to the indemnified party

23
<PAGE> 24

of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (i) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party,
(ii) the indemnified party has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (iii) a conflict of interests exists (based on advice of
counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iv) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All
such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld).

(e) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 7 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company, the
Selling Shareholders or the Underwriters, then the Company, the Selling
Shareholders and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and
directors of the Company, who may be liable for contribution) to which the
Company, the Selling Shareholders and the Underwriters may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company, the Selling Shareholders and the Underwriters. The relative
benefits received by the Company, the Selling Shareholders and the Underwriters
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering (before deducting expenses) received by each of the
Company and the Selling Shareholders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate
to reflect not only the relative benefits referred to in the foregoing sentence
but also the relative fault of the Company, the Selling Shareholders and the
Underwriters with respect to the statements or omissions which resulted in such
loss, claim,

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<PAGE> 25

liability, expense or damage, or action in respect thereof, as well as any
other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, the
Selling Shareholders or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(e) were to be determined by pro rata or per capita
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 7(e)
shall be deemed to include, for purpose of this Section 7(e), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(e), an Underwriter shall not be required to
contribute any amount in excess of the underwriting discounts received by it
(less the aggregate amount of any damages which such Underwriter and its
controlling persons have otherwise been required to pay in respect of the same
or any similar claim), and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(e) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(e), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer and director of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof.
Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution maybe made under this Section 7(e), will notify any such party or
parties from whom contribution may be sought, but the omission to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 7(e). No party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).

(f) The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the Company and the
Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any investigation made by the
Underwriters or on their behalf, (ii) acceptance of any of the Shares and
payment therefor or (iii) any termination of this Agreement.

8. TERMINATION.

The Underwriters' obligations under this Agreement may be
terminated at any time on or prior to the Closing Date (or, with respect to the
Option Shares, on or prior to the Option Closing Date), by notice to the
Company and the Selling Shareholders from the Representatives, without
liability on the part of any of the Underwriters to the Company or the

25
<PAGE> 26

Selling Shareholders, if, prior to delivery and payment for the Shares (or the
Option Shares, as the case may be), in your sole and reasonable judgment, (i)
trading in any of the equity securities of the Company shall have been
suspended by the Commission, by an exchange that lists the Shares or by the
Nasdaq National Market, (ii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the over-the-counter market
shall have been suspended or limited or minimum or maximum prices shall have
been generally established on such exchange, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by such exchange or by
order of the Commission or any court of other governmental authority, (iii) a
general banking moratorium shall have been declared by either Federal or state
authorities or (iv) any material adverse change in the financial or securities
markets in the United States or in political, financial or economic conditions
in the United States or any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity or crisis shall have occurred the effect of any of which is such as to
make it, in your sole and reasonable judgment, impracticable or inadvisable to
market the Shares on the terms and in the manner contemplated by the
Prospectus.

9. SUBSTITUTION OF UNDERWRITERS.

If any Underwriter shall fail or refuse to purchase any of the
Firm Shares which it has agreed to purchase hereunder, and the aggregate number
of Firm Shares which such defaulting Underwriter agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
Shares that such defaulting Underwriter agreed but failed or refused to
purchase, in the proportions which the number of Firm Shares which they have
respectively agreed to purchase pursuant to Section 1 bears to the aggregate
number of Firm Shares which all such non-defaulting Underwriters have so agreed
to purchase, or in such other proportions as you may specify; provided, that in
no event shall the maximum number of Firm shares which an Underwriter has been
obligated to purchase pursuant to Section 1 be increased pursuant to this
Section 9 by more than one-ninth of such number of Firm Shares without the
prior written consent of such Underwriter. If an Underwriter shall fail or
refuse to purchase any Firm Shares and the aggregate number of Firm Shares
which such defaulting Underwriter agreed but failed or refused to purchase
exceeds one-tenth of the aggregate number of the Firm Shares and arrangements
satisfactory to the non-defaulting Underwriters or the Company for the purchase
of such Firm Shares are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company for the purchase or sale of any Shares under this
Agreement. In any such case the Underwriters or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be effected.
Any action taken pursuant to this Section 9 shall not relieve any defaulting
Underwriter from liability in respect to any default of such Underwriter under
this Agreement.

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<PAGE> 27

10. DEFAULT BY A SELLING SHAREHOLDER.

If any of the Selling Shareholders shall fail to sell and
deliver the number of Shares that such Selling Shareholder is obligated to
sell, the Underwriters may, at their option, by notice to the Company, either
(a) require the Company to sell and deliver such number of shares of Common
Stock as to which the Selling Shareholders have defaulted, (b) elect to
purchase the Firm Shares and the Option Shares that the Company and the
non-defaulting Selling Shareholders have agreed to sell pursuant to this
Agreement, or (c) terminate this Agreement if the Company shall have refused to
sell and deliver to the Underwriters the shares of Common Stock referred to in
clause (a) of this Section 10.

In the event of a default under this Section 10 that does not
result in the termination of this Agreement, either the Underwriters or the
Company shall have the right to postpone the Closing Date or Option Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents
or arrangements. No action taken pursuant to this Section 10 shall relieve the
Company or the Selling Shareholder so defaulting from liability, if any, in
respect of such default.

11. MISCELLANEOUS.

All communications hereunder shall be in writing and, if sent
to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to the Representatives in care of J.C. Bradford & Co.,
J.C. Bradford Financial Center, 330 Commerce Street, Nashville, Tennessee
37201, Attention: Michael C. Nunan, or if sent to the Company or any Selling
Shareholder shall be mailed, delivered or telegraphed and confirmed in writing
to the Company at 15 South Main Street, Suite 750, Greenville, South Carolina
29601, Attention: John M. Sterling, Jr.

This Agreement has been and is made solely for the several
Underwriters', the Company's and the Selling Shareholders' benefits and of the
controlling persons, directors and officers referred to in Section 7, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such purchaser, of Shares from an Underwriter.

This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.

This Agreement may be signed in two or more counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.

In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

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<PAGE> 28

The Company, the Selling Shareholders and you each hereby
irrevocably waive any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.

You hereby represent and warrant to the Company that you have
authority to act hereunder on behalf of the several Underwriters, and any
action hereunder taken by you will be binding upon all the Underwriters.

Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Shareholders and you.

Very truly yours,

EMERGENT GROUP, INC.

By:
--------------------------------------
John M. Sterling, Jr.,
Chairman, President and Chief
Executive Officer

SELLING SHAREHOLDERS:

By:
--------------------------------------
,
------------------------------
As Attorney-in-Fact for each of the
Selling Shareholders identified on
Schedule II hereto

Confirmed and accepted as of the
date first above written.

J.C. BRADFORD & CO.
RAYMOND JAMES & ASSOCIATES, INC.
WHEAT, FIRST SECURITIES, INC.
For themselves and as Representatives
of the several Underwriters

By: J.C. Bradford & Co.

By:
--------------------------

28
<PAGE> 29

SCHEDULE I

Underwriters

Number of
Name of Underwriter Firm Shares
------------------- -----------
<S> <C>
J.C. Bradford & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Raymond James & Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .

Wheat, First Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

29
<PAGE> 30

SCHEDULE II

SELLING SHAREHOLDERS

<TABLE>
<CAPTION>
Name of Selling Shareholder Number of Shares
- --------------------------- ----------------
<S> <C>
Enterprise Finance Company

John Hancock Mutual Life Insurance Co.

John M. Sterling, Jr.

C. Thomas Wyche

Charles C. Mickel

Minor M. Shaw

Buck Mickel

Buck A. Mickel

Kevin J. Mast

TOTAL
</TABLE>

<PAGE> 1

EXHIBIT 10.5 REVISED AND RESTATED AGREEMENT

THIS REVISED AND RESTATED AGREEMENT is entered into by and between
Carolina Investors, Inc. ("CII") and FIRST GREENSBORO HOME EQUITY, INC. and its
subsidiary, FIRST GREENSBORO HOME EQUITY OF ARKANSAS, INC. (collectively
"FGHE").

RECITALS

1. The parties wish to revise and restate their Agreement
entered into in June of 1994.

2. FGHE is in the business of making home equity loans and
providing credit underwriting to residents of [CONFIDENTIAL PORTION DELETED],
and such other states as the parties may agree to from time to time, secured
by first and second residential mortgages.

