HABERSHAM BANCORP, S-4, 1995-03-02

HABERSHAM BANCORP
S-4, 1995-03-02
STATE COMMERCIAL BANKS

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<PAGE> 1

As Filed With the Securities And Exchange Commission on March 2, 1995;
Registration No. 33-
----------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

HABERSHAM BANCORP
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Georgia 6025 58-1563165
--------------- -------------------- -------------------
(State of other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classi- Identification No.)
incorporation) fication Code No.)

Highway 441 North
P. O. Box 1980
Cornelia, Georgia 30531
(706) 778-1000
-----------------------------------------------------------------
(Address, including ZIP Code, and telephone number, including
area code, of registrant's principal executive offices)

Kathryn L. Knudson, Esq.
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor, 191 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 572-6600
-----------------------------------------------------
(Name, address, including ZIP Code, and telephone
number, including area code, of agent for service)

Approximate date of commencement of the proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.

If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G check the following box.
----

Exhibit Index on page 213. Page 1 of 222 pages.
<PAGE> 2
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
Proposed Proposed
Title of each class maximum maximum Amount of
of securities Amount to be offering aggregate Registration
to be registered registered price per unit offering price Fee
------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Common stock 828,975(1) shares $10.25(2) $8,496,994(2) $2,930(2)

</TABLE>

(1) The number of shares being registered assumes that: (i) each holder of
Security Bancorp, Inc. common stock elects to receive shares of the
Registrant's common stock in the merger described herein, and (ii) the
consummation of a five-for-one stock split (in the form of a 400% stock
dividend) with respect to the Registrant's outstanding shares of common stock
that will be effected following shareholder approval of an increase in the
number of authorized shares of the Registrant's common stock at its April 15,
1995 Annual Meeting of Shareholders and prior to the consummation of the
merger. The Registrant will deregister any shares that are not issued in the
merger, whether as a result of elections by Security shareholders to receive
cash in lieu of stock in the merger or the failure of the Registrant's
shareholders to approve the increase in the number of authorized shares
described above.

(2) In accordance with Rule 457(f)(2), the registration fee is based upon the
book value ($10.25) at December 31, 1994 of the shares of Security common stock
to be received by the Registrant in connection with the merger.
<PAGE> 3

HABERSHAM BANCORP
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION IN FORM S-4 CAPTION IN PROSPECTUS
------ ------------------- ---------------------
<S> <C> <C>
1 Forepart of Registration Statement and Facing Page of Registration Statement; Proxy
Outside Front Cover Page of Prospectus. .
Statement/Prospectus Cover Page

2 Inside Front and Outside Back Cover Proxy Statement/Prospectus Cover Page;
Pages of Prospectus . . . . . . . . . . . Available Information

3 Risk Factors, Ratio of Earnings to Summary
Fixed Charges and Other Information . . .

4 Terms of the Transaction . . . . . . . . Summary; The Merger; Certain Differences in
the Rights of Habersham and Security
Shareholders; Appendices A and B

5 Pro Forma Financial Information . . . . . Summary; Pro Forma Combined Financial Data

6 Material Contracts with the Company Summary; The Merger
Being Acquired . . . . . . . . . . . . .

7 Additional Information Required for Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . . . .

8 Interests of Named Experts and Counsel. . Not Applicable

9 Disclosure of Commission Position on Part II of Registration Statement--
Indemnification for Securities Act Undertakings
Liabilities . . . . . . . . . . . . . . .

10 Information with Respect to S-3 Not Applicable
Registrants . . . . . . . . . . . . . . .

11 Incorporation of Certain Information Not Applicable
by Reference . . . . . . . . . . . . . .

</TABLE>
<PAGE> 4

<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION IN FORM S-4 CAPTION IN PROSPECTUS
------ ------------------- ---------------------
<S> <C> <C>
12 Information with Respect to S-2 or S-3 Available Information; Incorporation of
Registrants . . . . . . . . . . . . . . . . Certain Information by Reference; Summary;
Habersham Bancorp Histori-cal Financial
Statements--Habersham; Habersham Bancorp
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Supervision and Regulation

13 Incorporation of Certain Information Incorporation of Certain Information by
by Reference . . . . . . . . . . . . . . . Reference

14 Information with Respect to Not Applicable
Registrants Other Than S-2 or S-3
Registrants . . . . . . . . . . . . . . . .

15 Information with Respect to S-3 Not Applicable
Companies . . . . . . . . . . . . . . . . .

16 Information with Respect to S-2 or S-3 Available Information; Incorporation of
Companies . . . . . . . . . . . . . . . . . Certain Information by Reference; Summary;
Security Bancorp, Inc. Historical Financial
Statements; Security Bancorp, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Supervision and Regulation

17 Information with Respect to Companies Not Applicable
Other Than S-2 or S-3 Companies . . . . . .

18 Information if Proxies, Consents or Incorporation of Certain Information by
Authorizations Are to be Solicited . . . . Reference; Summary; General Information; The
Merger; Appendix D

19 Information if Proxies, Consents or Not Applicable
Authorizations Are Not to be Solicited
in an Exchange Offer. . . . . . . . . . . .

</TABLE>
<PAGE> 5

SECURITY BANCORP, INC.
1600 MARIETTA HIGHWAY
CANTON, GEORGIA 30114
(404) 479-2111

___________________, 1995

To the Shareholders of Security Bancorp, Inc.:

You are cordially invited to attend the Special Meeting of Shareholders
Meeting") of Security Bancorp, Inc. ("Security"), to be held at Security's
main office at 1600 Marietta Highway, Canton, Georgia at __________ a.m./p.m.
on ______________, 1995.

At the Special Meeting, you will be asked to consider and vote upon
the approval of the merger agreement (the "Merger Agreement") that provides for
the merger (the "Merger") of Security with and into Habersham Bancorp
("Habersham"), with Habersham surviving the Merger and Habersham Bank and
Security State Bank continuing to operate as separate subsidiaries of
Habersham. If the Merger is consummated, each outstanding share of Security
common stock (excluding shares held by Security, Habersham or their
subsidiaries or by shareholders who perfect their dissenters' rights) shall
cease to be outstanding and shall be converted into and exchanged for the right
to receive, at the election of each shareholder, either shares of Habersham
common stock or cash as described in the Section entitled "THE MERGER -- Merger
Consideration" in the accompanying Proxy Statement/Prospectus. The affirmative
vote of the holders of a majority of the shares of Security common stock
entitled to vote at the Special Meeting is required for approval of the Merger
Agreement.

Enclosed are a Notice of Special Meeting, Proxy Statement/Prospectus
and Form of Proxy for the Special Meeting. The Proxy Statement/Prospectus
describes in more detail the Merger Agreement and the proposed Merger,
including a description of the consideration to be paid to Security
shareholders in the Merger, material conditions to consummation of the Merger
and the effects of the Merger on the rights of Security shareholders. Please
give this information your careful attention.

THE BOARD OF DIRECTORS OF SECURITY HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER AGREEMENT AND HAS APPROVED THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREIN, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREIN.

In view of the importance of the action to be taken, we urge you to
complete, sign and date the enclosed form of proxy and return it promptly in
the enclosed envelope, whether or not you plan to attend the Special Meeting.
If you attend the Special Meeting, you may vote in person, even if you
previously returned your proxy.

We look forward to seeing you at the Special Meeting.

Sincerely,

C. Mickle Moye
President
<PAGE> 6

SECURITY BANCORP, INC.
1600 MARIETTA HIGHWAY
CANTON, GEORGIA 30114
(404) 479-2111

NOTICE OF SPECIAL MEETING TO
BE HELD _____________, 1995

To the Shareholders of Security Bancorp, Inc.:

Notice is hereby given that a special meeting of shareholders (the
"Special Meeting") of Security Bancorp, Inc. ("Security") will be held at
Security's main office, located at 1600 Marietta Highway, Canton, Georgia at
___________ a.m./p.m., on _________________, 1995, for the following
purposes:

PROPOSAL 1: THE MERGER. To consider and vote upon a proposal to
approve the Agreement and Plan of Merger, dated January 16, 1995 (the "Merger
Agreement") by and between Security and Habersham Bancorp ("Habersham"),
pursuant to which, among other matters, Security will merge with and into
Habersham (the "Merger") and the shares of Security common stock outstanding on
the effective date of the Merger (excluding shares held by Security, Habersham
or their subsidiaries or by shareholders who perfect their dissenters' rights)
will be converted into the right to receive, at the election of each
shareholder, either shares of Habersham common stock or cash as described in
the section entitled "THE MERGER -- Merger Consideration" in the accompanying
Proxy Statement/Prospectus. A copy of the Merger Agreement is set forth in
Appendix A to the accompanying Proxy Statement/Prospectus and is incorporated
by reference herein.

PROPOSAL 2: OTHER BUSINESS. To transact such other business as may
properly come before the Special Meeting or any adjournment or postponement of
the Special Meeting.

Only shareholders of record at the close of business on ___________,
1995 are entitled to receive notice of and to vote at the Special Meeting or
any adjournments or postponements thereof. Approval of the Merger Agreement
and the consummation of the transactions contemplated thereby requires the
affirmative vote of the holders of a majority of the shares of Security common
stock entitled to vote at the Special Meeting.

THE BOARD OF DIRECTORS OF SECURITY UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED THEREBY.

________________________________________
By Order of the Directors,
C. Mickle Moye, President
<PAGE> 7

PROXY STATEMENT/PROSPECTUS

PROXY STATEMENT OF
SECURITY BANCORP, INC.
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD __________, 1995

_______________

THIS PROXY STATEMENT INCLUDES THE PROSPECTUS OF
HABERSHAM BANCORP
RELATING TO UP TO 828,975 SHARES OF COMMON STOCK
ISSUABLE IN CONNECTION WITH THE MERGER OF
SECURITY BANCORP, INC. AND
HABERSHAM BANCORP

_______________

This Proxy Statement/Prospectus is being furnished to holders of
common stock, $1.00 par value ("Security Common Stock"), of Security Bancorp,
Inc., a Georgia corporation ("Security"), in connection with the solicitation
of proxies by the Security Board of Directors for use at a Special Meeting of
Shareholders to be held at ______ a.m./p.m., on ____________, 1995, at
Security's main office, located at 1600 Marietta Highway, Canton, Georgia,
and at any adjournment or adjournments thereof (the "Special Meeting").

The purpose of the Special Meeting is to consider and vote upon a
proposal to approve an Agreement and Plan of Merger, dated as of January 16,
1995 (the "Merger Agreement"), by and between Security and Habersham Bancorp, a
Georgia corporation ("Habersham"), which provides for, among other things, the
merger of Security with and into Habersham (the "Merger"). See "SUMMARY," "THE
MERGER" and Appendices A and B to this Proxy Statement/Prospectus.

Upon consummation of the Merger, each outstanding share of Security
Common Stock (excluding shares held by Security, Habersham or their
subsidiaries or by shareholders who perfect their dissenters' rights) shall
cease to be outstanding and shall be converted into and exchanged for the right
to receive, at the election of each shareholder, either shares of Habersham
common stock ("Habersham Common Stock") or cash (the "Merger Consideration"),
calculated in the manner described in the following paragraph.

share Book Value of the Habersham Common Stock at December 31, 1994 will be
adjusted for purposes of this calculation to $11.12 per share. If the Stock
Split is consummated, the 525,000 shares of Security Common Stock outstanding
on the date hereof remain outstanding immediately prior to consummation of the
Merger and no Security shareholder exercises his or her dissenters' rights with
respect to the Merger, each outstanding share of Security Common Stock will be
converted into the right to receive $17.56 in cash or 1.579 shares of Habersham
Common Stock in the Merger. If the Stock Split is not consummated but the
other assumptions remain as stated, however, each outstanding share of Security
Common Stock will be converted into the right to receive $17.56 in cash or
0.3158 shares of Habersham Common Stock in the Merger.

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 PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE SHARES OF HABERSHAM COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR
SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

The date of this Proxy Statement/Prospectus is ___________, 1995, and
it is being mailed or otherwise delivered to Security shareholders on or about
such date.
<PAGE> 9

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Parties to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Special Meeting; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Market for Common Stock and Related Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . 10
Comparison of Certain Unaudited Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Record Date, Solicitation, and Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 16
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Recommendation of Security's Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Distribution of Habersham Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Management and Operations After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Contracts Between Habersham and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Post Acquisition Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Conditions to Consummation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Amendment, Waiver, and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Resales of Habersham Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

HABERSHAM BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

SECURITY BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

</TABLE>
<PAGE> 10

<TABLE>
<S> <C>
PRO FORMA COMBINED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

CERTAIN DIFFERENCES IN THE RIGHTS OF HABERSHAM AND
SECURITY SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Shareholder Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Vote Required for Certain Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Bank Holding Company Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Federal Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Bank Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Audit and Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Fair Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Anti-Tying Restrictions Eased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Community Development and Regulatory Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Interstate Banking and Branching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Future Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

HABERSHAM BANCORP HISTORICAL FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

SECURITY BANCORP, INC. HISTORICAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
</TABLE>

APPENDICES:

<TABLE>
<S> <C> <C>
Appendix A -- Agreement and Plan of Merger, dated as of January 16, 1995, by and between Habersham and Security
Appendix B -- Form of Letter Agreement Regarding Stock Options, dated as of January 16, 1995, among Habersham,
Security and the Security Option Holders named therein
Appendix C -- Opinion of Alex Sheshunoff & Co. Investment Banking
Appendix D -- Title 14, Chapter 2, Article 13 of the Georgia Business Corporation Code Relating to Rights of Dissenting
Shareholders

</TABLE>
<PAGE> 11

AVAILABLE INFORMATION

Habersham and Security are each subject to the reporting and
informational requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act"), and, in
accordance therewith, file reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
filed by Habersham and Security with the Commission may be inspected and copied
at the principal office of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and should be available at the
Commission's Regional Offices at 7 World Trade Center, New York, New York
10048, and Northwestern Atrium Center, 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, at prescribed rates.

This Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement on Form S-4, of which this
Proxy Statement/Prospectus is a part, and exhibits thereto (together with any
amendments thereto, the "Registration Statement"), which has been filed by
Habersham with the Commission under the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act"), certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission and to which portions reference is hereby made for further
information. Statements contained in this Proxy Statement/Prospectus
concerning the provisions of certain documents filed as exhibits to the
Registration Statement are necessarily brief descriptions thereof, and are not
necessarily complete, and each such statement is qualified in its entirety by
reference to the full text of such document.

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN
DOCUMENTS THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS
ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM: HABERSHAM BANCORP, HIGHWAY 441
NORTH, CORNELIA, GEORGIA 30531 ATTENTION: EDWARD D. ARIAIL, CORPORATE
SECRETARY, (706) 778-1000, AS TO HABERSHAM DOCUMENTS; AND FROM SECURITY
BANCORP, INC., 1600 MARIETTA HIGHWAY, CANTON, GEORGIA 30114, ATTENTION: C.
MICKLE MOYE, PRESIDENT, (404) 479-2111, AS TO SECURITY DOCUMENTS. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE BY
____________, 1995.

All information contained herein with respect to Habersham and its
subsidiaries has been supplied by Habersham, and all information with respect
to Security and Security State Bank has been supplied by Security.

No person has been authorized to give any information or to make any
representation other than those contained in this Proxy Statement/Prospectus
and, if given or made, such information or representation should not be relied
upon as having been authorized by Habersham or Security. Neither the delivery
of this Proxy Statement/Prospectus nor any distribution of the securities to
which this Proxy Statement/Prospectus relates shall, under any circumstances,
create any implication that there has been no change in the affairs of
Habersham, Security, or any of their respective subsidiaries since the date
hereof or than the information contained herein is correct as of any time
subsequent to its date. This Proxy Statement/Prospectus does not constitute an
offer to sell, or a solicitation of an offer to purchase, any securities other
than the securities to which it relates or an offer to sell or a solicitation
of an offer to purchase the securities offered by this Proxy
Statement/Prospectus in any jurisdiction in which such an offer or solicitation
is not lawful.
<PAGE> 12

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed by Habersham and Security, respectively,
with the Commission (Habersham File No. 0-13153; Security File No. 33-25552-A)
under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by
reference in this Proxy Statement/Prospectus. The financial statements and
accompanying notes thereto and the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained in
such documents have been updated to include the year ended December 31, 1994
and appear elsewhere in this Proxy Statement/Prospectus. Accordingly, such
sections of the indicated documents are not incorporated herein by reference.

Habersham documents:

(i) Habersham's Annual Report on Form 10-KSB for the year
ended December 31, 1993;

(ii) Habersham's Quarterly Reports on Form 10-QSB for the
three months ended March 31, 1994, the six months ended June 30, 1994,
and the nine months ended September 30, 1994; and

(iii) the description of Habersham Common Stock set forth in
Habersham's Registration Statement filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of
updating any such description.

Security documents:

(i) Security's Annual Report on Form 10-KSB for the year
ended December 31, 1993; and

(ii) Security's Quarterly Reports on Form 10-QSB for the
three months ended March 31, 1994, the six months ended June 30, 1994,
and the nine months ended September 30, 1994.

All documents filed by Habersham and Security pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Proxy Statement/Prospectus and prior to the date of the Special Meeting are
hereby incorporated by reference in this Proxy Statement/Prospectus and shall
be deemed a part hereof from the date of filing of such document.

Any statement contained herein, in any supplement hereto or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Proxy Statement/Prospectus to the extent that a statement contained
herein, in any supplement hereto or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement, this Proxy Statement/Prospectus, or any supplement
hereto.

2
<PAGE> 13

SUMMARY

The following is a summary of certain information contained elsewhere
in this Proxy Statement/Prospectus. This summary is not intended to be a
complete description of the matters covered in this Proxy Statement/Prospectus
and is subject to and qualified in its entirety by reference to the more
detailed information contained elsewhere in this Proxy Statement/Prospectus,
including the Appendices hereto, and in the documents incorporated by reference
in this Proxy Statement/Prospectus. Copies of the Merger Agreement and the
Option Agreement (as defined below) are set forth in Appendices A and B,
respectively, to this Proxy Statement/Prospectus and reference is made thereto
for a complete description of the terms of the Merger. Shareholders are urged
to read carefully the entire Proxy Statement/Prospectus, including the
Appendices. As used in this Proxy Statement/Prospectus, the terms "Habersham"
and "Security" refer to such corporations, respectively, and where the context
requires, such corporations and their respective subsidiaries.

PARTIES TO THE MERGER

Habersham. Habersham is a Georgia corporation and a bank holding
company registered under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). Through its bank subsidiary, Habersham Bank, Habersham operates
three full-service branch offices in Habersham County, Georgia. Habersham Bank
provides such customary banking services as checking and savings accounts,
various types of time deposits, safe deposit facilities and individual
retirement accounts. It also makes secured and unsecured loans and provides
other financial services to its customers. Habersham Bank has a full-time
trust officer on staff and offers a full spectrum of trust services, including
trust administration, asset management services, estate and will probate and
administration and other services in the area of personal trusts. Habersham
Bank also provides data processing services for financial institutions.

For the year ended December 31, 1994, Habersham reported net income of
approximately $1.7 million. At December 31, 1994, Habersham had total
consolidated assets of approximately $161 million and consolidated
shareholders' equity of approximately $15.9 million.

Habersham's principal executive offices are located at Highway 441
North, Cornelia, Georgia 30531, and its telephone number is (706) 778-1000.
For additional information regarding Habersham and its business, see "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "SUMMARY --
Selected Financial Data," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Habersham," "SUPERVISION AND
REGULATION," and "FINANCIAL STATEMENTS -- Habersham."

Security. Security is a Georgia corporation and a bank holding
company registered under the BHC Act. Through its bank subsidiary, Security
State Bank ("Security Bank"), Security operates a full-service banking office
in Cherokee County, Georgia, its primary service area. Security Bank offers a
full range of commercial banking services to individuals, professional and
business customers in its primary service area. These services include
personal and business checking accounts and savings and other types of
certificates of deposit. Security Bank does not presently offer trust or
fiduciary services and relies on trust and fiduciary services offered by
corresponding banks. Security Bank also offers a range of short- and
medium-term commercial, consumer and real estate loans.

3
<PAGE> 14

For the year ended December 31, 1994, Security reported net income of
approximately $468,000. At December 31, 1994, Security had total consolidated
assets of approximately $40 million and consolidated shareholders' equity of
approximately $5.4 million.

Security's principal executive offices are located at 1600 Marietta
Highway, Canton, Georgia 30114, and its telephone number is (404) 479-2111.
For additional information regarding Security and its business, see "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "SUMMARY --
Selected Financial Data," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Security," "SUPERVISION AND REGULATION,"
and "FINANCIAL STATEMENTS -- Security."

SPECIAL MEETING; RECORD DATE

The Special Meeting will be held at _______ a.m./p.m. on ____________,
1995, at Security's main office at 1600 Marietta Highway, Canton, Georgia. At
the Special Meeting, Security's shareholders will consider and vote upon
approval of the Merger Agreement and the consummation of the transactions
contemplated therein. Security's Board of Directors has fixed the close of
business on _______________, 1995, as the record date for determining the
Security shareholders entitled to receive notice of and to vote at the Special
Meeting (the "Record Date"). As of the Record Date, there were [525,000]
shares of Security Common Stock issued and outstanding and entitled to be voted
at the Special Meeting. For additional information with respect to the Special
Meeting, including the Record Date and votes required for approval, see
"GENERAL INFORMATION."

THE MERGER

General. The Merger Agreement provides that Security will merge with
and into Habersham, which will be the surviving corporation of the Merger and
will continue to be governed by the laws of the State of Georgia. At the time
the Merger becomes effective (the "Effective Time"), each outstanding share of
Security Common Stock (excluding shares held by Security, Habersham or their
subsidiaries or by shareholders who perfect their dissenters' rights) shall
cease to be outstanding and shall be converted into and exchanged for the right
to receive, at the election of each shareholder, either shares of Habersham
Common Stock or cash (the "Merger Consideration"). If the Merger Agreement is
approved at the Special Meeting, all required governmental and other consents
and approvals are obtained and all of the other conditions to the obligations
of the parties to consummate the Merger are either satisfied or waived (as
permitted), the Merger will be consummated. A copy of the Merger Agreement is
set forth in Appendix A to this Proxy Statement/Prospectus. See "THE MERGER."

Merger Consideration. The Merger Agreement provides that, at the
effective time of the Merger, each outstanding share of Security Common Stock
(excluding shares held by Security, Habersham or their subsidiaries and by
shareholders who perfect their dissenters' rights) will cease to be outstanding
and will be converted into and exchanged for the right to receive the Merger
Consideration, calculated in the manner described in the following paragraph.
The Merger Consideration will be paid in either shares of Habersham Common
Stock or cash at the election of each holder of shares of Security Common Stock
surrendered in the Merger, subject to pro rata distribution under the
circumstances described below.

4
<PAGE> 15

The Merger Consideration will be calculated by (i) multiplying 1.5
times the aggregate Book Value (as defined in the Merger Agreement) of the
Security Common Stock at December 31, 1994 (which products equals $9,220,601)
and (ii) dividing that product by the number of shares of Security Common Stock
outstanding immediately prior to consummation of the Merger (presently 525,000
shares). If the Merger Consideration is to be paid in shares of Habersham
Common Stock, the number of shares of Habersham Common Stock to be issued in
exchange for a share of Security Common Stock will be calculated by dividing
the Merger Consideration by the Book Value (as defined in the Merger Agreement)
per share of Habersham Common Stock at December 31, 1994. Assuming
consummation of Habersham's five-for-one stock split described herein (the
"Stock Split") prior to consummation of the Merger, the $55.60 per share Book
Value of the Habersham Common Stock at December 31, 1994 will be adjusted for
purposes of this calculation to $11.12 per share. If the Stock Split is
consummated, the 525,000 shares of Security Common Stock outstanding on the
date hereof remain outstanding immediately prior to consummation of the Merger
and no shareholders exercise their dissenters' rights with respect to the
Merger, each outstanding share of Security Common Stock will be converted into
the right to receive $17.56 in cash or 1.579 shares of Habersham Common Stock
in the Merger. If the Stock Split is not consummated but the other assumptions
remain as stated, however, each outstanding share of Habersham Common Stock
will be converted into the right to receive $17.56 in cash or 0.3158 shares of
Habersham Common Stock in the Merger. See "SUMMARY -- Market for Common Stock
and Related Shareholder Matters" and "CERTAIN DIFFERENCES IN THE RIGHTS OF
HABERSHAM AND SECURITY SHAREHOLDERS -- Authorized Capital Stock" for a
description of the terms and effects of the Stock Split.

If the aggregate amount of cash elected to be received by Security
shareholders plus the cash expected to be paid to any shareholders ("Dissenting
Shareholders") who elect to exercise their statutory right to dissent to the
Merger pursuant to Article 13 of the Georgia Business Corporation Code (the
"Georgia Code") exceeds $4,610,300 (representing 50% of the total merger
consideration) (the "Maximum Cash Value"), cash representing the Maximum Cash
Value will be distributed as follows: first, to the Dissenting Shareholders,
who will be paid in full in cash; and second, to the Security shareholders
electing to receive cash in the Merger ("Electing Shareholders"), who will be
paid cash on a pro rata basis. In determining the pro rata amounts to be
distributed, each share of Security Common Stock held by an Electing
Shareholder will represent the right to receive (i) cash in an amount
determined by dividing (x) the Maximum Cash Value less the amount payable to
Dissenting Shareholders (the "Available Cash") by (y) the number of shares of
Security Common Stock ("Number of Cash Election Shares") held by Electing
Shareholders; and (ii) the number of shares of Habersham Common Stock obtained
by dividing (x) the difference between the aggregate amount of cash requested
by Electing Shareholders and the Available Cash by (y) the Number of Cash
Election Shares, and dividing the resulting amount by the Book Value per share
of Habersham Common Stock at December 31, 1994 (as adjusted, if applicable, to
reflect the effect of the Stock Split).

Option Agreements. Pursuant to the terms of Letter Agreements, dated
as of January 16, 1995 (the "Option Agreements"), Habersham, Security and each
holder of options to purchase Security Common Stock (individually, a "Security
Option" and collectively, "Security Options") have agreed that all Security
Options will be cancelled in the Merger and replaced by one of the following
forms of consideration:

5
<PAGE> 16

(i) cash in an amount equal to the difference between the Book
Value of a share of Security Common Stock as of December 31, 1994 (adjusted, as
applicable, to reflect the effect of the Stock Split) and the $10.00 per share
exercise price of a Security Option) (the "Appreciation"), multiplied by the
number of shares of Security Common Stock subject to the Security Option;

(ii) that number of shares of Habersham Common Stock obtained by
multiplying the Appreciation by the number of shares of Security Common Stock
subject to the Security Option and dividing the result by the Book Value of a
share of Habersham Common Stock as of December 31, 1994 (as adjusted, if
applicable, to reflect the effect of the Stock Split); or

(iii) options to purchase Habersham Common Stock, with the
number of shares subject to the new option being determined by multiplying the
number of shares of Security Common Stock subject to the Security Option by
1.053 (assuming the Stock Split has been consummated) or 0.2106 (if the Stock
Split has not been consummated), and the per share exercise price for the new
options being the book value per share of Habersham Common Stock immediately
following consummation of the Merger, excluding loan loss reserves.

A form of Option Agreement is attached as Appendix B to this Proxy
Statement/ Prospectus. See "THE MERGER -- Stock Option Agreements."

Votes Required. Approval of the Merger Agreement and consummation of
the transactions contemplated therein requires the affirmative vote of the
holders of a majority of the outstanding shares of the Security Common Stock
entitled to vote at the Special Meeting. As of the Record Date, Security's
directors and executive officers and their affiliates held approximately
[41.7]% of the outstanding shares of Security Common Stock entitled to vote at
the Special Meeting. As of the Record Date, Habersham and its directors and
executive officers and their affiliates held [117,905] shares of Security
Common Stock, representing approximately [22.5]% of Security's outstanding
Common Stock. See "GENERAL INFORMATION -- Votes Required" and "THE MERGER --
Interests of Certain Persons in the Merger."

SECURITY SHAREHOLDERS HAVE THE RIGHT TO DISSENT FROM APPROVAL OF THE
MERGER AGREEMENT AND OBTAIN PAYMENT FOR THE FAIR VALUE OF THEIR SHARES OF
SECURITY COMMON STOCK BY FOLLOWING THE PROCEDURES DESCRIBED IN TITLE 14,
CHAPTER 2, ARTICLE 13 ("ARTICLE 13") OF THE GEORGIA CODE. SEE APPENDIX D
HERETO AND "THE MERGER--DISSENTERS' RIGHTS."

Recommendation of the Security Board of Directors. The Board of
Directors of Security believes that the Merger is in the best interests of
Security and its shareholders and has approved the Merger Agreement and the
consummation of the transactions contemplated therein. THE SECURITY BOARD OF
DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREIN. In
deciding to approve the Merger Agreement and the consummation of the
transactions contemplated therein, Security's Board of Directors considered a
number of factors, including the compatibility of the operations of Security
and Habersham and the financial condition, results of operations, and future
prospects of Security and Habersham. David D. Stovall, who is a director of
both Habersham and Security, abstained from any proceedings or discussions of
the Security Board of Directors relating to the Merger. See "THE MERGER --
Background of the Merger;" "-- Reasons for the Merger" and "-- Interests of
Certain Persons in the Merger."

6
<PAGE> 17

Opinion of Financial Advisor. Security has received a written opinion
of Alex Sheshunoff & Co. Investment Banking ("Sheshunoff"), dated January 12,
1995, that, as of such date, the consideration to be received by Security
shareholders in connection with the Merger was fair, from a financial point of
view, to the holders of Security Common Stock. The full text of Sheshunoff's
opinion, which describes the procedures followed, assumptions made, limitations
on the review taken, and other matters in connection with rendering such
opinion, is set forth in Appendix C to this Proxy Statement/Prospectus and
should be read in its entirety by Security shareholders. For additional
information regarding Sheshunoff's opinion and a discussion of its
qualifications and the method of its selection, see "THE MERGER -- Opinion of
Financial Advisor."

Effective Time. If the Merger is approved by the requisite vote of the
Security shareholders, all required governmental and other consents and
approvals are obtained and the other conditions to the obligations of the
parties to consummate the Merger are either satisfied or waived (as permitted),
the Merger will be consummated and will become effective on the date and at the
time that Articles of Merger reflecting the Merger are filed with the Secretary
of State of the State of Georgia (the "Effective Time"). Assuming satisfaction
of all conditions to consummation, the Merger is expected to be made effective
during the second quarter of 1995. Habersham and Security each has the right,
acting unilaterally, to terminate the Merger Agreement should the Merger not be
consummated by September 30, 1995. See "THE MERGER -- Effective Time" and
" -- Amendment, Waiver, and Termination."

Delivery of Habersham Certificates. Promptly after the Effective Time,
each record holder of shares of Security Common Stock outstanding at the
Effective Time will be mailed a transmittal letter (with instructions) to use
in effecting the surrender and cancellation of those certificates in exchange
for either cash or shares of Habersham Common Stock. Habersham shall not be
obligated to deliver the consideration to which any former holder of Security
Common Stock is entitled until such holder surrenders such holder's certificate
or certificates representing such holder's shares for exchange. The
certificate or certificates so surrendered shall be duly endorsed as Habersham
may require. See "THE MERGER -- Distribution of Habersham Certificates."

Certain Federal Income Tax Consequences. The Merger is intended to be
a tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). Generally, no gain or loss
should be recognized for federal income tax purposes by Security shareholders
as a result of the Merger, except that gain or loss will be recognized with
respect to any cash received in the Merger. A condition to consummation of the
Merger is the receipt by each of Habersham and Security of an opinion of
Powell, Goldstein, Frazer & Murphy, counsel to Habersham, as to the
qualification of the Merger as a tax-free reorganization and certain other
federal income tax consequences of the Merger. See "THE MERGER -- Certain
Federal Income Tax Consequences."

BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER AND OTHER FACTORS, EACH HOLDER
OF SECURITY COMMON STOCK IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISER TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER
(INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX
LAWS).

7
<PAGE> 18

Interests of Certain Persons in the Merger. As of January 16, 1995,
the directors and officers of Security beneficially owned an aggregate of
approximately 16,874 shares of Habersham Common Stock, representing
approximately 4.9% of the then outstanding shares of Habersham Common Stock.
In addition, the directors and officers of Habersham beneficially owned 117,905
shares of Security Common Stock as of that date, representing approximately
22.5% of the then outstanding shares of Security Common Stock.

David D. Stovall, the President of Habersham and a member of its Board
of Directors, is also the Chairman of the Board of Directors of Security and
owns approximately 5.8% of Security's outstanding Common Stock, and Thomas A.
Arrendale, III, the Vice Chairman of the Board of Habersham, owns approximately
11.5% of Security's outstanding Common Stock. Habersham also owns 26,249
shares of Security Common Stock (representing approximately 5.0% of the
outstanding shares), with respect to which voting and investment power is
shared by the members of a proxy committee consisting of three Habersham
directors other than Mr. Stovall and Mr. Arrendale, III. Mr. Stovall
participated in the negotiation of the terms of the Merger solely in his
capacity as President and Chief Executive Officer of Habersham and did not vote
on the Merger or participate in any discussions of its terms in his capacity as
a Security director. Mr. Arrendale did not participate in any discussions or
negotiations of the Merger with any member of Security's management or Board.
Neither Mr. Stovall nor Mr. Arrendale will receive any benefit as a result of
the Merger that will not be shared on a pro rata basis by all other Security
shareholders. See "THE MERGER -- Background of the Merger."

Contracts Between Habersham and Security. Habersham Bank provides
auditing and data processing services to Security Bank and to other financial
institutions. See "THE MERGER -- Contracts Between Habersham and Security" for
a description of the general terms upon which such services are performed.
Security's management believes these services are performed on terms as
favorable to Security Bank as could have been obtained from other vendors.

Conditions to Consummation. Consummation of the Merger is subject to
various conditions, including among other matters: (i) approval of the Merger
Agreement by the Security shareholders; (ii) receipt of all governmental and
other consents and approvals necessary to permit consummation of the Merger,
including those of the Board of Governors of the Federal Reserve System (the
"Federal Reserve") and the Department of Banking and Finance of the State of
Georgia (the "DBF"); (iii) receipt of approval for the listing of the Habersham
Common Stock on the Nasdaq National Market or the Nasdaq SmallCap Market; (iv)
execution of the Option Agreement in the form attached as Appendix B; (v) an
aggregate of not more than 52,500 shares of Security Common Stock dissenting
from the Merger (unless a greater number is permitted by Habersham in its sole
discretion); and (vi) satisfaction of certain other usual conditions, including
the receipt of the tax opinion discussed above. The foregoing are the material
conditions to the consummation of the Merger. See "THE MERGER -- Conditions to
Consummation" and "-- Amendment, Waiver, and Termination."

Regulatory Approvals. The Merger is subject to the prior approval of
the Federal Reserve and the DBF. Applications have been filed with the Federal
Reserve and the DBF for approval of the Merger. There can be no assurance that
the approval of the Federal Reserve or the DBF will be obtained or as to the
timing or conditions of such approval. See "THE MERGER -- Regulatory
Approvals."

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<PAGE> 19

Conduct of Business Pending the Merger. Security has agreed in the
Merger Agreement to, among other things, operate its business only in the
ordinary course and to take no action that would adversely affect its ability
to perform its covenants and agreements under the Merger Agreement. In
addition, Security has agreed not to take certain actions relating to the
operation of Security pending consummation of the Merger without the prior
written consent of Habersham, except as otherwise permitted by the Merger
Agreement, including, among other things: (i) amending its Articles of
Incorporation or Bylaws or the governing instruments of Security Bank; (ii)
becoming responsible for any obligation for borrowed money in excess of an
aggregate of $500,000, except in accordance with past practices; (iii)
acquiring or exchanging any shares of its capital stock or paying any dividend
or other distribution with respect to its capital stock; (iv) issuing, selling
or pledging additional shares of any Security capital stock, any rights to
acquire any such stock or any security convertible into such stock, except
pursuant to the exercise of outstanding stock options; (v) adjusting or
reclassifying any of its capital stock; (vi) acquiring control over any other
entity; (vii) granting any increase in compensation or benefits to its
employees or officers (except as previously disclosed to Habersham or as
required by law), paying any bonus (except as previously disclosed to Habersham
or in accordance with any existing program or plan) or entering into or
amending any severance agreements with its officers; (viii) granting any
increase in compensation or other benefits to any of its directors (except as
previously disclosed to Habersham); (ix) entering into or amending any
employment contract that it does not have the unconditional right to terminate
without certain liability, except for any amendment required by law; (x)
adopting any new employee benefit plan or program or materially changing any
existing plan or program; (xi) making any significant changes in accounting
methods, except for any change required by law; (xii) commencing any litigation
other than in accordance with past practice or settling any litigation for
money damages in excess of $250,000; or (xiii) materially amending or
terminating any material contracts. See "THE MERGER -- Conduct of Business
Pending the Merger."

Termination. The Merger Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time by mutual consent of the
Boards of Directors of Security and Habersham. In addition, the Merger
Agreement may be terminated, and the Merger abandoned, prior to the Effective
Time by either Habersham or Security if (i) the other party breaches and does
not timely cure any representation, warranty, covenant or other agreement
contained in the Merger Agreement and (other than representations and
warranties relating to the capital stock of each of Habersham and Security)
such breach, individually or in the aggregate, has a Material Adverse Effect,
as defined in the Merger Agreement, on the non-breaching party, (ii) any
consent or approval of certain regulatory authorities is denied by final
nonappealable action of such authority, (iii) the Security shareholders fail to
approve the Merger Agreement, (iv) any of the conditions precedent to the
obligations of the terminating party to consummate the Merger cannot be
satisfied or fulfilled by September 30, 1995, or (v) the Merger has not been
consummated by September 30, 1995. See "THE MERGER -- Amendment, Waiver, and
Termination."

Accounting Treatment. It is anticipated that the Merger will be
accounted for as a "purchase" for financial reporting purposes. See "THE
MERGER -- Accounting Treatment."

Resale of Habersham Common Stock. The Habersham Common Stock issuable
in connection with the Merger will be freely transferable by the holders of
such shares, except for those holders who may be deemed to be "affiliates"
(generally including directors, certain executive officers, and 10% or more
shareholders) of Security or Habersham under applicable federal securities
laws. See "THE MERGER -- Resale of Habersham Common Stock."

9
<PAGE> 20

Dissenters' Rights. A holder of Security common stock who dissents
from the Merger is entitled to the rights and remedies of dissenting
shareholders set forth in Article 13 of the Georgia Code, subject to compliance
with the procedures set forth therein. Among other things, a dissenting
shareholder is entitled to receive cash in an amount equal to the "fair value"
of such holder's shares. A copy of Article 13 of the Georgia Code is set forth
in Appendix D to this Proxy Statement/Prospectus and a summary thereof is
included under "The Merger--Dissenters' Rights." TO PERFECT DISSENTERS'
RIGHTS, A SHAREHOLDER MUST COMPLY WITH ARTICLE 13 OF THE GEORGIA CODE, WHICH
REQUIRES, AMONG OTHER THINGS, THAT THE SHAREHOLDER GIVE SECURITY NOTICE OF SUCH
HOLDER'S INTENTION TO DISSENT FROM APPROVAL OF THE MERGER AGREEMENT PRIOR TO
THE VOTE OF THE SECURITY SHAREHOLDERS AT THE SPECIAL MEETING AND THAT SUCH
SHAREHOLDER NOT VOTE HIS OR HER SHARES IN FAVOR OF THE MERGER AGREEMENT. ANY
SECURITY SHAREHOLDER WHO RETURNS A SIGNED PROXY BUT FAILS TO PROVIDE
INSTRUCTIONS AS TO THE MANNER IN WHICH SUCH HOLDER'S SHARES ARE TO BE VOTED
WILL BE DEEMED TO HAVE VOTED IN FAVOR OF THE MERGER AGREEMENT AND THUS WILL NOT
BE ENTITLED TO ASSERT DISSENTERS' RIGHTS.

MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS

Habersham Common Stock. There is no established public trading market
for the Habersham Common Stock. Habersham is aware of transactions that have
resulted in shares being traded since January 1, 1993 at prices ranging from a
low of approximately $37.00 per share to a high of approximately $43.00 per
share. The most recent trade prior to announcement of the Merger was effected
on December 30, 1994 at a purchase price of $43.00 per share,and trades since
the announcement of the Merger have also been effected at a price of $43.00 per
share.

As of March 1, 1995, a total of 335,051 shares of Habersham Common
Stock were issued and outstanding and held by 400 holders of record. An
additional 38,600 shares (including 5,000 shares granted under a plan subject
to shareholder approval) were subject to outstanding options to purchase
Habersham Common Stock.

In order to qualify the Habersham Common Stock for listing on the
Nasdaq National Market, Habersham intends to declare a five-for-one stock split
in the form of a 400% stock dividend with respect to its outstanding Common
Stock prior to consummation of the Merger. The effective date of the stock
split will occur after Habersham's April 15, 1995 Annual Shareholders' Meeting
because Habersham must obtain shareholder approval of an increase in the number
of authorized shares of Habersham Common Stock from 1 million to 10 million
before effecting the split. If shareholder approval is not obtained, the
Habersham Common Stock will not qualify for listing on the Nasdaq National
Market, but will qualify for listing on the Nasdaq SmallCap Market. The
Habersham Board of Directors also plans to reduce the par value of the
Habersham Common Stock from $2.50 to $1.00 per share. See "CERTAIN DIFFERENCES
IN THE RIGHTS OF HABERSHAM AND SECURITY SHAREHOLDERS -- Authorized Capital
Stock."

Security Common Stock. There is no established public trading market
for the Security Common Stock. The Security Common Stock has been traded at a
consistent price of $10.00 per share since January 1, 1993. The most recent
trade prior to announcement of the Merger was effected on November 23, 1994.
No trades have been effected since the announcement of the Merger.

10
<PAGE> 21

As of February 28, 1995, a total of 525,000 shares of Security Common
Stock were issued and outstanding and held by 323 holders of record. An
additional 67,750 shares were subject to outstanding options to purchase
Security Common Stock.

Dividends. Habersham pays dividends to its shareholders
semi-annually. Dividends were paid at a rate of $0.40 per share in 1994 and
$0.40 per share in 1993. No assurance can be given, however, regarding the
existence or extent of future dividend payments. Security has not paid any
dividends to its shareholders since inception and does not anticipate paying
any dividends in the immediate future. The dividends payable by Habersham and
Security depend primarily on their income, which in turn largely depends upon
dividends received from their subsidiary banks. Under Georgia law, a bank must
obtain the approval of the DBF before cash dividends may be paid if (i) the
total classified assets at the most recent examination of such bank exceed 80%
of the equity capital, (ii) the aggregate amount of dividends declared or
anticipated to be declared in the calendar year exceeds 50% of the net profits,
after taxes but before dividends, for the previous calendar year, or (iii) the
ratio of equity capital to adjusted assets is less than 6%. Based on the
foregoing factors, Habersham is not required to seek DBF approval prior to
paying cash dividends.

COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA

The following summary presents selected comparative unaudited per
share data for Habersham and Security on a historical basis and on a pro forma
combined basis assuming the Merger had been effective during the period
presented and assuming that 75% of the Security shareholders elect to receive
Habersham Common Stock in the Merger. The Merger is reflected under the
purchase method of accounting and pro forma data is derived accordingly. The
information shown below should be read in conjunction with the historical
financial statements of Habersham and Security, including the respective notes
thereto, and with the unaudited pro forma financial information, including the
notes thereto, appearing elsewhere herein. See "AVAILABLE INFORMATION,"
"INCORPORATION OF CERTAIN INFORMATION BY REFERENCE," "PRO FORMA COMBINED
FINANCIAL DATA," "THE MERGER -- Accounting Treatment" and "FINANCIAL
STATEMENTS."

<TABLE>
<CAPTION>
Year Ended
December 31, 1994
-----------------
<S> <C>
HABERSHAM COMMON STOCK
Net income per common share:
Historical $ 4.91
Pro forma combined 3.86
Dividends per common share:
Historical $ 0.40
Pro forma combined 0.29
Book value per common share:
Historical $47.36
Pro forma combined 49.60

</TABLE>

11
<PAGE> 22

<TABLE>
<CAPTION>
Year Ended
December 31, 1994
-----------------
<S> <C>
SECURITY COMMON STOCK
Net income per common share:
Historical $ 0.89
Equivalent pro forma combined 1.22
Dividends per common share:
Historical $ 0
Equivalent pro forma combined $ 0
Book value per common share:
Historical $10.25
Equivalent pro forma combined 15.67
</TABLE>

12
<PAGE> 23

SELECTED FINANCIAL DATA OF HABERSHAM (HISTORICAL)

The following table sets forth selected historical financial data of
Habersham and has been derived from its financial statements. Such selected
historical financial data should be read in conjunction with Habersham's
audited consolidated financial statements at December 31, 1994 and 1993 and for
each of the three years in the period ended December 31, 1994, including the
respective notes thereto, which appear elsewhere herein.

(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
For the years ended December 31
-------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest Income $ 12,435 $ 12,330 $ 13,823 $ 15,601 $ 15,515
Interest Expense 4,801 4,678 6,528 8,654 9,157
Other Income 1,207 918 1,049 897 923
Other Expense 6,620 6,330 6,081 5,655 5,043
Income before cumulative
effect of change in
accounting principle 1,658 1,645 1,410 1,293 1,104
Net Income 1,658 1,558 1,410 1,293 1,104

PER SHARE AMOUNTS
Income before cumulative
effect of change in
accounting principle $ 4.91 $ 4.92 $ 4.24 $ 3.71 $ 3.18
Cumulative effect of change
in accounting principle (.26)
Net income $ 4.91 $ 4.66 $ 4.24 $ 3.71 $ 3.18
Dividends .40 .40 .38 .35 .35
Weighted average number of
common and common
equivalent shares
outstanding 337,959 334,413 332,734 349,126 347,480

AT DECEMBER 31
Total Assets $161,327 $158,856 $150,639 $160,705 $152,976
Earning Assets 152,018 150,212 140,726 149,953 141,790
Loans 100,848 104,154 105,104 104,052 104,614
Deposits 141,615 138,459 134,451 144,232 137,285
Shareholders' Equity 15,851 15,546 13,710 12,959 11,803

RATIOS
Return on average assets 1.02% 1.01% .89% .83% .75%
Return on average equity 10.50% 10.66% 10.70% 10.36% 9.65%
Dividend payout ratio 8.02% 8.51% 8.84% 9.46% 11.02%
Average equity to average
assets ratio 9.76% 9.50% 8.31% 8.03% 7.74%
</TABLE>

13
<PAGE> 24

SELECTED FINANCIAL DATA OF SECURITY (HISTORICAL)

The following table sets forth selected historical financial data of
Security and has been derived from and should be read in conjunction with
Security's audited consolidated financial statements for the three years ended
December 31, 1994, including the notes thereto, which appear elsewhere herein.

<TABLE>
<CAPTION>
(Dollars in thousands, except per share data) For the years ended December 31
-------------------------------
1994 1993 1992 1991 1990
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest Income $ 3,610 $ 3,074 $ 2,177 $ 1,041 $ 379
Interest Expense 1,504 1,307 1,039 622 105
Other Income 306 198 120 49 23
Other Expense 1,501 1,193 956 897 398
Income (Loss) before extraordinary item 468 680 107 (570) (106)
Net Income (Loss) 468 680 148 (570) (106)

PER SHARE AMOUNTS
Income (Loss) before extraordinary item $ 0.89 $ 1.30 $ 0.20 ($1.09) ($0.22)
Extraordinary item $ 0.08
Net Income (Loss) $ 0.89 $ 1.30 $ 0.28 ($1.09) ($0.22)
Weighted average number of common shares 525,000 525,000 525,000 525,000 479,900

AT DECEMBER 31
Total Assets 40,044 40,037 28,962 17,564 8,581
Earning Assets 36,995 37,132 25,949 14,879 7,054
Loans, net 30,002 28,184 17,186 9,886 450
Deposits 33,981 34,531 24,283 13,120 3,692
Shareholders' Equity 5,383 5,166 4,421 4,272 4,842

RATIOS
Return on average assets 1.12% 1.92% 0.60% -4.10% -1.92%
Return on average equity 8.79% 14.55% 3.44% -12.51% -2.49%
Average equity to average assets ratio 12.79% 13.21% 17.46% 32.75% 77.14%
</TABLE>

14
<PAGE> 25

SELECTED PRO FORMA FINANCIAL DATA OF HABERSHAM AND SECURITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table sets forth unaudited selected pro forma combined
financial data of Habersham and Security assuming the Merger is consummated and
accounted for under the purchase method and assuming 75% of the Security
shareholders elect to receive Habersham Common Stock in the Merger. The pro
forma balance sheet data has been prepared assuming the Merger was consummated
on December 31, 1994 and the pro forma income statement data has been prepared
assuming the Merger was consummated on January 1, 1994. The pro forma
financial data is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that
would have occurred if the Merger had been consummated when indicated, nor is
it necessarily indicative of future operating results or financial position.
The pro forma financial data has been derived from and should be read in
conjunction with the pro forma financial data, including the notes thereto,
appearing elsewhere in this Proxy Statement/Prospectus. See "AVAILABLE
INFORMATION" and "PRO FORMA COMBINED FINANCIAL DATA."

(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended
December 31, 1994
-----------------
<S> <C>
INCOME STATEMENT DATA:
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,588
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . 373
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,514
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,362
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,785

PER SHARE DATA:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.86
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.29
Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.60
Weighted average number of
common and common stock
equivalent shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462,338

December 31, 1994
-----------------
BALANCE SHEET DATA (AT PERIOD-END)
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 129,060
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,904
Non-interest bearing deposits . . . . . . . . . . . . . . . . . . . . . . . . 19,350
Interest bearing deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 156,247
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,766

</TABLE>

15
<PAGE> 26

GENERAL INFORMATION

SPECIAL MEETING

This Proxy Statement/Prospectus is being furnished by Security to its
shareholders in connection with the solicitation of proxies by the Board of
Directors of Security from holders of the outstanding shares of Security Common
Stock for use at the Special Meeting of shareholders of Security to be held at
Security's main office, located at 1600 Marietta Highway, Canton, Georgia, at
_______ a.m./p.m., on _______________, 1995, and at any adjournments and
postponements thereof (the "Special Meeting"), to consider and vote upon a
proposal to approve the Merger Agreement, which provides for, among other
things, the merger of Security with and into Habersham (the "Merger"), and to
transact such other business as may properly come before the Special Meeting.

This document is also being furnished by Habersham to Security
shareholders as a prospectus in connection with the issuance by Habersham of
shares of Habersham Common Stock upon consummation of the Merger.

The Merger Agreement provides for a transaction in which Security will
merge with and into Habersham. Habersham will be the surviving corporation of
the Merger and Habersham Bank and Security Bank will continue to operate as
separate subsidiaries of Habersham. At the Effective Time, each share of
issued and outstanding Security Common Stock (other than shares held by
Security, Habersham or their subsidiaries or by shareholders perfecting their
dissenters' rights) shall cease to be outstanding and shall be converted into
and exchanged for the right to receive, at the election of each shareholder,
shares of Habersham Common Stock or cash (the "Merger Consideration"). See
"THE MERGER -- Merger Consideration."

If the Merger Agreement is approved at the Special Meeting, all
required governmental and other consents and approvals are obtained, and all of
the other conditions to the obligations of the parties to consummate the Merger
are either satisfied or waived (as permitted), the Merger will be consummated.
See "THE MERGER -- Effective Time."

RECORD DATE, SOLICITATION, AND REVOCABILITY OF PROXIES

The Security Board of Directors has fixed the close of business on
_______________, 1995, as the record date for determining the Security
shareholders entitled to receive notice of and to vote at the Special Meeting
(the "Record Date"). Only holders of record of Security Common Stock as of the
Record Date are entitled to notice of and to vote at the Special Meeting. As
of the Record Date, [525,000] shares of Security Common Stock were issued and
outstanding and held by [323] record holders. Holders of Security Common Stock
are entitled to one vote on each matter considered and voted on at the Special
Meeting for each share of Security Common Stock held of record at the close of
business on the Record Date. The presence, in person or by properly executed
proxy, of the holders of a majority of the outstanding shares of Security
Common Stock entitled to vote at the Special Meeting is necessary to constitute
a quorum at the Special Meeting. Abstentions

16
<PAGE> 27

will be counted, but "broker non-votes" will not be counted, as shares present
for purposes of determining the presence of a quorum. Neither abstentions nor
"broker non-votes" will be counted as votes cast for purposes of determining
whether a proposal has received sufficient votes for approval.

Proxies in the form accompanying this Proxy Statement/Prospectus are
solicited by Security's Board of Directors. Shares of Security Common Stock
represented by properly executed proxies, if such proxies are received in time
and are not revoked, will be voted in accordance with the instructions
indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL
BE VOTED "FOR" APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREIN, AND AS DETERMINED BY A MAJORITY OF THE
MEMBERS OF THE SECURITY BOARD OF DIRECTORS AS TO ANY OTHER MATTER THAT MAY COME
BEFORE THE SPECIAL MEETING. ANY HOLDER OF SECURITY COMMON STOCK WHO RETURNS A
SIGNED PROXY BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER IN WHICH SUCH
HOLDER'S SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE VOTED IN FAVOR OF
APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREIN, AND WILL NOT BE ENTITLED TO ASSERT DISSENTERS' RIGHTS.

A Security shareholder who has given a proxy may revoke it at any time
prior to its exercise at the Special Meeting or prior to the receipt by
Security of proxies voting in favor of the Merger by all shareholders, by (i)
giving written notice of revocation to the Secretary of Security, (ii) properly
submitting to Security a duly executed proxy bearing a later date, or (iii)
voting in person at the Special Meeting. All written notices of revocation and
other communications with respect to revocation of proxies should be addressed
to Security as follows: Security Bancorp, Inc., 1600 Marietta Highway, Canton,
Georgia 30114, Attention: President. A proxy appointment will not be revoked
by death or supervening incapacity of the shareholder executing the proxy
statement unless, before the shares are voted, notice of such death or
incapacity is filed with Security's Corporate Secretary or other person
responsible for tabulating votes on behalf of Security.

The expense of soliciting proxies for the Special Meeting will be paid
for by Security, although Habersham and Security have agreed to each pay
one-half of the cost of preparing and mailing this Proxy Statement/Prospectus.
In addition to the solicitation of shareholders of record by mail, telephone or
personal contact, Security will be contacting brokers, dealers, banks or voting
trustees or their nominees who can be identified as record holders of Security
Common Stock; such holders, after inquiry by Security, will provide information
concerning quantity of proxy and other materials needed to supply such
materials to beneficial owners, and Security will reimburse them for the
expense of mailing the proxy materials to such persons.

VOTE REQUIRED

Approval of the Merger Agreement and consummation of the transactions
contemplated therein requires the affirmative vote of the holders of a majority
of the outstanding shares of Security Common Stock entitled to vote thereon at
the Special Meeting. The Merger Agreement and the consummation of the
transactions contemplated therein do not require the approval of the holders of
Habersham Common Stock.

17
<PAGE> 28

As of the Record Date, Security's directors and executive officers,
and their affiliates, held approximately [41.7]% of the outstanding shares of
Security Common Stock entitled to vote at the Special Meeting. As of the
Record Date, Habersham and its directors and executive officers and their
affiliates held approximately [22.5]% of the outstanding shares of Security
Common Stock. See "THE MERGER -- Interests of Certain Persons in the Merger."

RECOMMENDATION OF SECURITY'S BOARD OF DIRECTORS

For the reasons described in the section of this Proxy
Statement/Prospectus entitled "THE MERGER -- Reasons for the Merger", the Board
of Directors of Security (with the exception of Mr. Stovall, who has abstained
from proceedings relating to the Merger in his capacity as a Security director)
has adopted the Merger Agreement, believes the Merger is in the best interests
of Security and its shareholders and recommends that shareholders of Security
vote "FOR" approval of the Merger Agreement and the consummation of the
transactions contemplated therein. See "THE MERGER -- Background of the
Merger;" "-- Reasons for the Merger" and -- Interests of Certain Persons in the
Merger."
THE MERGER

The following information describes certain information pertaining to
the Merger. This description does not purport to be complete and is qualified
in its entirety by reference to the Appendices hereto, including the Merger
Agreement, the Option Agreement and the Opinion of the Financial Advisor,
copies of which are set forth in Appendices A, B and C respectively, to this
Proxy Statement/Prospectus and is incorporated herein by reference. All
shareholders are urged to read the Appendices in their entirety.

GENERAL

The Merger Agreement provides that Security shall merge with and into
Habersham (the "Merger"). Habersham will be the surviving corporation of the
Merger and will continue to be governed by the laws of the State of Georgia.
At the time the Merger becomes effective, each share of issued and outstanding
Security Common Stock (excluding shares held by Habersham, Security or their
subsidiaries or shareholders who perfect their dissenters' rights) shall cease
to be outstanding and shall be converted into and exchanged for the right to
receive, at the election of each shareholder, either shares of Habersham Common
Stock or cash (the "Merger Consideration"), calculated as described under
"Merger Consideration" below. If the Merger Agreement is approved at the
Special Meeting, all required governmental and other consents and approvals are
obtained and all other conditions to the obligations of the parties to
consummate the Merger are either satisfied or waived (as permitted), the Merger
will be consummated. A copy of the Merger Agreement is set forth in Appendix A
of this Proxy Statement/Prospectus.

18
<PAGE> 29

BACKGROUND OF THE MERGER

From time to time during the fourth quarter of 1994, the Security
Board of Directors and David Stovall, in his capacity as President and Chief
Executive Officer of Habersham, discussed informally whether a combination
between Habersham and Security might benefit the constituent institutions and
their shareholders. On November 28, 1994, Mr. Stovall discussed a possible
combination between Habersham and Security with the Habersham Board of
Directors. The Habersham Board, having knowledge of Mr. Stovall's position on
the Security Board of Directors and his ownership of Security Common Stock,
unanimously authorized Mr. Stovall to discuss the terms of such a combination
with members of Security's management and Board of Directors on behalf of
Habersham. See "Interests of Certain Persons in the Merger" below.

On November 28, 1994, Mr. Stovall presented the terms of the proposed
Merger and a draft of a Letter of Intent setting forth such terms to Security's
Board of Directors. Mr. Stovall then left the meeting. After discussion, the
members of the Board approved the Letter of Intent by a unanimous vote, with
Mr. Stovall abstaining. C. Mickle Moye, the President and Chief Executive
Officer of Security, and Mr. Stovall then signed the Letter of Intent on behalf
of their respective institutions.

During the next two weeks, Mr. Stovall and counsel to Habersham
discussed the terms of the proposed Merger with Mr. Moye and counsel to
Security. At a special Board meeting on December 8, 1994, Habersham's Board of
Directors ratified the Letter of Intent and instructed Mr. Stovall to negotiate
a formal merger agreement in accordance with its terms and to execute all
documents and take all such actions as he deemed necessary or appropriate to
consummate the Merger.

On December 19, 1994, the Security Board of Directors appointed a
Negotiating Committee consisting of five directors to negotiate the terms of
the Merger with Mr. Stovall and to report the results of their negotiations to
the Board of Directors at the next Board meeting. The Negotiating Committee
met on December 30, 1994, and reviewed a draft of the Merger Agreement,
Habersham's audited financial statements and internal due diligence reports
prepared by bank management, independent auditors and counsel. The Negotiating
Committee also decided to engage Alex Sheshunoff & Co. Investment Banking
("Sheshunoff") to render a fairness opinion in connection with the Merger and
retained an independent consulting firm to review Habersham's loan portfolio
and other related matters.

On January 4, 1995, two members of Security's Negotiating Committee
(Mr. Moye and C. Kenneth White) and counsel to Security met with Mr. Stovall
and counsel to Habersham to negotiate the final terms of the Merger Agreement.
Following the meeting, the representatives of Security prepared a memorandum
summarizing the results of the meeting and furnished the memorandum to
Security's Negotiating Committee.

19
<PAGE> 30

On January 16, 1995, the Negotiating Committee reviewed the terms of
the final Merger Agreement with the Board of Directors of Security and
recommended that the Board approve the Merger Agreement in the form presented.
Mr. Stovall did not participate in the meeting. The Board reviewed reports and
information regarding Habersham and Security and reviewed Sheshunoff's opinion
stating that the consideration to be paid to the Security shareholders pursuant
to the terms of the Merger Agreement was fair to such shareholders from a
financial point of view. After further discussion, and based on the reasons
stated in "Reasons for the Merger--Security" below, the Board approved the
Merger Agreement and Mr. Moye executed it on Security's behalf. Mr. Stovall
also executed the Merger Agreement on behalf of Habersham.

On January 21, 1995, the Habersham Board of Directors reviewed and
ratified the Merger Agreement and Mr. Stovall's execution thereof. The reasons
for the Habersham Board's approval of the Merger Agreement are set forth in the
section entitled "Reasons for the Merger--Habersham" below.

REASONS FOR THE MERGER

Security. The Security Board of Directors, after consideration of
relevant business, financial, legal and market factors, approved the Merger
Agreement. Security's Board did not assign any relative or specific weight to
the factors considered. The factors considered included:

(i) The alternatives to the Merger, including remaining
as an independent financial institution in light of current economic
conditions in Security Bank's primary market and the competition
presented by larger financial institutions operating in that market.

(ii) The value of the consideration to be received by
Security's shareholders relative to the book value and earnings per
share of the Security Common Stock.

(iii) Information concerning the financial condition,
results of operations and business prospects of Habersham.

(iv) The current lack of marketability of the Security
Common Stock, contrasted with the ability of Security's shareholders
to exchange their Security Common Stock for Habersham Common Stock in
connection with the Merger and thereafter have the ability to trade
such stock on Nasdaq.

(v) The synergies and operational efficiencies, increased
financial and managerial resources and enhanced service capabilities
that would result from combining Habersham and Security.

(vi) The competitive and regulatory environment for
financial institutions generally.

20
<PAGE> 31

(vii) The financial terms of recent business combinations
in the financial services industry with respect to the multiples
received on book value of the acquired entities.

(viii) The tax aspects of the Merger with respect to the
consideration to be received by the Security shareholders.

(ix) The opinion of Sheshunoff as to the fairness, from a
financial point of view, of the consideration to be received by the
holders of Security Common Stock. See "Opinion of Financial Advisor."

THE BOARD OF DIRECTORS OF SECURITY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT AND CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREIN.

Habersham. In the opinion of the Habersham Board of Directors, the
Merger will enable Habersham to expand its market area into the rapidly growing
Cherokee County area currently served by Security. Other factors considered
(but not accorded any relative or specific weight) by the Board included:

(i) The financial terms of the Merger. The Board was of
the view that the consideration to be issued to Security shareholders
in the Merger represented fair payment for the business and assets of
Security.

(ii) The expansion of Habersham's shareholder base as a
result of the Merger, which, together with the Stock Split, would
enable Habersham to meet the Nasdaq National Market listing criteria
and thereby develop an established trading market for the Habersham
Common Stock.

(iii) Information concerning the business, operations and
financial condition of Security.

(iv) The impact generally of the Merger on the various
constituencies served by Habersham.

(v) The likelihood of the Merger being approved by the
appropriate regulatory authorities.

OPINION OF FINANCIAL ADVISOR

In January 1995, Security retained Alex Sheshunoff & Co. Investment
Banking ("Sheshunoff"), an investment banking firm based in Austin, Texas, on
the basis of its experience, to render a written fairness opinion (the
"Opinion") to the Board of Directors and shareholders of Security. Sheshunoff
has been in the business of consulting for the banking industry for twenty
years, including the appraisal and valuation of banking institutions and their
securities in connection

21
<PAGE> 32

with mergers and acquisitions and equity offerings. Sheshunoff has a long
history of familiarity and involvement with the banking industry nationwide, as
well as familiarity with the Georgia market and recent transactions in this
market. Except as described herein, Sheshunoff is not affiliated in any way
with Security, Habersham or their respective affiliates.

On January 12, 1995, in connection with its consideration of the
Letter of Intent, Sheshunoff issued its Opinion to the Board of Directors of
Security that, in its opinion as investment bankers, the terms of the Merger as
provided in the Letter of Intent were fair, from a financial perspective, to
Security and its shareholders. This Opinion was based upon conditions as they
existed on December 31, 1994. A copy of the Opinion is attached as Appendix C
to this Proxy Statement/Prospectus and should be read in its entirety by
Security shareholders. Sheshunoff's written Opinion does not constitute an
endorsement of the Merger or a recommendation to any shareholder as to how such
shareholder should vote at the Special Meeting.

In rendering its written Opinion, Sheshunoff reviewed certain publicly
available information concerning Habersham and Security, including each party's
audited financial statements and annual reports. Sheshunoff considered many
factors in making its evaluation. In arriving at its Opinion regarding the
fairness of the transaction, Sheshunoff reviewed: (i) the Letter of Intent from
Habersham to Security dated November 28, 1994; (ii) the most recent external
auditor's reports to the Boards of Directors of each organization; (iii) the
December 31, 1994 balance sheet and income statement for each organization and
the audited December 31, 1993 balance sheet and income statement for each
organization; (iv) the Rate Sensitivity Analysis reports for each organization;
(v) each organization's listing of marketable securities showing rate, maturity
and market value as compared to book value; (vi) each organization's internal
loan classification list; (vii) a listing of other real estate owned for each
organization; (viii) the budget and long range operating plan of each
organization; (ix) the minutes of the Board of Directors meetings for each
organization; (x) the most recent Board report for each organization; (xi) the
listing and description of significant real properties for Habersham; (xii) the
directors and officers liability and blanket bond insurance policies for each
organization; and (xiii) market conditions and current trading levels of
outstanding equity securities of both organizations. Sheshunoff conducted an
on-site review of each organization's historical performance and current
financial condition and performed a market area analysis.

In addition, Sheshunoff discussed with the management of Security and
Habersham the relative operating performance and future prospects of each
organization, primarily with respect to the current level of their earnings and
future expected operating results, giving weight to Sheshunoff's assessment of
the future of the banking industry and each organization's performance within
the industry. Sheshunoff compared the results of operation of Security's
subsidiary bank with the results of operation of a peer group comprised of all
Georgia banks with total assets of $25 to $49 million (121 banks). Sheshunoff
compared the results of operation of Habersham's subsidiary bank with the
results of operations of a peer group comprised of all Georgia banks with total
assets of $100 to $499 million (88 banks).

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Many variables affect the value of banks, not the least of which is
the uncertainty of future events, so that the relative importance of the
valuation variables differs in different situations, with the result that
appraisal theorists argue about which variables are the most appropriate ones
on which to focus. Most appraisers agree that the primary financial variables
to be considered are earnings, equity, dividends or dividend-paying capacity,
asset quality and cash flow. In addition, in most instances, if not all, value
is further tempered by non-financial factors such as marketability, voting
rights or block size, history of past sales of the banking company's stock, the
nature and relationship of the other shareholdings in the bank and special
ownership or management considerations.

Sheshunoff analyzed the total purchase price on a cash equivalent fair
market value basis using the standard evaluation techniques (as discussed
below), including comparable sales multiples, net present value, cash flow
analysis, return on investment and the price equity index based on certain
assumptions of projected growth, earnings and dividends and a range of discount
rates from 10% to 15%.

Net asset value is the value of the net equity of a bank including
every kind of property and value. This approach normally assumes liquidation
on the date of appraisal with the recognition of securities gains or losses,
real estate appreciation or depreciation, adjustments to the loan loss reserve,
discounts to the loan portfolio and changes in the net value of other assets.
As such, it is not the best approach to use when valuing a going concern,
because it is based on historical costs and varying accounting methods. Even
if the assets and liabilities are adjusted to reflect prevailing prices and
yields (which is often of limited accuracy because readily available data is
often lacking), it still results in a liquidation value for the concern.
Furthermore, because this method does not take into account the values
attributable to the going concern such as the interrelationship among the
company's assets and liabilities, customer relations, market presence, image
and reputation, and staff expertise and depth, little weight is given by
Sheshunoff to the net asset value method of valuation.

Market value is generally defined as the price, established on an
"arms-length" basis, at which knowledgeable, unrelated buyers and sellers would
agree. The market value is frequently used to determine the price of a
minority block of stock when both the quantity and the quality of the
"comparable" data are deemed sufficient. However, the relative thinness of the
specific market for the stock of the banking company being appraised may result
in the need to review alternative markets for comparative pricing purposes.
The "hypothetical" market value for a small bank with a thin market for its
stock is normally determined by comparison to the average price to earnings,
price to equity and dividend yield of local or regional publicly-traded bank
issues, adjusting for significant differences in financial performance criteria
and for any lack of marketability or liquidity. The market value in connection
with the evaluation of control of a bank is determined by the previous sales of
banks in the state or region. In valuing a business enterprise, when
sufficient comparable trade data is available, the market value deserves
greater weighing than the net asset value and similar emphasis as the
investment value as discussed below.

Sheshunoff maintains substantial files concerning the prices paid for
banking institutions nationwide. The database includes transactions involving
Georgia banking organizations and banking organizations in the Southern region
of the United States in 1994 and over the past five years. The

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database provides comparable pricing and financial performance data for banking
organizations sold or acquired. Organized by different peer groups, the data
presents averages of financial performance and purchase price levels, thereby
facilitating a valid comparative purchase price analysis. In analyzing the
transaction value of Security, Sheshunoff has considered the market approach
and has evaluated price to equity and price to earnings multiples of Georgia
and Southern banking organizations.

Comparable Sales Multiples. Sheshunoff calculated an "Adjusted Book
Value" of $18.14 per share, based on Security's December 31, 1994 equity and
the average price to equity multiple of 1.77x for Georgia banking organizations
sold in 1994. Sheshunoff calculated an "Adjusted Earnings Value" of $12.99 per
share, based on Security's 1994 earnings and the average price to earnings
multiple of 14.60x for Georgia banking organizations sold in 1994. The
financial performance characteristics of the Georgia banking organizations
vary, sometimes substantially, from those of Security. When the variance is
significant for relevant performance factors, adjustments to the price
multiples is appropriate when comparing them to the transaction value.

The investment value is sometimes referred to as the income value or
earnings value. One investment value method frequently used estimates the
present value of an enterprise's future earnings or cash flow. Another popular
investment value method is to determine the level of current annual benefits
(earnings, cash flow, dividends, etc.), and then capitalize one or more of the
benefit types using an appropriate capitalization rate such as an earnings or
dividend yield. Yet another method of calculating investment value is a cash
flow analysis of the ability of a banking company to service acquisition debt
obligations (at a certain price level) while providing sufficient earnings for
reasonable dividends and capital adequacy requirements. In connection with the
cash flow analysis, the return on investment that would accrue to a prospective
buyer at the transaction value is calculated. The investment value methods
which were analyzed in connection with this transaction were the net present
value analysis, the cash flow analysis and the return on investment analysis,
which are discussed below.

Net Present Value Analysis. The investment or earnings value of any
banking organization's stock is an estimate of the present value of the future
benefits, usually earnings, cash flow or dividends, which will accrue to the
stock. An earnings value is calculated using an annual future earnings stream
over a period of time of not less than ten years and the residual value of the
earnings stream after ten years, assuming no earnings growth, and an
appropriate capitalization rate (the net present value discount rate).
Sheshunoff's computations were based on an analysis of the banking industry,
the economic and competitive situations in Security's market area and
Security's and its subsidiary bank's current financial condition and historical
levels of growth and earnings. Using a net present value discount rate of 12%,
an acceptable discount rate considering the risk-return relationship most
investors would demand for an investment of this type as of the valuation date,
the "Net Present Value of Future Earnings" equaled $12.69 per share.

Cash Flow Analysis. The cash flow method assumes the formation of a
bank holding company with maximum leverage according to Federal Reserve System
guidelines and analyzes the ability of the bank to retire holding company
acquisition debt within a reasonable period of time while maintaining adequate
capital. Using this method, Sheshunoff arrived at a value of $16.80 per share.

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Return on Investment Analysis. Return on investment analysis (ROI)
also assumes the formation of a bank holding company using maximum regulatory
leverage and analyzes the ten year ROI of a 33.33% equity investment at the
transaction value of $17.56 per share for Security compared to a liquidation at
book value in the year 2004, and a sale at ten times projected earnings for the
year 2004. This ROI analysis provides a benchmark for assessing the validity
of the fair market value of a majority block of stock. The ROI analysis is one
approach to valuing a going concern, and is directly impacted by the earnings
stream, dividend payout levels and levels of debt, if any. Other financial and
nonfinancial factors indirectly affect the ROI; however, these factors more
directly influence the level of ROI an investor would demand from an investment
in a majority block of stock of a specific bank at a certain point in time.
The ROI, assuming liquidation at book value in 2004, is 5.13%, and the ROI,
assuming sale at ten times earnings in 2004, is 12.24%.

Price Equity Index Analysis. Furthermore, a price level indicator,
the equity index, may be used to confirm the validity of the transaction value.
The equity index adjusts the price to equity multiple in order to facilitate a
truer price level comparison with comparable banking organizations, regardless
of the differing levels of equity capital. The equity index is derived by
multiplying the price to equity multiple by the equity-to-asset ratio. In this
instance, a transaction value of $17.56 per share results in an equity index of
22.98. The price equity index for banking organizations sold in Georgia in
1994 equaled 16.50.

Finally, another test of appropriateness for the transaction value of
a majority block of stock is the net present value- to-transaction value ratio.
Theoretically, an earnings stream may be valued through the use of a net
present value analysis. In Sheshunoff's experience with majority block
community bank stock valuations, it has determined that a relationship does
exist between the net present value of an "average" community banking
organization and the transaction value of a majority block of the banking
organization's stock. The net present value-to-transaction value ratio equals
72.27% for Security, which falls within Sheshunoff's expected range. There are
many other factors to consider, when valuing a going concern, that do not
directly impact the earnings stream and the net present value but that do exert
a degree of influence over the fair market value of a going concern. These
factors include, but are not limited to, the general condition of the industry,
the economic and competitive situations in the market area and the expertise of
the management of the organization being valued.

When the net asset value, market value and investment value methods
are subjectively weighed, using the appraiser's experience and judgment, it is
Sheshunoff's opinion that the proposed transaction is fair.

Sheshunoff considered this transaction as a merger rather than a
purchase. Consideration was given to the levels of book value and earnings per
share appreciation or dilution percentages between the merger partners over the
next three to five years after consummation. A merger is usually completed
with the hopes of realizing economies of scale and earnings enhancement
opportunities, thereby providing a benefit to Security shareholders that
otherwise might not be attainable. To justify the fairness of the transaction
for Security shareholders, it is important to project, based upon realistic
projections of future performance, a positive impact for Security shareholders.
Sheshunoff

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projected that Security shareholders will have a higher level of earnings per
share, equity per share and dividends per share after the Merger with Habersham
than they would on a stand-alone basis. The primary focus has been on the
short-term and long-term earnings per share and equity per share appreciation
potential for Security shareholders.

Neither Security nor Habersham imposed any limitations upon the scope
of the investigation to be performed by Sheshunoff in formulating its Opinion.
In rendering its Opinion, Sheshunoff did not independently verify the asset
quality and financial condition of Security or Habersham, but instead relied
upon the data provided by or on behalf of Security and Habersham to be true and
accurate in all material respects.

For its services as independent financial analyst for the Merger,
including the rendering of its Opinion referred to above, Security has paid
Sheshunoff aggregate fees of $11,000. Security also agreed to reimburse
Sheshunoff for reasonable out-of-pocket expenses. Prior to being retained for
this assignment, Sheshunoff has provided professional services and products to
Habersham and Security.

MERGER CONSIDERATION

Merger Consideration. The Merger Agreement provides that, at the
effective time of the Merger, each outstanding share of Security Common Stock
(excluding shares held by Security, Habersham or their subsidiaries and by
shareholders who perfect their dissenters' rights) will cease to be outstanding
and will be converted into and exchanged for the right to receive either shares
of Habersham Common Stock or cash (the "Merger Consideration"), calculated in
the manner described in the following paragraph. The Merger Consideration will
be paid in either shares of Habersham Common Stock or cash at the election of
each holder of shares of Security Common Stock surrendered in the Merger,
subject to pro rata distribution under the circumstances described below.

The Merger Consideration will be calculated by (i) multiplying 1.5
times the aggregate Book Value (as defined in the Merger Agreement) of the
Security Common Stock at December 31, 1994 (which product equals $9,220,601)
and (ii) dividing that product by the number of shares of Security Common Stock
outstanding immediately prior to consummation of the Merger (presently 525,000
shares). If the Merger Consideration is to be paid in shares of Habersham
Common Stock, the number of shares of Habersham Common Stock to be issued in
exchange for a share of Security Common Stock will be calculated by dividing
the Merger Consideration by the Book Value (as defined in the Merger Agreement)
per share of Habersham Common Stock at December 31, 1994. Assuming
consummation of Habersham's five-for-one stock split described herein (the
"Stock Split") prior to consummation of the Merger, the $55.60 per share Book
Value of the Habersham Common Stock at December 31, 1994 will be adjusted for
purposes of this calculation to $11.12 per share. If the Stock Split is
consummated, the 525,000 shares of Security Common Stock outstanding on the
date hereof remain outstanding immediately prior to consummation of the Merger
and no shareholders exercise their dissenters' rights with respect to the
Merger, each outstanding share of Security Common Stock will be converted into
the right to receive $17.56 in cash or 1.579 shares of Habersham Common Stock
in the Merger. If the Stock Split is not consummated, but the other

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assumptions remain as stated, however, each outstanding share of Security
Common Stock will be converted into the right to receive $17.56 in cash or
0.3158 shares of Habersham Common Stock in the Merger. See "SUMMARY -- Market
for Common Stock and Related Shareholder Matters" and "CERTAIN DIFFERENCES IN
THE RIGHTS OF HABERSHAM AND SECURITY SHAREHOLDERS -- Authorized Capital Stock"
for a description of the terms and effects of the Stock Split.

If the aggregate amount of cash elected to be received by Security
shareholders plus the cash expected to be paid to any shareholders who elect to
exercise their statutory right to dissent to the Merger pursuant to Article 13
of the Georgia Code ("Dissenting Shareholders") exceeds $4,610,300
(representing 50% of the total merger consideration) (the "Maximum Cash
Value"), cash representing the Maximum Cash Value will be distributed as
follows: first, to the Dissenting Shareholders, who will be paid in full in
cash; and second, to the Security shareholders electing to receive cash in the
Merger ("Electing Shareholders"), who will be paid cash on a pro rata basis.
In determining the pro rata amounts to be distributed, each share of Security
Common Stock held by an Electing Shareholder will represent the right to
receive (i) cash in an amount determined by dividing (x) the Maximum Cash Value
less the amount payable to Dissenting Shareholders (the "Available Cash") by
(y) the number of shares of Security Common Stock ("Number of Cash Election
Shares") held by Electing Shareholders; and (ii) the number of shares of
Habersham Common Stock obtained by dividing (x) the difference between the
aggregate amount of cash requested by Electing Shareholders and the Available
Cash by (y) the Number of Cash Election Shares, and dividing the resulting
amount by the Book value per share of Habersham Common Stock at December 31,
1994 (as adjusted, if applicable, to reflect the effect of the Stock Split).

STOCK OPTIONS

Pursuant to the terms of the Option Agreements, Habersham, Security
and each holder of Security Options have agreed that all Security Options will
be cancelled in the Merger and replaced by one of the following forms of
consideration:

(i) cash in an amount equal to the difference between the Book
Value of a share of Security Common Stock as of December 31, 1994 (as adjusted,
if applicable, to reflect the effect of the Stock Split) and the $10.00 per
share exercise price of a Security Option (the "Appreciation"), multiplied by
the number of shares of Security Common Stock subject to the Security Option;

(ii) that number of shares of Habersham Common Stock obtained
by multiplying the Appreciation by the number of shares of Security Common
Stock subject to the Security Option and dividing the result by the Book Value
of a share of Habersham Common Stock as of December 31, 1994 (as adjusted, if
applicable, to reflect the effect of the Stock Split); or

(iii) options to purchase Habersham Common Stock, with the
number of shares subject to the new option being determined by multiplying the
number of shares of Security Common Stock subject to the Security Option by
1.0531 (assuming the Stock Split has been consummated) or 0.2106115 (if the
Stock Split has not been consummated), and the per share exercise price for the
new options being the book value per share of Habersham Common Stock
immediately following consummation of the Merger, excluding loan loss reserves.

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FRACTIONAL SHARES

Pursuant to the terms of the Merger Agreement, each holder of shares
of Security Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of Habersham Common Stock
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Habersham Common Stock multiplied by the
Book Value per share of Habersham Common Stock at December 31, 1994 (as
adjusted, if applicable, to reflect the effect of the Stock Split). No such
holder will be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.

EFFECTIVE TIME

If the Merger Agreement is approved by the requisite vote of Security
shareholders, all other required governmental and other consents and approvals
are received and the other conditions to the parties' obligations to consummate
the Merger are satisfied or waived (as permitted), the Merger will be
consummated and effected on the date and at the time Articles of Merger
reflecting the Merger are filed with the Secretary of State of the State of
Georgia (the "Effective Time"). Unless otherwise mutually agreed upon in
writing by the chief executive officers of each of Habersham and Security,
Habersham and Security have agreed to use their reasonable efforts to cause the
Effective Time to occur on the last business day of the month in which occurs
the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required consent of any regulatory
authority having authority over and approving or exempting the Merger, and (ii)
the date on which the shareholders of Security approve the Merger Agreement to
the extent such approval is required by applicable law; or such later date as
may be mutually agreed upon in writing by the chief executive officers of
Habersham and Security. Assuming satisfaction of all conditions to
consummation of the Merger, the Merger is expected to be made effective during
the second quarter of 1995. Either Habersham or Security may terminate the
Merger Agreement if the Merger has not been consummated by September 30, 1995.
See "Conditions to Consummation" and "Amendment, Waiver, and Termination."

DISTRIBUTION OF HABERSHAM CERTIFICATES

Promptly after the Effective Time, Habersham shall mail appropriate
transmittal materials to each record holder of Security Common Stock for use in
effecting the surrender and cancellation of those certificates in exchange for
the Habersham Common Stock or cash to which such shareholder is entitled as a
result of the Merger. The transmittal materials will contain an affidavit for
lost or stolen stock certificates and shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of Security Common Stock shall pass, only upon proper
delivery of such certificates to Habersham by the former shareholders of
Security. SECURITY SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES FOR
EXCHANGE UNTIL THEY RECEIVE SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS. After
the Effective Time, each holder of shares of Security Common Stock issued and
outstanding at the Effective Time (other than shares as to which dissenters'
rights have been perfected) shall surrender the certificate or certificates
representing such shares to Habersham, and the certificates thus surrendered
will be canceled. Unless otherwise

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designated by a Security shareholder on the transmittal letter, certificates
representing shares of Habersham Common Stock issued to Security shareholders
in connection with the Merger will be issued and delivered to the tendering
Security shareholder at the address on record with the Security Common Stock
transfer agent. Habersham shall not be obligated to deliver the consideration
to which any former holder of Security Common Stock is entitled until such
holder surrenders such holder's certificate or certificates representing such
holder's shares for exchange. The certificate or certificates so surrendered
shall be duly endorsed as Habersham may require. No party shall be liable to a
holder of Security Common Stock for any property delivered in good faith to a
public official pursuant to any applicable abandoned property law.

After the Effective Time, holders of certificates will have no rights
with respect to the shares of Security Common Stock represented thereby other
than the right to surrender such certificates and receive in exchange therefor
the shares of Habersham Common Stock or cash to which such holders are
entitled, as described above. In addition, no dividend or other distribution
payable to holders of record of Habersham Common Stock will be paid to the
holder of any Security certificates until such holder surrenders such
certificates for exchange as instructed. Subject to applicable law, upon
surrender of the certificates, such holder will receive the cash or
certificates representing the shares of Habersham Common Stock issuable upon
the exchange or conversion of such shares of Security Common Stock, all
withheld dividends or other distributions (without interest), and any withheld
cash payments (without interest) to which such shareholder is entitled.

If any certificate for Habersham Common Stock is to be issued in a
name other than that in which the Security certificate surrendered for exchange
is issued, the Security certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer, and the person requesting such
exchange shall affix any requisite stock transfer tax stamps to the
certificates surrendered, shall provide funds for their purchase, or shall
establish to the exchange agent's satisfaction that such taxes are not payable.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material federal income tax
consequences of the Merger. This discussion is based on the provisions of the
Code, the United States Department of the Treasury Regulations thereunder and
rulings and court decisions as of the date hereof, all of which are subject to
change, possibly retroactively. The discussion is included for general
information purposes only, applies only to Security shareholders, if any, who
hold their stock as a capital asset, and may not apply to Security
shareholders, if any, who received their stock upon the exercise of employee
stock options or otherwise as compensation. Habersham and Security have not
requested a ruling from the Internal Revenue Service (the "Service"). A
condition to consummation of the Merger is the receipt by Habersham and
Security of an opinion of Powell, Goldstein, Frazer & Murphy, counsel to
Habersham, as to the qualification of the Merger as a tax-free reorganization
and certain other federal income tax consequences of the Merger.

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The Merger is intended to be a tax-free reorganization within the
meaning of Section 368(a) of the Code. Among other things, the following
discussion is based on Security shareholders maintaining sufficient equity
ownership interest in Habersham after the Merger. The Service takes the
position for purposes of issuing an advance ruling on reorganizations, that the
shareholders of an acquired corporation (i.e., Security) must maintain a
continuing equity ownership interest in the acquiring corporation (i.e.,
Habersham) equal, in terms of value, to at least 50% of their interest in such
acquired corporation. For this purpose, shares of Security Common Stock
exchanged for cash in lieu of fractional shares of Habersham Common Stock will
be treated as outstanding shares of Security Common Stock at the Effective
Time. Moreover, shares of Security Common Stock and Habersham Common Stock
held by Security shareholders and otherwise sold, redeemed or disposed of prior
or subsequent to such time are taken into account. In addition, management of
Habersham has no plan or intention to cause Habersham to redeem or otherwise
reacquire the shares of Habersham Common Stock issued in the Merger. In
addition to the foregoing requirements certain additional matters must be true
with respect to the Merger. Habersham believes that these additional factual
matters will be satisfied.

Assuming the Merger is treated as a reorganization as defined in
Section 368(a) of the Code, the following summarizes the federal income tax
consequences to the Security shareholders:

(i) No gain or loss will be recognized for federal
income tax purposes by Security shareholders upon the exchange of
their shares of Security Common Stock for Habersham Common Stock.

(ii) The basis of the shares of Habersham Common Stock
to be received by Security shareholders will be the same as the basis
of the Security Common Stock surrendered in exchange therefor.

(iii) The holding period of the Habersham Common Stock to
be received by Security shareholders will include the period during
which the shares of Security Common Stock surrendered in exchange
therefor had been held, provided such shares were held by such
shareholders as a capital asset at the Effective Time.

(iv) Security shareholders who elect to receive cash in
exchange for their shares of Security Common Stock or who dissent from
the Merger will be treated as having received such payment as
distributions in redemption of their shares of such stock, subject to
certain limitations. Whether the redemption will be considered a
distribution in full payment in exchange for shares or a dividend
generally is determined under principles of Section 302 of the Code.
If the redemption is considered a distribution in full payment in
exchange for the shares of a shareholder, such shareholder will
recognize gain or loss measured by the difference between the amount
of cash received and such shareholder's adjusted basis in the stock
surrendered. Generally, any gain or loss recognized upon exchange
treatment will be capital gain or loss provided that the shares of
Security Common Stock constitute a capital asset in the hands of the
exchanging shareholder. Security shareholders electing to receive
cash in the Merger or to exercise dissenters' rights should consult
their own tax advisers as to the tax treatment in their particular
circumstances.

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(v) The payment of cash in lieu of fractional shares of
Habersham Common Stock will be treated as if the fractional shares
were issued as part of the exchange and then redeemed by Habersham.
Whether these cash payments will be treated as having been received as
distributions in full payment in exchange for the fractional shares of
Habersham Common Stock redeemed or a dividend generally is determined
under Section 302 of the Code. Generally, any gain or loss recognized
upon exchange treatment will be capital gain or loss, provided the
fractional share constitutes a capital asset in the hands of the
exchanging shareholder.