3. CII is willing to provide funds with which certain loans
originated by FGHE ("Qualified Mortgages") may be closed and funded, with
each such loan to be immediately assigned to CII at closing, in consideration
of the funds so advanced by CII.

4. CII will attempt to package and sell blocks of Qualified
Mortgages except as set forth herein. [CONFIDENTIAL PORTION DELETED]

AGREEMENT

1. Funding of Loans. From time to time during the term of this
Agreement, FGHE will submit Loan Approval Information and Funding Requests to
CII substantially in the form of the attached Exhibits A1 and A2 with respect
to Qualified Mortgages. Each such Funding Request will be submitted not less
than two (2) days prior to the proposed closing date or funding date, whichever
applies, of such Qualified Mortgage and CII will promptly advise FGHE of its
approval or disapproval, which shall be within CII's sole discretion, of each
such Funding Request.

a. For purposes of this Agreement, the term "Qualified Mortgage"
means a first or second mortgage home loan which is made by
FGHE and closed by FGHE's attorney in compliance with all
applicable federal, state and local statutes, rules and
regulations and which meets the underwriting criteria of this
Agreement set forth on Exhibit B, as such underwriting
criteria may be modified from time to time by the parties.
CII shall be entitled to audit FGHE's credit underwriting
standards and practices on a quarterly basis upon fifteen
(15) day prior written notice.
<PAGE> 2

b. Upon CII's approval of a Funding Request for a Qualified
Mortgage, FGHE shall retain an approved attorney, listed on
the attached Exhibit C (such list of approved attorneys may
be amended and supplemented from time to time by mutual
agreement of the parties) to close such Qualified Mortgage
and shall direct such attorney as follows:

(i) [CONFIDENTIAL PORTION DELETED]
(ii) [CONFIDENTIAL PORTION DELETED]
(iii) [CONFIDENTIAL PORTION DELETED]
(iv) [CONFIDENTIAL PORTION DELETED]
(v) [CONFIDENTIAL PORTION DELETED]
(vi) [CONFIDENTIAL PORTION DELETED]

2. Sale of Loans. CII will package blocks of Qualified
Mortgages and sell them to institutional buyers on a monthly basis.
[CONFIDENTIAL PORTION DELETED]

a. [CONFIDENTIAL PORTION DELETED]
b. [CONFIDENTIAL PORTION DELETED]
c. [CONFIDENTIAL PORTION DELETED]
d. [CONFIDENTIAL PORTION DELETED]

2.1 Unsold Blocks of Qualified Mortgages. In the event that CII
chooses not to sell a block of Qualified Mortgages pursuant to 2. above, but
instead wishes to hold such block as part of its own portfolio, then
[CONFIDENTIAL PORTION DELETED]

a. [CONFIDENTIAL PORTION DELETED]

2.2 Certain [CONFIDENTIAL PORTION DELETED] Loans. (a) CII shall
purchase from FGHE all "Logical To Book" loans, as defined below, at the
closing of each such loan. The purchase price of each such loan shall
[CONFIDENTIAL PORTION DELETED]

[CONFIDENTIAL PORTION DELETED]

b. During the time CII holds each such loan, the parties agree
that:

(i) [CONFIDENTIAL PORTION DELETED]
(ii) [CONFIDENTIAL PORTION DELETED]

c. CII's obligation to buy and FGHE's obligation to sell such
[CONFIDENTIAL PORTION DELETED] loans hereunder shall continue
for a term of one year and shall continue thereafter unless
terminated by either party by thirty (30) day prior written
notice to the other.

2
<PAGE> 3

d. As used herein, the term "Logical To Book" loan shall mean a
second mortgage residential loan which meets all of the
following criteria:

(i) First lien on a residential property (including
mobile homes) with a 50% loan-to-value or less;

(ii) Given by FGHE in connection with the first mortgage
to which such loan is subordinate, which first
mortgage loan meets the definition of Qualified
Mortgage hereunder made and is sold to CII hereunder;

(iii) First or second mortgages made for sole purpose of
renovating or completing property so that a loan can
be made and sold;

(iv) Secured by second mortgage on borrower's principal
residence, which is a permanent structure and not a
mobile home;

(v) First Mortgage loan and associated [CONFIDENTIAL
PORTION DELETED] loan are both current and not in
default;

(vi) [CONFIDENTIAL PORTION DELETED]

3. Representations and Warranties.

a. CII hereby represents and warrants as follows:

(i) CII is a corporation duly organized, validly existing
and in good standing under the laws of South Carolina
and is qualified to do business in each other
jurisdiction in which such qualification is required
or where CII maintains an office or does substantial
business.

(ii) All corporate actions required to be taken by or on
behalf of CII to authorize its execution of this
Agreement and the performance of its obligations
hereunder have been fully and properly taken. The
execution and consummation of this Agreement and the
transactions contemplated hereby do not and will not
violate any corporate charter, bylaw, contract,
indenture, agreement, covenant or understanding by
which CII is bound or to which is a party, or any
applicable law or regulation; or require the consent
of any governmental authority (unless such consent
has been obtained).

(iii) CII is in compliance with all applicable laws and
regulations. There are no actions, suits or
proceedings pending, or, to the knowledge of CII,
threatened against CII in any court or before any
administrative or regulatory agency the adverse
outcome of which CII would have a material adverse
effect on the assets and business of CII.

<PAGE> 4

b. FGHE hereby represents and warrants as follows:

(i) FGHE is a corporation duly organized, validly
existing and in good standing under the laws
of [CONFIDENTIAL PORTION DELETED]and is qualified to
do business in [CONFIDENTIAL PORTION DELETED] and in
each other jurisdiction in which such qualification
is required or where it maintains an office or does
substantial business. FGHE is a corporation duly
organized, validly existing and in good
standing under the laws of [CONFIDENTIAL PORTION
DELETED] and is qualified to do business in
[CONFIDENTIAL PORTION DELETED] and in each other
jurisdiction in which such qualification is required.

(ii) FGHE possesses all necessary licenses and meets all
other legal requirements to lend funds giving rise to
Qualified Mortgages and to sell Qualified Mortgages
to CII.

(iii) All corporate actions required to be taken by or on
behalf of FGHE to authorize its execution of this
Agreement and the performance of its obligations
hereunder have been fully and properly taken. The
execution and consummation of this Agreement and the
Qualified Mortgages contemplated hereby do not and
will not violate any corporate charter, bylaw,
contract, indenture, agreement, covenant or
understanding by which FGHE is bound or to which is
a party, or any applicable law or regulation; or
require the consent of any governmental authority
(unless such consent has been obtained).

(iv) FGHE is in compliance with all applicable laws and
regulations. There are no actions, suits or
proceedings pending, or, to the knowledge of FGHE,
threatened against FGHE in any court or before any
administrative or regulatory agency the adverse
outcome of which FGHE would have a material
adverse effect on the assets and business of FGHE.

(v) No fee or other charges shall be made by FGHE with
respect to any loan hereunder except for fees which
are reasonable and customary in the locality for the
services provided and which are imposed in full
compliance with all applicable federal, state and
local laws and regulations.

(vi) [CONFIDENTIAL PORTION DELETED]

(vii) [CONFIDENTIAL PORTION DELETED]

4
<PAGE> 5

(viii) During the term of this Agreement, FGHE shall not
[CONFIDENTIAL PORTION DELETED]

(c) Representations and warranties with respect to Qualified
Mortgages. At the time of transfer and conveyance of each
Qualified Mortgage to CII, FGHE hereby represents and
warrants to CII (which representations and warranties shall
survive the purchase and shall continue in full force and
effect until such Qualified Mortgages are paid in full) with
respect to each such Qualified Mortgage, as follows:

(i) FGHE is the sole and lawful owner of the Qualified
Mortgage and CII will receive good and marketable
title thereto free and clear of any and all liens,
encumbrances, claims and rights of any party
whatsoever.

(ii) No previous transfer or assignment of the Qualified
Mortgage will be effective and no other party has any
option of first refusal or other arrangement to
acquire, directly or indirectly, the Qualified
Mortgage.