MANAGEMENT AND OPERATIONS AFTER THE MERGER

Habersham will be the surviving corporation resulting from the Merger
and will continue to be governed by the laws of the State of Georgia and
operate in accordance with its Articles of Incorporation and Bylaws as in
effect immediately prior to the Effective Time until otherwise amended or
repealed after the Effective Time. The directors and officers of Habersham in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, will serve as the directors and officers
of Habersham from and after the Effective Time in accordance with Habersham's
Bylaws. At or as soon after the Effective Time as is possible, Habersham will
increase the size of its Board of Directors to seven (7) and will select a
member of the Security Board of Directors (as such Board existed immediately
prior to the Effective Time) to fill the resulting vacancy.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

As of January 16, 1995, the directors and executive officers of
Security beneficially owned an aggregate of 16,874 shares of Habersham Common
Stock, representing approximately 4.9% of the then outstanding shares of
Habersham Common Stock, and the directors and executive officers of Habersham
owned an aggregate of 117,905 shares of Security Common Stock, representing
22.5% of the then outstanding Security Common Stock.

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Mr. Stovall participated in the negotiation of the terms of the Merger solely
in his capacity as President and Chief Executive Officer of Habersham and did
not vote on the Merger or participate in any discussions of its terms in his
capacity as a Security director. Mr. Arrendale did not participate in any
discussions or negotiations of the Merger with any member of Security's
management or Board.

Other than as described above, no director or executive officer of
Habersham or Security, and no associate of any such person, has any substantial
interest, direct or indirect, in the Merger, other than an interest arising
from the ownership of Security Common Stock, in which case the director or
officer receives no benefit not shared on a pro rata basis by all other holders
of Security Common Stock.

CONTRACTS BETWEEN HABERSHAM AND SECURITY

Habersham Bank provides auditing and data processing services to
Security Bank and other financial institutions pursuant to the terms of a
standard Data Processing Agreement. Fees are based on the type of system
(e.g., deposit, loan, etc.) used and are calculated on a per-item or
per-account basis. Security Bank pays approximately $4,000 per month for such
services. Security's management believes these services are performed on terms
as favorable to Security Bank as could have been obtained from other vendors.

INDEMNIFICATION

The Merger Agreement provides that, for a period of six years after
the Effective Time, Habersham will indemnify each person entitled to
indemnification from Security or any of its subsidiaries to the full extent
permitted under the laws of the State of Georgia and by Security's Articles and
Bylaws, as in effect on the date of the Merger Agreement, with respect to
matters occurring at or prior to the Effective Time.

The Merger Agreement also provides that, for three years after the
Effective Time, Habersham will use its reasonable efforts to maintain
Security's existing directors' and officers' liability insurance policy (or a
policy providing comparable coverage) on terms no less favorable than those in
effect on the date of the Merger Agreement, provided that Habersham will not be
obligated to make premium payments which exceed, for the portion relating to
actions taken by Security's directors and officers prior to the Effective Time,
150% of the annual premium payment on Security's current policy in effect as of
the date of the Merger Agreement. Habersham, Security and the members of
Security's Board of Directors have entered into a Letter Agreement dated
January 30, 1995 providing that the Security directors may pay any additional
premiums necessary to maintain their existing directors' and officers'
liability coverage in the event the premium for such coverage increases beyond
150% of the current premium for the three-year period described above.

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POST ACQUISITION COMPENSATION AND BENEFITS

The Merger Agreement provides that, after the Effective Time,
Habersham will provide generally to officers and employees of Security and
Security Bank, employee benefits under employee benefit plans (including the
Habersham Bancorp Savings Investment Plan but excluding any stock option or
other plan involving the potential issuance of Habersham Common Stock), on
terms and conditions that, when taken as a whole, are substantially similar to
those currently provided by Habersham and its subsidiaries to their similarly
situated officers and employees. For purposes of participation and vesting
under such employee benefit plans, service with Security or its subsidiaries
prior to the Effective Time will be treated as service with Habersham or any
subsidiary participating in such plans. The Merger Agreement also provides
that Habersham will honor all provisions for vested amounts earned or accrued
through the Effective Time under Security's benefit plans.

CONDITIONS TO CONSUMMATION

The obligations of Security and Habersham to consummate the Merger are
subject to the satisfaction or waiver (to the extent permitted) of the
following conditions: (i) the Merger, the Merger Agreement and all other
documents and instruments to be delivered in connection therewith shall have
been approved by the shareholders of Security; (ii) the required regulatory
approvals described under "Regulatory Approvals" shall have been received,
generally without any conditions or requirements which would, in the reasonable
judgment of the Board of Directors of either Habersham or Security, materially
adversely affect the economic or business benefits of the transactions
contemplated by the Merger Agreement so as to render inadvisable the
consummation of the Merger; (iii) each party shall have received any required
consents of third parties; (iv) no court or regulatory authority shall have
taken any action prohibiting, restricting or making illegal the consummation of
the transactions contemplated by the Merger Agreement; (v) the Registration
Statement of which this Proxy Statement/Prospectus is a part shall have been
declared effective by the Commission and shall not be subject to a stop order
or any threatened stop order, and the shares of Habersham Common Stock issuable
in connection with the Merger shall have been qualified, registered or
otherwise approved for exchange under the securities laws of the various states
in which such qualification, registration or approval is required; (vi) the
Habersham Common Stock shall have been approved for listing on Nasdaq; (vii)
Habersham and Security shall have received an opinion of Powell, Goldstein,
Frazer & Murphy as to certain tax matters; (viii) the other party's
representations and warranties shall remain accurate, and the other party shall
have performed all of the agreements, covenants, acts and undertakings to be
performed by it pursuant to the Merger Agreement, and shall have delivered
certificates confirming satisfaction of the foregoing requirements; (ix) each
party shall have received an opinion of the other party's counsel, dated the
closing date, as to certain matters; (x) Habersham shall have received a letter
from Deloitte & Touche LLP with respect to certain financial information
regarding Security; (xi) Habersham shall have received a letter from each
affiliate of Security relating to securities law compliance; (xii) Security,
Habersham and the holders of Security Options shall have executed the Option
Agreement; (xiii) not more than 52,500 shares of Security Common Stock shall
have dissented from the Merger (unless a greater number is permitted by
Habersham in its sole discretion); and (xiv) Security shall

33
<PAGE> 44

have received from Sheshunoff a letter, dated not more than five (5) business
days prior to the date hereof, to the effect that, in the opinion of such firm,
the consideration to be received by Security shareholders in connection with
the Merger is fair, from a financial point of view, to such shareholders.

No assurances can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the appropriate
party. As of the date of this Proxy Statement/Prospectus, the parties know of
no reason to believe that any of the conditions set forth above will not be
satisfied.

The conditions to consummation of the Merger may be waived, in whole
or in part, to the extent permissible under applicable law, by the party for
whose benefit the condition has been imposed, without the approval of the
Security shareholders. See "Amendment, Waiver, and Termination."

REGULATORY APPROVALS

The Merger is subject to the prior approval of the Federal Reserve
under the BHC Act and the DBF under the Financial Institutions Code of Georgia.
Habersham has filed all applications required to be filed with the Federal
Reserve and the DBF in connection with the Merger. The Merger may not be
consummated until the thirtieth day after approval of the Merger by the Federal
Reserve, during which time the United States Department of Justice, the Federal
Trade Commission and other interested parties have the opportunity to file suit
seeking to enjoin consummation of the Merger on antitrust grounds. The 30-day
period referred to above may be reduced to 15 days if the Federal Reserve
receives no adverse comments from the United States Department of Justice
regarding the competitive factors of the Merger. There can be no assurance
that the approval of the Federal Reserve or the DBF will be obtained (or as to
the timing or conditions thereof).

AMENDMENT, WAIVER, AND TERMINATION

To the extent permitted by law, Security and Habersham, with the
approval of their respective Boards of Directors, may amend the Merger
Agreement by written agreement at any time without the approval of the
shareholders of Security, provided that after the approval of the Merger by
Security's shareholders, no amendment may decrease the consideration to be
received by Security shareholders without the requisite approval of Security
shareholders.

Prior to or at the Effective Time, either Security or Habersham,
acting through its respective Board of Directors, chief executive officer or
other authorized officer, may waive any default in the performance of any term
of the Merger Agreement by the other party, may waive or extend the time for
the fulfillment by the other party of any of its obligations under the Merger
Agreement, and may waive any of the conditions precedent to the obligations of
such party under the Merger Agreement, except any condition that, if not
satisfied, would result in the violation of an applicable law or governmental
regulation.

34
<PAGE> 45

The Merger Agreement may be terminated, and the Merger abandoned, at
any time prior to the Effective Time by mutual consent of the Boards of
Directors of Security and Habersham. In addition, the Merger Agreement may be
terminated, and the Merger abandoned, prior to the Effective Time by either
Habersham or Security if: (i) the other party breaches and does not timely cure
any representation, warranty, covenant or other agreement contained in the
Merger Agreement and (other than representations and warranties relating to the
capital stock of each of Habersham and Security) such breach, individually or
in the aggregate, has a Material Adverse Effect (as defined in the Merger
Agreement) on the non-breaching party; (ii) any consent or approval of certain
regulatory authorities is denied by final nonappealable action of such
authority; (iii) the Security shareholders fail to approve the Merger
Agreement; (iv) any of the conditions precedent to the obligations of the
terminating party to consummate the Merger cannot be satisfied or fulfilled by
September 30, 1995; or (v) the Merger has not been consummated by September 30,
1995.

CONDUCT OF BUSINESS PENDING THE MERGER

Security has agreed in the Merger Agreement, unless the prior consent
of Habersham is obtained, and except as otherwise contemplated by the Merger
Agreement, to operate its business only in the ordinary course, to preserve its
business organization and assets, to use its reasonable efforts to cause its
representations and warranties to be correct at all times and to maintain its
rights and franchises and to take no action that would adversely affect either
the ability of either party to perform its covenants and agreements under the
Merger Agreement or the ability of either party to obtain any consents or
approvals pursuant to any contract, law, order or permit that are required for
the transactions contemplated by the Merger Agreement. In addition, the Merger
Agreement contains certain other restrictions applicable to the conduct of the
business of Security prior to consummation of the Merger, as described below.

Security has agreed in the Merger Agreement not to take (or cause
Security Bank to take) certain actions relating to the operation of its
business until the earlier of the consummation of the Merger or the termination
of the Merger Agreement without the prior approval of Habersham. Those actions
generally include, without limitation: (i) amending the Articles of
Incorporation, Bylaws or other governing instruments of Security or Security
Bank; (ii) becoming responsible for any obligation for borrowed money in excess
of an aggregate of $500,000, except in the ordinary course of the business
consistent with past practices; (iii) acquiring or exchanging any shares of its
capital stock or paying any dividend or other distribution in respect of its
capital stock; (iv) issuing, selling or pledging additional shares of any
Security capital stock, any rights to acquire any such stock or any security
convertible into such stock, except pursuant to the exercise of outstanding
stock options; (v) adjusting or reclassifying any of its capital stock; (vi)
acquiring control over any other entity; (vii) granting any increase in
compensation or benefits to its employees or officers (except as previously
disclosed to Habersham or as required by law), paying any bonus (except as
previously disclosed to Habersham or in accordance with any existing program or
plan), entering into or amending any severance agreements with its officers;
(viii) granting any increase in compensation or other benefits to any of its
directors (except as previously disclosed to Habersham); (ix) entering into or
amending any employment contract that it does not have the unconditional right
to terminate without certain liability, except for any amendment required by
law; (x) adopting any new employee

35
<PAGE> 46

benefit plan or program or materially changing any existing plan or program;
(xi) making any significant changes in accounting methods, except for any
change required by law; (xii) commencing any litigation other than in
accordance with past practice or settling any litigation for money damages in
excess of $250,000; or (xiii) materially amending or terminating any material
contracts.

In addition, Security has agreed not to solicit, directly or
indirectly, any acquisition proposal from any other person or entity. Security
also has agreed not to negotiate with respect to any such proposal, to provide
information to any party making such a proposal or to enter into any agreement
with to any such proposal except in compliance with its legal obligations or
the fiduciary obligations of its Board of Directors. Security is also to use
reasonable efforts to cause its advisors and other representatives not to
engage in any of the foregoing activities.

Pursuant to the Merger Agreement, Habersham has agreed that, prior to
the Effective Time, it will continue to conduct its business and the business
of its subsidiaries in a manner designed in its reasonable judgment to enhance
the long-term value of the Habersham Common Stock and the business prospects of
Habersham.

EXPENSES AND FEES

The Merger Agreement provides that each party shall be responsible for
its own costs and expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by the Merger Agreement, except
that each of Habersham and Security shall pay one-half of the filing fees
payable and printing costs incurred in connection with the Registration
Statement and this Proxy Statement/Prospectus.

ACCOUNTING TREATMENT

The Merger is anticipated to be accounted for on a purchase accounting
basis. Under purchase accounting, the assets and liabilities of an acquired
company as of the effective date of an acquisition accounted for as a purchase
would be recorded at their respective fair values and added to those of the
acquiring company. Financial statements issued after consummation of an
acquisition accounted for as a purchase would reflect such values and would not
be restated retroactively to reflect the historical financial position or
results of operations of the acquired company.

RESALES OF HABERSHAM COMMON STOCK

The shares of Habersham Common Stock issued in connection with the
Merger will be freely transferable under the Securities Act, except for shares
issued to any shareholder who may be deemed to be an "affiliate" (generally
including, without limitation, directors, certain executive officers, and
beneficial owners of 10% or more of any class of capital stock) of Security for
purposes of Rule 145 under the Securities Act as of the date of the Special
Meeting. Such affiliates may not sell their shares of Habersham Common Stock
acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act or other applicable exemption
from the registration requirements of the Securities Act. Habersham may place
restrictive legends

36
<PAGE> 47

on certificates representing Habersham Common Stock issued to all persons who
are deemed to be "affiliates" of Security under Rule 145. In addition, as a
condition to consummation of the Merger, each person or entity that is an
"affiliate" of Security must enter into a written agreement in substantially
the form attached to the Merger Agreement relating to such restrictions on sale
or other transfer. This Proxy Statement/Prospectus does not cover resales of
Habersham Common Stock received by any person who may be deemed to be an
affiliate of Security.

DISSENTERS' RIGHTS

Pursuant to the provisions of Article 13 of the Georgia Code, if the
Merger is consummated, any holder of record of Security Common Stock who (i)
gives to Security, prior to the vote at the Special Meeting with respect to the
approval of the Merger Agreement, written notice of such holder's intent to
demand payment for such holder's shares and (ii) does not vote in favor
thereof, shall be entitled to receive, upon compliance with the statutory
requirements summarized below, the fair value of such holder's shares as of the
Effective Time.

A record shareholder may assert dissenters' rights as to fewer than
all of the shares registered in such holder's name only if such holder dissents
with respect to all shares beneficially owned by any one beneficial shareholder
and such holder notifies Security in writing of the name and address of each
person on whose behalf such holder asserts dissenters' rights. The rights of
such a partial dissenter are determined as if the shares as to which such
holder dissents and such holder's other shares were registered in the names of
different shareholders.

The written objection requirement referred to above will not be
satisfied under the Georgia Code by merely voting against approval of the
Merger Agreement by proxy or in person at the Special Meeting. Any holder of
Security Common Stock who returns a signed proxy but fails to provide
instructions as to the manner in which such shares are to be voted will be
deemed to have voted in favor of the Merger and will not be entitled to assert
dissenters' rights of appraisal. In addition to not voting in favor of the
Merger Agreement, a shareholder wishing to preserve the right to dissent and
seek appraisal must give a separate written notice of such holder's intent to
demand payment for such holder's shares if the Merger is effected, as
hereinabove provided.

Any written objection to the Merger Agreement satisfying the
requirements discussed above should be addressed as follows: Security Bancorp,
Inc., 1600 Marietta Highway, Canton, Georgia 30401, Attention: President.

If the Merger is authorized at the Meeting, Security must deliver a
written dissenters' notice (the "Dissenters' Notice") to all holders of
Security Common Stock who satisfied the foregoing requirements. The
Dissenters' Notice must be sent within ten days after the Effective Time and
must (i) state where the demand for payment must be sent and where and when
certificates for shares of Security Common Stock must be deposited, (ii) inform
holders of uncertificated shares to what extent transfer of these shares will
be restricted after the demand for payment is received, (iii) set a date by
which Security must receive the demand for payment (which date may not be fewer
than 30 nor more than 60 days after the Dissenters' Notice is delivered), and
(iv) be accompanied by a copy of Article 13 of the Georgia Code.

37
<PAGE> 48

A record shareholder who receives the Dissenters' Notice must demand
payment and deposit such holder's certificates in accordance with the
Dissenters' Notice. Such shareholder will retain all other rights of a
shareholder until those rights are canceled or modified by the consummation of
the Merger. A record shareholder who does not demand payment or deposit such
holder's share certificates where required, each by the date set in the
Dissenters' Notice, is not entitled to payment for such holder's shares under
Article 13 of the Georgia Code.

Except as described below, the surviving corporation resulting from
the Merger (the "Surviving Corporation") must, within ten days of the later of
the Effective Time or receipt of a payment demand, offer to pay to each
dissenting shareholder who complied with the payment demand and deposit
requirements described above the amount the Surviving Corporation estimates to
be the fair value of such holder's shares, plus accrued interest from the
Effective Time. Such offer of payment must be accompanied by (i) certain
recent Security financial statements, (ii) the Surviving Corporation's estimate
of the fair value of the shares, (iii) an explanation of how the interest was
calculated, (iv) a statement of the dissenter's right to demand payment under
Section 14-2-1327 of the Georgia Code, and (v) a copy of Article 13 of the
Georgia Code. If the shareholder accepts the Surviving Corporation's offer by
written notice to the Surviving Corporation within 30 days after the Surviving
Corporation's offer, payment must be made within 60 days after the later of the
making of the offer or the Effective Time.

If the Merger is not effected within 60 days after the date set forth
demanding payment and depositing share certificates, Security must return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares. If, after such return and release, the Merger is
effected, the Surviving Corporation must send a new Dissenters' Notice and
repeat the payment demand procedure described above.

Section 14-2-1327 of the Georgia Code provides that a dissenting
shareholder may notify the Surviving Corporation in writing of such holder's
own estimate of the fair value of such holder's shares and the interest due,
and may demand payment of such holder's estimate, if (i) such holder believes
that the amount offered by the Surviving Corporation is less than the fair
value of such holder's shares or that the interest due has been calculated
incorrectly, or (ii) Security, having failed to effect the Merger, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within 60 days after the date set for demanding
payment. A dissenting shareholder waives such holder's right to demand payment
under Section 14-2-1327 unless such holder notifies the Surviving Corporation
of such holder's demand in writing within 30 days after the Surviving
Corporation makes or offers payment for such holder's shares. If the Surviving
Corporation does not offer payment within ten days of the later of the
Effective Time or receipt of a payment demand, then (i) the shareholder may
demand the financial statements and other information required to accompany the
Surviving Corporation's payment offer, and the Surviving Corporation must
provide such information within ten days after receipt of the written demand,
and (ii) the shareholder may notify the Surviving Corporation of such holder's
own estimate of the fair value of such holder's shares and the amount of
interest due, and may demand payment of that estimate.

38
<PAGE> 49

If a demand for payment under Section 14-2-1327 remains unsettled, the
Surviving Corporation must commence a nonjury equity valuation proceeding in
the Superior Court of Habersham County, Georgia, within 60 days after receiving
the payment demand and must petition the court to determine the fair value of
the shares and accrued interest. If the Surviving Corporation does not
commence the proceeding within those 60 days, it is required to pay each
dissenting shareholder whose demand remains unsettled the amount demanded. The
Surviving Corporation is required to make all dissenting shareholders whose
demands remain unsettled parties to the proceeding and to serve a copy of the
petition upon each dissenting shareholder. The court may appoint appraisers to
receive evidence and to recommend a decision on fair value. Each dissenting
shareholder made a party to the proceeding is entitled to judgment for the fair
value of such holder's shares plus interest to the date of judgment.

The court in an appraisal proceeding commenced under the foregoing
provision must determine the costs of the proceeding, excluding fees and
expenses of attorneys and experts for the respective parties, and must assess
those costs against the Surviving Corporation, except that the court may assess
the costs against all or some of the dissenting shareholders to the extent the
court finds they acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 14-2-1327. The court also may assess the fees
and expenses of attorneys and experts for the respective parties against the
Surviving Corporation if the court finds the Surviving Corporation did not
substantially comply with the requirements of specified provisions of Article
13 of the Georgia Code, or against either the Surviving Corporation or a
dissenting shareholder if the court finds that such party acted arbitrarily,
vexatiously, or not in good faith with respect to the rights provided by
Article 13 of the Georgia Code.

If the court finds that the services of attorneys for any dissenting
shareholder were of substantial benefit to other dissenting shareholders
similarly situated, and that the fees for those services should be not assessed
against the Surviving Corporation, the court may award those attorneys
reasonable fees out of the amounts awarded the dissenting shareholders who were
benefited. No action by any dissenting shareholder to enforce dissenters'
rights may be brought more than three years after the Effective Time,
regardless of whether notice of the Merger and of the right to dissent was
given by Security or the Surviving Corporation in compliance with the
Dissenters' Notice and payment offer requirements.

The foregoing is a summary of the material rights of a dissenting
shareholder of Security, but is qualified in its entirety by reference to
Article 13 of the Georgia Code, included in Appendix D to this Prospectus/Proxy
Statement. Any Security shareholder who intends to dissent from approval of
the Merger Agreement should carefully review the text of such provisions and
should also consult with such holder's attorney. No further notice of the
events giving rise to dissenters' rights or any steps associated therewith will
be furnished to Security shareholders, except as indicated above or otherwise
required by law.

Any dissenting Security shareholder who perfects such holder's right
to be paid the value of such holder's shares will recognize taxable gain or
loss upon receipt of cash for such shares for federal income tax purposes. See
"THE MERGER -- Certain Federal Income Tax Consequences."

39
<PAGE> 50

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

The following discussion sets forth the major factors that affect Habersham's
results of operations and financial condition. These comments should be read
in conjunction with the consolidated financial statements.

ORGANIZATION

Habersham owns all of the outstanding stock of Habersham Bank and The Advantage
Group, Inc. ("Advantage"), a non-bank subsidiary. During 1994, Advantage
engaged in the development and marketing of personal computer software and
provided data processing services and management consulting advice to
depository institutions. Habersham Bank is now the primary provider of such
services, while Advantage continues to administer the Company's Kids Advantage
banking program and to provide certain personal computer software marketing and
development services. Advantage did not comprise a significant portion of the
financial position, results of operations, or cash flows of Habersham.
Management's discussion and analysis, which follows, relates primarily to
Habersham Bank.

RESULTS OF OPERATIONS

Habersham's net income was $1,658,385, $1,557,718 and $1,410,497 for the years
ended December 31, 1994, 1993 and 1992, respectively, with related earnings per
common and common equivalent share of $4.91, $4.66 and $4.24, respectively.
Net income represents a return on average equity of 10.50% for 1994, 10.66% for
1993 and 10.70% for 1992. Habersham's net income per share of common stock
rose 5.4% in 1994 to $4.91, up from $4.66 per share of common stock in 1993.

NET INTEREST INCOME

Net interest income is the largest single source of income for Habersham.
Management strives to develop a level of earning asset growth while maintaining
and developing a net yield on earning assets which will cover overhead and
other costs and provide a reasonable return to shareholders. Net interest
income for 1994 and 1993 was approximately $7.6 million compared to $7.3
million in 1992.

While average assets rose 5.23% in 1994 over 1993, net interest income for 1994
and 1993 remained relatively constant. The increase in interest income for
1994 of $104,584 over 1993 was offset by an increase in interest expense in
1994 over 1993 of $123,325. The increase in interest income for 1994 resulted
from a net increase in interest income on investment securities and federal
funds sold of approximately $568,000 offset by a decrease in interest income on
loans of approximately $463,000. The average balance of loans for 1994
decreased by $5,604,363 from 1993 with the average interest rate on loans of
9.8% in 1994 and 9.7% in 1993. The average balance on investment securities
and federal funds sold for 1994 increased 37.27% over 1993 with the average
interest rate decreasing to 5.43% in 1994 from 5.95% in 1993.

40
<PAGE> 51

The increase in interest expense for 1994 of $123,325 over 1993 results from
an increase in interest on deposits and short-term and other borrowings. The
average balance of deposits for 1994 increased 5.02% over 1993 with the average
rate paid decreasing to 3.18% in 1994 from 3.27% in 1993. The average balance
for short-term and other borrowings in 1994 increased 4.62% over 1993 as a
result of Habersham's decision to use Federal Home Bank advances beginning in
1993.

Average assets for 1993 decreased $4.7 million or 3% from 1992, while net
interest income increased $348,000 or 5% in 1993 over 1992.

The increase in net interest income for 1993 over 1992 resulted from a decrease
in interest income of approximately $1,492,000 and a decrease in interest
expense of approximately $1,850,000 between 1993 and 1992. A decrease in the
average rates earned on loans and investment securities caused the decrease in
total interest income between 1993 and 1992. A decrease in average rates paid
on deposits created the decrease in total interest expense between 1993 and
1992.

The interest margin of Habersham, the spread between interest income and
interest expense, was 5.08% in 1994, 5.39% in 1993 and 5.01% in 1992. Careful
management of deposit and loan growth and pricing has allowed Habersham to
average a net interest margin of approximately 5.2% over the last three years.

CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME AND EXPENSE,
AND AVERAGE YIELDS EARNED AND RATES PAID

The following table sets forth the consolidated average balance sheets for
Habersham, average rates paid on deposits, average rates earned on earning
assets, and total interest paid on deposits and earned on earning assets. This
information is presented for the years ended December 31, 1994 and 1993.

<TABLE>
<CAPTION>
1994 1993 1994 1993 1994 1993
AVERAGE AVERAGE YIELD/ YIELD/ INCOME INCOME
BALANCE BALANCE RATES RATES (EXPENSE) (EXPENSE)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 5,113,163 $ 4,742,654
Interest-bearing balances
with other banks 631,012 804,679 6.27% 4.82% $ 39,561 $ 38,746
Investment securities:
Taxable 30,554,176 19,628,106 5.33% 6.13% 1,628,829 1,165,243
Non-taxable 18,275,423 15,956,180 5.78% 6.33% 1,056,133 1,010,857
----------- -----------
Total investment securities 48,829,599 35,584,286
Federal funds sold 2,999,167 2,173,667 4.32% 3.30% 129,640 71,705
Loans, net (taxable)(1)(2) 97,732,297 103,336,660 9.80% 9.72% 9,580,514 10,043,542
Premises and equipment 3,138,724 3,471,295
Other assets 3,372,902 3,658,429
------------ ------------ ----------- -----------
TOTAL $161,816,864 $153,771,670 8.28% 8.72% $12,434,677 $12,330,093
============ ============ ----------- -----------
</TABLE>

41
<PAGE> 52
<TABLE>
<CAPTION>
1994 1993 1994 1993 1994 1993
AVERAGE AVERAGE YIELD/ YIELD/ INCOME INCOME
BALANCE BALANCE RATES RATES (EXPENSE) (EXPENSE)
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
Demand deposit accounts $ 14,067,454 $ 14,808,391
Money market and NOW 36,267,136 28,660,269 2.52% 2.68% $ (913,911) $ (769,086)
Savings accounts 5,247,192 4,927,940 2.82% 2.85% (148,197) (140,600)
Certificates of deposit 86,130,065 86,639,094 4.22% 4.28% (3,635,738) (3,709,863)
Short-term and other
borrowings 3,039,712 2,796,799 3.39% 2.08% (103,086) (58,058)
Other liabilities 1,276,447 1,328,921
------------ ------------ ----------- ------------
TOTAL 146,028,006 139,161,414 3.67% 3.80% $ 4,800,932 $ 4,677,607
----------- ------------
Shareholders' Equity 15,788,858 14,610,256
------------ ------------

TOTAL LIABILITIES &
EQUITY $161,816,864 $153,771,670
============ ============
NET YIELD ON INTEREST
EARNING ASSETS 5.08% 5.39% $ 7,633,745 $ 7,652,486
=========== ============
</TABLE>

(1) Interest earnings on nonaccrual loans are included in the foregoing
analysis to the extent that such interest earnings had been recorded
during 1994 and 1993.

(2) Loan fees of $275,541 and $324,406 are included in interest income for
the years ended December 31, 1994 and 1993, respectively.

The following table sets forth a summary of the changes in interest income and
interest expense resulting from changes in volume and rates for the period
indicated:

<TABLE>
<CAPTION>
1994 as compared to 1993 1993 as compared to 1992
Increase (Decrease) due to Increase (Decrease) due to
Net Rate(1) Volume(1) Net Rate(1) Volume(1)
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-BEARING ASSETS
Interest-bearing balances $ 815 $ 9,186 $ (8,371) $ (4,060) $ (22,573) $ 18,513
with other banks
Investment securities:
Taxable 463,586 (206,182) 669,768 (780,389) (294,393) (485,996)
Non-taxable 45,276 (101,532) 146,808 (13,946) (34,053) 20,107
--------- --------- --------- ----------- ----------- ----------
Total investment securities 508,862 (307,714) 816,576 (794,335) (328,446) (465,889)

Federal funds sold 57,935 30,693 27,242 (32,936) (35,335) 2,399
Loans, gross (taxable) (463,028) 81,716 (544,744) (661,506) (889,512) 228,006
--------- --------- --------- ----------- ----------- ----------

TOTAL INTEREST INCOME 104,584 (186,119) 290,703 (1,492,837) (1,275,866) (216,971)
--------- --------- --------- ----------- ----------- ----------
</TABLE>

<PAGE> 53

<TABLE>
<CAPTION>
1994 as compared to 1993 1993 as compared to 1992
Increase (Decrease) due to Increase (Decrease) due to
Net Rate(1) Volume(1) Net Rate(1) Volume(1)
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-BEARING LIABILITIES
Money market and NOW 144,825 (59,039) 203,864 (5,848) (140,244) 134,376
Savings accounts 7,597 (1,502) 9,099 2,929 (5,589) 8,518
Certificates of deposit (74,125) (52,339) (21,786) (1,875,743) (1,233,528) (642,215)
Short-term and other borrowings 45,028 39,975 5,053 28,211 (30,850) 59,061
-------- --------- --------- ----------- ----------- -----------

TOTAL INTEREST EXPENSE 123,325 (72,905) 196,230 (1,850,451) (1,410,211) (440,260)
-------- --------- --------- ----------- ----------- -----------

NET INTEREST INCOME $(18,741) $(113,214) $ 94,473 $ 357,614 $ 134,325 $ 223,289
======== ========= ========= =========== =========== ===========
</TABLE>
(1) The changes in interest income and/or expense not due solely to rate
or volume have been allocated to the rate component.

OTHER INCOME AND OTHER EXPENSE

Noninterest income in 1994 increased approximately $290,000 or 31.52% as
compared to 1993 and decreased approximately $131,000 or 12.48% as compared to
1992. The 1994 increase in other income results primarily from the gain on
sale of other real estate of $104,000, gains on sale of securities of $25,000
and approximately $89,000 of income relating to sales of the guaranteed portion
of loans guaranteed by the U.S. Small Business Administration. The 1993
decline in other income results primarily from the decrease in gains on
securities of $206,000 offset somewhat by increases in service charges on
deposit accounts and other income.

Other expenses increased by approximately $289,961 or 4.6% in 1994 as compared
to 1993 and increased by approximately $249,000 or 4.1% in 1993. These
increases are generally attributable to normal salary increases and higher
occupancy expenses for each year.

PROVISION FOR LOAN LOSSES

Habersham Bank's provision for loan losses is intended to create an allowance
for potential losses on outstanding loans at the end of each reporting period.
The provision for loan losses was $208,096 in 1994 as compared to $249,765 in
1993 and $566,000 in 1992. Habersham's allowance for loan losses totaled
$1,744,355 at December 31, 1994, which was 1.73% of year-end loans and 92% of
total nonperforming loans.

At December 31, 1994, loans over 90 days past due and nonaccrual loans totaled
$764,839 or .76% of gross outstanding loans, as compared to $960,289 or .92% at
December 31, 1993.

As a result of the decline in nonaccrual loans and other factors management
uses in determining its provision for loan losses, the provision for loan
losses provided in 1994 was approximately $42,000 less than the amount provided
in 1993 and the amount provided in 1993 was approximately $316,000 less than
the amount provided in 1992.

Net charge-offs amounted to $65,663 in 1994, representing .07% of average
loans, as compared to $351,455 in 1993, representing .34% of average loans in
1993.

43
<PAGE> 54

The following table summarizes, for the years ended December 31, 1994 and 1993,
selected information related to the allowance for loan losses:

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance of allowance for loan
losses at beginning of period $ 1,601,902 $ 1,703,592
----------- ------------
Loans charged off:
Commercial, financial and agricultural (37,146) (250,732)
Real estate -- construction
Real estate -- mortgage (17,011)
Installment loans to individuals (49,962) (45,433)
Other (21,025) (80,262)
----------- ------------
Total charged-off loans (125,144) (376,427)
----------- ------------
Recoveries:
Commercial, financial and agricultural 1,893
Real estate -- construction
Real estate -- mortgage 4,772
Installment loans to individuals 15,387 11,917
Other 37,429 13,055
----------- ------------
Total recoveries 59,481 24,972
----------- ------------
Net charge-offs (65,663) (351,455)

Additions to allowance 208,096 249,765
----------- ------------
Balance of allowance for loan
losses at end of period $ 1,744,335 $ 1,601,902
=========== ============
Average amount of loans $97,723,297 $103,336,660
=========== ============

Ratio of net charge-offs during the period to
average loans outstanding during the period .07% .34%

Ratio of allowance to year-end loans 1.73% 1.54%
</TABLE>

Habersham's provision for loan losses is based upon management's continuing
review and evaluation of the loan portfolio and is intended to create an
allowance adequate to absorb losses on loans outstanding as of the end of each
reporting period. For individually significant amounts, management's review
consists of evaluations of the borrowers' strength, value of the related
collateral and other factors. This evaluation is made by classifying loans
based on values assigned to each of the aforementioned variables. These
classifications are assigned by the loan review area and are reviewed by the
Board of Directors. Totals by loan classification, along with related
historical loss ratios, are used to determine the allowance required to provide
for potential losses. The review of groups of loans, which are individually

44
<PAGE> 55

insignificant, is based upon delinquency status of the group, lending policies
and previous collection experience of each category. The effects of current
conditions on specific industries or classes of borrowers are also considered
in determining allowance for loan loss requirements. Management believes such
allowance is adequate to absorb future losses on loans outstanding at
December 31, 1994.

The risk associated with loans varies with the creditworthiness of the
borrower, the type of loan (consumer, commercial or real estate) and its
maturity. Cash flows adequate to support a repayment schedule is an element
considered for all types of loans. Real estate loans are impacted by market
conditions regarding the value of the underlying property used as collateral.
Commercial loans are also impacted by the management of the business as well as
economic conditions.

The approximate anticipated amount of loan charge-offs by category during 1995
is as follows:

Commercial, financial and agricultural $190,000
Real estate - construction and mortgage 50,000
Installment loans to individuals 110,000
--------
Total $350,000
========

LOANS

Loan demand remained constant during 1994. The decrease in loans of
approximately $3.3 million or 3.17% in 1994 when compared to 1993 is due
primarily to the sale of loans related to poultry farms. This sale of loans
was reflected in the commercial loans decline of $3.8 million in 1994 as
compared to 1993. Loan demand remained flat during 1993, resulting in a
decrease in loans of approximately $950,000 or a 1% decrease when compared to
1992. The composition of Habersham Bank's real estate loan portfolio changed
during 1993. Construction loans decreased by approximately $1.3 million, or
20.7%, during 1993, but other real estate loans increased by approximately $2.6
million, or 3.9% as compared to 1992.

The amount of loans outstanding at December 31, 1994 and 1993 is set forth in
the following table according to type of loan. Habersham had no foreign loans
at December 31, 1994 and 1993.

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial, financial and agricultural $ 13,653,109 $ 19,006,561
Real Estate - construction 5,564,753 5,112,344
Real Estate - mortgage 68,992,708 68,830,196
Installment loans to individuals 12,637,913 11,204,998
------------ ------------
Total $100,848,483 $104,154,099
============ ============
</TABLE>

<PAGE> 56

The following table sets forth the maturities and sensitivities of loans to
changes in interest rates.
<TABLE>
<CAPTION>
DUE AFTER
DUE IN ONE THROUGH DUE AFTER
LOAN MATURITY: ONE YEAR FIVE YEARS FIVE YEARS TOTAL
-------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $ 10,347,246 $ 1,628,937 $ 1,676,926 $ 13,653,109
Real estate - construction 4,875,804 635,466 53,483 5,564,753
------------ ----------- ----------- ------------
TOTAL $ 15,223,050 $ 2,264,403 $ 1,730,409 $ 19,217,862
============ =========== =========== ============

LOAN INTEREST RATE
SENSITIVITY:

Selected loans with:
Predetermined interest rates $ 8,689,055 $ 1,941,803 $ 1,730,409 $ 12,361,267
Floating or adjustable interest rates 6,533,995 322,600 6,856,595
------------ ----------- ----------- ------------
TOTAL $ 15,223,050 $ 2,264,403 $ 1,730,409 $ 19,217,862
============ =========== =========== ============
</TABLE>

NONPERFORMING ASSETS AND PAST DUE LOANS

Nonperforming assets consist of nonaccrual loans, restructured loans and other
real estate owned. Nonperforming assets decreased $60,277 at December 31, 1994
or 1.93% from December 31, 1993.

The following table sets forth the totals of nonperforming assets, selected
ratios and accruing loans past due 90 days or more at December 31, 1994 and
1993.

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Nonperforming accounts:
Nonaccrual $ 568,822 $ 763,425
Restructured loans 1,318,790 1,169,987
Other real estate owned 1,165,954 1,180,431
---------- ----------
Total Nonperforming assets $3,053,566 $3,113,843
========== ==========

Ratios:
Nonperforming assets to total loans 3.03% 2.99%
Nonperforming assets to total loans
plus other real estate owned 2.99% 2.96%
Allowance to nonperforming assets 57.12% 51.44%
Accruing loans past due 90 days or more $ 196,017 $ 196,864
</TABLE>

Accrual of interest is discontinued when either principal or interest becomes
90 days past due, or earlier when, in management's opinion, collectibility of
such interest is doubtful unless the loan is

<PAGE> 57

both well secured and in process of collection. Interest income that would
have been recorded on these nonaccrual and restructured loans in accordance
with their original terms totaled $181,640 in 1994 and $170,235 in 1993
compared with interest income recognized of $132,884 and $99,244, respectively.

At December 31, 1994, Habersham had no significant loans which management
designated as potential problem loans which have not been disclosed above as
nonaccrual or past due loans.

Habersham held a concentration of loans at December 31, 1994 which totaled
approximately $22 million, and approximately 22.21% of total loans that
consisted of mortgages for agribusiness purposes in the poultry industry.

INVESTMENT SECURITIES

Habersham has classified all investment securities as either available for sale
or held to maturity depending upon whether Habersham has the intent and ability
to hold the investment securities to maturity. The classification of certain
investment securities as available for sale is consistent with Habersham's
investment philosophy of maintaining flexibility to manage the securities
portfolio. At December 31, 1994, approximately $28.5 million of investment
securities were classified as available for sale. Approximately $1 million of
unrealized loss was included in Shareholders' Equity related to the available
for sale investment securities.

The following table sets forth the carrying amounts of investment securities at
December 31, 1994 and 1993.

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Investment securities available for sale:
U.S. Treasury $ 5,671,680 $ 2,657,993
U.S. Government agencies 17,021,102 14,117,053
States and political subdivisions 5,192,169 5,702,768
Other investments 644,728 1,475,399
---------- -----------
Total $28,529,679 $23,953,213
=========== ===========
Investment securities held to maturity:
U.S. Treasury $ 198,698
U.S. Government agencies 5,724,080 $ 4,660,364
States and political subdivisions 13,176,349 11,890,243
Other investments 2,520,377 1,610,179
----------- -----------
Total $21,619,504 $18,160,786
=========== ===========
</TABLE>

47
<PAGE> 58

The following table sets forth the maturities of investment securities at
December 31, 1994, and the weighted yields of such securities on the basis of
book yield and on a tax equivalent basis (assuming a 34% tax rate).

<TABLE>
<CAPTION>
One Year 1-5 5-10 After
or Less Years Years 10 Years
-------- ----- ----- --------
<S> <C> <C> <C> <C>
Investment securities available for sale:

Carrying Value:
U.S. Treasury $1,428,863 $ 4,242,817
U.S. Government agencies 550,146 10,466,126 $4,011,032 $1,993,798
States and political subdivisions 295,417 2,750,671 1,710,858 435,223

Weighted average yields
U.S. Treasury 4.29% 5.30%
U.S. Government agencies 5.20% 6.03% 6.01% 5.99%
States and political subdivisions 6.25% 9.95% 9.62% 9.93%

Investment securities held to maturity:
Carrying Value:
U.S. Treasury $ 198,698
U.S. Government agencies $ 984,841 3,370,011 $ 803,429 $ 565,799
States and political subdivisions 950,069 8,135,500 3,336,304 754,476

Weighted average yields
U.S. Treasury 6.01%
U.S. Government agencies 4.41% 5.44% 6.53% 8.19%
States and political subdivisions 3.37% 7.98% 8.55% 9.80%
</TABLE>

Other investments, which are not significant, are not included in the above
maturity and weighted yields schedule. For financial reporting purposes, these
investments have been included in the after ten years category.

No securities were held which represent a combined total for one issuer which
is in excess of 10% of Habersham's equity capital at December 31, 1994.

At December 31, 1993, Habersham adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" in which an
unrealized gain on investment securities available for sale of approximately
$.3 million was recorded in shareholders' equity.

OTHER ASSETS

The majority of increase in other assets at December 31, 1994, as compared to
December 31, 1993, relates to the increase in the deferred tax asset of
$781,000. The increase in deferred tax asset was due to the tax effect of the
unrealized loss on investment securities available for sale.

<PAGE> 59

The decrease in other assets of approximately $1.1 million at December 31,
1993, as compared to December 31, 1992, primarily reflects the decrease in
other real estate resulting from the sale of a portion of the property for
approximately $850,000. In connection with the sale of the other real estate
in 1993, Habersham Bank granted loans totaling $600,100.

DEPOSITS

Average deposits increased $6.7 million and decreased $7.2 million during 1994
and 1993, respectively.

Habersham Bank's loan to deposit ratio based on average balances during each
year was 68.19%, 75.8% and 70.6% in 1994, 1993 and 1992, respectively.
Management anticipates maintaining a loan to deposit ratio between 70% and 80%
in 1995.

The following table sets forth the average amount of deposits for Habersham
which exceed 10% of average total deposits for the years ended December 31,
1994 and 1993.

<TABLE>
<CAPTION>
1994 1993
---- ----
AVG. AMT. AVE. AVG. AMT. AVG.
OUTSTANDING RATE OUTSTANDING RATE
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Interest-bearing demand deposits $36,267,136 2.52% $28,660,269 2.68%
Noninterest-bearing demand deposits 14,067,454 N/A 14,808,391 N/A
Time certificates of deposits 86,130,065 4.22% 86,639,094 4.28%

</TABLE>

At December 31, 1994, time certificates of deposit of $100,000 or more totaled
$21,165,754. The maturities of all time certificates of deposit over $100,000
are as follows:

3 months or less $10,676,622
Over 3 through 6 months 3,101,916
Over 6 through 12 months 4,046,727
Over 12 months 3,340,489
-----------
$21,165,754
===========
OTHER BORROWINGS

Other borrowings decreased $1.0 million from year-end 1994 to 1993 as a result
of repayment of borrowings from the Federal Home Loan Bank. The increase in
other borrowings of $2.5 million in 1993 resulted from borrowings from the
Federal Home Loan Bank.

49
<PAGE> 60

CAPITAL RESOURCES

Habersham Bank has consistently maintained capital ratios well above regulatory
requirements. Banking regulators measure capital adequacy using a ratio of
shareholders' equity, excluding any unrealized gain or loss on investment
securities available for sale, to total risk weighted assets, Tier I
requirement, and a ratio of shareholders' equity excluding any unrealized gain
or loss of investment securities available for sale plus the allowance for
possible loan losses to total risk weighted assets, total capital requirement.
Additionally, the regulators have also established an additional capital
adequacy guideline referred to as the Tier I leverage ratio that measures the
ratio of shareholders' equity excluding any unrealized gain or loss on
investment securities available for sale to average quarterly assets. The
following table sets forth Habersham Bank's ratios.

<TABLE>
<CAPTION>
Regulatory
1994 1993 Requirement
---- ---- -----------
<S> <C> <C> <C>
Tier I Capital 12.07% 11.58% 4%
Total Capital 13.32% 12.83% 8%
Tier I Leverage Ratio 9.37% 9.10% 4%
</TABLE>

Treasury stock activity consisted of 3,348 shares sold from the treasury at a
per share price of $35.09 in 1994.

Treasury stock activity consisted of 2,330 shares sold from the treasury at a
per share price of $36.93 in 1993.

Cash dividends were paid at a rate of $.40 per share for 1994, $.40 per share
for 1993 and at $.375 per share for 1992. The Company declared a 2 for 1 stock
split recorded in the form of a stock dividend effective November 1, 1992.

While management believes the current level of capital is sufficient for
current and foreseeable needs of Habersham, capital needs are continually
evaluated by management.

Management is not aware of any required regulatory changes, or any
recommendation by any regulatory authority, which will have a material effect
on Habersham's liquidity, capital or results of operations.

INTEREST RATE SENSITIVITY

The objective of asset and liability management is to maintain an optimum match
of maturities and interest sensitivity between loans and investment securities
and deposits. In order to obtain this optimum match, adjustable rate loans and
maturity matched investments are used.

Habersham Bank's historical performance in various economic climates assists
management in making long-term asset/liability decisions for the bank.

<PAGE> 61

The interest rate sensitivity analysis below has a positive one-year gap of
approximately $18 million (excess of earning assets repricing within one year
to interest-bearing liabilities). However, Habersham Bank's experience has
shown that NOW, IMMA and Savings deposits of approximately $39 million are
not rate sensitive.

The time period indicated in the table represents the shorter of the time
remaining before the asset or liability either matures or can be repriced. The
principal amounts for each asset and liability are shown in the period in which
it matures or reprices. The rate indicated represents the effective yield.
Funds from loan principal payments and anticipated loan repayments are included
in the period in which they are anticipated to be received. Savings, NOW and
IMMA accounts have been included in due in one year.

INTEREST RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
DUE AFTER DUE AFTER
YIELD/ DUE IN ONE THROUGH FIVE THROUGH DUE AFTER
EARNING ASSETS: RATE ONE YEAR FIVE YEARS TEN YEARS TEN YEARS TOTAL
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment securities:
Taxable investment securities
and interest-bearing balances
with other banks 5.80% $ 4,511,850 $18,277,652 $ 4,814,461 $4,176,702 $ 31,780,665
States and political subdivisions 5.80% 1,245,486 10,886,171 5,047,162 1,189,699 18,368,518
Loans 9.41% 79,715,080 19,686,973 1,446,430 100,848,483
Federal funds sold 5.62% 1,020,000 1,020,000
---- ------------ ----------- ------------ ---------- ------------
Total earning assets 8.19% 86,492,416 48,850,796 11,308,053 5,366,401 152,017,666
---- ------------ ----------- ------------ ---------- ------------
INTEREST-BEARING
LIABILITIES:

Deposits:
NOW and IMMA 2.88% 33,653,457 33,653,457
Savings 2.75% 5,504,444 5,504,444
Certificates of Deposit 4.54% 28,225,245 35,542,441 21,566,871 22,601 85,357,158
Short-term borrowings 3.77% 1,001,742 1,500,000 2,501,742
---- ------------ ----------- ------------ ---------- ------------
Total interest-bearing
liabilities 4.01% 68,384,888 37,042,441 21,566,871 22,601 127,016,801
---- ------------ ----------- ------------ ---------- ------------

INTEREST RATE SPREAD 4.42%
====
Excess (deficiency) of earning
assets over (to) interest-
bearing liabilities $ 18,107,528 $11,808,355 $(10,258,818) $ 5,343,800 $ 25,000,865
============ =========== ============= =========== ============

Cumulative gap $ 18,107,528 $29,915,883 $ 19,657,065 $25,000,865

Ratio of cumulative gap to
total earning assets 11.9% 19.7% 12.9% 16.4%

Ratio of earning assets to
interest-bearing liabilities 7.3% 1.3% 52.6% 237.4%

</TABLE>

<PAGE> 62

INFLATION

Habersham's assets and liabilities are generally monetary in nature.
Therefore, interest rates have a greater impact on Habersham's performance than
the effects of general levels of inflation. Interest rates do not necessarily
move in the same direction or magnitude as the prices of goods and services.

ACCOUNTING PRONOUNCEMENT

Statement of Financial Accounting Standards ("SFAS") No. 114, entitled
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS No. 118,
is not expected to have a significant effect on the consolidated financial
statements when the Statement is adopted as of January 1, 1995.

LIQUIDITY

Habersham Bank's liquidity program is designed and intended to provide guidance
in funding the credit and investment activities of the bank which at the same
time ensuring that the deposit obligations of the bank are met on a timely
basis. In order to permit active and timely management of assets and
liabilities, these accounts are monitored regularly in regard to volume, mix
and maturity. Habersham Bank's liquidity policy requires a minimum ratio of
20% of cash and certain short-term investments to net withdrawable deposit
accounts. This liquidity ratio was 33.15% and 31.29% at December 31, 1994 and
1993, respectively.

<PAGE> 63

SECURITY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Security's subsidiary, Security Bank, opened for business on October
22, 1990, operating as a full service commercial bank in the city of Canton,
Cherokee County, Georgia. Security Bank competes with other financial
institutions in its service area, and, because of this competitive banking
situation, has expanded its primary market area to include all of Cherokee and
contiguous counties, including north Fulton, north Cobb, Forsyth, western
Gwinnett, Bartow and Pickens counties.

The following is a discussion and analysis of Security Bank's results
of operations for the year ended December 31, 1994, compared to the year ended
December 31, 1993, and its financial condition as of December 31, 1994,
compared to its financial condition as of December 31, 1993. This information
should be read in conjunction with the audited financial statements and related
footnotes.

RESULTS OF OPERATIONS

Net Income. Net income for the year ended December 31, 1994 was
$467,602 or $.89 per share, compared to $680,493, or $1.30 per share, for the
year ended December 31, 1993. This decrease was due to income tax expense of
$278,509 during the year ended December 31, 1994 as compared to an income tax
benefit of $112,305 for the year ended December 31, 1993.

Interest Income. Interest income for the year ended December 31, 1994
was $3,610,089, compared with $3,073,902 for the year ended December 31, 1993,
an increase of $536,187 or 17%. The largest component of this increase was
interest and fees earned on the loan portfolio, totaling $3,180,363 compared
with $2,635,497 for the year ended December 31, 1993, an increase of $544,866,
or 21%. Interest income from investment securities and due from banks (time)
decreased $6,812, and interest on federal funds sold also decreased $1,867 for
the year ended December 31, 1994 as compared to the year ended December 31,
1993. The increase in interest income was due primarily to an increased volume
of loans.

Interest Expense. Interest expense for the year ended December 31,
1994 was $1,504,430, an increase of $197,606 or 15% over the year ended
December 31, 1993. Interest expense consisted entirely of interest paid on
deposits, the major source of Security Bank's loanable funds. The increase was
due to a higher volume of time deposits under $100,000, savings deposits and
interest bearing demand deposits.

Net Interest Income. Net interest income for the year ended December
31, 1994 was $2,105,659, compared to $1,767,078 for the year ended December 31,
1993, an increase of 19%. The increase in net interest income from December
31, 1993 to December 31, 1994 was due to an 18% increase in average earning
assets and an increase in net interest margin to 5.50% in 1994 from 5.46% in
1993. The increase in average earning assets was primarily due to an increase
in loan volume and investment in securities. The increase in net interest
margin was due to a higher volume of loans and a lower average cost of funds to
fund those loans during 1994.

<PAGE> 64

CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME AND EXPENSE, AND AVERAGE YIELDS
EARNED AND RATES PAID

The following table set forth the consolidated average balance sheets for
Security, average rates paid on deposits, average rates earned on earning
assets, and total interest paid on deposits and earned on earning assets. This
information is presented for the years ended December 31, 1994 and 1993.

<TABLE>
<CAPTION>
1994 1993 1994 1993 1994 1993
AVERAGE AVERAGE YIELD/ YIELD/ INCOME INCOME
BALANCE BALANCE RATES RATES (EXPENSE) (EXPENSE)
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Cash and due from banks $ 1,041,948 $ 1,024,205
Due from Banks (time) 210,653 250,000 5.00% 4.35% $ 10,523 $ 10,882
Investment securities 5,534,498 5,442,340 5.71% 5.92% 315,883 322,336
Federal funds sold 2,346,829 3,526,374 4.40% 2.98% 103,320 105,187
Loans (1) (2) 30,183,110 23,163,395 10.54% 11.38% 3,180,363 2,635,497
(less loan loss allowance) (542,049) (332,042)
Premises & equipment 1,880,069 1,936,737

Interest Receivable 299,025 236,754
Other Assets 635,307 158,410
----------- ----------- ------ ----- ---------- -----------
TOTAL $41,589,390 $35,406,173 9.43% 9.49% $3,610,089 $ 3,073,902
=========== =========== ====== ===== ========== ===========
LIABILITIES

Demand deposit accounts $ 2,701,111 $ 1,907,283
Money market & NOW 4,142,976 4,043,100 3.34% 3.50% $ 138,325 $ 141,616
Savings accounts 1,421,141 882,898 3.47% 3.49% 49,287 30,807
CD's $100,000 and over 2,733,267 3,667,460 4.71% 4.55% 128,722 166,717
Less than $100,000 24,672,592 19,882,937 4.82% 4.87% 1,188,096 967,684
Interest payable 242,988 221,577
Other liabilities 356,323 125,017
----------- ----------- ------ ----- ---------- -----------
TOTAL 36,270,398 30,730,272 3.93% 4.04% $1,504,430 $ 1,306,824
----------- ----------- ------ ----- ---------- -----------
Shareholders' Equity 5,318,992 4,675,901
----------- -----------

TOTAL LIABILITIES &
EQUITY $41,589,390 $35,406,173
=========== ===========
NET YIELD ON INTEREST
EARNING ASSETS 5.50% 5.46% $2,105,659 $ 1,767,078
====== ===== ========== ===========
</TABLE>

(1) Nonaccrual loans are included in the average balances.
(2) Loan fees included in interest income for 1994 are $302,926
and for 1993 are $369,896.

<PAGE> 65

The following rate/volume analysis details the changes in net
interest income allocated on a pro rata basis to the changes in rate variance
and the changes in volume variance at December 31, 1994.

<TABLE>
<CAPTION>
1994 Over (Under) 1993
----------------------
Total Caused by Caused by
Variance Rate Volume
-------- ----------- ----------
<S> <C> <C> <C>
Federal Funds Sold $ (1,867) $ 50,033 $ (51,900)
Due from Banks (time) (359) 1,608 (1,967)
Investment Securities (6,453) (11,715) 5,262
Loans 544,866 (195,012) 739,878
-------- --------- ---------
TOTAL INTEREST INCOME 536,187 (155,086) 691,273
-------- --------- ---------

Interest Bearing Deposits
Interest Bearing Demand (3,291) (6,627) 3,336
Savings 18,480 (197) 18,677
Certificates of Deposit-
$100,000 and Over (37,995) 6,005 (44,000)
Less than $100,000 220,412 (10,449) 230,861
-------- --------- ---------

TOTAL INTEREST EXPENSE 197,606 (11,268) 208,874
-------- --------- ---------

NET INTEREST INCOME $338,581 $(143,818) $ 482,399
======== ========= =========
</TABLE>

The average yield on Federal funds sold increased to 4.40% from 2.98% for
the years ended December 31, 1994 and December 31, 1993. The average balance
invested in Federal funds was $2,346,829 for the year ended December 31, 1994
and $3,526,374 for year ended December 31, 1993. The average yield invested in
due from banks for time deposits increased to 5.00% from 4.35% for the years
ended December 31, 1994 and December 31, 1993. The average balance invested was
$210,653 for the year ended December 31, 1994 and $250,000 for the year ended
December 31, 1993. The average yield for investment securities for the year
ended December 31, 1994 decreased to 5.71% from 5.92% for the same period last
year. The average investment in securities for the year ended December 31, 1994
increased to $5,534,498 from $5,442,340 for the same period last year. The
average yield on the loan portfolio decreased to 10.54% for the year ended
December 31, 1994 from 11.38% for the year ended December 31, 1993 based on
average balances of $30,183,110 and $23,163,395, respectively.

The average rate paid on interest bearing demand deposits for the years
ended December 31, 1994 and 1993 decreased to 3.34% from 3.50% based on average
balances of $4,142,976 and $4,043,100 for the respective periods. The average
rate paid on savings deposits decreased from 3.49% to 3.47% for the years ended
December 31, 1993 and December 31, 1994 based on average

55
<PAGE> 66

balances of $882,898 for December 31, 1993 and $1,421,141 for December 31,
1994. The average rate paid on CD's $100,000 and over increased to 4.71% from
4.55% for the years ended December 31, 1994 and December 31, 1993 with average
balances decreasing to $2,733,267 from $3,667,460 for the respective periods.
The average rate paid on CD's less than $100,000 decreased to 4.82% for the
year ended December 31, 1994 from 4.87% for the year ended December 31, 1993
with average balances increasing to $24,672,592 from $19,882,937, respectively.
Security had no other borrowings for the years ended December 31, 1994 and
December 31, 1993.

The following rate/volume analysis details the changes in net interest
income allocated on a pro rata basis to the changes in the rate variance and
the changes in volume variance at December 31, 1993.

<TABLE>
<CAPTION>
1993 Over (Under) 1992
----------------------
Total Caused by Caused by
Variance Rate Volume
-------- ---------- --------
<S> <C> <C> <C>
Federal Funds Sold $ 28,912 $ (6,126) $ 35,038
Due from Banks (time) (3,352) (3,352) 0
Investment Securities 51,380 (30,657) 82,037
Loans 820,197 (92,669) 912,866
----------- ----------- -----------
TOTAL INTEREST INCOME 897,137 (132,804) 1,029,941
----------- ----------- -----------

Interest Bearing Deposits
Interest Bearing Demand 44,684 (18,689) 63,373
Savings 18,393 (1,574) 19,967
Certificates of Deposit-
$100,000 and Over (145,570) (60,143) (85,427)
Less than $100,000 350,608 (102,051) 452,659
----------- ----------- -----------

TOTAL INTEREST INCOME 268,115 (182,457) 450,572
----------- ----------- -----------

NET INTEREST INCOME $ 629,022 $ 49,653 $ 579,369
=========== =========== ===========
</TABLE>

The average yield on Federal funds sold decreased to 2.98% from 3.24%
for the years ended December 31, 1993 and December 31, 1992. The average
balance invested in Federal funds was $3,526,374 for the year ended December
31, 1993 and $2,350,599 for year ended December 31, 1992. The average yield
invested in due from banks for time deposits decreased to 4.35% from 5.69% for
the years ended December 31, 1993 and December 31, 1992. The average balance
invested remained $250,000 for the years ended December 31, 1993 and December
31, 1992. The average yield for investment securities for the year ended
December 31, 1993 decreased to 5.92% from 6.68% for the same period last year.
The average investment in securities for the year ended

56
<PAGE> 67

December 31, 1993 increased to $5,442,340 from $4,056,577 for the same period
last year. The average yield on the loan portfolio decreased to 11.38% for the
year ended December 31, 1993 from 11.99% for the year ended December 31, 1992
based on average balances of $23,163,395 and $15,141,724, respectively.

The average rate paid on interest bearing demand deposits for the years
ended December 31, 1993 and 1992 decreased to 3.50% from 4.34% based on average
balances of $4,043,100 and $2,232,441 for the respective periods. The
average rate paid on savings deposits decreased from 3.99% to 3.49% for the
years ended December 31, 1992 and December 31, 1993 based on average balances
of $310,776 for December 31, 1992 and $882,898 for December 31, 1993. The
average rate paid on CD's $100,000 and over decreased to 4.55% from 5.63% for
the years ended December 31, 1993 and December 31, 1992 with average balances
decreasing to $3,667,460 from $5,544,967 for the respective periods. The
average rate paid on CD's less than $100,000 decreased to 4.87% for the year
ended December 31, 1993 from 5.83% for the year ended December 31, 1992 with
average balances increasing to $19,882,937 from $10,588,093, respectively.
Security had no other borrowings for the years ended December 31, 1993 and
December 31, 1992.

OTHER INCOME AND OTHER EXPENSE

Non-Interest Income. Non-interest income for the year ended December
31, 1994 was $306,404, compared to $198,079 in 1993, an increase of 55%, from
the previous year. The increase was due to an increased volume of deposits and
loans. Service charges on deposit accounts increased $27,609, from $112,906
for the year ended December 31, 1993. There were no sales of investment
securities during the years ended December 31, 1994 and December 31, 1993.
Security Bank had gains on sales of the guaranteed portion of Small Business
Administration loans amounting to $139,128 for the year ended December 31,
1994, compared to $76,161 in 1993, an increase of 83%. Other income increased
$17,749, to $26,761 for the year ended December 31, 1994, compared to $9,012
for the previous year.

Non-Interest Expenses. Non-interest expenses for the year
ended December 31, 1994 were $1,500,952, compared to $1,192,969 or an increase
of 26%, for the year ended December 31, 1993. The largest component of this
increase was due to an increase of $155,897 in salaries and employee benefits.
Salaries and employee benefits made up 51% of total non-interest expense for
the year ended December 31, 1994. The increase reflects normal salary
increases and higher staff levels, which were required as Security Bank's level
of activity in loans and deposits grew. Other non-interest expense items, such
as occupancy expense, equipment expense, data processing and FDIC insurance
premiums, increased as a result of the growth which the bank experienced.

Provision for Loan Losses. As a de novo bank, regulatory agencies
require that Security Bank maintain a loan loss reserve of no less than 1.0% of
gross loans. Security Bank has elected to build a loan loss reserve in excess
of that minimum in order that should loan losses occur, they could be charged
against the reserve without impairing income. Security Bank's provision for
possible loan losses was $165,000 for the year ended December 31, 1994,
compared to $204,000 for the year ended December 31, 1993. This provision
brings the loan loss reserve to 1.89% of outstanding loans as of December 31,
1994.

57
<PAGE> 68

Security Bank maintains an allowance for loan losses. The balance for
this account was $578,044 as of December 31, 1994 compared to $468,190 as of
December 31, 1993. The adequacy of this allowance is reviewed by management
monthly, and the allowance has been increased as the loan portfolio has grown.

An analysis of the activity in the Reserve for Loan Losses for the past
two years ended December 31 is presented in the following table:

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance at beginning of period $468,190 $247,639
-------- --------
Charge-offs:
Commercial, industrial and agricultural (45,000) (3,517)
Real estate-construction (19,358)
Real estate-mortgages ( 8,686) ---
Installment loans to individuals ( 4,559 ---
-------- --------
Total Charge-offs (77,603) (3,517)
-------- --------
Recoveries
Commercial, industrial and agricultural --- ---
Real estate-construction 18,991 20,068
Real estate-mortgages --- ---
Installment loans to individuals 3,466 ---
-------- --------
Total Recoveries 22,457 20,068
-------- --------
Net (Charge-offs) Recoveries (55,146) 16,551
Provision for possible loan losses 165,000 204,000
-------- --------
Balance at end of Period $578,044 $468,190
======== ========
Ratio of net charge-offs, (recoveries) during
the period to average loans outstanding during
the period 0.18% (0.07%)
</TABLE>

The following table shows the allocation for the reserve for
loan losses for the year ended December 31, 1994:

<TABLE>
<CAPTION>
Percent of
Loans in Each
Category to
1994 Total Loans
---- -----------

<S> <C> <C>
Commercial, industrial and agricultural $116,989 15%
Real estate-construction 259,985 38%
Real estate-mortgages 136,701 36%
Installment loans to individuals 64,369 11%
------- ----

Balance at end of period $578,044 100%
======== ====
</TABLE>

<PAGE> 69
The following table shows the allocation for the reserve for loan
losses for the year ended December 31, 1993:

<TABLE>
<CAPTION>
Percent of
Loans in Each
Category to
1993 Total Loans
---- -----------

<S> <C> <C>
Commercial, industrial and agricultural $ 69,719 12%
Real estate-construction 228,500 46%
Real estate-mortgages 119,802 33%
Installment loans to individuals 50,169 9%
------- ----

Balance at end of period $468,190 100%
======= ====
</TABLE>

LOAN PORTFOLIO

The loan portfolio increased to $30,579,646 at December 31, 1994 from
$28,652,646 at December 31, 1993. It is the practice of Security Bank to lend
primarily in its trade area and, to a large extent, extend credit
collateralized by real estate. The loan portfolio consists of a variety of
loans to customers for residential and commercial mortgages, residential and
commercial construction loans and commercial loans collateralized by real
estate. These lending activities could be similarly affected by a downturn in
the regional economy or in real estate values. Security Bank's loan customers
consist of both small to medium size businesses and individuals.

During 1994, the bank originated and sold the guaranteed portion of
certain Small Business Administration loans. The total proceeds from the sale
of these loans were $3,041,519 and $3,820,547 during 1994 and 1993,
respectively.

The following table shows the history of the loan portfolio for each of
the last two years ended December 31:

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial, industrial and agricultural $ 4,679,563 $ 3,474,452
Real estate-construction 11,757,856 13,248,399
Real estate-mortgage 11,121,340 9,584,146
Installment loans to individuals 3,218,455 2,522,282
----------- -----------
Total loans 30,777,214 28,829,279
Unearned Loan Fees (12,339) (10,863)
Unearned Discounts on Loans (185,229) (165,770)
Reserve for Loan Losses (578,044) (468,190)
------------ ------------
Total Net Loans $30,001,602 $28,184,456
=========== ===========
</TABLE>

59
<PAGE> 70

The maturities and interest sensitivity of selected loan categories are
presented below:

<TABLE>
<CAPTION>
MATURITIES Within 1 Through Over
December 31, 1994 1 Year 5 Years 5 Years Total
----------------- ------ --------- ------- -----
<S> <C> <C> <C> <C>
Commercial, industrial and agricultural $ 2,137,931 $2,058,671 $482,961 $ 4,679,563
Real estate-construction 11,757,856 -- -- 11,757,856
----------- ---------- -------- -----------
Total $13,895,787 $2,058,671 $482,961 $16,437,419
=========== ========== ======== ===========

SENSITIVITY
December 31, 1994
-----------------

Loans with predetermined interest rates $ 4,633,825 $1,857,800 $ 49,191 $ 6,540,816
Loans with floating interest rates 9,261,962 200,871 433,770 9,896,603
----------- ---------- -------- -----------
Total $13,895,787 $2,058,671 $482,961 $16,437,419
=========== ========== ======== ===========
</TABLE>

The following table sets forth the aggregate amount of loans which were
contractually past due 30 days or more and nonperforming assets as of the dates
indicated.

<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Loans:

Delinquent 30-89 days $670,200 $128,592
Delinquent 90 days or more --- ---
Nonaccrual 43,383 ---
-------- --------

Total $713,583 $128,592
======== ========

Nonperforming Assets:

Nonaccrual loans $ 43,383 $ ---
Real Estate Owned 231,174 129,715
-------- --------

Total $274,557 $129,715
======== ========
</TABLE>

Loans are placed on nonaccrual status when, in management's judgment,
collection of interest or principal is questionable. Loans on which the accrual
of interest has been discontinued or reduced due to the uncertainty of
collection amounted to $43,383 at December 31, 1994. There were no loans on
which the accrual of interest has been discontinued at December 31, 1993. If
interest on

60
<PAGE> 71

such loans had been accrued, such income would have approximated $5,117 for
1994. Interest payments recorded in 1994 as interest income for such
nonaccrual loans at December 31, 1994 were $4,871. There were no accruing
loans which were contractually past due 90 days or more as to principal or
interest payments at December 31, 1994 and 1993. There were no loans which
were considered "trouble debt restructurings" as defined in Statement of
Financial Accounting Standards No. 15 at December 31, 1994 and 1993.

The following table summarizes Security Bank's classified assets as of
the dates indicated.

<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
----------------- -----------------
<S> <C> <C>
Substandard $512,358 $311,316
Doubtful --- ---
Loss --- ---
-------- ---------

Total $512,358 $ 311,316
======== =========
</TABLE>

Credit risk arises from credit extension including loans, and certain
securities. At December 31, 1994, Security's credit risk was centered in its
portfolio of loans which totaled $30,579,646 and represented 83% of total
earning assets. The Board of Directors reviews monthly all loans past due
thirty days or more and all loans determined to have a higher than normal
degree of risk. Security Bank's loan policy requires that these high risk
loans be classified as special mention, substandard, doubtful, or loss. Loans
classified as substandard or doubtful may result in additional allocations to
the allowance for loan losses if deemed appropriate. Loans classified loss
will be charged off against the allowance or will carry a designated 100%
allowance until charged off. As of Security's last FDIC examination, October
17, 1994, substandard loans totaled $494,000. At December 31, 1994, loans
classified as substandard decreased to $450,713; in addition, $61,645 were
classified internally substandard at December 31, 1994.

Security's objective is to maintain a loan portfolio that is diverse in
terms of type of loan, industry concentration, geographic distribution and
borrower concentration in order to reduce the overall credit risk by minimizing
the adverse impact of any single event or set of occurrences. Security Bank
recognizes that it presently has a higher than normal concentration of
residential construction loans than it would normally carry while maintaining a
well diversified loan portfolio. This has been an essential part of the bank's
short-term strategy to serve the credit needs of its expanded market area,
while attaining, and maintaining, profitability. Consistent, however, with
sound banking practices, in order to achieve more diversity, the bank plans to
only nominally grow this portion of its loan portfolio in the future, while
increasing the commercial and consumer segments of its loan portfolio. Credit
risk management policies and procedures include an initial risk rating of loans
by the originating lending officer. This rating is reviewed for
appropriateness in the case of larger loans by higher level officers and by the
Director's Loan Committee.

Security receives collateral to support credit extension and
commitments for which collateral is deemed necessary. The most significant
categories of collateral are real estate, cash on deposit and marketable
securities. Security also obtains real and personal property as security for
some loans

<PAGE> 72

which are made on the basis of the general credit-worthiness of the borrower
and whose proceeds were not used for real estate- related purposes. Security
normally lends up to 75% of the appraised value of developed real estate and up
to 90% of the cost of new automobiles and equipment.

To determine the adequacy of the reserve level, management considers
the delinquency status of loans and other factors. Management also establishes
specific reserves for credits which management believes requires reserves
greater than those allocated according to their classification or delinquent
status. The adequacy of the allowance for loan losses is evaluated monthly,
based upon a review of significant loans, with particular emphasis being placed
upon past due loans and other loans that management believes require special
attention. Management considers the year-end allowance appropriate and
adequate to cover possible losses in the loan portfolio. Management's judgment,
however, is based upon a number of assumptions about future events which are
believed to be reasonable, but which may, or may not, prove valid. There can
be no assurance, therefore, that charge offs in future periods will not exceed
the allowance for loan losses, or that additional increases in the allowance
for loan losses will not be required.

INVESTMENT SECURITIES

The investments portfolio decreased $258,461, to $5,328,127 as of
December 31, 1994, compared to $5,586,588 for the year ended December 31, 1993,
or 4.6%. Approximately $403,673 of the decrease from 1993 to 1994 relates to a
decline in the market value of securities available-for-sale. Mortgage backed
securities totaled $1,181,574 at December 31, 1994 and $1,046,639 at December
31, 1993. The total market value of the investment portfolio was $5,324,689 at
December 31, 1994 or 5.4% less than amortized cost.

At December 31, 1993, Security implemented Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115). SFAS 115 classifies investment securities in
three categories which include held-to-maturity, trading or available-for-sale.
As of December 31, 1994, investment securities totaling $5,128,877 were
classified as available-for-sale and $199,250 were classified as
held-to-maturity. Investment securities classified as available-for-sale are
reported at fair value with unrealized gains and losses excluded from earnings
and reported as a separate component of stockholders' equity.

The amortized cost and estimated market value in various categories of
investment securities available-for-sale and held-to-maturity are shown in the
following table for each of the two years ended December 31:

<PAGE> 73

SECURITIES AVAILABLE-FOR-SALE:
<TABLE>
<CAPTION>
1994
----
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Losses Gains Value
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury $ 604,952 $ (10,592) $ --- $ 594,360
U.S. Government Agencies
and Corporations 3,607,989 (255,046) --- 3,352,943
Mortgage Backed Securities 1,216,175 (34,889) 288 1,181,574
---------- --------- -------- ----------
Total $5,429,116 $(300,527) $ 288 $5,128,877
========== ========= ======== ==========
SECURITIES HELD-TO-MATURITY:
U.S. Government Agencies $ 199,250 $ (3,438) $ --- $ 195,812
========== ========= ======== ==========
</TABLE>

SECURITIES AVAILABLE-FOR-SALE:
<TABLE>
<CAPTION>
1993
----

Gross Estimated
Amortized Unrealized Market
Cost Gains Value
---------- ----------- ---------

<S> <C> <C> <C>
U.S. Treasury $1,108,257 $ 18,798 $1,127,055
U.S. Government Agencies
and Corporations 3,379,370 33,524 3,412,894
Mortgage Backed Securities 995,527 51,112 1,046,639
---------- -------- ----------
Total $5,483,154 $103,434 $5,586,588
========== ======== ==========
</TABLE>

The following table shows the investment portfolio for
available-for-sale and held-to-maturity at amortized cost for maturity and
weighted average rate data at December 31, 1994:

<PAGE> 74

AVAILABLE FOR SALE:

<TABLE>
<CAPTION>
Under 1-5 5-10 Over 10
1 Year Years Years Years Total
------ ----- ----- ------- -----
<S> <C> <C> <C> <C> <C>
U.S. Treasury
Carrying Value $350,457 $ 254,495 -- -- $ 604,952
Yield 5.47% 5.49% -- -- 5.48%

U.S. Government
Agencies and Corp.
Carrying Value -- 2,857,989 750,000 -- 3,607,989
Yield -- 5.42% 6.48% -- 5.64%

Mortgage-backed
Securities
Carrying Value -- 187,699 -- 1,028,476 1,216,175
Yield -- 5.46% -- 6.13% 6.03%
-------- ---------- -------- ---------- ----------

Total Carrying
Value $350,457 $3,300,183 $750,000 $1,028,476 $5,429,116
======== ========== ======== ========== ==========
Weighted Average
Yield 5.47% 5.43% 6.48% 6.13% 5.71%
======== ========== ======== ========== ==========
</TABLE>

SECURITIES HELD-TO-MATURITY:

<TABLE>
<CAPTION>
Under 1-5 5-10 Over 10
1 Year Years Years Years Total
------ ----- ----- ------- -----
<S> <C>
U.S. Government
Agencies and Corp.
Carrying Value $ 199,250
Yield 8.04%
</TABLE>

ASSETS

Total assets as of December 31, 1994 were $40,044,377, compared to
$40,036,811 as of December 31, 1993, an increase of $7,566, or .02%. The loan
portfolio accounted for 75% of total assets as of December 31, 1994, compared to
70% of total assets as of December 31, 1993. The investments portfolio
accounted for 13% of total assets as of December 31, 1994, compared to 14% as of
December 31, 1993.

<PAGE> 75

LIABILITIES

Total liabilities as of December 31, 1994 were $34,661,503 compared to
$34,871,261 as of December 31, 1993, a decrease of $209,758, or .06%. This
decrease is due primarily to the bank's efforts to allow deposits taken in at
market rates from inside and outside the state of Georgia to roll off as they
mature, replacing them with core deposits. During the year ended December 31,
1994 these deposits were reduced from $15,728,979 at December 31, 1993 to
$9,794,970 as of December 31, 1994, a reduction of $5,934,009. An increase in
core deposits during 1994 resulted in an overall decrease in total deposits of
only $550,247 at December 31, 1994. Customer deposits were $33,980,731 as of
December 31, 1994 compared to $34,530,978 at December 31, 1993. Interest
payable on deposits was $327,027 as of December 31, 1994 and $225,425 as of
December 31, 1993. The increase in interest payable is due to the increase in
average rates paid on deposits.

The following table shows the maturity distribution of time deposits of
$100,000 and over at December 31, 1994:

<TABLE>
<CAPTION>
Certificates
of Deposit
------------
<S> <C>
Three months or less $ 400,318
Over three months to six months 200,000
Over six months to twelve months 527,948
Over twelve months 1,017,373
----------
Total $2,145,639
==========
</TABLE>

The following table is a distribution of average balances and average
rates paid on the deposit categories for the last two years ended December 31:

<TABLE>
<CAPTION>
1994 1993
---- ----
Amount Rate Amount Rate
------ ---- ------ ----
<S> <C> <C> <C> <C>
Demand--non-interest-bearing $ 2,701,111 $ 1,907,283
Demand--interest-bearing 4,142,976 3.34% 4,043,100 3.50%
Savings 1,421,141 3.47% 882,898 3.49%
Time 24,672,592 4.82% 19,882,937 4.87%
Time over $100,000 2,733,267 4.71% 3,667,460 4.55%
----------- -----------
Total $35,671,087 $30,383,678
=========== ===========
</TABLE>

65
<PAGE> 76

STOCKHOLDERS' EQUITY

Total stockholders' equity increased $217,324 to $5,382,874 as a result
of the current year net income less changes in unrealized holding loss on
securities available-for-sale. Stockholders' equity consisted of $525,000 for
common stock, $4,725,000 for additional paid in capital, $319,023 for retained
earnings and $(186,149) for unrealized loss on securities available-for-sale.

LIQUIDITY

Liquidity management involves the matching of the cash flow
requirements of customers who may be either depositors wanting to withdraw
funds or borrowers needing assurance that sufficient funds will be available to
meet their credit needs and the ability of the bank to meet those needs.
Security Bank seeks to meet liquidity needs primarily through short-term
interest-bearing deposits with other banks, overnight investments, investment
securities and the repayment of loans. In addition to these sources, the bank
maintains relationships with several correspondent banks, which can provide
short-term advances to the bank on short notice and which have agreed to
purchase loan participations, if needed. Security Bank's management intends to
closely monitor its liquid, short-term assets in an effort to maximize net
interest margins. Management believes Security Bank's sources of liquidity are
adequate to meet operating needs.

Liquidity, as of December 31, 1994 and measured by the ratio of net
cash, federal funds sold, and short-term marketable securities to total
deposits, was 21.50%. The adjusted liquidity ratio which represents 50% of
construction loans under contract that could be sold to one of Security Bank's
correspondent banks was 27.29%. Security Bank's policy states liquidity should
be maintained at a target ratio of 30%, with an acceptable range of plus or
minus 5%. Management feels that this ratio was adequate to meet the liquidity
needs of the bank.

As of September 1992, Security Bank was required to begin filing the
Report of Transaction Accounts, Other Deposits, and Vault Cash (FR2900)
quarterly. During the reporting period for the year ended December 31, 1994,
Security Bank was below the minimum requirement of $4.0 million in total
reservable liabilities; therefore, no reserve requirement was maintained.

<PAGE> 77

The following interest rate gap analysis discloses major categories of
interest earning assets and liabilities at December 31, 1994:

<TABLE>
<CAPTION>
0-3 4-12 1-5 Over
Months Months Years 5 Years TOTAL
------ ------ ----- ------- -----
<S> <C> <C> <C> <C> <C>
ASSETS
Loans:
Fixed Rate by
Maturity $ 4,505,657 $ 4,067,149 $ 7,321,566 $ 265,866 $16,160,238
Floating Rate by
Repricing Interval 14,616,976 --- --- --- 14,616,976

Securities:
Fixed Rate by
Maturity -- 350,457 1,942,550 --- 2,293,007
Floating Rate by
Repricing Interval 1,717,214 1,317,906 --- --- 3,035,120

Interest-bearing
Balances 99,000 --- 198,000 --- 297,000
Federal Funds Sold 790,000 --- --- --- 790,000
----------- ----------- ----------- ----------- -----------

Total $21,728,847 $ 5,735,512 $ 9,462,116 $ 265,866 $37,192,341
----------- ----------- ----------- ----------- -----------

LIABILITIES
Transaction
Accounts $ 2,318,265 --- --- --- $ 2,318,265
Money Market
Deposits Accounts 2,611,801 --- --- --- 2,611,801
Other Savings
Accounts 1,412,859 --- --- --- 1,412,859
Other Time Deposits
$100M and Over 400,320 727,946 1,017,373 --- 2,145,639
Other Time Deposits
Under $100M 5,324,715 8,172,665 9,745,514 --- 23,242,894
----------- ----------- ----------- ----------- -----------

Total $12,067,960 $ 8,900,611 $10,762,887 $ --- $31,731,458
----------- ----------- ----------- ----------- -----------

Gap 9,660,887 $(3,165,099) $(1,300,771) $ 265,866 $ 5,460,883
=========== =========== =========== =========== ===========

Gap/Total Assets 24.13% (7.90)% (3.25)% .66%
========== =========== =========== ===========

Cumulative Gap $ 9,660,887 $ 6,495,788 $ 5,195,017 $ 5,460,883
=========== =========== =========== ===========

Cumulative Gap/
Total Assets 24.13% 16.22% 12.97% 13.64%
=========== =========== =========== ===========

</TABLE>

An institution is considered to be liability sensitive, or as having a
negative GAP, when the amount of its interest bearing liabilities maturing or
repricing within a given time period exceeds the amount of its interest earning
assets also maturing or repricing within that time period. Conversely, an
institution is considered to be asset sensitive, or as having a positive GAP,
when the amount of its interest bearing liabilities maturing or repricing is
less than the amount of its interest earning assets also maturing or repricing
during the same period. Generally, in a falling interest rate

<PAGE> 78

environment, a negative GAP should result in an increase in net interest
income, and in a rising interest rate environment this negative GAP should
adversely affect net interest income. The converse would be true for a
positive GAP.

However, shortcomings are inherent in a simplified GAP analysis that
may result in an institution with a nominally negative GAP having interest rate
behavior associated with an asset sensitive balance sheet. For example,
although certain assets and liabilities may have similar maturities or periods
to repricing, they may react in different degrees to changes in market interest
rates. Furthermore, repricing characteristics of certain assets and
liabilities may vary substantially within a given time period. In the event of
a change in interest rates, prepayment and early withdrawal levels could also
deviate significantly from those assumed in calculating GAP.

Due in part to the shortcomings of GAP analysis, the asset/liability
committee of Security Bank believes that simulation modeling more accurately
estimates the effects of and exposure to interest rate changes. During 1994,
such modeling indicated that, given the bank's positive cumulative GAP
position, Security Bank's balance sheet was asset sensitive and would
experience increases in net interest income in a rising interest rate
environment. The asset/liability committee felt that the bank was properly
positioned from a GAP standpoint for the next twelve months.

CAPITAL

There are two federal measures of capital adequacy for banks,
risk-based capital guidelines and the leverage ratio. The risk-based capital
guidelines developed by regulatory authorities assign weighted levels of risk
to asset categories to measure capital adequacy. These guidelines establish a
phase-in period beginning in 1991 at which time a minimum of 7.25% of total
capital to risk-adjusted assets is required. One-half of 7.25% must consist of
qualifying capital which includes common shareholders' equity and qualifying
perpetual preferred stock (subject to certain limitations). At the end of
1992, this ratio must reach a minimum of 8% with 4% consisting of qualifying
capital. In addition, banks must meet minimum leverage ratios. The Federal
Deposit Insurance Corporation ("FDIC") has established a 3% minimum leverage
ratio of Tier 1 capital to total assets. Tier 1 capital essentially consists
of qualifying capital, and the minimum Tier 1 capital only applies to banks
which have received the highest supervisory rating from their regulators.
Institutions which have not received the highest rating, as well as
institutions with supervisory, financial or operational weaknesses, and
institutions anticipating significant growth are expected to operate well above
minimum capital standards. For example, most such banks generally have
operated at capital levels ranging from 1% to 2% above the stated minimums.
Higher capital ratios could be required if warranted by the particular
circumstances or risk profiles of individual banks. Thus, for all but the most
highly rated banks meeting the conditions set forth above, the minimum Tier 1
leverage ratio is 3% plus an additional cushion of at least 1% to 2%.

At December 31, 1994, Security Bank maintained capital ratios above
regulatory requirements. Required regulatory minimum levels are 4.00% for the
Tier 1 capital ratio, 8.00% for the total capital ratio, and 3.0 - 5.0% for the
Tier 1 leverage ratio. Security Bank's risk-adjusted capital ratio and
leverage ratio at December 31, 1994 were as follows:

<PAGE> 79

<TABLE>
<S> <C>
Risk adjusted capital ratio 18.14%
Required capital ratio 8.00%
Tier 1 leverage ratio 13.61%
Required Tier 1 leverage ratio 3.00% - 5.00%
</TABLE>

DISCLOSURE OF IMPACT OF ACCOUNTING CHANGES

Security has not yet adopted the provisions of Statement of Financial
Accounting Standards No. 107 regarding disclosures about the fair value of
financial instruments and No. 114 regarding accounting for impairment of loans.
These standards are expected to be adopted during the year ending December 31,
1995. Implementation of these standards is not expected to have a material
effect on Security's financial statements.

<PAGE> 80

PRO FORMA COMBINED FINANCIAL DATA

The following pro forma financial data has been prepared based upon the
historical financial statements of Habersham and Security. These pro forma
statements assume that 75% of the Security shareholders will elect to receive
Habersham Common Stock in the Merger and may not be indicative of the results
that actually would have occurred if the Merger had been in effect when
indicated or which may be obtained in the future. The pro forma balance sheet
has been prepared assuming the Merger was consummated on December 31, 1994 and
the pro forma income statement has been prepared assuming the Merger was
consummated on January 1, 1994. These pro forma statements do not reflect any
potential savings which may result from the consolidation of operations of
Habersham and Security.

The unaudited pro forma combined financial statements should be read in
conjunction with the historical consolidated financial statements, including
the notes thereto, of Habersham and Security appearing elsewhere herein. See
"AVAILABLE INFORMATION" and "FINANCIAL STATEMENTS."

<PAGE> 81

Habersham Bancorp
Pro forma Condensed Combined Consolidated Balance Sheet
As of December 31, 1994

<TABLE>
<CAPTION>
Historical
--------------------------- Pro Forma Pro Forma
Habersham Security Adjustments Combined
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS

Cash and due from banks $ 4,450,912 $ 1,214,670 $(2,520,914)(1) $ 3,144,668
Federal funds sold 1,020,000 790,000 1,810,000
Investment securities available for sale 28,529,679 5,128,877 33,658,556
Investment securities held to maturity 21,619,504 199,250 21,818,754
Loans, net 99,058,810 30,001,602 129,060,412
Premises and equipment, net 2,947,889 1,836,773 4,784,662
Interest receivable 1,346,942 342,747 1,689,689
Other assets 2,353,248 530,458 2,883,706
Core deposit intangible 550,000 (2) 550,000
Goodwill 3,503,491 (2) 3,503,491
------------ ----------- ----------- ------------
Total Assets $161,326,984 $40,044,377 $ 1,532,577 $202,903,938
============ =========== =========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Non-interest bearing deposits $ 17,100,436 $ 2,249,273 $ 19,349,709
Interest bearing deposits 124,515,059 31,731,458 156,246,517
Other borrowings 2,501,742 2,501,742
Accrued interest payable 1,000,104 327,027 1,327,131
Other liabilities 359,056 353,745 712,801

------------ ----------- ------------
Total Liabilities 145,476,397 34,661,503 180,137,900
------------ ----------- ------------

SHAREHOLDERS' EQUITY

Shareholders' Equity:
Common stock 875,000 525,000 $ (214,052)(1) 1,185,948
Additional paid-in Capital 3,321,028 4,725,000 1,879,503 (1) 9,925,531
Retained Earnings 13,110,034 319,023 (319,023)(1) 13,110,034
Unrealized loss on investment securities (1,013,344) (186,149) 186,149 (1) (1,013,344)
Treasury stock, at cost (442,131) (442,131)
------------ ----------- ----------- ------------
Total Shareholders' Equity 15,850,587 5,382,874 1,532,577 22,766,038
------------ ----------- ----------- ------------

Total Liabilities and Shareholders' Equity $161,326,984 $40,044,377 $ 1,532,577 $202,903,938
============ =========== =========== ============
</TABLE>

See notes to pro forma condensed combined consolidated financial statements.