(iii) All Qualified Mortgage Loan Documents (i) conform to
all applicable laws and regulations; (ii) are true,
valid, genuine and complete in all respects; (iii)
are enforceable against borrower in accordance with
their terms; and (iv) are subject to no defense,
claim or disability, counterclaim, offset or pending
bankruptcy. No defense, claim, disability,
counterclaim, or offset as described above will arise
against CII by virtue of the sale of the Qualified
Mortgage or assignment of the Qualified Mortgage
Documents under this Agreement. No suit, foreclosure
or any other legal action or preceding has been
brought by FGHE in accordance with its handling of
the Qualified Mortgages.

(iv) All Qualified Mortgage Loan Documents are completed
in compliance with all applicable laws and
regulations, and all computations made with respect
to any Qualified Mortgages are accurate.

(v) Each action taken by FGHE with respect to the
Qualified Mortgage and each Note, loan application,
agreement, form, letter, notice, statement, or other
materials used by FGHE in connection with the
origination, servicing and sale of each such
Qualified Mortgage, complies in all material respects
with all applicable laws and regulations, including
without limitation: the Consumer Credit Protection
Act and Regulation Z under Title I thereof; laws
respecting obtaining and/or using credit reports and
other information concerning individuals (including,
without limitation, the Fair Credit Reporting Act);
the Equal Credit Opportunity Act and Regulation B
thereunder; laws relating to unfair, deceptive, or
unconscionable acts and practices; laws governing the
sale of insurance

5
<PAGE> 6

(including, without limitation, credit life
insurance); federal laws and regulations relating to
such Qualified Mortgages (including without
limitation, the Real Estate Settlement Practices Act,
as amended); the Flood Disaster Protection Act; and
all applicable federal, state and local statutes,
regulations, ordinances, and administrative rulings.

(vi) There is due and owing on the Qualified Mortgage the
amount represented by FGHE to be due thereon.

(vii) With respect to each Qualified Mortgage which is a
deed of trust, a trustee, duly qualified under
applicable law to serve as such, has been properly
designated, serving and named in such deed of trust.
Except in connection with a trustee's sale after
default by the obligor, no fees or expenses are
payable by FGHE to the trustee under any deed of
trust.

(viii) The Qualified Mortgage has not arisen from a renewal
granted for the purpose of concealing from CII a
delinquency, and no collateral purporting to secure
the Note has been repossessed or disposed of or
foreclosed against by FGHE. No officer, director,
partner, employee or agent of FGHE (or of any
assignor of the Qualified Mortgage or of any broker
referring the Borrower under the Qualified Mortgage),
nor the FGHE has received any direct or indirect
benefit, fee, commission or other consideration or
value from any Borrower or from anyone else in
connection with the Qualified Mortgage (other than as
disclosed to CII in writing); nor has any such person
made, directly or indirectly, any payment on the Note
or on any of its officers, directors, partners,
employees or agents has made any agreement with any
Borrower providing for any variation of the interest
rate, schedules of payment or other terms and
conditions of the Note; and neither FGHE or any of
its officers, directors, partners, employees or
agents has received a request for approval of, or
notice of any proposed assumption, loss draft or
payoff of, the Qualified Mortgage.

(ix) A lender's title insurance policy regarding each
Qualified Mortgage became effective as of the
origination of such Qualified Mortgage, is, and shall
be, valid and is, and shall remain, in full force and
effect; such title insurance shows whether any prior
lien secures an open-end obligation requiring future
advances; any such insurance policy has been issued
by a title insurer qualified to do business in the
state in which the real property subject to a
Qualified Mortgage is located, insuring the priority
of the lien of the loan in the original principal
amount of such loan, which policy is in the then
current American Land Title Association or a state

6
<PAGE> 7

land title association form customarily used in the
state in which the insured property is located.

(x) The real property under each Qualified Mortgage is
insured, under standard homeowner's hazard and
casualty insurance policies, with appropriate
mortgagee clauses, for an amount equal to the loan
amount or more.

(xi) All real estate appraisals made in connection with
each Qualified Mortgage shall have been performed in
accordance with industry standards in the appraising
industry in the area where the appraised property is
located. Any disputes regarding appraisal accuracy
shall be submitted to an impartial appraiser,
appointed by CII, whose judgment shall be
determinative as to the accuracy of any appraisal.

(xii) There shall be no homestead or other exemption
available to the obligor of any Qualified Mortgage
which would interfere with the right to sell at a
trustee's sale or the right to foreclosure.

(xiii) There shall be no holder in due course claim or any
claim against any third party available to the
obligor of any Qualified Mortgage which would
interfere with the Mortgagee's right to enforce the
Qualified Mortgage, to sell at a trustee's sale, or
the right to foreclosure.

(xiv) FGHE shall be responsible for the misfeasance,
malfeasance or fraudulent acts of its employees or
agents.

(xv) The Qualified Mortgage is secured by a valid and
subsisting first or second priority lien or security
interest on the property as reflected in the Loan
Documents, and such lien or security interest in or
on Borrower's real and personal property
collateralizing the Note (including fixtures) is
valid and has been properly filed, recorded (or
received by the title insurance company for
recording) or otherwise perfected in accordance with
applicable law; and the Qualified Mortgage is insured
by a mortgage title insurance policy (or commitment
for same, the conditions having been satisfied).

(xvi) Each of the above representations and warranties (a)
applies to any and all Qualified Mortgages sold to
CII hereunder; (b) is for the benefit of CII and each
of its successors and assigns; (c) continues in full
force and effect for so long as the Note remains
outstanding and for such time as CII is subject to
any risk of loss or liability as to any Qualified
Mortgage purchased from FGHE hereunder; (d) is in
addition to any other specific warranties contained
elsewhere herein; and (e) is made by FGHE on

7
<PAGE> 8

its behalf and on the behalf of any third party
originator of any Qualified Mortgage which may be
sold hereunder in accordance with Section 2.

4. Limited Power of Attorney.

a. FGHE hereby makes, constitutes and appoints CII, its
successors and assigns, as FGHE's true and lawful
attorneys, with full power substitution in name of FGHE or
otherwise, whether in relation to real, personal, tangible or
intangible property, to do any and all of the following:

(i) To bill, demand, sue for, receive, collect, sign,
endorse, assign or comprise any and all notes,
checks, money orders or monies due on any Qualified
Mortgages sold to CII, and to receive, sign, endorse,
or assign any orders, certificates, insurance
policies and all benefits under any other instruments
or documents as may from time to time be necessary or
appropriate to accomplish the sales and transfers
provided for by this Agreement;

(ii) To complete, execute and record any assignment or
other document, including financing statements
covering any such collateral;

(iii) To exercise or perform any act, power or duty that
FGHE has or would have in connection with the
Qualified Mortgages purchased by CII, or which are
reasonable in order to protect CII's interest in the
collateral securing said Qualified Mortgage.

b. FGHE agrees that the foregoing powers are coupled with an
interest and are irrevocable notwithstanding FGHE's
dissolution, merger, consolidation or other corporate
reorganization or structural change or any other reason
whatsoever.

c. FGHE will, at CII's reasonable request from time to time,
execute one or more appropriate separate instruments
evidencing the powers granted CII in this Section, in form
suitable for recordation.

5. Opinion of Counsel; Certified Resolutions.

a. Prior to the time that CII first purchases any Qualified
Mortgages from FGHE under this Agreement, FGHE shall
provide to CII an Opinion of Counsel to FGHE, in form and
substance satisfactory to CII, stating that as of the date of
such Opinion:

(i) FGHE (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the
state of its incorporation or organization; (b) has
the requisite power and authority and the legal right
to conduct its

8
<PAGE> 9

business as now and heretofore conducted; (c) has all
necessary licenses, permits, consents or approvals
from or by, has made all necessary filings with, and
has given all necessary notices to, all governmental
authorities having jurisdiction, to the extent
required to conduct its business as now conducted in
all locations where it conducts business, and to the
extent necessary to assure the enforceability of each
Note and Mortgage in any location in which any
mortgaged property is located; and (d) is in
compliance with its certificate of incorporation and
bylaws or other governing documents.