<PAGE> 82

Habersham Bancorp
Pro forma Condensed Combined Consolidated Income Statement
For the year ended December 31, 1994
<TABLE>
<CAPTION>
Historical
----------------------------- Pro Forma Pro Forma
Habersham Security Adjustments Combined
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
Interest income
Loans $ 9,580,514 $ 3,180,363 $12,760,877
Investments-taxable 1,798,030 429,726 $ (151,255) (3) 2,076,501
Investments-non taxable 1,056,133 1,056,133
----------- ----------- ----------- -----------
Total interest income 12,434,677 3,610,089 (151,255) 15,893,511
----------- ----------- ----------- -----------

Interest expense
Deposits 4,697,846 1,504,430 6,202,276
Borrowings 103,086 103,086
----------- ----------- ----------- -----------
Total interest expense 4,800,932 1,504,430 6,305,362
----------- ----------- ----------- -----------
Net interest income 7,633,745 2,105,659 (151,255) 9,588,149

Provision for loan losses 208,096 165,000 373,096
----------- ----------- ----------- -----------
Net interest income after provision 7,425,649 1,940,659 (151,255) 9,215,053
----------- ----------- ----------- -----------

Non-interest income
Service charges on deposits 430,211 140,515 570,726
Other service charges and commissions 232,887 232,887
Securities gains, net 25,128 25,128
Other income 518,889 165,889 684,778
----------- ----------- ----------- -----------
Total non-interest income 1,207,115 306,404 1,513,519
----------- ----------- ----------- -----------

Non-interest expense
Salaries and employee benefits 3,152,261 768,348 3,920,609
Occupancy expenses 460,268 162,404 622,672
Furniture and equipment expenses 447,983 98,493 546,476
Data processing 179,421 60,533 239,954
Goodwill amortization 131,509 (4) 131,509
Other 2,379,972 411,174 110,000 (4) 2,901,146
----------- ----------- ------------ -----------
Total non-interest expense 6,619,905 1,500,952 241,509 8,362,366

----------- ----------- ----------- -----------
Income before income taxes 2,012,859 746,111 (392,764) 2,366,206

Income taxes 354,474 278,509 (51,427)(5) 581,556
----------- ----------- ----------- -----------
Net income $ 1,658,385 $ 467,602 $ (341,337) $ 1,784,650
=========== =========== =========== ===========

Net income per common and common
equivalent shares $ 4.91 $ 0.89 $ 3.86
=========== =========== =========== ===========

Weighted average number of common and
common stock equivalent shares 337,959 525,000 462,338
=========== =========== =========== ===========
</TABLE>

See notes to pro forma condensed combined consolidated financial statements.

<PAGE> 83

Habersham Bancorp
Notes to Pro Forma Condensed Combined Consolidated Financial Statements
As of December 31, 1994 and for the year then ended

(1) Adjustments to cash and shareholders' equity to reflect the estimated
purchase price of Security of $2,305,150 in cash and $6,915,451 in
shares of Habersham Common Stock. It is assumed that 124,379 shares
of Habersham Common Stock will be exchanged with Security's
shareholders for 75% of their common stock and all of Security's
outstanding stock options will be acquired for cash.

<TABLE>
<S> <C>
Cash paid to Security shareholders $ 2,305,150
Acquisition costs 100,000
Cash paid to Security's option holders 115,764
Habersham stock issued:
Par value 310,948
Additional paid-in capital 6,604,503
-----------
Total Estimated Purchase Price $ 9,436,365
-----------
</TABLE>

(2) Adjustments to allocate purchase price to the fair market value of
assets acquired and liabilities assumed. The following allocations
are based upon current estimates which will be subsequently adjusted
based upon final determination of the fair value of assets acquired
and liabilities assumed as of the closing date. The purchase price
has been allocated to the assets acquired and liabilities assumed as
follows:

<TABLE>
<S> <C>
Net Assets - historical $ 5,382,874
Core Deposit Intangible 550,000
Goodwill 3,503,491
-----------
Total Estimated Purchase Price $ 9,436,365
-----------
</TABLE>

Amortization period for core deposit intangible and goodwill has been
assumed to be five and twenty-five years, respectively.

(3) Estimated reduction in interest income as a result of the cash used to
purchase Security stock and related acquisition costs.

(4) Estimated annual amortization of core deposit intangible of $550,000
over a five year life and goodwill of $3,503,491 over a twenty-five
year life.

(5) Estimated tax effect of the pro forma adjustments.

<PAGE> 84

CERTAIN DIFFERENCES IN THE RIGHTS OF HABERSHAM
AND SECURITY SHAREHOLDERS

At the Effective Time, Security shareholders who do not elect to
receive cash in the Merger or perfect their dissenters' rights automatically
will become shareholders of Habersham, and their rights as shareholders will be
determined by Habersham's Articles and Bylaws. The following is a summary of
the material differences in the rights of shareholders of Habersham and
Security. Both Habersham and Security are Georgia corporations governed by the
Georgia Code. Accordingly, except as set forth below, there are no material
differences between the rights of an Habersham shareholder under Habersham's
Articles and Bylaws and the Georgia Code, on the one hand, and the rights of a
Security shareholder under Security's Articles and Bylaws and the Georgia Code,
on the other hand. This summary does not purport to be a complete discussion
of, and is qualified in its entirety by reference to, the Georgia Code and the
Articles and Bylaws of each corporation.

AUTHORIZED CAPITAL STOCK

Habersham. Habersham is authorized to issue 1,000,000 shares of
Habersham Common Stock, $2.50 par value, of which 335,051 shares were issued
and outstanding as of the Record Date. Habersham's Board of Directors intends
to seek shareholder approval of an increase in the number of authorized shares
of Habersham Common Stock from 1,000,000 to 10,000,000 at its April 15, 1995
Annual Shareholders' Meeting and thereafter to effect a five-for-one stock
split in the form of a 400% stock dividend with respect to its outstanding
shares of Common Stock if such approval is obtained. The Board of Directors
also plans to reduce the par value of the Common Stock from $2.50 to $1.00 per
share. The foregoing actions will become effective at or prior to the
Effective Time in order to qualify the Habersham Common Stock for listing on
the Nasdaq National Market. If the shareholder approval of the proposed
increase in authorized shares is not obtained, the Habersham Common Stock will
not qualify for listing on the Nasdaq National Market, but will qualify for
listing on the Nasdaq SmallCap Market.

Security. Security is authorized to issue 5,000,000 shares of
Security Common Stock, $1.00 par value, and 1,000,000 shares of preferred
stock, $1.00 par value ("Security Preferred Stock"), of which 525,000 shares of
Security Common Stock and no shares of Security Preferred Stock were issued and
outstanding as of the Record Date. The Board of Directors has the authority to
provide for the division and issuance of Security Preferred Stock in one or
more series and to fix the voting powers, designation, number, and the
dividend, redemption, liquidation, and conversion rights thereof, by adopting a
resolution or resolutions creating and designating such series. The rights of
the holders of Security Common Stock would be subject to any rights and
preferences of any Security Preferred Stock or series thereof that the Board of
Directors may issue.

<PAGE> 85

SHAREHOLDER MEETINGS

Habersham. Under Habersham's Bylaws, special meetings of the
shareholders may be called at any time by the President, the Chairman of the
Board or the Board of Directors. The holders of at least 25% of the votes
entitled to be cast in an election of directors may also call a special meeting
by delivering a written request to Habersham.

Security. Under Security's Bylaws, special meetings of the
shareholders may be called at any time by the Chairman of the Board or the
Board of Directors. The Georgia Code, however, also allows the holders of at
least 25% of the votes entitled to be cast on the issue to be considered at the
proposed meeting to call a special meeting by delivering a written demand to
the corporation stating the purpose of the meeting.

NUMBER OF DIRECTORS

Habersham. Habersham's Bylaws state that the Board of Directors is to
be composed of six persons. If the Board consists of more than nine directors
(as a result of an amendment to the Bylaws increasing the size of the Board),
the Articles of Incorporation require that the members of the Board serve in
three classes for staggered three-year terms. Because the Habersham Board of
Directors currently consists of only six members, however, each director serves
until the next annual meeting of shareholders following his election and until
his successor is duly elected and qualified.

Security. Security's Bylaws state that the Board of Directors will be
composed of five to fifteen directors, with the exact number of directors to be
fixed by resolution of the Board. The Board has fixed the number of directors
at ten, with each director serving until the next annual meeting of
shareholders following his election and until his successor is elected and
qualified.

DIRECTORS

Habersham. Habersham's Articles of Incorporation and Bylaws state
that a director may be removed from office (i) without cause only upon the
affirmative vote of the holders of at least 2/3 of the issued and outstanding
shares of Habersham Common Stock, and (ii) with cause only upon the affirmative
vote of the holders of a majority of the issued and outstanding shares of
Habersham Common Stock.

Security. Security's Bylaws state that a director may be removed only
for cause. Removal must be approved by the affirmative vote of the holders of
a majority of the outstanding shares of Security Common Stock at a meeting with
respect to which notice of such purpose has been given.

VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS

Habersham. Habersham's Articles of Incorporation require the
affirmative vote of the holders of at least 2/3 of the issued and outstanding
shares of Habersham Common Stock entitled to vote on the matter to approve:

<PAGE> 86

(i) any merger of Habersham with or into any other entity, or

(ii) any sale, lease, exchange or other disposition of all or
substantially all of Habersham's assets,

if the other party to the transaction is the beneficial owner of at least 5% of
the issued and outstanding shares of Habersham Common Stock entitled to vote in
an election of directors. This requirement will not apply if 2/3 of
Habersham's directors approved the transaction before the other party became
the beneficial owner of more than 5% of the outstanding shares of Habersham
Common Stock or before consummation of the transaction. Transactions between
Habersham and any majority owned subsidiary are also exempt from this
requirement.

Security. Security's Articles of Incorporation require the affirmative
vote of the holders of at least 75% of the issued and outstanding shares of
Security Common Stock entitled to vote on the matter to approve:

(i) any merger of Security or any of its subsidiaries
with or into any other entity;

(ii) any sale, lease, exchange or disposition of all or
substantially all of the assets of Security or any of its subsidiaries; or

(iii) the adoption of any plan or proposal for Security's liquidation
or dissolution;

unless at least 67% of the members of the Board of Directors have approved the
transaction. In that case, the affirmative vote of the holders of a majority
of the outstanding shares of Security Common Stock will be required to approve
the transaction.

SUPERVISION AND REGULATION

As bank holding companies, Habersham and Security are subject to
regulation under the BHC Act and its examination and reporting requirements.
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to bank holding companies and provides certain
specific information relevant to Habersham and Security.

Bank holding companies and banks are extensively regulated under both
federal and state law. The following is a brief summary of certain statutes,
rules, and regulations affecting Habersham, Security and their respective
subsidiaries. This summary is qualified in its entirety by reference to the
particular statutory and regulatory provision referred to below and is not
intended to be an exhaustive description of the statues or regulations
applicable to Habersham's or Security's business. Supervision, regulation and
examination of Habersham and Security and their subsidiary banks by the bank
regulatory agencies are intended primarily for the protection of depositors
rather than Habersham or Security shareholders.

<PAGE> 87

BANK HOLDING COMPANY REGULATION

Habersham and Security (the "Companies") are registered holding
companies under the BHC Act and the Georgia Bank Holding Company Act (the
"Georgia BHC Act") and are regulated under such acts by the Federal Reserve and
by the DBF, respectively.

As bank holding companies, the Companies are required to file annual
reports with the Federal Reserve and the DBF and such additional information as
the applicable regulator may require pursuant to the BHC Act and the Georgia
BHC Act. The Federal Reserve and the DBF may also conduct examinations of the
Companies to determine whether they are in compliance with both BHC Acts and
the regulations promulgated thereunder.

The BHC Act also requires every bank holding company to obtain prior
approval from the Federal Reserve before acquiring direct or indirect ownership
or control of more than 5% of the voting shares of any bank which is not
already majority owned or controlled by that bank holding company. The Federal
Reserve is prohibited, however, from approving the acquisition by a bank
holding company of the voting shares of, or substantially all the assets of,
any bank located outside Georgia, unless such acquisition is specifically
authorized by the laws of the state in which the bank is located. Acquisition
of any additional banks would require prior approval from both the Federal
Reserve and the Georgia Department. Under current Georgia law, a holding
company is authorized to acquire ownership or control of additional banks in
Georgia, Alabama, the District of Columbia, Florida, Kentucky, Louisiana,
Maryland, Mississippi, North Carolina, South Carolina, Tennessee and Virginia
(collectively, the "Southeastern Compact"), provided such states enact
reciprocal legislation and 80% of the deposits of the holding company are
maintained in this region. As of December 31, 1994, reciprocal legislation was
in effect in all of the aforementioned states. Florida, Georgia, North
Carolina and Tennessee, however, have recently enacted legislation that will
remove such states from the Southeastern Compact and will permit national
interstate acquisitions by institutions located in Florida, Georgia, North
Carolina and Tennessee in states which also permit national interstate
acquisitions.

On March 16, 1994, the Georgia legislature adopted the "Georgia
Interstate Banking Act," which provides that Georgia will no longer be a member
of the Southeastern Compact, effective July 1, 1995. Instead, (i) interstate
acquisitions by institutions located in Georgia will be permitted in states
which also allow national interstate acquisitions, and (ii) interstate
acquisitions of institutions located in Georgia will be permitted by
institutions located in states which also allow national interstate
acquisitions; provided, however, that if the board of directors of a Georgia
bank or bank holding company adopts a resolution to except such bank or bank
holding company from being acquired pursuant to the provisions of the Georgia
Interstate Banking Act and properly files a certified copy of such resolution
with the Georgia Department, such Georgia bank or bank holding company may not
be acquired by an institution located outside of the State of Georgia.

In addition, the President of the United States signed into law the
"Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994" on
September 29, 1994 (the "Interstate Branching Act"). Under the Interstate
Branching Act, effective June 1, 1997, (i) the regulatory agency

<PAGE> 88

responsible for any acquiring bank or bank holding company may approve an
application by a bank to acquire a branch across state lines if both banks
involved are adequately capitalized and the responsible regulatory agency
determines that the resulting bank will continue to be adequately capitalized
and that management of the bank has the necessary management skills to manage
the extended operation, and (ii) a bank holding company which has subsidiaries
in more than one state may, with the approval of the Federal Reserve, combine
banks across state lines.

The BHC Act and the Georgia BHC Act further provide that the Federal
Reserve and the Georgia Department will not approve any acquisition, merger or
consolidation (i) which would result in a monopoly, (ii) which would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States, (iii) the
effect of which may be substantially to lessen competition or to tend to create
a monopoly in any section of the country or (iv) which in any other manner
would be in restraint of trade, unless the anticompetitive effects of the
proposed transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
community to be served.

In addition to having the right to acquire ownership or control of
other banks, a bank holding company is authorized to acquire ownership or
control of nonbanking companies, provided the activities of such companies are
so closely related to banking or managing or controlling banks that the Federal
Reserve considers such activities to be proper to the operation and control of
banks. Regulation Y, promulgated by the Federal Reserve, sets forth those
activities which are regarded as closely related to banking or managing or
controlling banks and, thus, are permissible activities for bank holding
companies, subject to approval by the Federal Reserve in individual cases.

Federal Reserve policy requires a bank holding company to act as a
source of financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank may
not be warranted. Under these provisions, a bank holding company may be
required to loan money to its subsidiaries in the form of capital notes or
other instruments which qualify for capital under regulatory rules. Any loans
by the holding company to such subsidiary banks are likely to be unsecured and
subordinated to such bank's depositors and perhaps to its other creditors.

FEDERAL SECURITIES LAWS

Habersham and Security are subject to various federal securities laws,
including the Securities Act of 1933 (the "1933 Act") and the Securities
Exchange Act of 1934 (the "1934 Act"). The 1933 Act regulates the distribution
or public offering of securities, while the 1934 Act regulates trading in
securities that are already issued and outstanding. Both Acts provide civil
and criminal penalties for misrepresentations and omissions in connection with
the sale of securities, and the 1934 Act also prohibits market manipulation and
insider trading.

<PAGE> 89

Pursuant to the 1934 Act, Habersham and Security file annual,
quarterly and current reports with the Securities and Exchange Commission. In
addition, Habersham and its directors, executive officers and 5% shareholders
are subject to certain additional reporting requirements, including
requirements governing the submission of proxy statements and reports of
beneficial ownership of the Company's securities.

BANK REGULATION

Habersham Bank and Security Bank (the "Banks") operate as banks
organized under the laws of the State of Georgia subject to examination by the
Georgia Department. The Georgia Department regulates all areas of each bank's
commercial banking operations including reserves, loans, mergers, payment of
dividends, interest rates, establishment of branches, and other aspects of
operations.

The Banks are also insured and regulated by the Federal Deposit
Insurance Corporation (the "FDIC"). The major functions of the FDIC with
respect to insured banks include paying depositors to the extent provided by
law in the event an insured bank is closed without adequately providing for
payment of the claims of depositors, acting as a receiver of state banks placed
in receivership when so appointed by state authorities, and preventing the
continuance or development of unsound and unsafe banking practices. In
addition, the FDIC is authorized to examine insured banks which are not members
of the Federal Reserve to determine the condition of such banks for insurance
purposes. The FDIC also approves conversions, mergers, consolidations and
assumption of deposit liability transactions between insured banks and
noninsured banks or institutions to prevent capital or surplus diminution in
such transactions where the resulting, continued or assumed bank is an insured
non-member state bank.

Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the BHC Act on any extension of credit to the bank
holding company or any of its subsidiaries, on investment in the stock or other
securities of the bank holding company or its subsidiaries, and on the taking
of such stock or securities as collateral for loans to any borrower. In
addition, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit or provision of any property or services.

Under Georgia law, a bank must obtain the approval of the Georgia
Department before cash dividends may be paid if (i) the total classified assets
at the most recent examination of such bank exceeded 80% of the equity capital,
(ii) the aggregate amount of dividends declared or anticipated to be declared
in the calendar year exceeds 50% of the net profits, after taxes but before
dividends, for the previous calendar year or (iii) the ratio of equity capital
to adjusted assets is less than 6%.

The Banks are also subject to the provisions of the Community
Reinvestment Act of 1977, which requires the FDIC, in connection with its
regular examination of a bank, to assess the bank's record in meeting the
credit needs of the communities served by the bank, including low- and
moderate-income neighborhoods.

<PAGE> 90

CAPITAL REQUIREMENTS

Regulatory agencies measure capital adequacy with a framework that
makes capital requirements sensitive to the risk profile of the individual
banking institutions. The guidelines define capital as either Tier 1 or Core
capital (primarily shareholders equity) or Tier 2 capital (certain debt
instruments and a portion of the reserve for loan losses). There are two
measures of capital adequacy for bank holding companies and their subsidiary
banks: the leverage ratio and the risk-based capital requirements. Bank
holding companies and their subsidiary banks must maintain a minimum Tier 1
leverage ratio of 4%. In addition, Tier 1 capital must equal 4% of
risk-weighted assets, and total capital (Tier 1 plus Tier 2) must equal 8% of
risk-weighted assets. These are minimum requirements, however, and
institutions experiencing internal growth or making acquisitions, as well as
institutions with supervisory or operational weaknesses, will be expected to
maintain capital positions well above these minimum levels.

PROMPT CORRECTIVE ACTION

The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDIC Act") imposes a regulatory matrix which requires the federal banking
agencies to take prompt corrective action to deal with depository institutions
that fail to meet their minimum capital requirements or are otherwise in a
troubled condition. The prompt corrective action provisions require
undercapitalized institutions to become subject to an increasingly stringent
array of restrictions, requirements and prohibitions, as their capital levels
deteriorate and supervisory problems mount. Should these corrective measures
prove unsuccessful in recapitalizing the institution and correcting its
problems, the FDIC Act mandates that the institution be placed in receivership.

Pursuant to regulations promulgated under the FDIC Act, the corrective
actions that the banking agencies either must or may take are tied primarily to
an institution's capital levels. In accordance with the framework adopted by
the FDIC Act, the banking agencies have developed a classification system,
pursuant to which all banks and thrifts will be placed into one of five

<PAGE> 91

categories: well-capitalized institutions, adequately capitalized
institutions, undercapitalized institutions, significantly undercapitalized
institutions and critically undercapitalized institutions. The capital
thresholds established for each of the categories are as follows:

<TABLE>
<CAPTION>
========================================================================================================
Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
=========================================================================================================
<S> <C> <C> <C> <C>
Well Capitalized 5% or more 10% or more 6% or more Not subject
to a capital
directive

Adequately 4% or more 8% or more 4% or more --
Capitalized

Undercapitalized less than 4% less than 8% less than 4% --

Significantly less than 3% less than 6% less than 3% --
Undercapitalized

Critically 2% or less -- -- --
Undercapitalized tangible equity
</TABLE>

The undercapitalized, significantly undercapitalized and critically
undercapitalized categories overlap; therefore, a critically undercapitalized
institution would also be an undercapitalized institution and a significantly
undercapitalized institution. This overlap ensures that the remedies and
restrictions prescribed for undercapitalized institutions will also apply to
institutions in the lowest two categories.

An institution that falls into any of the three undercapitalized
categories automatically becomes subject to a number of supervisory sanctions,
which, among other things, (1) require the institution to submit a capital
restoration plan within forty-five (45) days after becoming undercapitalized;
(2) prohibit growth in the institution's average total assets from quarter to
quarter, unless its capital plan has been accepted and the increase in assets
is consistent with the plan and its capital levels are increasing at a rate
that will enable it to become adequately capitalized within a reasonable time;
and (3) prohibit the institution from making any acquisition, opening any
branch office or engaging any new line of business, unless its capital plan has
been accepted, the institution is in compliance with its plan, and the proposed
action has been approved by the appropriate banking agency and the FDIC.

The down-grading of an institution's category is automatic in two
situations: (1) whenever an otherwise well-capitalized institution is subject
to any written capital order or directive, and (2) where an undercapitalized
institution fails to submit or implement a capital restoration plan or has its
plan disapproved. The federal banking agencies may treat institutions in the
well-capitalized, adequately capitalized and undercapitalized categories as if
they were in the next lower capital level based on safety and soundness
considerations relating to factors other than capital levels.

<PAGE> 92

All insured institutions regardless of their level of capitalizations
are prohibited by the FDIC Act from paying any dividend or making any other
kind of capital distribution or paying any management fee to any controlling
person if following the payment or distribution the institution would be
undercapitalized. While the prompt corrective action provisions of the FDIC
Act contain no requirements or restrictions aimed specifically at adequately
capitalized institutions, other provisions of the FDIC Act and the agencies'
regulations relating to deposit insurance assessments, brokered deposits, and
interbank liabilities treat adequately capitalized institutions less favorably
than those that are well-capitalized.

The FDIC has adopted or currently proposes to adopt other rules
pursuant to the FDIC Act that include: (1) real estate lending standards for
banks, which would provide guidelines concerning loan-to-value ratios for
various types of real estate loans; (2) revision to the risk-based capital
rules to account for interest rate risk, concentration of credit risk and the
risks proposed by "non-traditional activities"; (3) rules requiring depository
institutions to develop and implement internal procedures to evaluate and
control credit and settlement exposure to their correspondent banks; (4) a rule
restricting the ability of depository institutions that are not well
capitalized from accepting brokered deposits; (5) rules addressing various
"safety and soundness" issues, including operations and managerial standards
for asset quality, earnings and stock valuations, and compensation standards
for the officers, directors, employees and principal shareholders of the
depository institutions; (6) rules mandating enhanced financial reporting and
audit requirements; and (7) rules restricting the ability of a state bank, or a
subsidiary thereof, to engage as principal in activities not permissible for a
national bank or make any investment not permissible for a national bank.

AUDIT AND REPORTING REQUIREMENTS

Effective January 1, 1993, all insured depository institutions having
total assets of $150 million or greater must be audited annually by independent
public accountants. In addition to certifying financial statements, the
auditor must attest to a report prepared by the institution's management on
matters including internal control structures and compliance with safety and
soundness requirements. The auditor must also report separately on these
matters. If an auditor subsequently ceases to be the depository institution's
accountant, both the auditor and the institution must notify the FDIC. Insured
depository institutions also must establish audit committees composed entirely
of outside directors independent of the institution's management.

In the case of a depository institution that is a subsidiary of a
holding company, most of these FDIC requirements may be satisfied if services
and functions comparable to those required under the FDIC Act are provided at
the holding company level and the depository institution meets certain other
qualifications, including having a rating from its primary regulator of "1" or
"2" on its most recent examination.

In addition, management is required to make annual reports on its
responsibility for preparing financial statements and establishing and
maintaining an internal control structure for financial reporting and
compliance.

As of December 31, 1994, Habersham Bank had total consolidated assets
of more than $150 million and Security Bank had total consolidated assets of
less than $150 million.

<PAGE> 93

FAIR LENDING

Effective April 15, 1994, ten federal agencies, including the federal
bank agencies, issued an "Interagency Policy Statement on Discrimination in
Lending" to provide guidance on what may be considered discrimination in the
offering of housing credit. The policy statement applies to all financial
institutions and sets forth three bases for discrimination cases: (i) overt
discrimination, (ii) disparate treatment (treating credit applicants
differently because of race or one of the other prohibited factors), and (iii)
disparate impact (neutral policies that have a discriminatory effect not
justified by business necessity).

ANTI-TYING RESTRICTIONS EASED

The Federal Reserve has adopted amendments to Regulation Y that allow
a bank or bank holding company to offer a discount on traditional bank products
(loans, deposits, trust services, etc.) and securities brokerage services
without violating anti-tying restrictions. This exemption from the anti-tying
provisions is conditioned on (1) the customer's obtaining a traditional bank
product from an affiliate, and (2) the traditional bank or brokerage product's
being available separately to customers.

In addition, the Federal Reserve has adopted amendments to Regulation
Y that permit a bank holding company or its nonbank subsidiary to offer a
discount on its product or service on condition that a customer obtain any
other product or service from that company or from any of its nonbank
affiliates. These amendments generally remove Federal Reserve-imposed
restrictions on tying when no bank is involved in the arrangement and the
products are separately available for purchase by the customer.

COMMUNITY DEVELOPMENT AND REGULATORY IMPROVEMENT

The Riegle Community Development and Regulatory Improvement Act became
effective on September 23, 1994. The Act reduces much of the red-tape with
which insured banks and thrifts have had to contend and facilitates the
establishment of community development financial institutions.

The Act provides for more than 50 means of reducing the current
administrative requirements imposed by previously enacted legislation. Among
the regulatory relief provisions are the following:

(1) Coordinated Exams. Federal and state regulators must coordinate their
exams and develop a system for naming a lead agency to conduct a
unified exam.

(2) Exam Schedules Extended. All CAMEL 1 banks under $250 million in
assets and CAMEL 2 banks under $100 million will be examined every 18
months rather than every year.

(3) Audit Requirements. Holding companies with less than $5 billion in
assets, and CAMEL 1 or 2-rated institutions with more than $5 billion
in assets, may satisfy the FDIC Act audit requirements with a
consolidated holding company audit.

<PAGE> 94

(4) Guidelines vs. Rules. Regulators may now issue guidelines -- instead
of rules -- for asset quality, earnings and stock valuations. Holding
companies will be exempt from these standards.

(5) Capital Rules. Regulators must take into account the size and
activities of a bank in issuing capital rules on interest rate risk,
concentration of credit risk and nontraditional activities risk.

(6) Loans to Insiders. Certain extensions of credit to insiders will not
require the prior approval of the board of directors, and current
lending limits to insiders will be less restrictive if the insider
does not participate in policy-making for the bank.

(7) Holding Company Activities. The Act will streamline the application
process for bank holding company formations, reorganizations and new
activity requests.

(a) Applications and Notices. The Act requires the regulatory
agencies to work together to eliminate overlapping or
unnecessary information requested in the application process
and to harmonize publication and notice requirements. The
bank regulatory agencies must take final action on
applications within a year of receiving a completed
application, unless the applicant waives this limit.

(b) Competitive Factors of Mergers. Under the Act, if the Federal
Reserve or the FDIC has not received any adverse comments from
the Justice Department regarding the competitive factors of
the merger, bank holding companies need wait only 15 days
after approval to complete a merger transaction. In addition,
reports on the competitive effects of merger transactions will
not be required if the responsible regulatory agency informs
the other agencies involved before the applicable date that
the report is not necessary.

(c) New Activities. Bank holding companies must provide at least
60 days' notice before engaging in a non-banking activity or
acquiring shares or control of a company that engages in
non-banking activities.

The Act also provides for the establishment of a Community Development
Financial Institutions Fund, which will have $382 million in funding available
over four years. The Fund may provide financial assistance through equity
investments, deposits, credit union shares, grants and technical assistance to
a Community Development Financial Institution ("CDFI"). However, the Fund may
not own more than 50% of the equity of a CDFI and cannot control its
operations. Furthermore, if the Fund deposits money in a CDFI, it may not
require collateral or security. A CDFI is any entity with the primary mission
of promoting community development, serving an investment area or targeted
population, that provides development services or equity investments and loans
through an affiliate or community partnership. One-third of the $382 million
authorized for CDFI is earmarked for the Bank Enterprise Act, under which banks
could receive a 5% to 15% rebate on their deposit insurance premiums for their
community development work in low- to moderate-income neighborhoods.

<PAGE> 95

Additionally, the Act provides for new consumer protections with
respect to high cost mortgages, i.e., credit transactions secured by the
consumer's home (such as a second mortgage or home equity loan), with an annual
percentage yield 10 points higher than Treasury securities of comparable
maturity or with total points and fees that exceed 8% of the loan amount or
$400.

Furthermore, the Act amends securities, banking, pension and tax laws
to encourage securitization of small business loans and the development of a
secondary market for pools of such loans. Federally chartered banks, thrifts,
credit unions and federal- or state-chartered government corporations will be
permitted to invest in these small business related securities. Institutions
that are well-capitalized (or adequately capitalized, with regulatory
permission) will qualify for favorable accounting, reserve, and capital
treatment of small business loans sold into the secondary market.

Finally, lenders may participate in capital access programs, designed
to encourage lenders to make loans to small- and medium-sized businesses. For
each loan enrolled in the program, the borrower and lender pay a premium into a
loan loss reserve fund, and the state matches that contribution. Participating
lenders assume the risk of loss on their loans, if the losses exceed the total
contributions in the reserve fund. Federal funds of up to $50 million are
authorized to match state contributions to these programs.

INTERSTATE BANKING AND BRANCHING

The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, which took effect on September 29, 1994, greatly broadens the scope of
permissible interstate banking. The following are highlights of the Act:

(1) Acquisitions by Holding Companies. The Act authorizes a bank holding
company or a foreign bank, one year after the Act is signed into law,
to acquire a bank holding company or bank located in any state upon
approval of the Federal Reserve Board. State banks will not be able
to "opt out" of interstate banking.

(2) State Prohibitions Against Interstate Branching. The Act allows
states to enact laws by June 1, 1997, prohibiting all out-of-state
banks from acquiring a branch in that state. A national bank whose
home state has "opted out" may not acquire or establish a branch
located in any other state.

(3) De Novo Branches. The Act prohibits a bank from establishing a de
novo branch in a host state unless the host state adopts a law
permitting all out-of-state banks to establish de novo branches.

(4) Time Periods for Bank Acquisitions. The Act upholds state laws that
establish a time period for which an in-state bank must be in
existence before an out-of-state bank or bank holding company may
acquire it.

(5) Anti-Trust Provision. The Act prohibits an acquirer from controlling
more than 10% of the insured deposits nationwide or 30% of the
deposits in the state after the acquisition is completed.

<PAGE> 96

(6) Regulatory Approval. Beginning June 1, 1997, the regulatory agency
responsible for an acquiring bank or bank holding company may approve
an application by a bank to acquire a branch across state lines if:

(a) each bank involved is adequately capitalized, and

(b) the responsible regulatory agency determines that the
resulting bank will continue to be adequately capitalized and
that the management of the bank has the necessary management
skills to manage the extended operation.

(7) Combination of Banks. Beginning June 1, 1997, a bank holding company
which has bank subsidiaries in more than one state may, with the
approval of the Federal Reserve Board, combine banks across state
lines.

(8) Community Reinvestment. Under the Act, national bank branches are
subject to state laws in the areas of community reinvestment, consumer
protection, fair lending, and intrastate branching.

(9) Branch Closings. The Act requires regulators to consult with
community organizations before permitting an interstate institution to
close a branch in a low-income area.

FUTURE REQUIREMENTS

Statute and regulations are regularly proposed which contain
wide-ranging proposals for altering the structures, regulations, and
competitive relationships of the nation's financial institutions. It cannot be
predicted whether or what form any proposed statute or regulation will be
adopted or the extent to which the business of the Companies may be affected by
such statute or regulation.

EXPERTS

The consolidated financial statements of Habersham at December 31,
1994 and 1993, and for each of the three years in the period ended December 31,
1994, included in this Proxy Statement/Prospectus, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report
appearing herein and have been so included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Security at December 31, 1994
and for each of the three years then ended, appearing elsewhere in this Proxy
Statement/Prospectus, have been audited by Joseph Decosimo and Company,
independent auditors, as set forth in their report thereon included herein in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.

<PAGE> 97

LEGAL MATTERS

The legality of the shares of Habersham Common Stock being offered
hereby is being passed upon for Habersham by Powell, Goldstein, Frazer &
Murphy, Atlanta, Georgia.

Powell, Goldstein, Frazer & Murphy, Atlanta, Georgia, counsel for
Habersham, will opine as to certain federal income tax consequences of the
Merger. See "THE MERGER -- Certain Federal Income Tax Consequences."

OTHER MATTERS

As of the date of this Proxy Statement/Prospectus, Security's Board of
Directors knows of no matters that will be presented for consideration at the
Special Meeting other than as described in this Proxy Statement/Prospectus.
However, if any other matter shall come before the Special Meeting or any
adjournments or postponements thereof and shall be voted upon, the proposed
proxy will be deemed to confer authority to the individuals named as authorized
therein to vote the shares represented by such proxy as to any such matters
that fall within the purposes set forth in the Notice of Special Meeting as
determined by a majority of the Board of Directors.

<PAGE> 98

HABERSHAM BANCORP
HISTORICAL FINANCIAL STATEMENTS

<PAGE> 99
INDEPENDENT AUDITORS' REPORT

Habersham Bancorp,
Its Shareholders and Directors:

We have audited the accompanying consolidated balance sheets of Habersham
Bancorp and its subsidiaries (the "Company") as of December 31, 1994 and 1993,
and the related consolidated statements of income, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and its subsidiaries
at December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles.

As discussed in the notes to the consolidated financial statements, in 1993 the
Company changed its methods of accounting for income taxes and investment
securities.

DELOITTE & TOUCHE LLP

Atlanta, Georgia
January 27, 1995

89
<PAGE> 100
HABERSHAM BANCORP
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993

<TABLE>
<CAPTION>
1994 1993
------------- -------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 4,450,912 $ 4,125,961
Federal funds sold 1,020,000 3,944,000
Investment securities available
for sale, at market value (Note 3) 28,529,679 23,953,213

Investment securities held to maturity, at cost
(estimated market value of $21,092,769 in
1994 and $18,777,353 in 1993 (Note 4) 21,619,504 18,160,786

Loans (Notes 5 and 13) 100,848,483 104,154,099
Less: Unearned income (45,338) (74,959)
Allowance for loan losses (Note 5) (1,744,335) (1,601,902)
-------------- -------------
Loans, net 99,058,810 102,477,238

-------------- -------------
Premises and equipment, net (Note 6) 2,947,889 3,362,505
Interest receivable 1,346,942 1,336,574
Other assets 2,353,248 1,496,014

-------------- --------------
TOTAL ASSETS $ 161,326,984 $ 158,856,291

============== =============
LIABILITIES

Deposits (Note 13)
Demand $ 17,100,436 $ 13,565,089
Money market and NOW accounts 33,653,457 33,459,658
Savings 5,504,444 5,162,956
Time ($100,000 and over) 21,165,754 22,260,745
Other time 64,191,404 64,010,552

-------------- -------------
Total Deposits 141,615,495 138,459,000
Short-term borrowings (Note 7) 1,001,742 1,259,424
Other borrowings (Note 7) 1,500,000 2,500,000
Accrued interest payable 1,000,104 951,050
Other liabilities 359,056 140,511

-------------- -------------
TOTAL LIABILITIES 145,476,397 143,309,985

-------------- -------------
SHAREHOLDERS' EQUITY (Notes 9 and 13)

Common stock, $2.50 par value, 1,000,000 shares
authorized; 350,000 shares issued 875,000 875,000
Additional paid-in capital 3,321,028 3,300,000
Retained earnings 13,110,034 11,584,709
Unrealized gain (loss) on investment securities
available for sale (1,013,344) 325,184
Treasury stock, at cost (442,131) (538,587)
-------------- -------------
SHAREHOLDERS' EQUITY -- NET 15,850,587 15,546,306

-------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 161,326,984 $ 158,856,291
============= =============
</TABLE>

See notes to consolidated financial statements.

90
<PAGE> 101

HABERSHAM BANCORP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME

Loans $ 9,580,514 $10,043,542 $10,705,048
Investments:
U.S. Treasury and Government agencies 1,531,470 1,031,171 1,788,165
States and political subdivisions
(exempt from federal income tax) 1,056,133 1,010,857 1,024,803
Other investment securities 136,920 172,818 200,273
Federal funds sold 129,640 71,705 104,641
----------- ----------- -----------
TOTAL INTEREST INCOME 12,434,677 12,330,093 13,822,930
----------- ----------- -----------
INTEREST EXPENSE

Time deposits, $100,000 and over 947,826 1,027,779 1,949,457
Other deposits 3,750,020 3,591,770 4,548,754
Short-term and other borrowings 103,086 58,058 29,847
----------- ----------- -----------
TOTAL INTEREST EXPENSE 4,800,932 4,677,607 6,528,058
----------- ----------- -----------
NET INTEREST INCOME 7,633,745 7,652,486 7,294,872
Provision for loan losses (Note 5) 208,096 249,765 566,000
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 7,425,649 7,402,721 6,728,872
----------- ----------- -----------
NON INTEREST INCOME

Service charges on deposit accounts 430,211 426,088 393,787
Other service charges and commissions 232,887 224,532 261,669
Securities gains, net 25,128 205,551
Other income 518,889 267,207 187,732
----------- ----------- -----------
TOTAL NON INTEREST INCOME 1,207,115 917,827 1,048,739
----------- ----------- -----------
NON INTEREST EXPENSE

Salaries and employee benefits (Note 10) 3,152,261 3,053,726 2,992,255
Occupancy expenses 460,268 447,818 499,639
Furniture and equipment expenses 447,983 466,997 403,311
Data processing 179,421 226,285 204,312
Other operating expenses (Note 11) 2,379,972 2,135,118 1,981,309
----------- ----------- -----------
TOTAL NON INTEREST EXPENSE 6,619,905 6,329,944 6,080,826
----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 2,012,859 1,990,604 1,696,785
Provision for income taxes (Note 8) 354,474 345,886 286,288
INCOME BEFORE CUMULATIVE EFFECT OF ----------- ----------- -----------
CHANGE IN ACCOUNTING PRINCIPLE 1,658,385 1,644,718 1,410,497

Cumulative effect of change in accounting principle (Note 8) (87,000)
----------- ----------- -----------

NET INCOME $ 1,658,385 $ 1,557,718 $ 1,410,497
=========== =========== ===========
PER COMMON AND COMMON EQUIVALENT SHARE:
Income before cumulative effect of change in accounting
principle $ 4.91 $ 4.92 $ 4.24
Cumulative effect of change in accounting principle (Note 8) (.26)
----------- ----------- -----------
NET INCOME PER SHARE (Note 9) $ 4.91 $ 4.66 $ 4.24
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING (Note 9) 337,959 334,413 332,734
=========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

<PAGE> 102

HABERSHAM BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, 1993 and 1992

<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Net income $ 1,658,385 $ 1,557,718 $ 1,410,497
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 208,096 249,765 566,000
Provision for other real estate 120,000 19,988 31,281
Depreciation and amortization 509,334 540,635 465,824
Cumulative effect of change in accounting principle 87,000
Loss (gain) on sale of premises and equipment 1,040 (195)
Gain on sale of securities (25,128) (205,551)
Gain on sale of other real estate (103,830)
Changes in assets and liabilities
(Increase) decrease in interest receivable (10,368) 66,226 309,162
(Increase) decrease in other assets (182,201) 46,355 (100,931)
Increase (decrease) in interest payable 49,054 (206,707) (554,524)
Increase (decrease) in other liabilities 218,545 (111,820) (786,957)
----------- ----------- -----------
Net cash provided by operating activities 2,442,927 2,249,160 1,134,606
----------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities available for sale:
Proceeds from maturity 6,440,949 9,299,503 16,063,258
Proceeds from sales 4,212,461 14,383,467
Purchases (17,232,821) (18,394,548) (19,992,301)
Investment securities held to maturity:
Proceeds from maturity 2,522,864
Purchases (5,981,582)
Net decrease (increase) in loans 3,045,041 1,214,619 (864,751)
Purchases of premises and equipment (143,525) (430,546) (615,999)
Proceeds from sale of premises and equipment 47,767 17,275
Proceeds from sale of other real estate 163,633 228,449 16,888
----------- ----------- -----------
Net cash used in investing activities (6,925,213) (8,082,523) 9,007,837
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase (decrease) in deposits 3,156,495 4,008,441 (9,780,987)
Net increase (decrease) in short-term borrowings (257,682) 190,875 306,063
Advances from Federal Home Loan Bank (1,000,000) 2,500,000
Purchase of treasury stock (606,548)
Proceeds from sale of treasury stock 117,484 86,047 69,843
Cash dividends (133,060) (132,520) (122,953)
----------- ----------- -----------
Net cash provided by (used in) financing activities 1,883,237 6,652,843 (10,134,582)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents (2,599,049) 819,480 7,861

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,069,961 7,250,481 7,242,620
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,470,912 $ 8,069,961 $ 7,250,481
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 4,659,814 $ 4,884,605 $ 7,082,582
Income taxes 367,089 343,697 468,376

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING
ACTIVITY:
Other real estate acquired through loan foreclosures $ 290,495 $ 30,989
Loans granted to facilitate the sale of other real estate 125,204 $ 600,100 351,000
Unrealized gain (loss) on investment securities
available for sale, net of tax effect (1,338,528) 325,184
</TABLE>

See notes to consolidated financial statements.

92
<PAGE> 103

HABERSHAM BANCORP
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
UNREALIZED GAIN (LOSS) ON
INVESTMENT
ADDITIONAL SECURITIES
COMMON PAID IN RETAINED AVAILABLE FOR TREASURY
STOCK CAPITAL EARNINGS SALE STOCK
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $875,000 $3,300,000 $ 8,873,859 $ $ (89,821)
Net income 1,410,497
Cash dividends, $.375 per
share (122,953)
Purchase of 20,396 shares of
Treasury Stock (606,548)
Sale of 2,423 shares of
Treasury Stock (1,892) 71,735
-------- ---------- ----------- ----------- ---------
Balance at December 31, 1992 875,000 3,300,000 10,159,511 (624,634)
Net income 1,557,718
Cash dividends, $.40 per share (132,520)
Sale of 2,330 shares of
Treasury Stock 86,047
Unrealized gain on investment
securities available for sale 325,184
-------- ---------- ----------- ----------- ---------
Balance at December 31, 1993 875,000 3,300,000 11,584,709 325,184 (538,587)
Net income 1,658,385
Cash dividends, $.40 per share (133,060)
Sale of 3,348 shares of
Treasury Stock 21,028 96,456
Unrealized loss on investment (1,338,528)
securities available for sale -------- ---------- ----------- ----------- ---------
Balance at December 31, 1994 $875,000 $3,321,028 $13,110,034 $(1,013,344) $(442,131)
======== ========== =========== =========== =========
</TABLE>

See notes to consolidated financial statements.

<PAGE> 104
HABERSHAM BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994, 1993 and 1992

1. ORGANIZATION AND BASIS OF PRESENTATION

The consolidated financial statements of Habersham Bancorp (the
"Company") include the financial statements of Habersham Bank (the "Bank")
and The Advantage Group, Inc., which are wholly-owned subsidiaries of the
Company. All intercompany transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of the Company conform with
generally accepted accounting principles and with general practice within
the banking industry. The following is a summary of the more significant
accounting policies:

CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, cash and cash equivalents
include cash on hand, amounts due from banks and federal funds sold.

INVESTMENT SECURITIES AVAILABLE FOR SALE
At December 31, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." Accordingly, the Company classified
certain additional investments as available for sale. Investments
available for sale are carried at market value. The related unrealized
gain (loss), net of tax, is included as a separate component of
shareholders' equity. Gains and losses from dispositions are based on the
net proceeds and the adjusted carrying amounts of the securities sold,
using the specific identification method.

INVESTMENT SECURITIES HELD TO MATURITY
Investment securities held to maturity are stated at cost, adjusted for
amortization of premiums and accretion of discounts which are recognized
as adjustments to interest income. The Company has the intent and ability
to hold these investment securities to maturity.

ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level considered
adequate to provide for potential losses in the loan portfolio. Management
determines the adequacy of the allowance based upon reviews of individual
loans, recent loss experience, current economic conditions, the risk

94
<PAGE> 105
characteristics of the various categories of loans and other pertinent
factors. Loans deemed uncollectible are charged to the allowance.
Provisions for loan losses and recoveries on loans previously charged off
are added to the allowance.

OTHER REAL ESTATE OWNED
Other real estate owned includes real estate acquired through
foreclosure. Other real estate owned is carried at the lower of its
recorded amount at date of foreclosure or fair value. Any expense
incurred in connection with holding such real estate or resulting from any
write-downs subsequent to foreclosure is included in other non interest
expense.

PREMISES AND EQUIPMENTS
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using primarily the straight-line
method over the estimated useful lives of the assets.

INTEREST INCOME ON LOANS
Interest on loans is recorded generally over the term of the loan based
on the unpaid principal balance. Accrual of interest is discontinued when
either principal or interest becomes 90 days past due, or when in
management's opinion, collectibility of such interest is doubtful.

LOAN ORIGINATION FEES AND COSTS
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield on the related
loan.

INCOME TAXES
Provisions for income taxes are based upon amounts reported in the
statements of income (after exclusion of non taxable income such as
interest on state and municipal securities) and include deferred taxes on
temporary differences between financial statement and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse.

EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of
common and common equivalent shares outstanding during the year.

ACCOUNTING PRONOUNCEMENT
Statement of Financial Accounting Standards ("SFAS") No. 114, entitled
"Accounting by Creditors for Impairment of a Loan" as amended by SFAS No.
118 is not expected to have a significant effect on the consolidated
financial statements when the Statement is adopted as of January 1, 1995.

95
<PAGE> 106
RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 and 1992 financial
statements to conform to the 1994 presentation.

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

Amortized cost, estimated market values and gross unrealized gains and
losses of investment securities available for sale are as follows:

<TABLE>
<CAPTION>
Gross Unrealized Estimated
Amortized ----------------- Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
December 31, 1994:
U.S. Treasury ...... $ 5,833,003 $ 161,323 $ 5,671,680
U.S. Government
agencies ......... 18,399,626 $ 47 1,378,571 17,021,102
States and political
subdivisions ..... 5,082,420 124,952 15,203 5,192,169
Other investments .. 750,000 105,272 644,728
----------- -------- ---------- -----------
$30,065,049 $124,999 $1,660,369 $28,529,679
=========== ======== ========== ===========

December 31, 1993:
U.S. Treasury ...... $ 2,646,674 $ 11,319 $ 2,657,993
U.S. Government
agencies ......... 14,050,692 150,338 $ 83,977 14,117,053
States and political
subdivisions ..... 5,263,750 439,018 5,702,768
Other investments .. 1,499,394 11,984 35,979 1,475,399
----------- -------- -------- -----------
$23,460,510 $612,659 $119,956 $23,953,213
=========== ======== ======== ===========

</TABLE>

During 1994, there were realized gains of $37,664 and realized losses
of $12,536 from sales of securities. During 1993, there were no sales of
securities.

The amortized cost and estimated market values of securities available
for sale at December 31, 1994, by contractual maturity, are shown as
follows. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties. Callable securities and
mortgage-backed securities are included in the year of their final
original maturity. Equity investments are included in the due after ten
years category.

96
<PAGE> 107

<TABLE>
<CAPTION>
Estimated
Amortized Cost Market Value
<S> <C> <C>
Due in one year or less................. $ 2,310,830 $ 2,274,426
Due after one year through five years... 18,274,026 17,459,614
Due after five years through ten years.. 6,353,103 5,721,890
Due after ten years..................... 3,127,090 3,073,749
----------- -----------
Total................................... $30,065,049 $28,529,679
=========== ===========
</TABLE>

Securities available for sale with market value of approximately
$10,689,270 were pledged as collateral at December 31, 1994 for public
deposits and other deposits, as required by law.

4. INVESTMENT SECURITIES HELD TO MATURITY

Amortized cost, estimated market values and gross unrealized gains and
losses of investment securities held to maturity are as follows:

<TABLE>
<CAPTION>
Gross Unrealized Estimated
Amortized ----------------- Market
December 31, 1994: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury .......... $ 198,698 $ 3,760 $ 194,938
U.S. Government
agencies............... 5,724,080 $ 8,215 344,909 5,387,386
States and political
subdivisions........... 13,176,349 158,482 344,763 12,990,068
Other investments....... 2,520,377 2,520,377
----------- -------- -------- -----------
Total................. $21,619,504 $166,697 $693,432 $21,092,769
=========== ======== ======== ===========

December 31, 1993:

U.S. Government
agencies............... $ 4,660,364 $ 26,165 $ 52,614 $ 4,633,915
States and political
subdivisions........... 11,890,243 653,175 10,159 12,533,259
Other investments....... 1,610,179 1,610,179
----------- --------- -------- -----------
Total................. $18,160,786 $ 679,340 $ 62,773 $18,777,353
=========== ========= ======== ===========
</TABLE>

The amortized cost and estimated market values of securities held to
maturity at December 31, 1994, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties. Callable securities and mortgage-backed
securities are included in the year of their final original maturity.
Equity investments are included in the due after ten years category.

97
<PAGE> 108
<TABLE>
<CAPTION>
Estimated
Amortized Cost Market Value
<S> <C> <C>
Due in one year or less................. $ 3,482,904 $ 3,438,992
Due after one year through five years... 11,704,209 11,400,033
Due after five years through ten years.. 4,139,733 3,977,565
Due after ten years..................... 2,292,658 2,276,179
----------- ------------
Total................................... $21,619,504 $ 21,092,769
=========== ============
</TABLE>

Securities held to maturity with market value of approximately
$7,855,621 were pledged as collateral at December 31, 1994 for public
deposits and other deposits, as required by law.

5. LOANS

At December 31, 1994 and 1993, loans are summarized as follows:

<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Real Estate:
Construction......................... $ 5,564,753 $ 5,112,344
Other................................ 68,992,708 68,830,196
Commercial............................. 13,170,219 17,044,658
Installment............................ 12,637,913 11,204,998
Other.................................. 482,890 1,961,903
------------ ------------
Total.............................. $100,848,483 $104,154,099
============ ============
</TABLE>

Changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Balance, January 1.............. $1,601,902 $1,703,592 $ 1,265,939
Provision for loan losses....... 208,096 249,765 566,000
Loans charged off............... (125,144) (376,427) (157,328)
Recoveries...................... 59,481 24,972 28,981
---------- ---------- ------------
Balance, December 31............ $1,744,335 $1,601,902 $ 1,703,592
========== ========== ============
</TABLE>

Nonaccrual loans and restructured loans totaled $1,887,612 and
$1,933,412 at December 31, 1994 and 1993, respectively. Interest income
that would have been recorded on nonaccrual loans and restructured loans
in accordance with their original terms totaled $181,640 in 1994 and
$170,235 in 1993, compared with amounts recognized of $132,884 and
$99,244, respectively.

98
<PAGE> 109
At December 31, 1993, the outstanding principal balance of loans sold
with recourse totaled $255,811. There were no loans sold with recourse at
December 31, 1994.

The Company is a party to financial instruments with off-balance-sheet
risk in the normal course of its lending activities to meet the financing
needs of its customers. These financial instruments include commitments
to extend credit and standby letters of credit. 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 and standby letters
of credit is represented by the contractual amount of those instruments.
The Company uses the same credit policies in making these commitments as
it does for on-balance-sheet instruments and evaluates each customer's
creditworthiness on a case-by-case basis. At December 31, 1994, the
Company had outstanding loan commitments of $10,614,313 and standby
letters of credit of $4,580,341. The amount of collateral obtained, if
deemed necessary, for these commitments by the Company, upon extension of
credit, is based on management's credit evaluation of the customer.
Collateral held, if any, varies but may include inventory, equipment, real
estate, or other property. As of December 31, 1994, the Bank's loans to
customers for agribusiness purposes in the poultry industry were
approximately $22 million.

6. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Land.......................... $ 233,750 $ 233,750
Buildings..................... 2,956,097 2,956,097
Furniture and equipment....... 2,799,730 3,548,658
---------- ----------
Total....................... 5,989,577 6,738,505
Less accumulated depreciation 3,041,688 3,376,000
---------- ----------
Premises and equipment, net... $2,947,889 $3,362,505
========== ==========
</TABLE>

Habersham Bank has entered into lease agreements for equipment through
1999. Approximate minimum rentals under noncancellable operating leases
are as follows:

Rental expense was approximately $85,939 in 1994, $108,000 in 1993 and
$55,000 in 1992.

99
<PAGE> 110
7. SHORT-TERM AND OTHER BORROWINGS

Short-term borrowings of $1,001,742 and $1,259,424 at December 31, 1994
and 1993, respectively, consist of customers' deposits of withholding
taxes held for the U. S. Treasury on a note option basis and bear interest
at 1/4 of 1% less than the federal funds rate.

Other borrowings at December 31, 1994 consist of a $1,500,000 Federal
Home Loan Bank advance with an adjustable rate using three months' LIBOR
minus eleven basis points. Other borrowings at December 31, 1993 consist
of a $1,000,000 Federal Home Loan Bank advance bearing interest at 3.65%
and $1,500,000 with an adjustable rate using three months' LIBOR minus
eleven basis points.

The average interest rates for other borrowings during 1994 and 1993
were 4.13% and 3.48%, respectively. The advance at December 31, 1994
matures in 1996.

8. INCOME TAXES

Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." Previously, the Company had accounted for
its income tax expense in accordance with Accounting Principles Board
Opinion No. 11. SFAS No. 109 requires the Company to provide deferred
income taxes based on temporary differences between financial statement
and tax bases of assets and liabilities using enacted tax rates in effect
for the year in which the temporary differences are expected to reverse.
The cumulative effect of the adoption of this pronouncement on the
Company's financial statements was to decrease net income by $87,000 ($.26
per share) for the year ended December 31, 1993.

The provision for income taxes for the years ended December 31, 1994,
1993 and 1992 are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current.................... $445,818 $302,036 $521,428
Deferred................... (91,344) 43,850 (235,140)
-------- -------- --------
Total.................... $354,474 $345,886 $286,288
======== ======== ========
</TABLE>

100
<PAGE> 111
At December 31, 1994 and 1993 the significant components of the
Company's net deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
Deferred Tax Assets: 1994 1993
<S> <C> <C>
Unrealized loss on investment
securities available for sale $ 522,000
Allowance for possible loan losses 424,000 $376,000
Deferred loan fees 57,000 35,000
Other 28,000 27,000
---------- --------
1,031,000 438,000
---------- --------
Deferred Tax Liabilities:
Unrealized gain on investment
securities available for sale (168,000)
Accumulated depreciation (52,000) (71,000)
Other assets (41,000) (42,000)
---------- --------
(93,000) (281,000)
---------- --------
Net Deferred Tax Asset Before
Valuation Allowance 938,000 157,000
Valuation Allowance
---------- --------
Net Deferred Tax Asset $ 938,000 $157,000
========== ========
</TABLE>

The provision for income taxes is less than that computed by applying
the federal statutory rate of 34% to income before income taxes as
indicated by the following:

<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Income tax at statutory rate... $684,372 $676,805 $576,907
Effect of tax-exempt income.... (317,126) (300,195) (291,747)
Other.......................... (12,772) (30,724) 1,128
-------- -------- --------
Provision for income taxes..... $354,474 $345,886 $286,288
======== ======== ========
</TABLE>

9. SHAREHOLDERS' EQUITY

Effective November 1, 1992, the Company declared a 2 for 1 stock split
recorded in the form of a stock dividend. Retroactively, common stock was
credited and undivided profits were charged for the amount of par value of
the additional shares issued of $437,500. All references to the number of
common shares and per common share amounts have been restated to reflect
the stock split.

The approval of the Georgia Department of Banking and Finance is
required if dividends declared by the Bank to the Company in any year will
exceed 50% of the net income of the Bank for the previous calendar year.
The Bank is also required to maintain minimum amounts of capital to total
"risk weighted" assets, as defined by the banking

101
<PAGE> 112
regulators. At December 31, 1994, the Bank is required to have minimum
Tier I and Total Capital ratios of 4% and 8%, respectively. The Bank's
actual ratios at that date were 12.07% and 13.32%, respectively.
Additionally, the Bank is required to maintain a leverage ratio (Tier I
Capital to total assets) of at least 4%. The Bank's leverage ratio at
December 31, 1994 was 9.37%.

At December 31, 1994 and 1993, the Company held 15,349 shares and
18,697 shares, respectively, in Treasury Stock.

10. EMPLOYEE BENEFIT AND STOCK OPTION PLANS

The Company has a contributory profit sharing plan under Internal
Revenue Code Section 401(k) (the "401K Plan"). The 401K Plan covers
substantially all employees. Employees may contribute up to 15% of their
annual salaries up to the amount allowed by the IRS. The Company will
contribute amounts as specified in the plan agreement. The Company's
contribution to the plan totaled $67,938 in 1994, $70,925 in 1993 and
$68,079 in 1992.

The Company's Incentive Stock Option Plan provides that officers and
certain employees of the Company and its subsidiaries may be granted
options to purchase shares of common stock of the Company at an amount
equal to the fair market value of the stock at the date of grant. The
options, which may be exercised immediately, expire five years from the
date of grant. The Plan limits the total number of shares which may be
purchased under the Plan to 35,000, which have been reserved for the Plan.
Stock option activity is summarized as follows:

<TABLE>
<CAPTION>
Number of Option Price
Options per Share
--------- ------------
<S> <C> <C>
Balance outstanding, December 31, 1991 18,000 $25.00 to $37.35
Granted 8,000 41.68
Exercised (400) 25.00
------
Balance outstanding, December 31, 1992 25,600 31.26 to 41.68
Granted 8,000 45.94
------
Balance outstanding, December 31, 1993 33,600 31.26 to 45.94
Granted 2,400 50.39
Exercised (2,000) 31.26
------
Balance outstanding, December 31, 1994 34,000 33.98 to 50.39
======
</TABLE>

Effective January 21, 1995, the Company's Board of Directors adopted,
subject to shareholder approval, an Outside Director Stock Option Plan.
Under the plan, 70,000 shares of common stock have been reserved for
issuance. The plan initially granted as of January 21, 1995 the option to
purchase 5,000 shares of common stock to outside directors who were
Company board members on April 16, 1994 at an amount equal to the fair
market value of the stock at that date. The options are fully vested on
the date of grant and exercisable six months from date of grant.

102
<PAGE> 113
11. OTHER OPERATING EXPENSES

Items comprising other operating expenses for the years ended December
31, 1994, 1993 and 1992 are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Outside services................. $ 714,538 $ 627,931 $ 678,921
Advertising and public relations. 489,952 471,758 389,011
Office supplies.................. 287,565 286,524 271,459
Other............................ 887,917 748,905 641,918
---------- ---------- ----------
Total.......................... $2,379,972 $2,135,118 $1,981,309
========== ========== ==========
</TABLE>

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated
fair value amounts have been determined by the Company using available
market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required to interpret market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company could
realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts.

<TABLE>
<CAPTION>
1994
-----------------------------
Carrying Fair
Amount Value
------------- -------------
<S> <C> <C>
Assets:
Cash and due from banks.................. $ 4,450,912 $ 4,450,912
Federal funds sold....................... 1,020,000 1,020,000
Investment securities available for sale. 28,529,679 28,529,679
Investment securities held to maturity... 21,619,504 21,092,769
Loans.................................... 99,058,810 99,780,771

Liabilities:
Deposits................................. 141,615,495 140,741,928
Short-term borrowings.................... 1,001,742 1,001,742
Other borrowings......................... 1,500,000 1,500,000

</TABLE>

103
<PAGE> 114
<TABLE>
<CAPTION>
1993
-----------------------------
Carrying Fair
Amount Value
------------- -------------
<S> <C> <C>
Assets:
Cash and due from banks.................. $ 4,125,961 $ 4,125,961
Federal funds sold....................... 3,944,000 3,944,000
Investment securities available for sale. 23,953,213 23,953,213
Investment securities held to maturity... 18,160,786 18,777,353
Loans.................................... 102,477,238 103,846,464

Liabilities:
Deposits................................. 138,459,000 139,330,059
Short-term borrowings.................... 1,259,424 1,259,424
Other borrowings......................... 2,500,000 2,500,000
</TABLE>

The carrying amounts of cash and due from banks, federal funds sold,
and short-term borrowings are a reasonable estimate of their fair value
due to the short-term nature of these financial instruments. The fair
value of investment securities available for sale and investment
securities held to maturity is based on quoted market prices and dealer
quotes. The fair value of loans and deposits is estimated by discounting
the future cash flows using interest rates currently charged by the
Bank for such financial instruments.

As required by the Statement, demand deposits are shown at their face
value. No value has been ascribed to core deposits, which generally bear a
low rate of or no interest and do not fluctuate in response to changes in
interest rates.

The fair value of commitments to extend credit and standby letters of
credit is estimated to approximate the amount outstanding (see Note 5).
The fair value has been estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of
the agreements and the present creditworthiness of the counterparties.

The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1994. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and,
therefore, current estimates of fair value may differ significantly from
the amounts presented herein.

13. RELATED PARTY TRANSACTIONS

Certain directors and executive officers of the Company, including
their associates, were loan customers of the Bank. Total loans to these
persons at December 31, 1994, 1993 and 1992 totaled $4,162,599,
$4,868,492 and $4,440,957, respectively.

104

<PAGE> 115
An analysis of the activity during 1994, 1993 and 1992 of loans to
executive officers, directors and principal shareholders is as follows:

<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Balance, January 1, .......... $4,868,492 $4,440,957 $ 2,607,749
Amounts advanced.............. 7,726,038 5,423,152 10,495,275
Repayments.................... (8,431,931) (4,995,617) (8,662,067)
---------- ---------- -----------
Balance, December 31, ........ $4,162,599 $4,868,492 $4,440,957
========== ========== ==========
</TABLE>

During February 1992, the Company purchased 20,000 shares of its common
stock from a related party at a cost of approximately $594,000.

At December 31, 1994, time deposits of $1,160,000 of a business
controlled by the principal shareholders of the Company were pledged as
collateral for loans of $1,160,000 made to unrelated parties.

14. SUBSEQUENT EVENT

On January 21, 1995, the Company's Board of Directors signed an
agreement to acquire all of the outstanding stock of Security Bancorp,
Inc. ("Security"). The approximate purchase price of Security is expected
to be $9.4 million, which is payable in cash and the issuance of shares of
common stock of the Company.

The acquisition will be accounted for using the purchase method of
accounting. At December 31, 1994, Security's total assets were
approximately $40.0 million and shareholders' equity was approximately
$5.4 million. Securitys' net income for the year ended December 31, 1994
was approximately $468,000.

105
<PAGE> 116
15. CONDENSED FINANCIAL STATEMENTS OF COMPANY (PARENT ONLY)

The condensed financial statements of the Company (parent only) are
presented below:

CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
ASSETS: 1994 1993
<S> <C> <C>
Cash..................................... $ 938,523 $ 198,234
Investment in subsidiaries............... 14,633,519 15,069,527
Other investments........................ 275,649 275,649
Other assets............................. 2,896 2,896
----------- -----------
Total assets............................. $15,850,587 $15,546,306
=========== ===========

SHAREHOLDERS' EQUITY:
Common stock............................. $ 875,000 $ 875,000
Additional paid-in Capital............... 3,321,028 3,300,000
Retained earnings........................ 13,110,034 11,584,709
Unrealized gain (loss) on investment
securities available for sale .......... (1,013,344) 325,184
Treasury stock, at cost.................. (442,131) (538,587)
----------- -----------
Shareholders' equity - net............... $15,850,587 $15,546,306
=========== ===========
</TABLE>

106
<PAGE> 117
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the years ended December 31, 1994, 1993 and 1992

<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
INCOME
Dividends from subsidiary........ $ 760,000 $ 140,000 $ 657,500
Other income - management fees
from subsidiary................. 321,533 293,334 326,411
----------- ----------- -----------
Total Income..................... 1,081,533 433,334 983,911

EXPENSES - General and
administrative.................. 327,074 299,558 331,720
----------- ----------- -----------

Income before income taxes and
equity in undistributed earnings
of subsidiaries................. 754,459 133,776 652,191
Income tax credit................ 1,406 1,579 1,347
----------- ----------- -----------
Income before equity
in undistributed earnings....... 755,865 135,355 653,538
Equity in undistributed earnings
of subsidiaries................. 902,520 1,422,363 756,959
----------- ----------- -----------

Net Income....................... 1,658,385 1,557,718 1,410,497

RETAINED EARNINGS AT
BEGINNING OF YEAR ............... 11,584,709 10,159,511 8,873,859
Cash dividends on common stock.. (133,060) (132,520) (122,953)
Loss on Treasury Stock.......... (1,892)
----------- ----------- -----------

RETAINED EARNINGS AT
END OF YEAR .................... $13,110,034 $11,584,709 $10,159,511
=========== =========== ===========
</TABLE>

107

<PAGE> 118
CONDENSED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, 1993 and 1992

<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1993 1992
<S> <C> <C> <C>
Net Income.......................... $1,658,385 $1,557,718 $1,410,497

Equity in undistributed
earnings of subsidiaries.......... (902,520) (1,422,362) (756,959)
---------- ---------- ----------
Net cash provided by
operating activities.............. 755,865 135,356 653,538
---------- ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of cash dividends........... (133,060) (132,520) (122,953)
Purchase of Treasury Stock.......... (606,548)
Proceeds from sale of
Treasury Stock.................... 117,484 86,047 69,843
---------- ---------- ----------

Net cash used by
financing activities............... (15,576) (46,473) (659,658)
---------- ---------- ----------

Increase (decrease) in cash........... 740,289 88,883 (6,120)

CASH AT BEGINNING OF YEAR............. 198,234 109,351 115,471
---------- ---------- ----------

CASH AT END OF YEAR................... $ 938,523 $ 198,234 $ 109,351
========== ========== ==========
</TABLE>

108
<PAGE> 119

SECURITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS AND AUDIT REPORT

December 31, 1994

109

<PAGE> 120
SECURITY BANCORP, INC. AND SUBSIDIARY
CONTENTS
________________________________________________________________________________

<TABLE>
<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS 1

CONSOLIDATED BALANCE SHEETS 2

CONSOLIDATED STATEMENTS OF INCOME 3

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 4

CONSOLIDATED STATEMENTS OF CASH FLOWS 5/6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7/18
</TABLE>

110

<PAGE> 121

[JOSEPH DECOSIMO AND COMPANY LETTERHEAD]

MEMBER AICPA DIVISION FOR CPA FIRMS
________________________________________________________________________________
PRIVATE COMPANIES PRACTICE SECTION SEC PRACTICE SECTION

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders
Security Bancorp, Inc.
Canton, Georgia

We have audited the accompanying consolidated balance sheets of Security
Bancorp, Inc. and subsidiary as of December 31, 1994 and 1993, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1994. These consolidated
financial statements are the responsibility of the corporation'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 audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Security Bancorp,
Inc. and subsidiary as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.

The corporation changed its methods of accounting for income taxes and debt
securities during 1993.

JOSEPH DECOSIMO AND COMPANY

Atlanta, Georgia
January 19, 1995

111
<PAGE> 122
SECURITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31, 1994 and 1993

<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________

1994 1993

<S> <C> <C>
ASSETS

Cash and Due from Banks $ 917,670 $ 868,152
Federal Funds Sold 790,000 2,643,000
------------ ------------
1,707,670 3,511,152
------------ ------------

Due from Banks (Time) 297,000 250,000
------------ ------------
Investment Securities Available-for-Sale -
U.S. Treasury and Agencies 3,947,303 4,539,949
Mortgage-Backed Securities 1,181,574 1,046,639
------------ ------------
5,128,877 5,586,588
------------ ------------
Investment Securities to be Held to Maturity 199,250 -
Loans - less allowance for loan losses
of $578,044 for 1994 and $468,190 for 1993 30,001,602 28,184,456
Bank Premises and Equipment, net 1,836,773 1,914,025
Interest Receivable 342,747 259,224
Deferred Income Taxes 209,726 103,000
Real Estate Owned 231,174 129,715
Other Assets 89,558 98,651
------------ ------------

TOTAL ASSETS $ 40,044,377 $ 40,036,811
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits $ 33,980,731 $ 34,530,978
Interest Payable 327,027 225,425
Income Taxes Payable 193,735 30,000
Other Liabilities 160,010 84,858
------------ ------------

Total Liabilities 34,661,503 34,871,261
------------ ------------

STOCKHOLDERS' EQUITY
Preferred Stock - $1 par value - 1,000,000
shares authorized; none issued - -
Common Stock - $1 par value - 5,000,000 shares
authorized; 525,000 issued and outstanding 525,000 525,000
Paid-In Capital 4,725,000 4,725,000
Retained Earnings (Deficit) 319,023 ( 148,579)
Unrealized Holding Gain (Loss) on
Securities Available-for-Sale, net of tax
of $(114,090) and $39,305 ( 186,149) 64,129
------------ ------------

Total Stockholders' Equity 5,382,874 5,165,550
------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,044,377 $ 40,036,811
============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

112

<PAGE> 123
SECURITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________

1994 1993 1992

<S> <C> <C> <C>
INTEREST INCOME
Loans $ 3,180,363 $ 2,635,497 $ 1,815,300
Investment Securities Available-for-Sale -
U.S. Treasury 40,609 99,747 118,773
U.S. Government Agencies 273,902 222,589 152,183
Investment Securities to be Held to Maturity 1,372 - -
Deposits in Banks 10,523 10,882 14,234
Federal Funds Sold 103,320 105,187 76,275
----------- ----------- -----------

Total Interest Income 3,610,089 3,073,902 2,176,765

INTEREST EXPENSE
Interest on Deposits 1,504,430 1,306,824 1,038,709
----------- ----------- -----------

Net Interest Income 2,105,659 1,767,078 1,138,056
Provision for Loan Losses 165,000 204,000 154,000
----------- ----------- -----------

Net Interest Income After
Provision for Loan Losses 1,940,659 1,563,078 984,056
----------- ----------- -----------

NONINTEREST INCOME
Service Charges on Deposit Accounts 140,515 112,906 75,013
Gain on Sale of Investment Securities - - 37,449
Gain on Sale of Loans 139,128 76,161 -
Other Income 26,761 9,012 7,512
----------- ----------- -----------

Total Noninterest Income 306,404 198,079 119,974
----------- ----------- -----------

NONINTEREST EXPENSE
Salaries and Employee Benefits 768,348 612,451 550,727
Equipment Expense 98,493 88,458 41,950
Occupancy Expense 162,404 154,396 99,537
Advertising 45,590 24,741 27,586
Data Processing 60,533 49,319 40,354
Supplies 39,474 37,317 28,961
Legal and Professional 68,454 59,503 43,615
Telephone 20,606 18,659 14,136
FDIC Insurance Premiums 90,114 61,175 35,665
Amortization 19,899 19,899 19,899
Other Expense 127,037 67,051 53,141
----------- ----------- -----------

Total Noninterest Expense 1,500,952 1,192,969 955,571
----------- ----------- -----------

INCOME BEFORE INCOME TAX PROVISION
(BENEFIT) AND EXTRAORDINARY ITEM 746,111 568,188 148,459

Income Tax Provision (Benefit) 278,509 (112,305) 41,383
----------- ----------- -----------

INCOME BEFORE EXTRAORDINARY ITEM 467,602 680,493 107,076

Tax Benefit of Net Operating Loss Carryforward - - 41,383
----------- ----------- -----------

NET INCOME $ 467,602 $ 680,493 $ 148,459
=========== =========== ===========

NET INCOME PER SHARE OF COMMON STOCK
Income Before Extraordinary Item $ .89 $ 1.30 $ .20
Extraordinary Item .- .- .08
----------- ----------- -----------
Net Income $ .89 $ 1.30 $ .28
=========== =========== ===========

Weighted Average Number of Shares of
Common Stock 525,000 525,000 525,000
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

113
<PAGE> 124
SECURITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________

UNREALIZED
HOLDING GAIN
(LOSS) ON
RETAINED SECURITIES
COMMON STOCK PAID-IN EARNINGS AVAILABLE-
SHARES AMOUNT CAPITAL (DEFICIT) FOR-SALE
<S> <C> <C> <C> <C> <C>
BALANCE - December 31, 1991 525,000 $ 525,000 $ 4,725,000 $(977,531) $ -

Net Income 148,459
------- --------- ----------- --------- ---------

BALANCE - December 31, 1992 525,000 525,000 4,725,000 (829,072) -

Net Income 680,493

Unrealized Holding Gain on
Securities Available-for-Sale 64,129
------- --------- ----------- --------- ---------

BALANCE - December 31, 1993 525,000 525,000 4,725,000 (148,579) 64,129

Net Income 467,602

Net Change in Unrealized Holding Gain
(Loss) on Securities Available-for-Sale (250,278)
------- --------- ----------- --------- ---------

BALANCE - December 31, 1994 525,000 $ 525,000 $ 4,725,000 $ 319,023 $(186,149)
======= ========= =========== ========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

114
<PAGE> 125
SECURITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 1994, 1993 and 1992

<TABLE>
<CAPTION>
______________________________________________________________________________________________________________________

1994 1993 1992

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 467,602 $ 680,493 $ 148,459
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities -
Depreciation 102,592 108,733 45,600
Amortization and Accretion 5,089 50,452 46,880
Provision for Loan Losses 165,000 204,000 154,000
Deferred Income Taxes 50,773 (142,305) -
Gain on Sale of Real Estate (16,640) - -
Gain on Sale of Investments - - (37,449)
Gain on Sale of Loans (139,128) (76,161) -
Proceeds from Sale of Loans 3,041,519 3,820,547 -
Loans Originated for Sale (2,862,160) (3,578,616) -
Changes in Operating Assets
and Liabilities -
Increase in -
Interest Receivables (83,523) (88,613) (1,647)
Other Assets (10,806) (10,067) (7,503)
Increase in -
Interest Payable 101,602 30,261 53,979
Income Taxes Payable 163,735 30,000 -
Other Liabilities 75,152 22,325 32,390
----------- ------------ -----------

NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,060,807 1,051,049 434,709
----------- ------------ -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sales of Investment
Securities - - 1,917,234
Proceeds from Maturities of Investment
Securities Available-for-Sale 1,933,020 923,256 1,258,444
Purchase of Investment Securities
Available-for-Sale (1,889,049) (1,851,687) (3,988,943)
Purchase of Investment Securities Held
to Maturity (199,250) - -
Net Increase in Loans (2,281,707) (11,498,289) (7,453,913)
Acquisition of Premises and
Equipment (25,340) (49,986) (21,980)
Cash Additions to Real Estate Owned (146,548) - -
Proceeds from Sale of Real Estate 341,832 - -
Net Increase in Certificates of Deposit (47,000) - -
----------- ------------ -----------

NET CASH USED BY INVESTING ACTIVITIES (2,314,042) (12,476,706) (8,289,158)
----------- ------------ -----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

115

<PAGE> 126
SECURITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 1994, 1993 and 1992

<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________

1994 1993 1992

<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Demand, Interest
Bearing Demand and Savings Deposits $ 1,247,343 $ 1,461,981 $ 3,519,555
Net Increase (Decrease) in Certificates
of Deposit (1,797,590) 8,785,911 7,643,384
------------ ------------ ------------

NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (550,247) 10,247,892 11,162,939
------------ ------------ ------------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,803,482) (1,177,765) 3,308,490

CASH AND CASH EQUIVALENTS -
beginning of year 3,511,152 4,688,917 1,380,427
------------ ------------ ------------

CASH AND CASH EQUIVALENTS -
end of year $ 1,707,670 $ 3,511,152 $ 4,688,917
============ ============ ============

SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash Paid for Interest $ 1,402,828 $ 1,276,563 $ 984,730
Income Taxes Paid $ 68,104 $ - $ -

NONCASH INVESTING ACTIVITIES
Additions to Real Estate Owned $ 443,191 $ 129,715 $ -
Sale of Real Estate Owned Financed
by the Bank $ 173,224 $ - $ -
Unrealized Gain (Loss) on Securities
Available-for-Sale, net of tax $ (250,278) $ 64,129 $ -
</TABLE>

The accompanying notes are an integral part of the financial statements.

116

<PAGE> 127
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________________________________________________________________________________

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and practices followed by the corporation
are as follows:

DESCRIPTION OF BUSINESS - The corporation is a one-bank holding company,
incorporated on November 22, 1988, primarily conducting business in Cherokee
and surrounding counties in Georgia.

CONSOLIDATED FINANCIAL STATEMENTS - The accompanying consolidated financial
statements include the accounts of the corporation's wholly-owned subsidiary,
Security State Bank. All intercompany transactions and balances have been
eliminated in the consolidated financial statements.

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

CASH EQUIVALENTS - For purposes of cash flows, the corporation considers
Federal Funds Sold to be cash equivalents. Security State Bank maintains at
various financial institutions cash and cash equivalent accounts which may at
times exceed federally insured amounts.

INVESTMENT SECURITIES - Investment securities are recorded in accordance with
the provisions of SFAS 115, "Accounting for Certain Investments in Debt and
Equity Securities." Investment securities are classified in three categories
which include held-to-maturity, trading or available-for-sale. Investment
securities classified as held-to-maturity are reported at amortized cost,
trading are reported at fair value with unrealized gains and losses included in
earnings, and available-for-sale are reported at fair value with unrealized
gains and losses excluded from earnings and reported in a separate component of
stockholders' equity.

The cost, adjusted for amortization of premiums and for accretion of discount,
of specific securities sold is used to compute gains or losses on sales of
securities.

RESERVE FOR LOAN LOSSES - The corporation provides for loan losses on a reserve
basis and includes in operating expenses an estimated amount for credit losses
determined by management based on loan loss experience and evaluation of
potential loss in the current loan portfolio.

INTEREST INCOME ON LOANS - Loans are stated at the principal amount
outstanding, net of deferred loan fees and costs. Income is accrued on the
principal amount outstanding. Accrual of interest is discontinued when, in
management's judgment, collection of interest or principal is questionable.
Upon such discontinuance, all unpaid accrued interest is reversed.

LOANS AND LOAN ORIGINATION FEES - Loan origination fees and related direct
incremental loan origination costs are offset and the resulting net amount is
deferred and taken into income as a loan yield adjustment using a method which
approximates the level yield method.

117
<PAGE> 128
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________________________________________________________________________________

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

LOAN SALES - When loans are sold, the recorded investment in the loans is
allocated between the portion of the loans sold and the portion retained based
on the relative fair values of those portions on the date the loans were
acquired. For purposes of recording the gain or loss on the sale of loans, the
difference between the recorded amount of and fair value of the portion of the
loans retained, is recorded as a discount and accreted to interest income over
the expected life of the loans.

BANK PREMISES AND EQUIPMENT - Bank premises and equipment are stated at cost
less accumulated depreciation. Expenditures for repairs, maintenance and minor
improvements are charged to expense as incurred. Additions and improvements
that significantly extend the lives of assets are capitalized. As assets are
retired or otherwise disposed of, the cost and related accumulated depreciation
are eliminated from the respective accounts and any gain or loss is reflected
in operations.

Depreciation is computed on the straight-line method and is charged to
operating expense over the estimated useful lives of the depreciable assets.

REAL ESTATE OWNED - Real estate owned acquired through, or in lieu of, loan
foreclosure, is initially recorded at fair value at the date of foreclosure,
establishing a new cost basis. After foreclosure, real estate is carried at
the lower of cost or appraised value minus estimated costs to sell.

INCOME TAXES - Income taxes are computed based on the provisions of SFAS 109,
"Accounting for Income Taxes." Deferred tax assets and liabilities are
recognized for the estimated future tax effects attributed to temporary
differences between book and tax bases of assets and liabilities and for
carryforward items. The measurement of current and deferred tax assets and
liabilities is based on enacted tax law. Deferred tax assets are reduced, if
necessary, by a valuation allowance for the amount of tax benefits that may not
be realized.

The corporation and its subsidiary file a consolidated income tax return. The
subsidiary provides for income taxes based on its contribution to income taxes
(benefits) of the consolidated group.

COMMON STOCK DATA - Income per share is computed by dividing the net income for
the period by the weighted average number of common and common stock equivalent
shares outstanding during the period. Common stock equivalents are omitted
from the computation if the effect of including the equivalents is
anti-dilutive or the dilutive effect is less than three percent.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS - In the ordinary course of business,
the corporation has entered into off-balance-sheet financial instruments
consisting of commitments to extend credit and standby letters of credit. Such
financial instruments are recorded in the financial statements when they are
funded or related fees are incurred or received.

RECLASSIFICATIONS - Certain reclassifications have been made to prior years'
financial statements to conform with the current year presentation.

118
<PAGE> 129
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_______________________________________________________________________________

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

NEW ACCOUNTING PRONOUNCEMENTS - The corporation has not yet adopted the
provisions of Statements of Financial Accounting Standards No. 107 regarding
disclosures about the fair value of financial instruments and No. 114 regarding
accounting for impairment of loans. These standards are expected to be adopted
during the year ending December 31, 1995. Implementation of these standards is
not expected to have a material effect on the financial statements of the
corporation.

NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated market value of debt securities as of December
31, 1994 and 1993, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.

<TABLE>
<CAPTION>
1994
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST LOSSES GAINS MARKET VALUE

<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE

U.S. Treasury -
Maturing within one year $ 350,457 $ (1,332) $ - $ 349,125
Maturing after one year but
within five years 254,495 (9,260) - 245,235
----------- --------- --------- -----------
604,952 (10,592) - 594,360
----------- --------- --------- -----------
U.S. Government Agencies -
Maturing after one year
but within five years 2,857,989 (199,634) - 2,658,355
Maturing after five years
but within ten years 750,000 (55,412) - 694,588
----------- --------- --------- -----------
3,607,989 (255,046) - 3,352,943
----------- --------- --------- -----------
Mortgage-Backed Securities -
Maturing after one year but
within five years 187,699 (9,952) - 177,747
Maturing after ten years 1,028,476 (24,937) 288 1,003,827
----------- --------- --------- -----------
1,216,175 (34,889) 288 1,181,574
----------- --------- --------- -----------

TOTAL INVESTMENT SECURITIES AVAILABLE-FOR-SALE $ 5,429,116 $(300,527) $ 288 $ 5,128,877
=========== ========= ========= ===========

<CAPTION>
1994
GROSS
AMORTIZED UNREALIZED ESTIMATED
COST LOSS MARKET VALUE

SECURITIES TO BE HELD TO MATURITY
<S> <C> <C> <C>
U.S. Government Agencies -
Maturing after one year but within five years $ 199,250 $ (3,438) $ 195,812
=========== ========= ===========

<CAPTION>
1993
GROSS
AMORTIZED UNREALIZED ESTIMATED
COST GAINS MARKET VALUE

SECURITIES AVAILABLE-FOR-SALE
<S> <C> <C> <C>
U.S. Treasury -
Maturing within one year $ 499,776 $ 4,676 $ 504,452
Maturing after one year but
within five years 608,481 14,122 622,603
----------- --------- -----------
1,108,257 18,798 1,127,055
----------- --------- -----------
U.S. Government Agencies -
Maturing after one year
but within five years 2,105,288 9,280 2,114,568
Maturing after five years
but within ten years 1,274,082 24,244 1,298,326
----------- --------- -----------
3,379,370 33,524 3,412,894
----------- --------- -----------
Mortgage-Backed Securities -
Maturing after one year but
within five years 223,207 2,212 225,419
Maturing after ten years 772,320 48,900 821,220
----------- --------- -----------
995,527 51,112 1,046,639
----------- --------- -----------

TOTAL INVESTMENT SECURITIES AVAILABLE-FOR-SALE $ 5,483,154 $ 103,434 $ 5,586,588
=========== ========= ===========

</TABLE>

There were no pledged securities at December 31, 1994 and 1993.

There were no sales of investment securities during 1994 and 1993. Proceeds
from sales of investment securities during 1992 were $1,917,234. Gross gains
of $37,449 were realized on the sale of these securities during 1992.

119

<PAGE> 130
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

_______________________________________________________________________________

NOTE 3 - LOANS

Loans by type are summarized as follows:
<TABLE>
<CAPTION>

1994 1993

<S> <C> <C>
Real Estate - Construction $ 11,757,856 $ 13,248,399
Real Estate - Mortgage 11,121,340 9,584,146
Commercial, Industrial and Agricultural Loans 4,679,563 3,474,452
Installment Loans to Individuals for Household,
Family and Other Consumer Expenditures 3,218,455 2,522,282
------------ ------------
Total Loans 30,777,214 28,829,279
Unearned Loan Fees (12,339) (10,863)
Unearned Discounts on Loans (185,229) (165,770)
Reserve for Loan Losses (578,044) (468,190)
------------ ------------
$ 30,001,602 $ 28,184,456
============ ============
</TABLE>

It is the practice of the bank to lend primarily in its trade area and, to a
large extent, extend credit collateralized by real estate. This includes
residential and commercial mortgages, residential and commercial construction
loans and commercial loans collateralized by real estate. These lending
activities could be similarly affected by a downturn in the regional economy or
in real estate values. With respect to real estate construction loans, the
corporation generally does not lend over 75% of the appraised value of the
property. In addition, the corporation generally obtains personal guarantees
of partial or full repayment from the borrowers for such loans and disburses
the proceeds of construction loans only as work progresses on the related
project.

At December 31, 1994, loans on which accrual of interest has been discontinued
totaled $43,383. There were no loans on which accrual of interest had been
discontinued at December 31, 1993. If interest on such loans had been accrued,
such income would have approximated $5,117 for 1994 and $2,200 for 1993.

During 1994 and 1993, the bank originated and sold the guaranteed portion of
certain Small Business Administration loans. The total proceeds from the sale
of these loans were $3,041,519 and $3,820,547 during 1994 and 1993,
respectively. The gross realized gains on these loan sales were $139,128 and
$76,161 during 1994 and 1993, respectively.