(ii) The execution, delivery and performance of this
Agreement and all instruments and documents delivered
or to be delivered by FGHE pursuant to this
Agreement, and the origination and sale by FGHE of
each Qualified Mortgage hereunder (a) are within
FGHE's corporate power and authority; (b) have been
duly authorized by all necessary or proper corporate
action; (c) are not in contravention of any provision
of FGHE's certificate of incorporation or bylaws;
(d) will not violate any law or regulation or any
order or decree of any court or governmental
authority; (e) will not conflict with or result in
the breach of, or constitute a default with respect
to, any agreement or other instrument to which FGHE
is a party or by which FGHE of any of its property
is bound; and (f) do not require any filing or
registration with, or the consent or approval of, any
governmental authority or any other person which has
not been made or obtained previously.

(iii) This Agreement has been duly executed and delivered
by FGHE, and is a valid, legal and binding
obligation of FGHE enforceable in accordance with
its terms except as such enforcement may be limited
by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or
affecting the rights of creditors generally, and by
general principles of equity (regardless of whether
such enforcement is considered in a proceeding in
equity or at law).

(iv) No action, claim, or proceeding is now pending or, to
the knowledge of counsel, threatened against FGHE
at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any
federal, state, or local government or of any agency
or subdivision thereof or before any arbitrator or
panel of arbitrators which, if adversely determined,
(a) would result in a liability of FGHE in an
amount greater than $10,000, (b) questions the
validity of any Note or Security Instrument, or (c)
could, wither individually or in the aggregate,
result in any material adverse change in the
business, operations, property or financial or other
condition of FGHE.

9
<PAGE> 10

b. Certified copies of any resolution or document of consent of
the board of directors or other appropriate governing body of
FGHE authorizing the execution of this Agreement and the
performance of its obligations hereunder, and evidencing the
authority of the executing officer(s) to execute this
Agreement and all other documents, instruments and
certificates related hereto and to the transactions
contemplated hereunder.

6. Meetings and Financial Statement. The principal officers of
CII and FGHE agree to meet on a quarterly or more frequent basis to discuss
all information pertinent to this Agreement, its implementation and
continuation. Each party will provide the other with copies of its quarterly
financial statements, including balance sheet, income statement and statement
of changes in financial position, all within 30 days of the close of each
fiscal quarter.

7. Term of Agreement; Damages For [ ] Termination or
Breach.

a. The term of this Agreement shall be [CONFIDENTIAL PORTION
DELETED]

b. If either party causes a [______] Termination of this
Agreement, as defined below or fails to cure a material
breach of its obligations hereunder within 30 days after
written demand by the other party, then the other party (the
"Injured Party") shall be entitled to [CONFIDENTIAL PORTION
DELETED]

c. A [______] Termination shall include any termination other
than:

(i) Termination by mutual written agreement of the
parties;

(ii) Termination by CII in the event that [CONFIDENTIAL
PORTION DELETED]

(iii) Termination by [CONFIDENTIAL PORTION DELETED]

8. Notices. Any notice or demand which is required or permitted
to be given by a provision of this Agreement shall be deemed to have been
sufficiently given if either served personally or sent by prepaid first class,
registered or certified mail, addressed to the party at its address set forth
below:

Buyer: Kevin B. Giddens
Carolina Investors, Inc.
208 Garvin Street
P.O. Box 998
Pickens, SC 29671

Seller: W.C. "Buddy" Jordan
First Greensboro Home Equity, Inc.
1500 Pinecroft Road Suite 200
Greensboro, NC 27407

10
<PAGE> 11

Either party may change its address by written notice to the other.

9. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there
are no representations, inducements or other provisions other than those
expressed in writing herein. All changes, additions or deletions hereto must
be made in writing and signed by each of the parties hereto.

10. No Agency. This Agreement and transactions entered into
pursuant hereto shall not create between the parties a relationship agency,
legal representation, joint venture, partnership or employment, and the parties
agree that neither party is in any way authorized to make any contract,
agreement, warranty or representation, or to create any obligations, express or
implied, on behalf of the others.

11. Survival of Provisions. All of the covenants, agreements,
representations and warranties made herein by the parties hereto shall survive
and continue in effect after the termination of the Agreement or the
consummation of the transactions contemplated hereby. This Agreement may be
executed in counterparts, all of which, taken together, shall constitute one
and the same instrument.

12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina and any
applicable federal laws. In event of litigation, parties irrevocably designate
venue as Pickens County, South Carolina.

Carolina Investors, Inc.

By:______________________________
_____________________________, CEO

Attest:

________________________
Secretary

11
<PAGE> 12

First Greenboro Home Equity, Inc.

By:
-------------------------------

-------------------------------
(Title)
Attest: (Corporate Seal)

- ------------------------------
Secretary

First Greensboro Home Equity

By:
-------------------------------

-------------------------------
(Title)
Attest: (Corporate Seal)

- ------------------------------
Secretary

Direct & Beneficial Owners of FGHE

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

<PAGE> 13

EXHIBITS

A1. Loan Approval Information

A2. Funding Request

B. Underwriting Criteria

C. Approved Attorneys

D. Loan Documentation

E. Closing Attorney Certificate

F. Assignment of Qualified Mortgage

G. Owners of FGHE

<PAGE> 1

EXHIBIT 10.6 AGREEMENT

THIS AGREEMENT is entered into by and between Carolina Investors, Inc.
("CII") and Prime Investors, Inc. ("Prime").

RECITALS

1. Prime is in the business of making home equity loans and
providing credit underwriting to residents of South Carolina and such other
states as the parties may agree to from time to time, secured by first and
second residential mortgages.

2. CII is willing to provide funds with which certain loans
originated by Prime ("Qualified Mortgages") may be closed and funded, with
each such loan to be immediately assigned to CII at closing, in consideration
of the funds so advanced by CII.

3. CII will attempt to package and sell blocks of Qualified
Mortgages except as set forth herein. [CONFIDENTIAL PORTION DELETED]

AGREEMENT

1. Funding of Loans. From time to time during the term of this
Agreement, Prime will submit Loan Approval Information and Funding Requests to
CII substantially in the form of the attached Exhibits A1 and A2 with respect
to Qualified Mortgages. Each such Funding Request will be submitted not less
than two (2) days prior to the proposed closing date or funding date, whichever
applies, of such Qualified Mortgage and CII will promptly advise Prime of its
approval or disapproval, which shall be within CII's sole discretion, of each
such Funding Request.

a. For purposes of this Agreement, the term "Qualified Mortgage"
means a first or second mortgage home loan which is made by
Prime and closed by Prime's attorney in compliance with all
applicable federal, state and local statutes, rules and
regulations and which meets the underwriting criteria of this
Agreement set forth on Exhibit B, as such underwriting
criteria may be modified from time to time by the parties.
CII shall be entitled to audit Prime's credit underwriting
standards and practices on a quarterly basis upon fifteen
(15) day prior written notice.

b. Upon CII's approval of a Funding Request for a Qualified
Mortgage, Prime shall retain an approved attorney, listed on
the attached Exhibit C (such list of approved attorneys may
be amended and supplemented from time to time by mutual
agreement of the parties) to close such Qualified Mortgage
and shall direct such attorney as follows:

(i) [CONFIDENTIAL PORTION DELETED]
(ii) [CONFIDENTIAL PORTION DELETED]
(iii) [CONFIDENTIAL PORTION DELETED]
<PAGE> 2

(iv) [CONFIDENTIAL PORTION DELETED]
(v) [CONFIDENTIAL PORTION DELETED]
(vi) [CONFIDENTIAL PORTION DELETED]
(vii) [CONFIDENTIAL PORTION DELETED]

2. Sale of Loans. CII will package blocks of Qualified
Mortgages and sell them to institutional buyers on a monthly basis.
[CONFIDENTIAL PORTION DELETED]

a. [CONFIDENTIAL PORTION DELETED]
b. [CONFIDENTIAL PORTION DELETED]
c. [CONFIDENTIAL PORTION DELETED]
d. [CONFIDENTIAL PORTION DELETED]

a. [CONFIDENTIAL PORTION DELETED]

3. Primary Financing Only ("PFO") Loans. "PFO" loans are
defined as second mortgage loans closed in conjunction with a first mortgage
loan. Prime shall close and CII shall purchase "PFO" loans based upon the
criteria as outlined in Exhibit H. CONFIDENTIAL PORTION DELETED]

4. Representations and Warranties.

a. CII hereby represents and warrants as follows:

2
<PAGE> 3

b. Prime hereby represents and warrants as follows:

(i) Prime is a corporation duly organized, validly
existing and in good standing under the laws
of South Carolina and is qualified to do business in
South Carolina and in each other jurisdiction in
which such qualification is required or where it
maintains an office or does substantial business.

(ii) Prime possesses all necessary licenses and meets all
other legal requirements to lend funds giving rise to
Qualified Mortgages and to sell Qualified Mortgages
to CII.

(iii) All corporate actions required to be taken by or on
behalf of Prime to authorize its execution of this
Agreement and the performance of its obligations
hereunder have been fully and properly taken. The
execution and consummation of this Agreement and the
Qualified Mortgages contemplated hereby do not and
will not violate any corporate charter, bylaw,
contract, indenture, agreement, covenant or
understanding by which Prime is bound or to which is
a party, or any applicable law or regulation; or
require the consent of any governmental authority
(unless such consent has been obtained).

(iv) Prime is in compliance with all applicable laws and
regulations. There are no actions, suits or
proceedings pending, or, to the knowledge of Prime,
threatened against Prime in any court or before any
administrative or regulatory agency the adverse
outcome of which Prime would have a material adverse
effect on the assets and business of Prime.

(v) No fee or other charges shall be made by Prime with
respect to any loan hereunder except for fees which
are reasonable and customary in the locality for the
services provided and which are imposed in full
compliance with all applicable federal, state and
local laws and regulations.

(vi) CONFIDENTIAL PORTION DELETED

(vii) CONFIDENTIAL PORTION DELETED

3
<PAGE> 4

(viii) During the term of this Agreement, Prime shall not
[CONFIDENTIAL PORTION DELETED]

(c) Representations and warranties with respect to Qualified
Mortgages. At the time of transfer and conveyance of each
Qualified Mortgage to CII, Prime hereby represents and
warrants to CII (which representations and warranties shall
survive the purchase and shall continue in full force and
effect until such Qualified Mortgages are paid in full) with
respect to each such Qualified Mortgage, as follows:

(i) Prime is the sole and lawful owner of the Qualified
Mortgage and CII will receive good and marketable
title thereto free and clear of any and all liens,
encumbrances, claims and rights of any party
whatsoever.

(iii) All Qualified Mortgage Loan Documents (i) conform to
all applicable laws and regulations; (ii) are true,
valid, genuine and complete in all respects; (iii)
are enforceable against borrower in accordance with
their terms; and (iv) are subject to no defense,
claim or disability, counterclaim, offset or pending
bankruptcy. No defense, claim, disability,
counterclaim, or offset as described above will arise
against CII by virtue of the sale of the Qualified
Mortgage or assignment of the Qualified Mortgage
Documents under this Agreement. No suit, foreclosure
or any other legal action or preceding has been
brought by Prime in accordance with its handling of
the Qualified Mortgages.

(iv) All Qualified Mortgage Loan Documents are completed
in compliance with all applicable laws and
regulations, and all computations made with respect
to any Qualified Mortgages are accurate.

(v) Each action taken by Prime with respect to the
Qualified Mortgage and each Note, loan application,
agreement, form, letter, notice, statement, or other
materials used by Prime in connection with the
origination, servicing and sale of each such
Qualified Mortgage, complies in all material respects
with all applicable laws and regulations, including
without limitation: the Consumer Credit Protection
Act and Regulation Z under Title I thereof; laws
respecting obtaining and/or using credit reports and
other information concerning individuals (including,
without limitation, the Fair Credit Reporting Act);
the Equal Credit Opportunity Act and Regulation B
thereunder; laws relating to unfair, deceptive, or
unconscionable acts and practices; laws governing the
sale of insurance

4
<PAGE> 5

(vi) There is due and owing on the Qualified Mortgage the
amount represented by Prime to be due thereon.

(viii) The Qualified Mortgage has not arisen from a renewal
granted for the purpose of concealing from CII a
delinquency, and no collateral purporting to secure
the Note has been repossessed or disposed of or
foreclosed against by Prime. No officer, director,
partner, employee or agent of Prime (or of any
assignor of the Qualified Mortgage or of any broker
referring the Borrower under the Qualified Mortgage),
nor the Prime has received any direct or indirect
benefit, fee, commission or other consideration or
value from any Borrower or from anyone else in
connection with the Qualified Mortgage (other than as
disclosed to CII in writing); nor has any such person
made, directly or indirectly, any payment on the Note
or on any of its officers, directors, partners,
employees or agents has made any agreement with any
Borrower providing for any variation of the interest
rate, schedules of payment or other terms and
conditions of the Note; and neither Prime or any of
its officers, directors, partners, employees or
agents has received a request for approval of, or
notice of any proposed assumption, loss draft or
payoff of, the Qualified Mortgage.

5
<PAGE> 6

land title association form customarily used in the
state in which the insured property is located.

(xii) There shall be no homestead or other exemption
available to the obligor of any Qualified Mortgage
which would interfere with the right to sell at a
trustee's sale or the right to foreclosure.

(xiv) Prime shall be responsible for the misfeasance,
malfeasance or fraudulent acts of its employees or
agents.

(xvi) Each of the above representations and warranties (a)
applies to any and all Qualified Mortgages sold to
CII hereunder; (b) is for the benefit of CII and each
of its successors and assigns; (c) continues in full
force and effect for so long as the Note remains
outstanding and for such time as CII is subject to
any risk of loss or liability as to any Qualified
Mortgage purchased from Prime hereunder; (d) is in
addition to any other specific warranties contained
elsewhere herein; and (e) is made by Prime on

6
<PAGE> 7

its behalf and on the behalf of any third party
originator of any Qualified Mortgage which may be
sold hereunder in accordance with Section 2.

5. Limited Power of Attorney.

a) Prime hereby makes, constitutes and appoints CII, its
successors and assigns, as Prime's true and lawful
attorneys, with full power substitution in name of Prime or
otherwise, whether in relation to real, personal, tangible or
intangible property, to do any and all of the following:

(ii) To complete, execute and record any assignment or
other document, including financing statements
covering any such collateral;

(iii) To exercise or perform any act, power or duty that
Prime has or would have in connection with the
Qualified Mortgages purchased by CII, or which are
reasonable in order to protect CII's interest in the
collateral securing said Qualified Mortgage.

b. Prime agrees that the foregoing powers are coupled with an
interest and are irrevocable notwithstanding Prime's
dissolution, merger, consolidation or other corporate
reorganization or structural change or any other reason
whatsoever.

c. Prime will, at CII's reasonable request from time to time,
execute one or more appropriate separate instruments
evidencing the powers granted CII in this Section, in form
suitable for recordation.

6. Opinion of Counsel; Certified Resolutions.

a. Prior to the time that CII first purchases any Qualified
Mortgages from Prime under this Agreement, Prime shall
provide to CII an Opinion of Counsel to Prime, in form and
substance satisfactory to CII, stating that as of the date of
such Opinion:

(i) Prime (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the
state of its incorporation or organization; (b) has
the requisite power and authority and the legal right
to conduct its

7
<PAGE> 8

(ii) The execution, delivery and performance of this
Agreement and all instruments and documents delivered
or to be delivered by Prime pursuant to this
Agreement, and the origination and sale by Prime of
each Qualified Mortgage hereunder (a) are within
Prime's corporate power and authority; (b) have been
duly authorized by all necessary or proper corporate
action; (c) are not in contravention of any provision
of Prime's certificate of incorporation or bylaws;
(d) will not violate any law or regulation or any
order or decree of any court or governmental
authority; (e) will not conflict with or result in
the breach of, or constitute a default with respect
to, any agreement or other instrument to which Prime
is a party or by which Prime of any of its property
is bound; and (f) do not require any filing or
registration with, or the consent or approval of, any
governmental authority or any other person which has
not been made or obtained previously.