120
<PAGE> 131
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

________________________________________________________________________________

NOTE 4 - RESERVE FOR LOAN LOSSES

Transactions in the reserve for loan losses are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992

<S> <C> <C> <C>
Reserve for Loan Losses -
beginning of year $ 468,190 $ 247,639 $ 100,826
Provision for Loan Losses 165,000 204,000 154,000
Loans Charged-Off (77,603) (3,517) (8,879)
Recoveries 22,457 20,068 1,692
--------- --------- ---------

Reserve for Loan Losses - end of year $ 578,044 $ 468,190 $ 247,639
========= ========= =========

</TABLE>

NOTE 5 - BANK PREMISES AND EQUIPMENT

Bank premises and equipment consist of the following:

<TABLE>
<CAPTION>
1994 1993

<S> <C> <C>
Land $ 262,905 $ 262,905
Buildings 1,410,720 1,410,720
Furniture and Equipment 524,073 498,733
----------- -----------
2,197,698 2,172,358
Accumulated Depreciation (360,925) (258,333)
----------- -----------
$ 1,836,773 $ 1,914,025
=========== ===========
</TABLE>

NOTE 6 - DEPOSITS

Deposits consist of the following classifications:

<TABLE>
<CAPTION>
1994 1993

<S> <C> <C>
Demand $ 2,249,273 $ 2,266,088
Interest Bearing Demand 4,930,066 4,021,464
Savings 1,412,859 1,057,303
Certificates of Deposit -
$100,000 and Over 2,145,639 3,133,651
Less than $100,000 23,242,894 24,052,472
------------ ------------
$ 33,980,731 $ 34,530,978
============ ============
</TABLE>

121
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SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

________________________________________________________________________________

NOTE 7 - PROVISION FOR INCOME TAXES

During 1993, the corporation implemented Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109
establishes standards for financial accounting and reporting for income taxes
that are currently payable and for provisions for deferred income taxes. The
standard requires a change from the deferred method to the asset and liability
method of accounting for income taxes. There was no cumulative effect of the
change in accounting method for the adoption of SFAS 109 because the
corporation had sustained losses from operations and established a valuation
allowance against the previously unrecognized tax benefits of these losses.

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

1994 1993 1992

<S> <C> <C> <C>
CURRENT PROVISION
Federal Income Tax $ 226,412 $ 30,000 $ -
State Income Tax 1,324 - -
DEFERRED (BENEFIT) PROVISION
Federal Income Tax (2,562) (83,305) -
State Income Tax 53,335 (59,000) -
--------- --------- ---------
$ 278,509 $(112,305) $ -
========= ========= =========
</TABLE>

Reconciliation of the provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
1994 1993 1992

<S> <C> <C> <C>
Federal Income Tax at Statutory Rate $ 253,678 $ 193,000 $ 50,476
State Income Taxes, net 24,831 - -
Effect of Using AMT Rate - 30,000 -
Reduction of Valuation Allowance - (328,000) -
Utilization of Net Operating Loss
Carryforward - - (41,383)
Effect of Graduated Rate - - (9,093)
Other - (7,305) -
--------- --------- ---------
$ 278,509 $(112,305) $ -
========= ========= =========
</TABLE>

122
<PAGE> 133
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

________________________________________________________________________________

NOTE 7 - PROVISION FOR INCOME TAXES - continued

The components of the deferred income tax asset are as follows:
<TABLE>
<CAPTION>
1994 1993

<S> <C> <C>
DEFERRED TAX ASSET
Federal $ 273,971 $ 175,000
State 47,488 76,000
--------- ---------
321,459 251,000
--------- ---------

DEFERRED TAX LIABILITY
Federal (97,395) (130,000)
State (14,338) (18,000)
--------- ---------
(111,733) (148,000)
--------- ---------

NET DEFERRED TAX ASSET $ 209,726 $ 103,000
========= =========
</TABLE>

The tax effects of each type of significant item that gave rise to deferred
taxes are as follows:

<TABLE>
<CAPTION>
1994 1993

<S> <C> <C>
Net Operating Loss and AMT Carryforward $ - $ 71,000
Net Unrealized Loss (Gain) on Securities
Available-for-Sale 114,091 (39,000)
Loan Loss Reserve 181,975 130,000
Depreciation (85,137) (65,000)
Deferred Start-Up Costs - 19,000
Other (1,203) (13,000)
--------- ---------
$ 209,726 $ 103,000
========= =========
</TABLE>

The activity in the valuation allowance for the year ended December 31, 1993,
was as follows:

<TABLE>
<CAPTION>
FEDERAL STATE

<S> <C> <C>
Valuation Allowance - beginning of year $ 247,869 $ 80,190
Adjustments for a Change in Circumstances
Concerning Future Realizability (247,869) (80,190)
--------- ----------
Valuation Allowance - end of year $ - $ -
========= ==========
</TABLE>

The adjustments for changes in circumstances concerning future realizability of
net deferred assets relate to the realization of net operating loss
carryforwards in 1993. It is more likely than not that the deferred tax assets
that existed as of December 31, 1993, would be realized in future periods.

123
<PAGE> 134

SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

________________________________________________________________________________

NOTE 8 - STOCK OPTION PLANS

In 1988, the corporation established an Employee Stock Option Plan. Under the
plan, the corporation can grant to key personnel options for an aggregate of
50,000 shares of common stock at not less than the fair market value of such
shares on the date the option is granted. If the employee owns shares of the
corporation representing more than 10% of the combined voting power, then the
price shall not be less than 110% of the fair market value of such shares on
the date the option is granted. No options may be granted under the plan after
November 21, 1998.

During 1993, the corporation established a Directors Stock Option Plan. Under
the plan, the corporation can grant members of the board of directors options
for an aggregate of 125,000 shares of common stock. The option exercise price
is the greater of $10 per share or the book value per share as of the end of
the year for which the option was granted. No options may be granted under the
plan after April 19, 1998.

Stock option activity is summarized as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
1994 1993 1992
<S> <C> <C> <C>
Outstanding at Beginning
of Period 57,750 7,750 9,250
Granted 10,000 50,000 -
Exercised - - -
Canceled - - (1,500)
------- ------- ------
Outstanding at End of Period 67,750 57,750 7,750
======= ======= ======

Exercisable at End of Period 67,750 57,750 7,750
======= ======= ======

Available to Grant at End of Period 107,250 117,250 42,250
======= ======= ======
</TABLE>

For all stock options granted, the option price is $10 per share which
represents the fair value of the options at the date of grant. The stock
options for the purchase of 2,500, 5,250, 50,000 and 10,000 shares expire July
1, 1995, January 2, 1997, April 19, 2003 and January 15, 2004, respectively.

In conjunction with the proposed merger discussed in Note 14, an option
agreement was signed on January 16, 1995, whereby option holders can receive
cash equal to the amount by which the book value per share of the corporation,
without considering the loan loss reserve or unrealized loss on Securities
Available-for-Sale, exceeds the option price of $10 per share.

124
<PAGE> 135
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________________________________________________________________________________

NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND
CONCENTRATION OF CREDIT RISK

The corporation is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financial needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve to varying degrees elements of
credit risk in excess of the amount recognized in the balance sheet. The
contractual or notional amounts of those instruments express the extent of
involvement the corporation has in particular classes of financial instruments.

The corporation's exposure to credit loss from nonperformance by the other
party to the financial instruments for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those
instruments. The corporation uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments.

The corporation generally requires collateral or security to support financial
instruments with off-balance-sheet credit risk.
<TABLE>
<CAPTION>
CONTRACT OR NOTIONAL AMOUNT
AS OF DECEMBER 31,
1994 1993

<S> <C> <C>
Financial Instruments Whose Contracts
Represent Credit Risk -
Commitments to Extend Credit $ 20,065,765 $ 22,859,962
Less: Funded Portion of Commitments
to Extend Credit (13,904,297) (14,343,527)
------------ ------------
6,161,468 8,516,435
Standby Letters of Credit 56,267 61,200
------------ ------------
$ 6,217,735 $ 8,577,635
============ ============
</TABLE>

Commitments to extend credit are legally binding agreements to lend to
customers. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of fees. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future liquidity requirements.
The corporation evaluates each customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the
corporation on extension of credit, is based on management's credit assessment
of the counterparty. Collateral held varies but may include real estate,
accounts receivable, inventory, property, plant and equipment, and existing
income producing commercial properties.

125
<PAGE> 136

SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________________________________________________________________________________

NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS
OF CREDIT RISK - continued

Standby letters of credit are conditional commitments issued by the corporation
guaranteeing performance by a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The extent of collateral held for
those commitments varies.

Concentrations of credit risk exist due to a significant percentage of loans
secured by real estate. These loans represent 74% of total outstanding loans
as of December 31, 1994.

NOTE 10 - RELATED PARTY TRANSACTIONS

Certain directors and executive officers of the corporation and companies of
which they are principal owners were loan customers of the bank during 1994.
In the opinion of management, such loans are made in the ordinary course of
business at normal credit terms including interest rate and collateralization.
As of December 31, 1994, $444,561 of these loans were outstanding. During
1994, $274,257 of loans were made and repayments totaled $154,128. As of
December 31, 1993, $324,432 of these loans were outstanding.

A company, which is a shareholder in the corporation, provides data processing
and internal auditing services to the bank. Total fees paid to this company
were $50,882 for 1994, $60,787 for 1993 and $33,503 for 1992.

Certain directors of the corporation received fees related to appraisal
services and loan closings. These fees were collected from loan customers.
Management believes the services obtained from these directors were on terms as
favorable to the bank as could have been obtained from unaffiliated parties.

NOTE 11 - SHORT TERM BORROWINGS

At December 31, 1994, $3,750,000 of unused unsecured lines of credit from
nonaffiliated banks were available to the corporation.

NOTE 12 - REGULATORY MATTERS

Banking regulations limit the amount of dividends that may be paid without
prior approval of the bank's regulatory agency. At December 31, 1994, no
dividends have been paid without prior approval.

126
<PAGE> 137
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

________________________________________________________________________________

NOTE 13 - PROPOSED MERGER

Habersham Bancorp, Cornelia, Georgia, and the corporation have signed a letter
of intent to combine the two corporations. The combination is expected to be a
merger in which Habersham Bancorp common stock or cash will be issued for the
corporation's common stock, at the election of the corporation's stockholders.
Habersham Bancorp will pay 1.5 times the corporation's book value, as defined,
at December 31, 1994. The corporation's book value, which for purposes of the
proposed transaction is total stockholders' equity, excluding unrealized losses
on securities, plus the allowance for loan losses, is $6,147,067 at December
31, 1994. The proposed merger is subject to the approval of regulatory
authorities and stockholders of the corporation.

NOTE 14 - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

Condensed financial statements of Security Bancorp, Inc. are summarized as
follows:
<TABLE>
<CAPTION>

CONDENSED BALANCE SHEETS
1994 1993

<S> <C> <C>
ASSETS

Cash $ 677 $ 592
Investment in Subsidiary* 5,382,197 5,164,958
----------- -----------

TOTAL ASSETS $ 5,382,874 $ 5,165,550
=========== ===========

STOCKHOLDERS' EQUITY $ 5,382,874 $ 5,165,550
=========== ===========

*Eliminated in consolidation

<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS

1994 1993 1992
<S> <C> <C> <C>
INCOME $ 100 $ 200 $ -

EXPENSE 15 2,827 3,117
--------- --------- ---------

INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED INCOME
OF SUBSIDIARY 85 (2,627) (3,117)

Equity in Undistributed Income of Subsidiary 467,517 683,120 151,576
--------- --------- ---------

NET INCOME $ 467,602 $ 680,493 $ 148,459
========= ========= =========
</TABLE>

127
<PAGE> 138
SECURITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________________________________________________________________________________

NOTE 14 - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS - continued

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
1994 1993 1992

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 467,602 $ 680,493 $ 148,459

Adjustments to Reconcile Net Income to
Net Cash Provided (Used) by Operating
Activities -
Undistributed Income of Subsidiary (467,517) (683,120) (151,576)
--------- --------- ---------

CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 85 (2,627) (3,117)

CASH FLOWS FROM INVESTING ACTIVITIES - - -

CASH FLOWS FROM FINANCING ACTIVITIES - - -
--------- --------- ---------

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 85 (2,627) (3,117)

CASH AND CASH EQUIVALENTS -
beginning of year 592 3,219 6,336
--------- --------- ---------

CASH AND CASH EQUIVALENTS -
end of year $ 677 $ 592 $ 3,219
========= ========= =========
</TABLE>

128
<PAGE> 139
APPENDIX A
----------

AGREEMENT AND PLAN OF MERGER

BY AND BETWEEN

HABERSHAM BANCORP

AND

SECURITY BANCORP, INC.

DATED AS OF JANUARY 16, 1995
<PAGE> 140

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 2 TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3 MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Shares Held by Security or Habersham . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Conversion of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 4 EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Rights of Former Security Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Security Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 Allowance for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.13 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.17 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.18 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

-i-
<PAGE> 141

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.19 Accounting Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.20 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF HABERSHAM . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Habersham Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.9 Allowance for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.13 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.17 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.18 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.19 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.20 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Affirmative Covenants of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Negative Covenants of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Covenants of Habersham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE 8 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1 Registration Statement; Proxy Statement; Shareholder Approval . . . . . . . . . . . . . . . 29
8.2 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.10 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.11 Agreement of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

</TABLE>

-ii-
<PAGE> 142

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
8.12 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.13 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . . 34
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Conditions to Obligations of Habersham . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.3 Conditions to Obligations of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.12 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

</TABLE>

-iii-
<PAGE> 143

LIST OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
1. Form of Letter Agreement between Habersham and holders of Security Options (Section 3.5).

2. Form of agreement of affiliates of Security. (Section 8.11).

3. Matters as to which Counsel for Security will opine. (Section 9.2(d)).

4. Matters as to which Powell, Goldstein, Frazer & Murphy will opine. (Section 9.3(d)).

"PREVIOUSLY DISCLOSED" REFERENCES

SECTION NUMBER DESCRIPTION

5.3 Capital Stock (Security)

5.5 Financial Statements (Security)

5.10 Assets (Security)

5.14 Employee Benefit Plans (Security)

5.15 Material Contracts (Security)

6.3(b) Capital Stock (Habersham)

6.10 Assets (Habersham)

6.5 Financial Statements (Habersham)

6.14 Employee Benefit Plans (Habersham)

6.15 Material Contracts (Habersham)

7.2(d)(g) Negative Covenants of Security

8.11 Agreement of Affiliates (Security)

8.12 Employee Benefits and Contracts (Habersham)

11.1 Definitions

</TABLE>

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of January 16, 1995 by and between HABERSHAM BANCORP
("Habersham"), a corporation organized and existing under the laws of the State
of Georgia, with its principal office located in Cornelia, Georgia, and
SECURITY BANCORP, INC. ("Security"), a corporation organized and existing under
the laws of the State of Georgia, with its principal office located in Canton,
Georgia.

PREAMBLE

The Boards of Directors of Security and Habersham are of the opinion
that the transactions described herein are in the best interests of the parties
and their respective shareholders. This Agreement provides for the combination
of Security with Habersham pursuant to the merger of Security with and into
Habersham. At the effective time of such merger, the outstanding shares of the
capital stock of Security shall be converted into the right to receive either
shares of the common stock of Habersham or cash. The transactions described in
this Agreement are subject to the approvals of the shareholders of Security,
the Board of Governors of the Federal Reserve System, the Georgia Department of
Banking and Finance and the satisfaction of certain other conditions described
in this Agreement. It is the intention of the parties to this Agreement that
the Merger for federal income tax purposes shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code.

Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.

NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:

ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER

1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, Security shall be merged with and into
Habersham in accordance with the provisions of Section 14-2-1101 of the GBCC
and with the effect provided in Section 14-2-1106 of the GBCC (the "Merger").
Habersham shall be the Surviving Corporation resulting from the Merger. The
Merger shall be consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective Boards of Directors of Security and
Habersham.

1.2 TIME AND PLACE OF CLOSING. The Closing will take place at
10:00 a.m. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 10:00 a.m.), or at such
other time as the Parties, acting through their chief executive officers may
mutually agree. The place of Closing shall be at the offices of Powell,
Goldstein, Frazer & Murphy, Atlanta, Georgia, or such other place as may be
mutually agreed upon by the Parties.

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1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of Georgia (the "Effective Time"). Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officers of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on the last
business day of the month in which occurs the last to occur of (a) the
effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (b) the date on which the shareholders
of Security approve this Agreement to the extent such approval is required by
applicable Law; or such later date as may be mutually agreed upon in writing by
the chief executive officers of each Party.

ARTICLE 2
TERMS OF MERGER

2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
Habersham in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed.

2.2 BYLAWS. The Bylaws of Habersham in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.

2.3 DIRECTORS AND OFFICERS. The directors of Habersham in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Habersham in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the officers of Habersham from and after
the Effective Time in accordance with the Bylaws of Habersham. On the Closing
Date of the Merger, or as soon thereafter as is practicable, Habersham will
increase the size of its Board of Directors to seven (7) and will select a
member of the Security Board of Directors (as such Board existed on the Closing
Date) to fill the resulting vacancy.

ARTICLE 3
MANNER OF CONVERTING SHARES

3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof the shares of the constituent
corporations shall be converted as follows:

(a) Each share of Habersham Capital Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.

(b) Each share of Security Common Stock (excluding shares
held by Security or SSB or by Habersham or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
the Merger

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Consideration per Share. The Merger Consideration per Share shall be paid in
either shares of Habersham Common Stock or cash at the election of each holder
of the shares of Security Common Stock being surrendered in the Merger, subject
to Section 3.1(c) hereof. The Merger Consideration per Share shall be
calculated by dividing the Total Merger Consideration by the number of shares
of Security Common Stock outstanding immediately prior to the Effective Time.
If the Merger Consideration per Share is to be paid in shares of Habersham
Common Stock, the number of shares of Habersham Common Stock to be issued in
exchange for a share of Security Common Stock shall be calculated by dividing
the Merger Consideration per Share by the Value per Share of Habersham Common
Stock.

(c) If the aggregate amount of cash elected to be
received by the Security shareholders plus the cash expected to be paid to any
shareholders ("Dissenting Shareholders") who elect to exercise their statutory
rights to dissent to the Merger pursuant to Article 13 of the GBCC exceeds the
Maximum Cash Value, cash representing the Maximum Cash Value will be
distributed as follows: first, to the Dissenting Shareholders who will be paid
in full in cash; and second, to the Security shareholders electing to receive
cash in the Merger ("Electing Shareholders") who will be paid cash on a pro
rata basis. The determination of the pro rata amounts will be as follows:
each share of Security Common Stock held by an Electing Shareholder will
represent the right to receive (i) cash in an amount determined by dividing the
Maximum Cash Value less the amount payable to Dissenting Shareholders (the
"Available Cash") by the number of shares of Security Common Stock ("Number of
Cash Election Shares") held by Electing Shareholders; and (ii) the number of
shares of Habersham Common Stock obtained by dividing the difference between
the aggregate amount of cash requested by Electing Shareholders and the
Available Cash by the Number of Cash Election Shares and dividing the resulting
amount by the Value per Share of Habersham Common Stock.

(d) (i) "Total Merger Consideration" shall mean 1.5 times
the Book Value of the Security Common Stock at December 31,
1994.

(ii) "Book Value" shall mean common stock, surplus,
undivided profits, current year profits, reserves for
organizational expenses and reserves for possible loan losses.
Book Value shall not include unrealized gains or losses from
securities portfolios or treasury stock.

(iii) "Value per Share of Habersham Common Stock" shall
mean 1.0 times the Book Value of the Habersham Common Stock at
December 31, 1994.

(iv) "Maximum Cash Value" shall mean 50% of the Total
Merger Consideration.

3.2 ANTI-DILUTION PROVISIONS. In the event Security or Habersham
changes the number of shares of Security Common Stock or Habersham Common Stock,
respectively, issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date therefor (in the case of a stock split or similar
recapitalization) shall be prior to the Effective Time, the Merger Consideration
per Share shall be proportionately adjusted.

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3.3 SHARES HELD BY SECURITY OR HABERSHAM. Each of the shares of
Security Common Stock held by any Security Company or by any Habersham Company,
in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.

3.4 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of shares of Security Common Stock exchanged
pursuant to the Merger, or of options to purchase shares of Security Common
Stock, who would otherwise have been entitled to receive a fraction of a share
of Habersham Common Stock (after taking into account all certificates delivered
by such holder) shall receive in lieu thereof cash (without interest) in an
amount equal to such fractional part of a share of Habersham Common Stock
multiplied by the Cash Value per share. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.

3.5 CONVERSION OF STOCK OPTIONS.

(a) At the Effective Time, all rights with respect to
Security Common Stock pursuant to stock options ("Security Options") granted by
Security under the Security Stock Plans, which are outstanding at the Effective
Time, whether or not exercisable, shall be converted into either cash,
Habersham Common Stock or options to purchase Habersham Common Stock pursuant
to the terms of that certain Letter Agreement dated January 16, 1995 among
Habersham, Security and the holders of Security Options referred to in Section
9.1(g) of this Agreement, the form of which is attached hereto as Exhibit 1.

(b) All restrictions or limitations on transfer with
respect to Security Common Stock awarded under the Security Stock Plans or any
other plan, program, or arrangement of any Security Company, to the extent that
such restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program or arrangement, shall remain
in full force and effect with respect to shares of Habersham Common Stock into
which such restricted stock is converted pursuant to Section 3.1 of this
Agreement.

ARTICLE 4
EXCHANGE OF SHARES

4.1 EXCHANGE PROCEDURES. Unless the parties otherwise agree,
promptly after the Effective Time, Habersham shall mail to the former
shareholders of Security appropriate transmittal materials which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of Security Common Stock shall pass, only upon
proper delivery of such certificates to Habersham. After the Effective Time,
each holder of shares of Security Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) issued and outstanding at
the Effective Time shall surrender the certificate or certificates representing
such shares to Habersham and shall promptly upon surrender thereof receive in
exchange therefor the consideration provided in Section 3.1 of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement.
To the extent required by Section 3.4 of this Agreement, each holder of shares
of Security Common Stock issued and outstanding at the Effective Time also
shall receive, upon surrender of the certificate or certificates representing
such shares, cash in lieu of any fractional

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share of Habersham Common Stock to which such holder may be otherwise entitled
(without interest). Habersham shall not be obligated to deliver the
consideration to which any former holder of Security Common Stock is entitled
as a result of the Merger until such holder surrenders his certificate or
certificates representing the shares of Security Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of Security
Common Stock so surrendered shall be duly endorsed as Habersham may require.
Any other provision of this Agreement notwithstanding, Habersham shall not be
liable to a holder of Security Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.

4.2 RIGHTS OF FORMER SECURITY SHAREHOLDERS. At the Effective
Time, the stock transfer books of Security shall be closed as to holders of
Security Common Stock immediately prior to the Effective Time and no transfer
of Security Common Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of Security Common Stock (other than shares to be canceled pursuant to Section
3.3 of this Agreement) shall from and after the Effective Time represent for
all purposes only the right to receive the consideration provided in Sections
3.1 and 3.4 of this Agreement in exchange therefor. To the extent permitted by
Law, former shareholders of record of Security shall be entitled to vote after
the Effective Time at any meeting of Habersham shareholders the number of whole
shares of Habersham Common Stock into which their respective shares of Security
Common Stock are converted, regardless of whether such holders have exchanged
their certificates representing Security Common Stock for certificates
representing Habersham Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by Habersham
on the Habersham Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of Habersham Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate representing shares of Security Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 4.1 of this Agreement. However, upon
surrender of such Security Common Stock certificate, both the Habersham Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered cash payments to be paid
for fractional share interests (without interest) shall be delivered and paid
with respect to each share represented by such certificate.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SECURITY

Security hereby represents and warrants to Habersham as follows:

5.1 ORGANIZATION, STANDING, AND POWER. Security is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Security
is duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such

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jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Security.

5.2 AUTHORITY; NO BREACH BY AGREEMENT.

(a) Security has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Security, subject to the approval of this Agreement by the holders of a
majority of the outstanding Security Common Stock. Subject to such requisite
shareholder approval, this Agreement represents a legal, valid and binding
obligation of Security, enforceable against Security in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).

(b) Neither the execution and delivery of this Agreement
by Security, nor the consummation by Security of the transactions contemplated
hereby, nor compliance by Security with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of Security's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Security Company under, any Contract or Permit of any Security
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Security, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.1 (b) of this Agreement, violate any Law or Order
applicable to any Security Company or any of their respective Assets.

(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service with respect to any employee benefit plans, and other than Consents,
filings or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Security, no notice to, filing with, or Consent of any public body or authority
is necessary for the consummation by Security of the Merger and the other
transactions contemplated in this Agreement.

5.3 CAPITAL STOCK.

(a) The authorized capital stock of Security consists of
(i) 5,000,000 shares of Security Common Stock, of which 525,000 shares are
issued and outstanding as of the date of this Agreement and not more than
525,000 shares will be issued and outstanding at the Effective Time and (ii)
1,000,000 shares of Security Preferred Stock, none of which are issued and
outstanding as of the date of this Agreement. All of the issued and
outstanding shares of capital stock of Security are duly and validly issued and
outstanding and are fully paid and nonassessable under the GBCC. None of the
outstanding shares of capital stock of Security has been issued in violation of
any preemptive rights of the current or past shareholders of Security.
Security has reserved 67,750

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<PAGE> 150

shares of Security Common Stock for issuance under the Security Stock Plans,
pursuant to which options to purchase not more than 67,750 shares of Security
Common Stock are outstanding as of the date of this Agreement and at the
Effective Time.

(b) Except as set forth in Section 5.3(a) of this
Agreement, or as Previously Disclosed, there are no shares of capital stock or
other equity securities of Security outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of Security or contracts,
commitments, understandings, or arrangements by which Security is or may be
bound to issue additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its capital stock.

5.4 SECURITY SUBSIDIARIES. SSB is the only subsidiary of Security
as of the date of this Agreement and will be the only subsidiary of Security at
the Effective Time. Security owns all of the issued and outstanding shares of
capital stock of SSB. No equity securities of SSB are or may become required
to be issued (other than to Security) by reason of any options, warrants,
scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of SSB, and there are no
Contracts by which SSB is bound to issue (other than to Security) additional
shares of its capital stock or options, warrants, or rights to purchase or
acquire any additional shares of its capital stock or by which any Security
Company is or may be bound to transfer any shares of the capital stock of SSB
(other than to Security). There are no Contracts relating to the rights of any
Security Company to vote or to dispose of any shares of the capital stock of
SSB. All of the shares of capital stock of SSB held by Security are fully paid
and nonassessable under the applicable corporation Law of the jurisdiction in
which SSB is organized and are owned by Security free and clear of any Lien.
SSB is a bank that is duly organized and validly existing under the Laws of the
jurisdiction in which it is organized. SSB has the corporate power and
authority necessary for it to own, lease and operate its Assets and to carry on
its business as now conducted, and SSB is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Security. SSB is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.

5.5 FINANCIAL STATEMENTS. Security has Previously Disclosed, and
delivered to Habersham prior to the execution of this Agreement copies of all
Security Financial Statements for periods ended prior to the date hereof and
will deliver to Habersham copies of all Security Financial Statements prepared
subsequent to the date hereof. The Security Financial Statements (as of the
dates thereof and for the periods covered thereby) (a) are or, if dated after
the date of this Agreement, will be in accordance with the books and records of
the Security Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained
in accordance with good business practices, and (b) present or will present, as
the case may be, fairly the consolidated financial position of the Security
Companies as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the Security Companies for
the periods indicated, in accordance with GAAP (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto or,
in the case of interim financial statements, to normal recurring year-end
adjustments that are not material).

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5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Security Company has
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Security as
of December 31, 1993 and September 30, 1994, included in the Security Financial
Statements or reflected in the notes thereto. No Security Company has incurred
or paid any Liability since September 30, 1994, except for such Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Security.

5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1994, except as disclosed in SEC Documents filed by Security prior to the date
of this Agreement, (a) there have been no events, changes or occurrences which
have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Security, and (b) the Security Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Security provided in Article Seven of this
Agreement.

5.8 TAX MATTERS.

(a) All Tax returns required to be filed by or on behalf
of any of the Security Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before September 30, 1994, and on or before the date of most recent
fiscal year end immediately preceding the Effective Time, except to the extent
that all such failures to file, taken together, are not reasonably likely to
have a Material Adverse Effect on Security and all returns filed are complete
and accurate to the Knowledge of Security. All Taxes shown on filed returns
have been paid. As of the date of this Agreement, there is no audit
examination, deficiency, or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Material Adverse Effect on Security, except as reserved
against in the Security Financial Statements delivered prior to the date of
this Agreement. All Taxes and other Liabilities due with respect to completed
and settled examinations or concluded Litigation have been paid.

(b) None of the Security Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect, and no unpaid tax
deficiency has been asserted in writing against or with respect to any Security
Company, which deficiency is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security.

(c) Adequate provision for any Taxes due or to become due
for any of the Security Companies for the period or periods through and
including the date of the respective Security Financial Statements has been
made and is reflected on such Security Financial Statements.

(d) Deferred Taxes of the Security Companies have been
provided for in accordance with GAAP.

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(e) Each of the Security Companies is in compliance with,
and its records contain all information and documents (including, without
limitation, properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under
federal, state and local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code, except for such instances of noncompliance and such omissions as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Security.

(f) Effective January 1, 1993, Security adopted Financial
Accounting Standards Board Statement 109, "Accounting for Income Taxes."

5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
possible loan or credit losses (the "Allowance") shown on the consolidated
balance sheets of Security included in the most recent Security Financial
Statements dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of Security included in the Security
Financial Statements as of dates subsequent to the execution of this Agreement
will be, as of the dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of the Security Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the Security Companies as of the dates thereof except where the failure of such
Allowance to be so adequate is not reasonably likely to have a Material Adverse
Effect on Security.

5.10 ASSETS. Except as Previously Disclosed or as disclosed or
reserved against in the Security Financial Statements, the Security Companies
have good and marketable title, free and clear of all Liens, to all of their
respective Assets. All material tangible properties used in the businesses of
the Security Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
Security's past practices. All Assets which are material to Security's
business on a consolidated basis, held under leases or subleases by any of the
Security Companies, are held under valid Contracts enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
policies of fire, theft, liability, and other insurance maintained with respect
to the Assets or businesses of the Security Companies provide adequate coverage
under current industry practices against loss or Liability, and the fidelity
and blanket bonds in effect as to which any of the Security Companies is a
named insured are reasonably sufficient. The Assets of the Security Companies
include all assets required to operate the business of the Security Companies
as presently conducted.

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5.11 ENVIRONMENTAL MATTERS.

(a) To the Knowledge of Security, each Security Company,
its Participation Facilities and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Security.

(b) To the Knowledge of Security, there is no Litigation
pending or threatened before any court, governmental agency or authority or
other forum in which any Security Company or any of its Participation
Facilities has been or, with respect to threatened Litigation, may be named as
a defendant (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material (as defined below) or oil, whether or not occurring at,
on, under or involving a site owned, leased or operated by any Security Company
or any of its Participation Facilities, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security.

(c) To the Knowledge of Security, there is no Litigation
pending or threatened before any court, governmental agency or board or other
forum in which any of its Loan Properties (or any Security Company in respect
of such Loan Property) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material or oil,
whether or not occurring at, on, under or involving a Loan Property, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Security.

(d) To the Knowledge of Security, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Security.

(e) During the period of (i) any Security Company's
ownership or operation of any of their respective current properties, (ii) any
Security Company's participation in the management of any Participation
Facility, or (iii) any Security Company's holding of a security interest in a
Loan Property, there have been no releases of Hazardous Material or oil in, on,
under or affecting any such property, Participation Facility, or Loan Property,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security. Prior to the period of (i)
any Security Company's ownership or operation of any of their respective
current properties, (ii) any Security Company's participation in the management
of any Participation Facility, or (iii) any Security Company's holding of a
security interest in a Loan Property, there were no releases of Hazardous
Material or oil in, on, under or affecting any such property, Participation
Facility or Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Security.

5.12 COMPLIANCE WITH LAWS. Security is duly registered as a bank
holding company under the BHC Act. Each Security Company has in effect all
Permits necessary for it to own, lease or operate its Assets and to carry on
its business as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Security, and there has occurred no Default under any such
Permit, other than

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Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security. No Security Company:

(a) is in violation of any Laws, Orders or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security; and

(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Security
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Security, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security, or (iii) requiring any
Security Company to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.

5.13 LABOR RELATIONS. No Security Company is the subject of any
Litigation asserting that it or any other Security Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other Security Company
to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving any Security Company,
pending or threatened, or to its Knowledge, is there any activity involving any
Security Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.

5.14 EMPLOYEE BENEFIT PLANS.

(a) Security has Previously Disclosed, and delivered or
made available to Habersham prior to the execution of this Agreement copies in
each case of all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus, or
other incentive plans all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans" as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to by any Security Company or Affiliate thereof
for the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors independent contractors, or other
beneficiaries are eligible to participate (collectively, the "Security Benefit
Plans"). Any of the Security Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Security Pension Plan." No Security Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.

(b) All Security Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which

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are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Security. No Security Company nor, to the Knowledge of
Security, any other party has engaged in a transaction with respect to any
Security Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof would subject any Security Company to a tax or
penalty imposed by either Section 4975 of the Internal Revenue Code or Section
502(i) of ERISA in amounts which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Security.

(c) Neither Security nor any entity which is considered
one employer with Security under Section 414 of the Internal Revenue Code (an
"ERISA Affiliate of Security") maintains or has ever maintained a Security
Pension Plan.

(d) No Security Company has any obligations for retiree
health and life benefits under any of the Security Benefit Plans and there are
no restrictions on the rights of such Security Company to amend or terminate
any such Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Material Adverse Effect on Security.

(e) Except as Previously Disclosed, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of any Security Company
from any Security Company under any Security Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Security Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.

(f) The actuarial present values of all accrued deferred
compensation entitlements (including, without limitation, entitlements under
any executive compensation, supplemental retirement, or employment agreement)
of employees and former employees of any Security Company and their respective
beneficiaries have been fully reflected on the Security Financial Statements to
the extent required by and in accordance with GAAP.

(g) Security and each ERISA Affiliate of Security has
complied with the continuation of coverage requirements of Section 1001 of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA
Sections 601 through 608.

(h) Neither Security nor any ERISA Affiliate of Security
is obligated, contingently or otherwise, under any agreement to pay any amount
which would be treated as a "parachute payment," as defined in Section 280G(b)
of the Internal Revenue Code (determined without regard to Section
280G(b)(2)(A)(ii) of the Internal Revenue Code).

(i) Other than routine claims for benefits, there are no
actions, audits, investigations, suits or claims pending, or threatened against
any Security Benefit Plan, any trust or other funding agency created
thereunder, or against any fiduciary of any Security Benefit Plan or against
the assets of any Security Benefit Plan.

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5.15 MATERIAL CONTRACTS. Except as Previously Disclosed or
otherwise reflected in the Security Financial Statements, none of the Security
Companies, nor any of their respective Assets, businesses or operations, is a
party to, or is bound or affected by, or receives benefits under, (a) any
employment, severance, termination, consulting or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $10,000,
excluding "at will" employment arrangements, (b) any Contract relating to the
borrowing of money by any Security Company or the guarantee by any Security
Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (c) any Contracts between or among Security
Companies, and (d) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by Security with the
SEC as of the date of this Agreement that has not been filed as an exhibit to
Security's Form 10-K filed for the fiscal year ended December 31, 1993, or in
an SEC Document and identified to Habersham (together with all Contracts
referred to in Sections 5.10 and 5.14(a) of this Agreement, the "Security
Contracts"). None of the Security Companies is in Default under any Security
Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Security. All of
the indebtedness of any Security Company for money borrowed is prepayable at
any time by such Security Company without penalty or premium.

5.16 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Security, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Security Company,
or against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Security, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Security
Company, that are reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Security.

5.17 REPORTS. Since January 1, 1992, each Security Company has
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and Forms 8-K, (b) other
Regulatory Authorities, and (c) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Security). As of their respective dates, each of
such reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document to Security's
Knowledge did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.

5.18 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Security
Company or any Affiliate thereof to Habersham pursuant to this Agreement or any
other document, agreement or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made,

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not misleading. None of the information supplied or to be supplied by any
Security Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by Habersham with the SEC will, when the Registration
Statement becomes effective, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Security Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Security's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a Security
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of Security, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Security Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.

5.19 ACCOUNTING TAX AND REGULATORY MATTERS. No Security Company or
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (a) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of
a condition or restriction of the type referred to in the second sentence of
such Section. To the Knowledge of Security, there exists no fact,
circumstance, or reason why the requisite Consents referred to in Section
9.1(b) of this Agreement cannot be received in a timely manner without the
imposition of any condition of the type described in the second sentence of
such Section 9.1(b).

5.20 CHARTER PROVISIONS. Each Security Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Security Company or
restrict or impair the ability of Habersham to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of any Security Company
that may be acquired or controlled by it.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF HABERSHAM

Habersham hereby represents and warrants to Security as follows:

6.1 ORGANIZATION, STANDING, AND POWER. Habersham is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and is duly registered as a bank holding company under the
BHC Act. Habersham has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Habersham
is

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duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Habersham.

6.2 AUTHORITY; NO BREACH BY AGREEMENT.

(a) Habersham has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Habersham. This Agreement represents a legal, valid and binding
obligation of Habersham, enforceable against Habersham in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).

(b) Neither the execution and delivery of this Agreement
by Habersham, nor the consummation by Habersham of the transactions
contemplated hereby, nor compliance by Habersham with any of the provisions
hereof will (i) conflict with or result in a breach of any provision of
Habersham's Articles of Incorporation or Bylaws, or (ii) constitute or result
in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Habersham Company under, any Contract
or Permit of any Habersham Company, where such Default or Lien, or any failure
to obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Habersham, or (iii) subject to receipt
of the requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any Habersham Company or any of their
respective Assets.

(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, and other than Consents, filings or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Habersham, no notice to,
filing with, or Consent of any public body or authority is necessary for the
consummation by Habersham of the Merger and the other transactions contemplated
in this Agreement.

6.3 CAPITAL STOCK.

(a) The authorized capital stock of Habersham consists of
(i) 1,000,000 shares of Habersham Common Stock. On the date of this Agreement,
there were 334,651 shares of Habersham Common Stock issued and outstanding. As
of the date of this Agreement, 39,000 shares

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of Habersham Common Stock were reserved for issuance upon the exercise of
outstanding stock options and purchases under the Habersham Bancorp Incentive
Stock Option Plan. All of the issued and outstanding shares of Habersham
Capital Stock are, and all of the shares of Habersham Common Stock to be issued
in exchange for shares of Security Common Stock upon consummation of the
Merger, when issued in accordance with the terms of this Agreement, will be,
duly and validly issued and outstanding and fully paid and nonassessable under
the GBCC. None of the outstanding shares of Habersham Capital Stock has been,
and none of the shares of Habersham Common Stock to be issued in exchange for
shares of Security Common Stock upon consummation of the Merger will be, issued
in violation of any preemptive rights of the current or past shareholders of
Habersham.

(b) Except as set forth in Section 6.3(a) of this
Agreement, or as Previously Disclosed, there are no shares of capital stock or
other equity securities of Habersham outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of Habersham or contracts,
commitments, understandings, or arrangements by which Habersham is or may be
bound to issue additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its capital stock.

6.4 HABERSHAM BANK. Habersham owns all of the issued and
outstanding shares of capital stock of Habersham Bank. No equity securities of
Habersham Bank are or may become required to be issued (other than to a
Habersham Company) by reason of any options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the
capital stock of Habersham Bank, and there are no Contracts by which Habersham
Bank is bound to issue (other than to a Habersham Company) additional shares of
its capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock or by which Habersham Bank is or may be
bound to transfer any shares of the capital stock of Habersham Bank (other than
to a Habersham Company). There are no Contracts relating to the rights of any
Habersham Company to vote or to dispose of any shares of the capital stock of
Habersham Bank. All of the shares of capital stock of Habersham Bank held by
Habersham are fully paid and nonassessable under the applicable Law under which
Habersham Bank is organized and are owned by Habersham free and clear of any
Lien. Habersham Bank is a bank that is duly organized and validly existing
under the laws of the jurisdiction in which it is organized. Habersham has the
corporate power and authority necessary for it to own, lease and operate its
Assets and to carry on its business as now conducted and is duly qualified or
licensed to transact business in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Habersham. Habersham Bank is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder.

6.5 FINANCIAL STATEMENTS. Habersham has Previously Disclosed and
delivered to Security prior to the execution of this Agreement copies of all
Habersham Financial Statements for periods ended prior to the date hereof and
will deliver to Security copies of all Habersham Financial Statements prepared
subsequent to the date hereof. The Habersham Financial Statements (as of the

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dates thereof and for the periods covered thereby) (a) are or, if dated after
the date of this Agreement, will be in accordance with the books and records of
the Habersham Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained
in accordance with good business practices, and (b) present or will present, as
the case may be, fairly the consolidated financial position of the Habersham
Companies as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the Habersham Companies for
the periods indicated, in accordance with GAAP (subject to exceptions as to
consistency specified therein or as may be indicated in the notes thereto or,
in the case of interim financial statements, to normal recurring year-end
adjustments that are not material).

6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Habersham Company has
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Habersham, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Habersham as
of December 31, 1993 and September 30, 1994, included in the Habersham
Financial Statements or reflected in the notes thereto. No Habersham Company
has incurred or paid any Liability since September 30, 1994, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Habersham.

6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1994, except as disclosed in SEC Documents filed by Habersham prior to the date
of this Agreement, (a) there have been no events, changes or occurrences which
have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Habersham, and (b) the Habersham Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Habersham provided in Article Seven of this
Agreement.

6.8 TAX MATTERS.

(a) All Tax returns required to be filed by or on behalf
of any of the Habersham Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before September 30, 1994, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, except to the
extent that all such failures to file, taken together, are not reasonably
likely to have a Material Adverse Effect on Habersham, and all returns filed
are complete and accurate to the Knowledge of Habersham. All Taxes shown on
filed returns have been paid. As of the date of this Agreement, there is no
audit examination, deficiency, or refund Litigation with respect to any Taxes
that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Material Adverse Effect on Habersham,
except as reserved against in the Habersham Financial Statements delivered
prior to the date of this Agreement. All Taxes and other Liabilities due with
respect to completed and settled examinations or concluded Litigation have been
paid.

(b) None of the Habersham Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect,

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and no unpaid tax deficiency has been asserted in writing against or with
respect to any Habersham Company, which deficiency is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Habersham.

(c) Adequate provision for any Taxes due or to become due
for any of the Habersham Companies for the period or periods through and
including the date of the respective Habersham Financial Statements has been
made and is reflected on such Habersham Financial Statements.

(d) Deferred Taxes of the Habersham Companies have been
provided for in accordance with GAAP.

(e) Effective January 1, 1993, Habersham adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."

6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The Allowance shown on
the consolidated balance sheets of Habersham included in the most recent
Habersham Financial Statements dated prior to the date of this Agreement was,
and the Allowance shown on the consolidated balance sheets of Habersham
included in the Habersham Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or guidelines) to
provide for losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the Habersham Companies and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the Habersham Companies as of the dates thereof except
where the failure of such Allowance to be so adequate is not reasonably likely
to have a Material Adverse Effect on Habersham.

6.10 ASSETS. Except as Previously Disclosed or as disclosed or
reserved against in the Habersham Financial Statements, the Habersham Companies
have good and marketable title, free and clear of all Liens, to all of their
respective Assets. All tangible properties used in the businesses of the
Habersham Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with Habersham's
past practices. All Assets which are material to Habersham's business on a
consolidated basis, held under leases or subleases by any of the Habersham
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The policies of fire, theft,
liability, and other insurance maintained with respect to the Assets or
businesses of the Habersham Companies provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket
bonds in effect as to which any of the Habersham Companies is a named insured
are reasonably sufficient. The Assets of the Habersham Companies include all
assets required to operate the business of the Habersham Companies as presently
conducted.

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6.11 ENVIRONMENTAL MATTERS.

(a) To the Knowledge of Habersham, each Habersham
Company, its Participation Facilities, and its Loan Properties are, and have
been, in compliance with all Environmental Laws, except for violations which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Habersham.

(b) To the Knowledge of Habersham, there is no Litigation
pending or threatened before any court, governmental agency or authority or
other forum in which any Habersham Company or any of its Participation
Facilities has been or, with respect to threatened Litigation, may be named as
a defendant (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material (as defined below) or oil, whether or not occurring at,
on, under or involving a site owned, leased or operated by any Habersham
Company or any of its Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Habersham.

(c) To the Knowledge of Habersham, there is no Litigation
pending or threatened before any court, governmental agency or board or other
forum in which any of its Loan Properties (or any Habersham Company in respect
of such Loan Property) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material or oil,
whether or not occurring at, on, under or involving a Loan Property, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Habersham.

(d) To the Knowledge of Habersham, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Habersham.