(iii) This Agreement has been duly executed and delivered
by Prime, and is a valid, legal and binding
obligation of Prime enforceable in accordance with
its terms except as such enforcement may be limited
by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or
affecting the rights of creditors generally, and by
general principles of equity (regardless of whether
such enforcement is considered in a proceeding in
equity or at law).

(iv) No action, claim, or proceeding is now pending or, to
the knowledge of counsel, threatened against Prime
at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any
federal, state, or local government or of any agency
or subdivision thereof or before any arbitrator or
panel of arbitrators which, if adversely determined,
(a) would result in a liability of Prime in an
amount greater than $10,000, (b) questions the
validity of any Note or Security Instrument, or (c)
could, wither individually or in the aggregate,
result in any material adverse change in the
business, operations, property or financial or other
condition of Prime.

8
<PAGE> 9

b. Certified copies of any resolution or document of consent of
the board of directors or other appropriate governing body of
Prime authorizing the execution of this Agreement and the
performance of its obligations hereunder, and evidencing the
authority of the executing officer(s) to execute this
Agreement and all other documents, instruments and
certificates related hereto and to the transactions
contemplated hereunder.

7. Meetings and Financial Statement. The principal officers of
CII and Prime agree to meet on a quarterly or more frequent basis to discuss
all information pertinent to this Agreement, its implementation and
continuation. Each party will provide the other with copies of its quarterly
financial statements, including balance sheet, income statement and statement
of changes in financial position, all within 30 days of the close of each
fiscal quarter.

8. Term of Agreement; Damages For [ ] Termination or
Breach.

a. The term of this Agreement shall be [CONFIDENTIAL PORTION
DELETED]

b. If either party causes a [____________] Termination of this
Agreement, as defined below or fails to cure a material
breach of its obligations hereunder within 30 days after
written demand by the other party, then the other party (the
"Injured Party") shall be entitled to [CONFIDENTIAL PORTION
DELETED]

c. A [______] Termination shall include any termination other
than:

(i) Termination by mutual written agreement of the
parties;
(ii) Termination by CII in the event that [CONIDENTIAL
PORTION DELETED]
(iii) Termination by [CONFIDENTIAL PORTION DELETED]

9. Notices. Any notice or demand which is required or permitted
to be given by a provision of this Agreement shall be deemed to have been
sufficiently given if either served personally or sent by prepaid first class,
registered or certified mail, addressed to the party at its address set forth
below:

Buyer: Dennis W. Canupp

Carolina Investors, Inc.
208 Garvin Street
P.O. Box 998
Pickens, SC 29671

Seller: Kelly Ahrens

Prime Investors, Inc.

1447 E. Main Street

Spartanburg, SC 29307

9
<PAGE> 10

Either party may change its address by written notice to the other.

10. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there
are no representations, inducements or other provisions other than those
expressed in writing herein. All changes, additions or deletions hereto must
be made in writing and signed by each of the parties hereto.

11. No Agency. This Agreement and transactions entered into
pursuant hereto shall not create between the parties a relationship agency,
legal representation, joint venture, partnership or employment, and the parties
agree that neither party is in any way authorized to make any contract,
agreement, warranty or representation, or to create any obligations, express or
implied, on behalf of the others.

12. Survival of Provisions. All of the covenants, agreements,
representations and warranties made herein by the parties hereto shall survive
and continue in effect after the termination of the Agreement or the
consummation of the transactions contemplated hereby. This Agreement may be
executed in counterparts, all of which, taken together, shall constitute one
and the same instrument.

13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina and any
applicable federal laws. In event of litigation, parties irrevocably designate
venue as Pickens County, South Carolina.

Carolina Investors, Inc.

By:
----------------------

-------------------------, CEO

Attest:

- -----------------------------
Secretary

Prime Investors, Inc.

By:
-------------------------------

-------------------------------
(Title)
Attest: (Corporate Seal)

- ------------------------------
Secretary

10
<PAGE> 11

EXHIBITS

A1. Loan Approval Information
A2. Funding Request
B. Underwriting Criteria
C. Approved Attorneys
D. Loan Documentation
E. Closing Attorney Certificate
F. Assignment of Qualified Mortgage
G. Procedures for Construction, Multi Disbursement and Home Improvement
Loans
H. Primary Financing Only ("PFO")

I. Owners of Prime

J. Carolina Investors Brokers

<PAGE> 1

EXHIBIT 10.7 AGREEMENT

THIS AGREEMENT is entered into by and between Carolina Investors, Inc.
("CII") and Amerifind Group, Inc. (AmeriFund).

RECITALS
1. AmeriFund is in the business of making home equity loans
and providing credit underwriting to residents of [_____] and such other states
as the parties may agree to from time to time, secured by first and second
residential mortgages.

2. CII is willing to provide funds with which certain loans
originated by AmeriFund ("Qualified Mortgages") may be closed and funded,
with each such loan to be immediately assigned to CII at closing, in
consideration of the funds so advanced by CII.

3. CII will attempt to package and sell blocks of Qualified
Mortgages and/or securitize them. [CONFIDENTIAL PORTION DELETED]

AGREEMENT

1. Funding of Loans; Expansion Opportunities. During the term
of this Agreement, AmeriFund will submit Loan Approval Information and
Funding Requests to CII substantially in the form of the attached Exhibits A1
and A2 with respect to Qualified Mortgages. AmeriFund will be obligated to
sell and CII will be obligated to purchase all "Qualified Mortgages" which meet
the Underwriting Criteria on the attached Exhibit B. Each such Funding Request
will be submitted not less than two (2) days prior to the proposed closing date
or funding date, whichever applies, of such Qualified Mortgage.

a. For purposes of this Agreement, the term "Qualified Mortgage"
means a first or second mortgage home loan which is made by
AmeriFund and closed by AmeriFund's Closing Agent in
compliance with all applicable federal, state and local
statutes, rules and regulations and which meets the
underwriting criteria of this Agreement set forth on Exhibit
B, as such underwriting criteria may be modified from time to
time by CII to satisfy market requirements or as otherwise
agreed to by the parties. CII shall be entitled to audit
AmeriFund's credit underwriting standards and practices on
a monthly basis upon fifteen (15) day prior written notice.

b. Upon CII's approval of a Funding Request for a Qualified
Mortgage, AmeriFund shall retain an approved attorney or
title company ("Closing Agent"), listed on the attached
Exhibit C (such list of approved attorneys or title companies
may be amended and supplemented from time to time by mutual
agreement of the parties) to close such Qualified Mortgage
and shall direct such Closing Agent as follows:

(i) [CONFIDENTIAL PORTION DELETED]
(ii) [CONFIDENTIAL PORTION DELETED]
(iii) [CONFIDENTIAL PORTION DELETED]
(iv) [CONFIDENTIAL PORTION DELETED]
(v) [CONFIDENTIAL PORTION DELETED]
<PAGE> 2

(vi) [CONFIDENTIAL PORTION DELETED]
(vii) [CONFIDENTIAL PORTION DELETED]

c. Expansion Into Additional Geographic Areas.

(i) [CONFIDENTIAL PORTION DELETED]
(ii) [CONFIDENTIAL PORTION DELETED]
(iii) [CONFIDENTIAL PORTION DELETED]
(iv) [CONFIDENTIAL PORTION DELETED]
(v) [CONFIDENTIAL PORTION DELETED

2. Sale of Loans. CII will package blocks of Qualified Mortgages and
sell them to institutional buyers on a monthly basis or securitize them.
[CONFIDENTIAL PORTION DELETED]
a. [CONFIDENTIAL PORTION DELETED
b. [CONFIDENTIAL PORTION DELETED]
c. [CONFIDENTIAL PORTION DELETED]

2.1 Securitization of Loans. If the Qualified Mortgages are
securitized by CII (CII will give notice to AmeriFund prior to the delivery
of a block of loans), then [CONFIDENTIAL PORTION DELETED]

2.2 Unsold Blocks of Qualified Mortgages. In the event that CII
chooses not to sell a block of Qualified Mortgages pursuant to 2. above, but
instead wishes to hold such block as part of its own portfolio, then
[CONFIDENTIAL PORTION DELETED]

a. [CONFIDENTIAL PORTION DELETED]

3. Representations and Warranties.

a. CII hereby represents and warrants as follows:

(i) CII is a corporation duly organized, validly existing and in
good standing under the laws of South Carolina and is
qualified to do business in each other jurisdiction in which
such qualification is required or where CII maintains an
office or does substantial business.

(ii) All corporate actions required to be taken by or on behalf of
CII to authorize its execution of this Agreement and the
performance of its obligations hereunder have been fully and
properly taken. The execution and consummation of this
Agreement and the transactions contemplated hereby do not and
will not violate any corporate charter, bylaw, contract,
indenture, agreement, covenant or understanding by which CII
is bound or to which is a party, or any applicable law or
regulation; or require the consent of any governmental
authority (unless such consent has been obtained).

2
<PAGE> 3

(iii) CII is in compliance with all applicable laws and
regulations. There are no actions, suits or proceedings
pending, or, to the knowledge of CII, threatened against CII
in any court or before any administrative or regulatory
agency the adverse outcome of which CII would have a material
adverse effect on the assets and business of CII.

(iv) CII will provide accounting and computer services to
AmeriFund for the term of this Agreement and at a monthly fee
agreeable to by both parties.

(v) CII will not preclude AmeriFund from geographic expansion
to other states, except as provided in section 3. b. (viii).

(vi) CII will purchase all Qualified Mortgages in accordance with
the terms of this Agreement.

(vii) After AmeriFund notifies CII in writing of an Expansion
Opportunity pursuant to 1(c) above, CII agrees that it will
not enter into negotiations with third parties identified in
such notice during the term of this Agreement plus 6 months,
unless AmeriFund gives its written consent which should not
be unreasonably withheld.

(viii) [CONFIDENTIAL PORTION DELETED]

b. AmeriFund hereby represents and warrants as follows:

(i) AmeriFund Group, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of
Florida and is qualified to do business in Florida and in
each other jurisdiction in which such qualification is
required or where it maintains an office or does substantial
business.

(ii) AmeriFund possesses all necessary licenses and meets all
other legal requirements to lend funds giving rise to
Qualified Mortgages and to sell Qualified Mortgages to CII.

(iii) All corporate actions required to be taken by or on behalf of
AmeriFund to authorize its execution of this Agreement and
the performance of its obligations hereunder have been fully
and properly taken. The execution and consummation of this
Agreement and the Qualified Mortgages contemplated hereby do
not and will not violate any corporate charter, bylaw,
contract, indenture, agreement, covenant or understanding by
which AmeriFund is bound or to which is a party, or any
applicable law or regulation; or require the consent of any
governmental authority (unless such consent has been
obtained).

(iv) AmeriFund is in compliance with all applicable laws and
regulations. There are no actions, suits or proceedings
pending, or, to the knowledge of AmeriFund, threatened
against AmeriFund in any court or before any administrative
or

3
<PAGE> 4

regulatory agency the adverse outcome of which AmeriFund
would have a material adverse effect on the assets and
business of AmeriFund.

(v) No fee or other charges shall be made by AmeriFund with
respect to any loan hereunder except for fees which are
reasonable and customary in the locality for the services
provided and which are imposed in full compliance with all
applicable federal, state and local laws and regulations.

(vi) [CONFIDENTIAL PORTION DELETED]

(vii) [CONFIDENTIAL PORTION DELETED]

(viii) During the term of this Agreement, AmeriFund shall not
[CONFIDENTIAL PORTION DELETED]

(ix) [CONFIDENTIAL PORTION DELETED]

(x) [CONFIDENTIAL PORTION DELETED]

(c) Representations and warranties with respect to Qualified
Mortgages. At the time of transfer and conveyance of each
Qualified Mortgage to CII, AmeriFund hereby represents and
warrants to CII (which representations and warranties shall
survive the purchase and shall continue in full force and
effect until such Qualified Mortgages are paid in full) with
respect to each such Qualified Mortgage, as follows:

(i) AmeriFund is the sole and lawful owner of the Qualified
Mortgage and CII will receive good and marketable title
thereto free and clear of any and all liens, encumbrances,
claims and rights of any party whatsoever.

(ii) No previous transfer or assignment of the Qualified Mortgage
will be effective and no other party has any option of first
refusal or other arrangement to acquire, directly or
indirectly, the Qualified Mortgage.

(iii) All Qualified Mortgage Loan Documents (i) conform to all
applicable laws and regulations; (ii) are true, valid,
genuine and complete in all respects; (iii) are enforceable
against borrower in accordance with their terms; and (iv) are
subject to no defense, claim or disability, counterclaim,
offset or pending bankruptcy. No defense, claim, disability,
counterclaim, or offset as described above will arise against
CII by virtue of the sale of the Qualified Mortgage or
assignment of the Qualified Mortgage Documents under this
Agreement. No suit, foreclosure or any other legal action or
preceding has been brought by AmeriFund in accordance with
its handling of the Qualified Mortgages.

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<PAGE> 5

(iv) All Qualified Mortgage Loan Documents are completed in
compliance with all applicable laws and regulations, and all
computations made with respect to any Qualified Mortgages are
accurate.

(v) Each action taken by AmeriFund with respect to the
Qualified Mortgage and each Note, loan application,
agreement, form, letter, notice, statement, or other
materials used by AmeriFund in connection with the
origination, servicing and sale of each such Qualified
Mortgage, complies in all material respects with all
applicable laws and regulations, including without
limitation: the Consumer Credit Protection Act and
Regulation Z under Title I thereof; laws respecting obtaining
and/or using credit reports and other information concerning
individuals (including, without limitation, the Fair Credit
Reporting Act); the Equal Credit Opportunity Act and
Regulation B thereunder; laws relating to unfair, deceptive,
or unconscionable acts and practices; laws governing the sale
of insurance (including, without limitation, credit life
insurance); federal laws and regulations relating to such
Qualified Mortgages (including without limitation, the Real
Estate Settlement Practices Act, as amended); the Flood
Disaster Protection Act; and all applicable federal, state
and local statutes, regulations, ordinances, and
administrative rulings.

(vi) There is due and owing on the Qualified Mortgage the amount
represented by AmeriFund to be due thereon.

(vii) With respect to each Qualified Mortgage which is a deed of
trust, a trustee, duly qualified under applicable law to
serve as such, has been properly designated, serving and
named in such deed of trust. Except in connection with a
trustee's sale after default by the obligor, no fees or
expenses are payable by AmeriFund to the trustee under any
deed of trust.

(viii) The Qualified Mortgage has not arisen from a renewal granted
for the purpose of concealing from CII a delinquency, and no
collateral purporting to secure the Note has been repossessed
or disposed of or foreclosed against by AmeriFund. No
officer, director, partner, employee or agent of AmeriFund
(or of any assignor of the Qualified Mortgage or of any
broker referring the Borrower under the Qualified Mortgage),
nor the AmeriFund has received any direct or indirect
benefit, fee, commission or other consideration or value from
any Borrower or from anyone else in connection with the
Qualified Mortgage (other than as disclosed to CII in
writing); nor has any such person made, directly or
indirectly, any payment on the Note or on any of its
officers, directors, partners, employees or agents has made
any agreement with any Borrower providing for any variation
of the interest rate, schedules of payment or other terms and
conditions of the Note; and neither AmeriFund or any of its
officers, directors, partners, employees or agents has
received a request for approval of, or notice of any proposed
assumption, loss draft or payoff of, the Qualified Mortgage.

5
<PAGE> 6

(ix) A lender's title insurance policy regarding each Qualified
Mortgage became effective as of the origination of such
Qualified Mortgage, is, and shall be, valid and is, and shall
remain, in full force and effect; such title insurance shows
whether any prior lien secures an open-end obligation
requiring future advances; any such insurance policy has been
issued by a title insurer qualified to do business in the
state in which the real property subject to a Qualified
Mortgage is located, insuring the priority of the lien of the
loan in the original principal amount of such loan, which
policy is in the then current American Land Title Association
or a state land title association form customarily used in
the state in which the insured property is located.

(x) The real property under each Qualified Mortgage is insured,
under standard homeowner's hazard and casualty insurance
policies, with appropriate mortgagee clauses, for an amount
equal to the loan amount or more.

(xi) All real estate appraisals made in connection with each
Qualified Mortgage shall have been performed in accordance
with industry standards in the appraising industry in the
area where the appraised property is located. Any disputes
regarding appraisal accuracy shall be submitted to an
impartial appraiser, appointed by CII, whose judgment shall
be determinative as to the accuracy of any appraisal.

(xii) There shall be no homestead or other exemption available to
the obligor of any Qualified Mortgage which would interfere
with the right to sell at a trustee's sale or the right to
foreclosure.

(xiii) There shall be no holder in due course claim or any claim
against any third party available to the obligor of any
Qualified Mortgage which would interfere with the Mortgagee's
right to enforce the Qualified Mortgage, to sell at a
trustee's sale, or the right to foreclosure.

(xiv) AmeriFund shall be responsible for the misfeasance,
malfeasance or fraudulent acts of its employees or agents.

(xv) The Qualified Mortgage is secured by a valid and subsisting
first or second priority lien or security interest on the
property as reflected in the Loan Documents, and such lien or
security interest in or on Borrower's real and personal
property collateralizing the Note (including fixtures) is
valid and has been properly filed, recorded (or received by
the title insurance company for recording) or otherwise
perfected in accordance with applicable law; and the
Qualified Mortgage is insured by a mortgage title insurance
policy (or commitment for same, the conditions having been
satisfied).

6
<PAGE> 7

remains outstanding and for such time as CII is subject to
any risk of loss or liability as to any Qualified Mortgage
purchased from AmeriFund hereunder; (d) is in addition to
any other specific warranties contained elsewhere herein; and
(e) is made by AmeriFund on its behalf and on the behalf of
any third party originator of any Qualified Mortgage which
may be sold hereunder in accordance with Section 2.

4. [CONFIDENTIAL PORTION DELETED]

5. Limited Power of Attorney.

a) AmeriFund hereby makes, constitutes and appoints CII, its
successors and assigns, as Amerifund's true and lawful
attorneys, with full power substitution in name of AmeriFund
or otherwise, whether in relation to real, personal,
tangible or intangible property, to do any and all of the
following:

(i) To bill, demand, sue for, receive, collect, sign, endorse,
assign or comprise any and all notes, checks, money orders or
monies due on any Qualified Mortgages sold to CII, and to
receive, sign, endorse, or assign any orders, certificates,
insurance policies and all benefits under any other
instruments or documents as may from time to time be
necessary or appropriate to accomplish the sales and
transfers provided for by this Agreement;

(ii) To complete, execute and record any assignment or other
document, including financing statements covering any such
collateral;

(iii) To exercise or perform any act, power or duty that AmeriFund
has or would have in connection with the Qualified
Mortgages purchased by CII, or which are reasonable in order
to protect CII's interest in the collateral securing said
Qualified Mortgage.

b. AmeriFund agrees that the foregoing powers are coupled with
an interest and are irrevocable notwithstanding AmeriFund's
dissolution, merger, consolidation or other corporate
reorganization or structural change or any other reason
whatsoever.

c. AmeriFund will, at CII's reasonable request from time to
time, execute one or more appropriate separate instruments
evidencing the powers granted CII in this Section, in form
suitable for recordation.

6. Opinion of Counsel; Certified Resolutions.

a. Prior to the time that CII first purchases any Qualified
Mortgages from AmeriFund under this Agreement, AmeriFund
shall provide to CII an Opinion of Counsel to AmeriFund, in
form and substance satisfactory to CII, stating that as of
the date of such Opinion:

7
<PAGE> 8

(i) AmeriFund (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the state of
its incorporation or organization; (b) has the requisite
power and authority and the legal right to conduct its
business as now and heretofore conducted; (c) has all
necessary licenses, permits, consents or approvals from or
by, has made all necessary filings with, and has given all
necessary notices to, all governmental authorities having
jurisdiction, to the extent required to conduct its business
as now conducted in all locations where it conducts business,
and to the extent necessary to assure the enforceability of
each Note and Mortgage in any location in which any mortgaged
property is located; and (d) is in compliance with its
certificate of incorporation and bylaws or other governing
documents.

(ii) The execution, delivery and performance of this Agreement and
all instruments and documents delivered or to be delivered by
AmeriFund pursuant to this Agreement, and the origination
and sale by of each Qualified Mortgage hereunder
(a) are within AmeriFund's corporate power and authority;
(b) have been duly authorized by all necessary or proper
corporate action; (c) are not in contravention of any
provision of AmeriFund's certificate of incorporation or
bylaws; (d) will not violate any law or regulation or any
order or decree of any court or governmental authority; (e)
will not conflict with or result in the breach of, or
constitute a default with respect to, any agreement or other
instrument to which AmeriFund is a party or by which
AmeriFund of any of its property is bound; and (f) do not
require any filing or registration with, or the consent or
approval of, any governmental authority or any other person
which has not been made or obtained previously.

(iii) This Agreement has been duly executed and delivered by
AmeriFund, and is a valid, legal and binding obligation of
AmeriFund enforceable in accordance with its terms except
as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws
relating to or affecting the rights of creditors generally,
and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or
at law).

(iv) No action, claim, or proceeding is now pending or, to the
knowledge of counsel, threatened against AmeriFund at law,
in equity or otherwise, before any court, board, commission,
agency or instrumentality of any federal, state, or local
government or of any agency or subdivision thereof or before
any arbitrator or panel of arbitrators which, if adversely
determined, (a) would result in a liability of AmeriFund in
an amount greater than $10,000, (b) questions the validity of
any Note or Security Instrument, or (c) could, wither
individually or in the aggregate, result in any material
adverse change in the business, operations, property or
financial or other condition of AmeriFund.

b. Certified copies of any resolution or document of consent of
the board of directors or other appropriate governing body of
AmeriFund authorizing the execution of this Agreement and
the performance of its obligations hereunder, and evidencing
the

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authority of the executing officer(s) to execute this
Agreement and all other documents, instruments and
certificates related hereto and to the transactions
contemplated hereunder.

7. Meetings and Financial Statement. The principal officers of
CII and AmeriFund agree to meet on a quarterly or more frequent basis to
discuss all information pertinent to this Agreement, its implementation and
continuation. Each party will provide the other with copies of its monthly
financial statements, including balance sheet, income statement and statement
of changes in financial position, all within 30 days of the close of each
month.

8. Term of Agreement; Damages For [ ] Termination or
Breach.

a. The term of this Agreement shall be [CONFIDENTIAL PORTION
DELETED]

c. A [______] Termination shall include any termination other
than:

(i) Termination by mutual written agreement of the
parties;

(ii) Termination by CII in the event that [CONFIDENTIAL
PORTION DELETED]

(iii) Termination by [CONFIDENTIAL PORTION DELETED]

Buyer: Carolina Investors, Inc.
208 Garvin Street
P.O. Box 998
Pickens, SC 29671

Seller: Gregory N. Warren
AmeriFund Group, Inc.
163 E. Morse Blvd. 2nd Floor
Winter Park, Florida 32789

Either party may change its address by written notice to the other.

10. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there
are no representations, inducements or other

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<PAGE> 10
provisions other than those expressed in writing herein. All changes,
additions or deletions hereto must be made in writing and signed by each of the
parties hereto.

13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina and any
applicable federal laws.

Carolina Investors, Inc.

By:
------------------------------
, CEO
-----------------------------
Attest:

- -----------------------------
Secretary

Amerifund Group, Inc.

By:
--------------------------------

--------------------------------
(Title)
Attest: (Corporate Seal)

- ------------------------------
Secretary

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<PAGE> 11

Direct & Beneficial Owners of AmeriFund

__________________________________
Gregory N. Warren

__________________________________
Jana Batey

__________________________________
Diane Warren

__________________________________
Randall Warren

__________________________________
David Warren

__________________________________
Judith Isaason

__________________________________
David Isaason

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EXHIBITS

A1. Loan Approval Information

A2. Funding Request

B. Underwriting Criteria

C. Approved Closing Agents

D. Loan Documentation

E. Closing Attorney Certificate

F. Assignment of Qualified Mortgage

G. Procedures for Construction Multi Disbursement and Home Improvement
Loans

H. Owners of AmeriFund and Others

I. License Agreement for Loan Tracking Program

J. Calculation of Profit or Loss

K. Approved Appraiser List