(e) During the period of (i) any Habersham Company's
ownership or operation of any of their respective current properties, (ii) any
Habersham Company's participation in the management of any Participation
Facility, or (iii) any Habersham Company's holding of a security interest in a
Loan Property, there have been no releases of Hazardous Material or oil in, on,
under or affecting such properties, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Habersham.
Prior to the period of (i) any Habersham Company's ownership or operation of
any of their respective current properties, (ii) any Habersham Company's
participation in the management of any Participation Facility, or (iii) any
Habersham Company's holding of a security interest in a Loan Property, to the
Knowledge of Habersham, there were no releases of Hazardous Material or oil in,
on, under or affecting any such property, Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Habersham.

6.12 COMPLIANCE WITH LAWS. Habersham is duly registered as a bank
holding company under the BHC Act. Each Habersham Company has in effect all
Permits necessary for it to own, lease or operate its Assets and to carry on
its business as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Habersham, and there has occurred no Default under any such
Permit, other than

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Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Habersham. No Habersham Company:

(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Habersham
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Habersham, (ii) threatening to revoke any Permits,
the revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Habersham, or (iii) requiring any
Habersham Company to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.

6.13 LABOR RELATIONS. No Habersham Company is the subject of any
Litigation asserting that it or any other Habersham Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other Habersham Company
to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving any Habersham Company,
pending or threatened, or to its Knowledge, is there any activity involving any
Habersham Company's employees seeking to certify a collective bargaining unit
or engaging in any other organization activity.

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6.14 EMPLOYEE BENEFIT PLANS.

(a) Habersham has Previously Disclosed and delivered or
made available to Security prior to the execution of this Agreement copies in
each case of all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus, or
other incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans" as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to by any Habersham Company or Affiliate thereof
for the benefit of employees, retirees, dependents, spouses, directors.,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses. directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "Habersham Benefit
Plans"). Any of the Habersham Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Habersham Pension Plan." No Habersham Pension Plan is or has been
a multiemployer plan within the meaning of Section 3(37) of ERISA.

(b) All Habersham Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Habersham. Each
Habersham ERISA Plan which is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from
the Internal Revenue Service, and Habersham is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. To
the Knowledge of Habersham, no Habersham Company nor any other party has
engaged in a transaction with respect to any Habersham Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof
would subject any Habersham Company to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Habersham.

(c) Neither Habersham nor any entity which is considered
one employer with Habersham under Section 414 of the Internal Revenue Code (an
"ERISA Affiliate of Habersham") maintains or has ever maintained a "defined
benefit plan," as defined in Section 414(j) of the Internal Revenue Code.

(d) Except as Previously Disclosed, (i) no Habersham
Company has any obligations for retiree health and life benefits under any of
the Habersham Benefit Plans and (ii) there are no restrictions on the rights of
such Habersham Company to amend or terminate any such Plan without incurring
any Liability thereunder, which Liability is reasonably likely to have a
Material Adverse Effect on Habersham.

(e) Except as Previously Disclosed, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of any Habersham
Company from any Habersham Company under any Habersham Benefit Plan or
otherwise, (ii) increase any benefits

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otherwise payable under any Habersham Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.

(f) Habersham and each ERISA Affiliate of Habersham has
complied with the continuation of coverage requirements of Section 1001 of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA
Sections 601 through 608.

(g) Neither Habersham nor any ERISA Affiliate of
Habersham is obligated, contingently or otherwise, under any agreement to pay
any amount which would be treated as a "parachute payment," as defined in
Section 280G(b) of the Internal Revenue Code (determined without regard to
Section 280G(b)(2)(A)(ii) of the Internal Revenue Code).

(h) Other than routine claims for benefits, there are no
actions, audits, investigations, suits or claims pending, or threatened against
any Habersham Benefit Plan, any trust or other funding agency created
thereunder, or against any fiduciary of any Habersham Benefit Plan or against
the assets of any Habersham Benefit Plan.

6.15 MATERIAL CONTRACTS. Except as Previously Disclosed or
otherwise reflected in the Habersham Financial Statements, none of the
Habersham Companies, nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (a) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $10,000, excluding "at will" employment arrangements, (b) any
Contract relating to the borrowing of money by any Habersham Company or the
guarantee by any Habersham Company of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, trade payables, and Contracts relating to borrowings or
guarantees made in the ordinary course of business), (c) any Contracts between
or among Habersham Companies, and (d) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-K filed by
Habersham with the SEC as of the date of this Agreement that has not been filed
as an exhibit to Habersham's Form 10-K filed for the fiscal year ended December
31, 1993, or in an SEC Document and identified to Habersham (together with all
Contracts referred to in Sections 6.10 and 6.14(a) of this Agreement, the
"Habersham Contracts"). None of the Habersham Companies is in Default under
any Habersham Contract, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Habersham.
All of the indebtedness of any Habersham Company for money borrowed is
prepayable at any time by such Habersham Company without penalty or premium.

6.16 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Habersham, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Habersham
Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Habersham. nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against any
Habersham Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Habersham.

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6.17 REPORTS. Since January 1, 1992, each Habersham Company has
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements, (b) other Regulatory Authorities, and (c) any applicable state
securities or banking authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Habersham). As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document to Habersham's Knowledge did not, in all material respects,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

6.18 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Habersham
Company or any Affiliate thereof to Security pursuant to this Agreement or any
other document, agreement or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied
or to be supplied by any Habersham Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by Habersham with the SEC,
will, when the Registration Statement becomes effective, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein not misleading. None of the information
supplied or to be supplied by any Habersham Company or any Affiliate thereof
for inclusion in the Proxy Statement to be mailed to Security's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by any Habersham Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of Security, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Habersham Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.

6.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No Habersham Company
or any Affiliate thereof has taken any action or has any Knowledge of any fact
or circumstance that is reasonably likely to (a) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (b)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement. To the Knowledge of
Habersham, there exists no fact, circumstance, or reason why the requisite
Consents referred to in Section 9.1(b) of this Agreement

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cannot be received in a timely manner without the imposition of any condition
or restriction of the type described in the second sentence of such Section
9.1(b).

6.20 CHARTER PROVISIONS. Each Habersham Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Habersham Company
or restrict or impair the ability of any Security shareholder to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
Habersham Common Stock that may be acquired or controlled by it.

ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION

7.1 AFFIRMATIVE COVENANTS OF SECURITY. Unless the prior written
consent of Habersham shall have been obtained, and except as otherwise
contemplated herein, Security shall, and shall cause SSB: (a) to operate its
business in the usual, regular and ordinary course; (b) to preserve intact its
business organization and Assets and maintain its rights and franchises; (c) to
use its reasonable efforts to cause its representations and warranties to be
correct at all times; and (d) to take no action which would (i) adversely
affect the ability of any Party to obtain any Consents required for the
transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement or (ii) adversely affect in any material respect the ability of
either Party to perform its covenants and agreements under this Agreement.

7.2 NEGATIVE COVENANTS OF SECURITY. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, Security covenants and agrees that it will not do or agree or commit
to do, or permit SSB to do or agree or commit to do, any of the following
without the prior written consent of the chief executive officer of Habersham,
which consent shall not be unreasonably withheld:

(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any Security Company, or

(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a Security
Company to another Security Company) in excess of an aggregate of
$500,000 (for the Security Companies on a consolidated basis) except
in the ordinary course of the business of Security Companies
consistent with past practices (which shall include, for SSB, creation
of deposit liabilities, purchases of federal funds, and entry into
repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any share of
stock held by any Security Company of any Lien or permit any such Lien
to exist; or

(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any Security
Company, or

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declare or pay any dividend or make any other distribution in respect
of Security's capital stock; or

(d) except for this Agreement, or pursuant to the
exercise of stock options outstanding as of the date hereof and
pursuant to the terms thereof in existence on the date hereto, or as
Previously Disclosed, issue, sell, pledge, encumber, authorize the
issuance of or enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of or otherwise permit to become
outstanding, any additional shares of Security Common Stock or any
other capital stock of any Security Company, or any stock appreciation
rights, or any option, warrant, conversion, or other right to acquire
any such stock, or any security convertible into any such stock; or

(e) adjust, split, combine or reclassify any capital
stock of any Security Company or issue or authorize the issuance of
any other securities in respect of or in substitution for shares of
Security Capital Stock or sell, lease, mortgage or otherwise dispose
of or otherwise encumber (i) any shares of capital stock of SSB
(unless any such shares of stock are sold or otherwise transferred to
Security) or (ii) any Asset having a book value in excess of $250,000
other than in the ordinary course of business for reasonable and
adequate consideration; or

(f) acquire direct or indirect control over any Person,
other than in connection with (i) internal reorganizations or
consolidations involving SSB, (ii) foreclosures in the ordinary course
of business, or (iii) acquisitions of control by SSB in its fiduciary
capacity; or

(g) grant any increase in compensation or benefits to the
employees or officers of any Security Company (including such
discretionary increases as may be contemplated by existing employment
agreements), except in accordance with past practice Previously
Disclosed or as required by Law; pay any bonus except in accordance
with past practice Previously Disclosed or the provisions of any
applicable program or plan adopted by its Board of Directors prior to
the date of this Agreement; enter into or amend any severance
agreements with officers of any Security Company; grant any increase
in fees or other increases in compensation or other benefits to
directors of any Security Company except in accordance with past
practice Previously Disclosed; or

(h) enter into or amend any employment Contract between
any Security Company and any Person (unless such amendment is required
by Law) that the Security Company does not have the unconditional
right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective
Time; or

(i) adopt any new employee benefit plan of any Security
Company or make any material change in or to any existing employee
benefit plans of any Security Company other than any such change that
is required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan; or

(j) make any significant change in any accounting methods
or systems of internal accounting controls, except as may be
appropriate to conform to changes in regulatory accounting
requirements or GAAP; or

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(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any
Security Company for money damages in excess of $250,000 or material
restrictions upon the operations of any Security Company; or

(l) except in the ordinary course of business, modify,
amend or terminate any material Contract or waive, release, compromise
or assign any material rights or claims.

7.3 COVENANTS OF HABERSHAM. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement,
Habersham covenants and agrees that it shall continue to conduct its business
and the business of its Subsidiaries in a manner designed in its reasonable
judgment, to enhance the long-term value of the Habersham Common Stock and the
business prospects of the Habersham Companies and to the extent consistent
therewith use all reasonable efforts to preserve intact the Habersham
Companies' core businesses and goodwill with their respective employees and the
communities they serve.

7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to it
or any of its Subsidiaries which (a) is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it or (b) is reasonably
likely to cause or constitute a material breach of any of its representations,
warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.

7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the SEC will
comply in all material respects with the securities Laws and will not contain
any 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, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.

ARTICLE 8
ADDITIONAL AGREEMENTS

8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
As soon as practicable after execution of this Agreement, Habersham shall file
the Registration Statement with the SEC, and shall use its reasonable efforts
to cause the Registration Statement to become effective under the 1933 Act and
take any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of Habersham
Common Stock upon consummation of the Merger. Security shall furnish all
information concerning it and the holders of its capital stock as Habersham may
reasonably request in connection with such action. Security shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration

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Statement is declared effective by the SEC, for the purpose of voting upon
approval of this Agreement and such other related matters as it deems
appropriate. In connection with the Shareholders' Meeting, (a) Habersham shall
prepare and file with the SEC on Security's behalf a Proxy Statement (which
shall be included in the Registration Statement) and mail it to Security's
shareholders, (b) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Proxy
Statement, (c) the Board of Directors of Security shall recommend (subject to
compliance with their fiduciary duties as advised by counsel) to its
shareholders the approval of this Agreement, (d) the Board of Directors and
officers of Security shall use their reasonable efforts to obtain such
shareholders' approval (subject to compliance with their fiduciary duties as
advised by counsel), and (e) the members of the Board of Directors of Security
shall vote all of their shares of Security Common Stock in favor of approval of
this Agreement.

8.2 LISTING. As soon as practicable after the date hereof,
Habersham will file an Initial Listing Application with Nasdaq with respect to
the Habersham Common Stock.

8.3 APPLICATIONS. Habersham shall promptly prepare and file, and
Security shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.

8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Habersham shall execute and file the Articles of
Merger with the Secretary of State of the State of Georgia in connection with
the Closing.

8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws, as promptly as practicable so as to permit
consummation of the Merger at the earliest possible date and to otherwise
enable consummation of the transactions contemplated hereby and shall cooperate
fully with the other Party hereto to that end (it being understood that any
amendments to the Registration Statement filed by Habersham in connection with
the Habersham Common Stock to be issued in the Merger or a resolicitation of
proxies as a consequence of an acquisition agreement by Habersham or any of its
Subsidiaries shall not violate this covenant), including, without limitation,
using its reasonable efforts to lift or rescind any Order adversely affecting
its ability to consummate the transactions contemplated herein and to cause to
be satisfied the conditions referred to in Article 9 of this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.

8.6 INVESTIGATION AND CONFIDENTIALITY.

(a) Prior to the Effective Time, each Party will keep the
other Party advised of all material developments relevant to its business and
to consummation of the Merger and shall permit the other Party to make or cause
to be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions

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contemplated hereby and shall not interfere unnecessarily with normal
operations. No investigation by a Party shall affect the representations and
warranties of the other Party.

(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return all documents and copies
thereof and all work papers containing confidential information received from
the other Party, except for one copy of any materials prepared by that Party or
any attorney for or other representative of that Party based upon such
confidential information.

(c) Each Party agrees to give the other Party notice as
soon as practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent,
either a material breach of any representation, warranty, covenant or agreement
of the other Party or which has had or is reasonably likely to have a Material
Adverse Effect on the other Party.

8.7 PRESS RELEASES. Prior to the Effective Time, Security and
Habersham shall consult with each other as to the form and substance of any
press release or other public disclosure materially related to this Agreement
or any other transaction contemplated hereby; provided, however, that nothing
in this Section 8.7 shall be deemed to prohibit any Party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such Party's disclosure obligations imposed by Law.

8.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the transactions contemplated hereby, no Security Company nor any Affiliate
thereof nor any investment banker, attorney, accountant or other representative
(collectively, "Representatives") retained by any Security Company shall
directly or indirectly solicit any Acquisition Proposal by any Person. Except
to the extent necessary to comply with the fiduciary duties of Security's Board
of Directors as advised by counsel, no Security Company or any Affiliate or
Representative thereof shall furnish any non-public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but Security may
communicate information about such an Acquisition Proposal to its shareholders
if and to the extent that it is required to do so in order to comply with its
legal obligations as advised by counsel. Security shall promptly notify
Habersham orally and in writing in the event that it receives any inquiry or
proposal relating to any such transaction. Security shall (a) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of the
foregoing, and (b) direct and use its reasonable efforts to cause all of its
Representatives not to engage in any of the foregoing.

8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for treatment as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes.

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8.10 CHARTER PROVISIONS. Each Security Company shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws or other governing instruments of any
Security Company or restrict or impair the ability of Habersham to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
any Security Company that may be acquired or controlled by it. Each Habersham
Company shall take all necessary action to ensure that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to
any Person under the Articles of Incorporation, Bylaws or other governing
instruments of any Habersham Company or restrict or impair the ability of any
Security shareholder to vote, or otherwise exercise the rights of a shareholder
with respect to, shares of Habersham Common Stock that may be acquired or
controlled by it.

8.11 AGREEMENT OF AFFILIATES. Security has Previously Disclosed
all Persons whom it reasonably believes is an "affiliate" of Security for
purposes of Rule 145 under the 1933 Act. Security shall use its reasonable
efforts to cause each such Person to deliver to Habersham not later than thirty
(30) days after the date of this Agreement, a written agreement, substantially
in the form of Exhibit 2, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Security Common Stock held by
such Person except as contemplated by such agreement or by this Agreement and
will not sell, pledge, transfer, or otherwise dispose of the shares of
Habersham Common Stock to be received by such Person upon consummation of the
Merger except in compliance with applicable provisions of the 1933 Act and the
rules and regulations thereunder. Habersham shall be entitled to place
restrictive legends upon certificates for shares of Habersham Common Stock
issued to affiliates of Security pursuant to this Agreement to enforce the
provisions of this Section 8.11). Habersham shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of Habersham Common Stock by such affiliates.

8.12 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, Habersham shall provide generally to officers and employees of the
Security Companies who continue employment with the Security Companies
following the Effective Time employee benefits under employee benefit plans
(including the Habersham Bancorp Savings Investment Plan but excluding any
stock option or other plan involving the potential issuance of Habersham Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Habersham Companies to their
similarly situated officers and employees. For purposes of participation and
vesting under such employee benefit plans, the service of the employees of the
Security Companies prior to the Effective Time shall be treated as service with
a Habersham Company participating in such employee benefit plans, provided
that, with respect to any employee benefit plan where the benefits are funded
through insurance, the granting of such service shall be subject to the consent
of the appropriate insurer and may be conditioned upon an employee's
participation in a Security Benefit Plan of the same type immediately prior to
the Effective Time. Habersham also shall honor in accordance with their terms
all employment, severance, consulting and other compensation Contracts
Previously Disclosed to Habersham between any Security Company and any current
or former director, officer, or employee thereof and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Time
under the Security Benefit Plans.

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8.13 INDEMNIFICATION.

(a) For a period of six years after the Effective Time,
Habersham shall indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the Security Companies (each, an
"Indemnified Party") against all Liabilities arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the full extent
permitted under Georgia Law and by Security's Articles of Incorporation and
Bylaws as in effect on the date hereof including provisions relating to
advances of expenses incurred in the defense of any Litigation. Without
limiting the foregoing, in any case in which approval by Habersham is required
to effectuate any indemnification, Habersham shall direct, at the election of
the Indemnified Party, that the determination of any such approval shall be
made by independent counsel mutually agreed upon between Habersham and the
Indemnified Party.

(b) Habersham shall use its reasonable efforts to
maintain Security's existing directors' and officers' liability insurance
policy (or a policy, including Habersham's existing policy, providing at least
comparable coverage) covering persons who are currently covered by such
insurance for a period of three years after the Effective Time on terms no less
favorable than those in effect on the date hereof, provided that Habersham
shall not be obligated to make annual premium payments in respect of such
policy (or coverage replacing such policy) which exceed, for the portion
related to Security's directors and officers, 150% of the annual premium
payments on Security's current policy in effect as of the date of this
Agreement.

(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a), upon learning of any such Liability or
Litigation, shall promptly notify Habersham thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) Habersham
shall have the right to assume the defense thereof and Habersham shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Habersham elects not to
assume such defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between Habersham and
the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Habersham shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that Habersham shall be obligated pursuant to this
paragraph (c) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense
of any such Litigation, and (iii) Habersham shall not be liable for any
settlement effected without its prior written consent; and provided further
that Habersham shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law.

(d) If Habersham or any of its successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in each
case, proper provision shall be made so that the successors and assigns of
Habersham shall assume the obligations set forth in this Section 8.13.

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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:

(a) SHAREHOLDER APPROVAL. The shareholders of Security
shall have approved this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger, as and to the
extent required by Law, or by the provisions of any governing
instruments.

(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner
(including, without limitation, requirements relating to the raising
of additional capital or the disposition of Assets) which in the
reasonable judgment of the Board of Directors of either Party would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render
inadvisable the consummation of the Merger.

(c) CONSENTS AND APPROVALS. Each Party shall have
obtained any and all Consents required for consummation of the Merger
(other than those referred to in Section 9.1(b) of this Agreement) or
for the preventing of any Default under any Contract or Permit of such
Party which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such
Party.

(d) LEGAL PROCEEDINGS. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action which
prohibits, restricts or makes illegal consummation of the transactions
contemplated by this Agreement.

(e) REGISTRATION STATEMENT. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of
Habersham Common Stock issuable pursuant to the Merger shall have been
received.

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(f) TAX MATTERS. Security and Habersham shall have
received a written opinion of counsel from Powell, Goldstein, Frazer &
Murphy, in form reasonably satisfactory to it (the "Tax Opinion"), to
the effect that for federal income tax purposes (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, (ii) the exchange in the Merger of Security
Common Stock for Habersham Common Stock will not give rise to gain or
loss to the shareholders of Security with respect to such exchange
(except to the extent of any cash received), and (iii) neither
Security nor Habersham will recognize gain or loss as a consequence of
the Merger (except for income and deferred gain recognized pursuant to
Treasury regulations issued under Section 1502 of the Internal Revenue
Code). In rendering such Tax Opinion, counsel shall be entitled to
rely upon representations of officers of Security and Habersham
reasonably satisfactory in form and substance to such counsel.

(g) AGREEMENT REGARDING STOCK OPTIONS. Security,
Habersham and the holders of Security Stock Options shall have
executed a Letter Agreement regarding the treatment of the Security
Stock Options in the Merger.

9.2 CONDITIONS TO OBLIGATIONS OF HABERSHAM. The obligations of
Habersham to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Habersham pursuant to Section 11.6(a) of
this Agreement:

(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Security set forth or referred to in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii)
for representations and warranties (other than the representations and
warranties set forth in Section 5.3 of this Agreement, which shall be
true in all material respects) the inaccuracies of which relate to
matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Security.

(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Security to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.

(c) CERTIFICATES. Security shall have delivered to
Habersham (i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer, to the effect that the
conditions of its obligations set forth in Section 9.2(a) and 9.2(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Security's Board of Directors and
shareholders evidencing the taking of all corporate action necessary
to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, all in such reasonable detail as Habersham and its counsel
shall request.

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(d) OPINION OF COUNSEL. Security shall have delivered to
Habersham an opinion of Parker, Johnson, Cook & Dunlevie, counsel to
Security, dated as of the Closing Date, in substantially the form of
Exhibit 3 hereto.

(e) ACCOUNTANT'S LETTERS. Habersham shall have received
from Deloitte & Touche LLP, letters dated not more than five (5) days
prior to (i) the date of the Proxy Statement and (ii) the Effective
Time, with respect to certain financial information regarding
Security, in form and substance reasonably satisfactory to Habersham,
which letters shall be based upon customary specified procedures
undertaken by such firm.

(f) AFFILIATES AGREEMENTS. Habersham shall have received
from each affiliate of Security the affiliates letter referred to in
Section 8.11 hereof.

(g) DISSENTING SHARES. The aggregate number of shares of
Security Common Stock dissenting to the Merger shall not exceed 52,500
shares unless Habersham, in its sole discretion, shall agree to a
larger number.

9.3 CONDITIONS TO OBLIGATIONS OF SECURITY. The obligations of
Security to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Security pursuant to Section 11.6(b) of
this Agreement:

(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Habersham set forth or referred to in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii)
for representations and warranties (other than the representations and
warranties set forth in Section 6.3 of this Agreement, which shall be
true in all material respects) the inaccuracies of which relate to
matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Habersham.

(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Habersham to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.

(c) CERTIFICATES. Habersham shall have delivered to
Security (i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Habersham's Board of Directors evidencing
the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as Security and its counsel shall request.

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(d) OPINION OF COUNSEL. Habersham shall have delivered
to Security an opinion of Powell, Goldstein, Frazer & Murphy, counsel
to Habersham, dated as of the Closing Date, in substantially the form
of Exhibit 4 hereto.

(e) FAIRNESS OPINION. Security shall have received from
Alex Sheshunoff & Co. Investment Banking a letter, dated not more than
five (5) business days prior to the date of the Proxy Statement, to
the effect that, in the opinion of such firm, the consideration to be
received by Security shareholders in connection with the Merger is
fair, from a financial point of view, to such shareholders.

(f) NASDAQ LISTING. Habersham shall have caused the
Habersham Common Stock to be listed on Nasdaq.

ARTICLE 10
TERMINATION

10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Security, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:

(a) By mutual consent of the Board of Directors of
Habersham and the Board of Directors of Security; or

(b) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event of a breach by the other Party of any
representation or warranty contained in this Agreement which cannot be
or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach and which breach
would provide the non-breaching party the ability to refuse to
consummate the Merger under the standard set forth in Section 9.2(a)
of this Agreement in the case of Habersham and Section 9.3(a) of this
Agreement in the case of Security; or

(c) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event of a material breach by the other Party
of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach; or

(d) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) if
the shareholders of Security fail to vote their approval of this
Agreement and the transactions contemplated

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hereby as required by the GBCC at the Shareholders' Meeting where the
transactions were presented to such shareholders for approval and
voted upon; or

(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated on or before
September 30, 1995, but only if the failure to consummate the
transactions contemplated hereby on or before such date is not caused
by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 10.1(e); or

(f) By the Board of Directors of either Party (provided
that the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event that any of the conditions precedent to
the obligations of such Party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) of
this Agreement.

10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (a) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (b) a termination pursuant to
Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.

10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.11 and 8.13 of this Agreement.

ARTICLE 11
MISCELLANEOUS

11.1 DEFINITIONS. Except as otherwise provided herein, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:

"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or Assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the Assets of such Party or any of its Subsidiaries.

"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person or
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person.

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"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.

"ALLOWANCE" shall have the meaning provided in Section 5.9 of
this Agreement.

"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or
utilized in such Person's business, directly or indirectly, in whole
or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.

"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.

"BOOK VALUE" shall mean common stock, surplus, undivided
profits, current year profits, reserves for organizational expenses
and reserves for possible loan losses. Book Value shall not include
unrealized gains or losses from securities portfolios or treasury
stock.

"CLOSING" shall mean the closing of the transactions
contemplated hereby, as described in Section 1.2 of this Agreement.

"CLOSING DATE" shall mean the date on which the Effective Time
occurs.

"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.

"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.

"DEFAULT" shall mean (a) any breach or violation of or default
under any Contract, Order or Permit, (b) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order or Permit, or (c) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.

"EFFECTIVE TIME" shall mean the date and time at which the
Merger becomes effective as defined in Section 1.3 of this Agreement.

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"ENVIRONMENTAL LAWS" shall mean all Laws which are
administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
primary jurisdiction over pollution or protection of the environment.

"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

"ERISA AFFILIATE" shall have the meaning provided in Section
5.14 of this Agreement.

"ERISA PLAN" shall have the meaning provided in Section 5.14
of this Agreement.

"EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof and
may be referred to in this Agreement and any other related instrument
or document without being attached hereto.

"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.

"GEORGIA ARTICLES OF MERGER" shall mean the Articles of Merger
to be executed by Habersham and filed with the Secretary of State of
the State of Georgia relating to the Merger as contemplated by Section
1.1 of this Agreement.

"GBCC" shall mean the Georgia Business Corporation Code.

"HABERSHAM BANK" shall mean Habersham Bank, a Georgia
state-chartered bank and a Habersham subsidiary.

"HABERSHAM BENEFIT PLANS" shall have the meaning set forth in
Section 6.14 of this Agreement.

"HABERSHAM CAPITAL STOCK" shall mean, collectively, the
Habersham Common Stock and any other class or series of capital stock
of Habersham.

"HABERSHAM COMMON STOCK" shall mean the $2.50 par value common
stock of Habersham.

"HABERSHAM COMPANIES" shall mean, collectively, Habersham and
all Habersham Subsidiaries.

"HABERSHAM FINANCIAL STATEMENTS" shall mean (a) the
consolidated statements of condition (including related notes and
schedules, if any) of Habersham as of September 30, 1994, and as of
December 31, 1993 and 1992, and the related statements of income,
changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) for the nine months ended September 30,
1994, and for each of the three years ended December 31,

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1993, 1992 and 1991, as filed by Habersham in SEC Documents and (b)
the consolidated statements of condition of Habersham (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 1994.

"HABERSHAM STOCK PLANS" shall mean the existing stock option
and other stock-based compensation plans.

"HABERSHAM SUBSIDIARIES" shall mean the Subsidiaries of
Habersham.

"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive
Environment Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., or any similar federal, state or local Law.

"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.

"KNOWLEDGE" as used with respect to a Person shall mean the
knowledge after due inquiry of the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer,
General Counsel, any Assistant or Deputy General Counsel, or any
Senior or Executive Vice President of such Person.

"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including, without
limitation, those promulgated, interpreted or enforced by any of the
Regulatory Authorities.

"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including, without limitation, costs of investigation,
collection and defense), claim, deficiency, guaranty or endorsement of
or by any Person (other than endorsements of notes, bills, checks, and
drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.

"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of on, or with respect to any property or property interest,
other than (i) Liens for current property Taxes not yet due and
payable. (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business, and (iii) Liens which are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on a Party.

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"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating
to or affecting a Party, its business, its Assets (including, without
limitation, Contracts related to it), or the transactions contemplated
by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by
Regulatory Authorities.

"LOAN PROPERTY" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only
with respect to such property.

"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.

"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change or occurrence which has a material adverse impact on (a) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, including but not limited to a
decrease in the Party's Book Value of five percent (5%) or more, or
(b) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "material adverse
impact" shall not be deemed to include the impact of (x) changes in
banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, (y) changes in
generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies,
and (z) the Merger and compliance with the provisions of this
Agreement on the operating performance of the Parties.

"MAXIMUM CASH VALUE" shall mean 50% of the Total Merger
Consideration.

"MERGER" shall mean the merger of Security with and into
Habersham referred to in Section 1.1 of this Agreement.

"NASD" shall mean the National Association of Securities
Dealers, Inc.

"NASDAQ" shall mean the National Market System or the SmallCap
System of the National Association of Securities Dealers Automated
Quotations System.

"1933 ACT" shall mean the Securities Act of 1933, as amended.

"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.

"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local

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or foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Regulatory Authority.

"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management (including any property or facility held in a joint
venture) and, where required by the context, said term means the owner
or operator of such facility or property, but only with respect to
such facility or property.

"PARTY" shall mean either Security or Habersham, and "Parties"
shall mean both Security and Habersham.

"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its capital stock, Assets, Liabilities, or business.

"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.

"PREVIOUSLY DISCLOSED" shall mean information (a) delivered in
writing prior to the date of this Agreement in the manner and to the
Party and counsel described in Section 11.8 of this Agreement and
describing in reasonable detail the matters contained therein,
provided that in the case of Subsidiaries acquired after the date of
this Agreement, such information may be so delivered by the acquiring
Party to the other Party prior to the date of such acquisition, or (b)
disclosed prior to the date of this Agreement by one Party to the
other in an SEC Document delivered to such other Party in which the
specific information has been identified by the Party making the
disclosure.

"PROXY STATEMENT" shall mean the proxy statement used by
Security to solicit the approval of its shareholders of the
transactions contemplated by this Agreement and shall include the
prospectus of Habersham relating to shares of Habersham Common Stock
to be issued to the shareholders of Security.

"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, filed with the SEC by
Habersham under the 1933 Act in connection with the transactions
contemplated by this Agreement.

"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NASD, and the SEC.

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"SEC DOCUMENTS" shall mean all reports and registration
statements filed, or required to be filed, by a Party or any of its
Subsidiaries with any Regulatory Authority pursuant to the Securities
Laws.

"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.

"SECURITY BENEFIT PLANS" shall have the meaning set forth in
Section 5.14 of this Agreement.

"SECURITY COMMON STOCK" shall mean the $1.00 par value common
stock of Security.

"SECURITY COMPANIES" shall mean, collectively, Security and
SSB.

"SECURITY FINANCIAL STATEMENTS" shall mean (a) the
consolidated balance sheets (including related notes and schedules, if
any) of Security as of September 30, 1994, and as of December 31, 1993
and 1992, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended September 30, 1994, and
for each of the three fiscal years ended December 31, 1993, 1992 and
1991, as filed by Security in SEC Documents, and (b) the consolidated
balance sheets of Security (including related notes and schedules, if
any) and related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
included in SEC Documents filed with respect to periods ended
subsequent to September 30, 1994.

"SECURITY PREFERRED STOCK" shall mean the $1.00 par value
preferred stock of Security.

"SECURITY STOCK PLANS" shall mean the existing stock option
and other stock-based compensation plans of Security.

"SECURITY STOCK OPTIONS" shall mean the options to purchase an
aggregate of 67,750 shares of Security Common Stock held by the
members of the SSB Board of Directors and Mr. Rick Kononen as of the
Effective Time.

"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of Security to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.

"SSB" shall mean Security State Bank, a Georgia state
chartered bank and the sole subsidiary of Security.

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<PAGE> 185

"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns
or controls 5% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
5% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, however, there shall not be
included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a
fiduciary capacity.

"SURVIVING CORPORATION" shall mean Habersham as the surviving
corporation resulting from the Merger.

"TAXES" shall mean any federal, state, county, local, foreign
and other taxes, assessments, charges, fares, and impositions,
including interest and penalties thereon or with respect thereto.

"TOTAL MERGER CONSIDERATION" shall mean 1.5 times the Book
Value of the Security Common Stock at December 31, 1994.

"VALUE PER SHARE OF HABERSHAM COMMON STOCK" shall mean 1.0
times the Book Value of the Habersham Common Stock at December 31,
1994.

11.2 EXPENSES. Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that each of the Parties shall bear
and pay one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection
with the printing of the Registration Statement and the Proxy Statement.

11.3 BROKERS AND FINDERS. Except for Security's engagement of Alex
Sheshunoff & Co. Investment Banking for the purposes described in Section
9.3(e), each of the Parties represents and warrants that neither it nor any of
its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a
claim by any broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by Security or
Habersham, each of Security and Habersham, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in
respect of any such claim.

11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, other than as
provided in Section 8.13 of this Agreement.

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<PAGE> 186

11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided, however,
that after any such approval by the holders of Security Common Stock, there
shall be made no amendment decreasing the consideration to be received by
Security shareholders without the further approval of such shareholders.

11.6 WAIVERS.

(a) Prior to or at the Effective Time, Habersham, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Security, to waive or extend the time for the
compliance or fulfillment by Security of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Habersham under this Agreement, except any condition which, if
not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of
Habersham.

(b) Prior to or at the Effective Time, Security, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Habersham, to waive or extend the time for the
compliance or fulfillment by Habersham of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Security under this Agreement, except any condition which, if
not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of Security.

(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.

11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.

11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:

-43-

<PAGE> 187

Habersham: Habersham Bancorp
P. O. Box 1980
Highway 441 North
Cornelia, Georgia 30531
Telecopy Number: (706) 778-6886

Attention: David D. Stovall
President

Copy to Counsel: Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 572-6999

Attention: Kathryn L. Knudson

Security: Security Bancorp, Inc.
1600 Marietta Highway
P. O. Box 351
Canton, Georgia 30114
Telecopy Number: (404) 479-1925

Attention: C. Mickle Moye
President

Copy to Counsel: Parker, Johnson, Cook & Dunlevie
Suite 700
1275 Peachtree Street, N.E.
Atlanta, Georgia 30309
Telecopy Number: (404) 888-7490

Attention: Fred J. Pinckney

11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia, without regard
to any applicable conflicts of Laws, except to the extent that the federal laws
of the United States may apply to the Merger.

11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.

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<PAGE> 188

11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.

11.13 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

[SIGNATURES ON NEXT PAGE]

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<PAGE> 189

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.

ATTEST: HABERSHAM BANCORP

/s/ Edward D. Ariail By: /s/ David D. Stovall
- ------------------------------- ---------------------------------
Secretary David D. Stovall
President

[CORPORATE SEAL]

ATTEST: SECURITY BANCORP, INC.

/s/ Jeffrey K. Roach By: /s/ C. Mickle Moye
- ------------------------------- ---------------------------------
Secretary C. Mickle Moye
President

[CORPORATE SEAL]

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<PAGE> 190

APPENDIX B

FORM OF LETTER AGREEMENT

REGARDING STOCK OPTIONS

-1-
<PAGE> 191

HABERSHAM BANCORP
HIGHWAY 441 NORTH
CORNELIA, GEORGIA 30531

January 16, 1995

Option Holders
Security Bancorp, Inc.
1600 Marietta Highway
P. O. Box 351
Canton, Georgia 30114

Attn: All Security Directors, Rick Kononen

Re: Proposed Combination Between Habersham Bancorp ("Habersham") and
Security Bancorp, Inc. ("Security")

Gentlemen:

1. MERGER AGREEMENT. Habersham and Security have entered
into an Agreement and Plan of Merger, dated January 16, 1995 (the "Merger
Agreement"), relating to the proposed merger (the "Merger") of Security and
Habersham. This letter (a) addresses how the options to purchase Security
Common Stock which are issued and outstanding will be treated in the Merger and
(b) confirms certain obligations of the Security directors under the Merger
Agreement.

2. TERMS. Capitalized terms used in this Letter Agreement
without definition shall have the meanings set forth in the Merger Agreement.

3. OPTION ALTERNATIVES. Habersham and the undersigned option
holder agree that the undersigned's option will be treated according to one of
the alternatives set forth below, as selected by the option holder:

a. Habersham will cash out each option held by the
option holder in exchange for cash equal to the
amount by which Security's Book Value (as defined
in the Merger Agreement) per share as of December
31, 1994 exceeds the exercise price of the option
($10 per share) (the "Appreciation") multiplied
by the number of shares subject to the option; or

b. Habersham will cash out each option held by the
option holder in exchange for that number of
shares of Habersham Common Stock which is
determined by multiplying the Appreciation by the
number of shares subject to the option and
dividing the result by the Book Value (as defined
in the Merger Agreement) of a share of Habersham
Common Stock as of December 31, 1994; or
<PAGE> 192

January 16, 1995
Page 2

c. Habersham will permit Security option holders to
convert their options to purchase Security Common
Stock to options to purchase Habersham Common
Stock. The number of shares subject to the new
option will be determined by multiplying the
number of shares subject to the old option(s) by
an exchange ratio (the "Option Exchange Ratio"),
which shall be determined by dividing the Book
Value of a share of Security Common Stock by the
Book Value of a share of Habersham Common Stock
as of December 31, 1994 (Book Values as defined
in the Merger Agreement). The per share exercise
price for the new option will be the book value
per share of Habersham Common Stock immediately
following consummation of the Merger, excluding
loan loss reserves.

4. EXISTING OPTION CANCELLED. Upon receipt by a Security
option holder of the consideration described in Section 3 above, the option
holder's existing Security option will thereby be deemed superseded and
extinguished, notwithstanding any provision to the contrary contained in the
agreement reflecting such existing Security option. The obligations to be
performed by Habersham under this Agreement are in lieu of all of the
obligations that Security, its successors and assigns, were bound to perform
with respect to the existing Security options.

5. CERTAIN ACTIONS. Those of the undersigned who are
directors of Security further agree as follows: Except with respect to the
Merger Agreement and the transactions contemplated thereby, no Security Company
nor any Affiliate thereof nor any investment banker, attorney, accountant or
other representative (collectively, "Representatives") retained by any Security
Company shall directly or indirectly solicit any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties of
Security's Board of Directors as advised by counsel, no Security Company or any
Affiliate or Representative thereof shall furnish any non-public information
that it is not legally obligated to furnish, negotiate with respect to, or
enter into any Contract with respect to, any Acquisition Proposal, but Security
may communicate information about such an Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations as advised by counsel. Security shall
promptly notify Habersham orally and in writing in the event that it receives
any inquiry or proposal relating to any such transaction. Security shall (a)
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (b) direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.

6. MISCELLANEOUS.

a. This Letter Agreement shall terminate upon
termination of the Merger Agreement.

<PAGE> 193

January 16, 1995
Page 3

b. This Letter Agreement constitutes the entire
agreement among the parties hereto with respect
to the transactions contemplated hereby and
supersedes all prior arrangements or
understandings with respect thereto, written or
oral.

c. This Letter Agreement may be amended by a
subsequent writing signed by each of the parties
hereto upon the approval of the Boards of
Directors of each of the corporate parties.

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

e. This Letter Agreement may be executed in one or
more counterparts, each of which shall be deemed
to be an original, but all of which together
shall constitute one and the same instrument.

HABERSHAM BANCORP

By: /s/ David D. Stovall
------------------------------------
David D. Stovall*
President

The foregoing is accepted and agreed as of the date written above.

SECURITY BANCORP, INC.

By: /s/ C. Mickle Moye
------------------------------------
C. Mickle Moye
President

(Signatures Continued)

<PAGE> 194

January 16, 1995
Page 4

OPTION HOLDERS

<TABLE>
<S> <C>
/s/ C. Mickle Moye /s/ Garland F. Pinholster
- ---------------------------------------------- -------------------------------------------------------
C. Mickle Moye Garland F. Pinholster

/s/ Bill H. Barnett /s/ G. Lloyd Schoen
- ---------------------------------------------- -------------------------------------------------------
Bill H. Barnett G. Lloyd Schoen

/s/ Gary C. Harden /s/ Donald J. Snell
- ---------------------------------------------- -------------------------------------------------------
Gary C. Harden Donald J. Snell

/s/ Jackson M. Heard /s/ C. Kenneth White
- ---------------------------------------------- -------------------------------------------------------
Jackson M. Heard C. Kenneth White

/s/ Michael C. Martin /s/ Rick Kononen
- ---------------------------------------------- -------------------------------------------------------
Michael C. Martin Rick Kononen

/s/ David D. Stovall
- ----------------------------------------------
David D. Stovall*
</TABLE>

- -----------------------
*/ A separate, identical letter agreement was executed on January 16,
1995 by: (i) Thomas A. Arrendale, Jr., Chairman of the Habersham Board
of Directors, on behalf of Habersham, (ii) C. Mickle Moye, on behalf
of Security, and (iii) David D. Stovall in his individual capacity as
an Option Holder.

<PAGE> 195

APPENDIX C

OPINION OF ALEX

SHESHUNOFF & CO. INVESTMENT BANKING

<PAGE> 196

Alex Sheshunoff & Co. Investment Banking
Nineteenth Floor
98 San Jacinto Boulevard
Austin, Texas 78701

January 12, 1995

Board of Directors
Security Bancorp, Inc.
1600 Marietta Highway
Canton, Georgia 30114

Members of the Board:

You have requested our opinion, as an independent financial analyst to the
common shareholders of Security Bancorp, Inc., Canton, Georgia ("Security"), as
to the fairness, from a financial point of view to the common shareholders of
Security, of the terms of the proposed acquisition of Security by Habersham
Bancorp, Cornelia, Georgia ("Habersham"). Pursuant to the terms of Habersham's
Letter of Intent dated November 28, 1994 and discussions with management,
Habersham will pay one and one half times Security's adjusted book value at
December 31, 1994, or a total purchase price of $9,219,000 in the form of
$3,227,000 in cash and $5,992,000 in Habersham common stock. Based upon a
negotiated value of $57.74 per share for Habersham common stock, Habersham will
issue 107,505 common shares to Security shareholders.

As part of its banking analysis business, Alex Sheshunoff & Co. Investment
Banking is continually engaged in the valuation of bank, bank holding company
and thrifts securities in connection with mergers and acquisitions nationwide.
Prior to being retained for this assignment, Alex Sheshunoff & Co. Investment
Banking has provided professional services and products to Habersham. The
revenues derived from such services and products are insignificant when
compared to the firm's total gross revenues.

In connection with this assignment, we reviewed (i) the Letter of Intent from
Habersham to Security dated November 28, 1994; (ii) the most recent external
auditor's reports to the Boards of Directors of each organization; (iii) the
December 31, 1994 Report of Condition and Income for each organization and the
audited December 31, 1993 Balance Sheet and Income Statements for each
organization; (iv) the Rate Sensitivity Analysis reports for each organization;
(v) each organization's listing of marketable securities showing rate, maturity
and market value as compared to book value; (vi) each organization's internal
loan classification list; (vii) a listing of other real estate owned for each
organization; (viii) the budget and long range operating plan of each
organization; (ix) the Minutes of the Board of Directors of each organization;
(x) the most recent Board report for each organization; (xi) the listing and
description of significant real properties for Habersham and (xii) the
directors and officers liability insurance and blanket bond insurance policies
for each organization.

<PAGE> 197

Board of Directors
Security Bancorp, Inc.
January 12, 1995
Page 2

We have also had discussions with the management of Security and Habersham
regarding their respective financial results and have analyzed the most current
financial data available on Security and Habersham. We also considered such
other information, financial studies, analyses and investigations, and economic
and market criteria which we deemed relevant. We have met with the management
of Security and Habersham to discuss the foregoing information with them.

We have considered certain financial data of Security and Habersham, and have
compared that data with similar data for other banks and bank holding companies
which have recently merged or been acquired; furthermore, we have considered
the financial terms of these business combinations involving said banks and
bank holding companies.

We have not independently verified any of the information reviewed by us and
have relied on its being complete and accurate in all material respects. In
addition, we have not made an independent evaluation of the assets of Security
or Habersham.

In reaching our opinion we took into consideration the financial benefits of
the proposed transaction to all Security shareholders. Based on all factors
that we deem relevant and assuming the accuracy and completeness of the
information and data provided to us by Security and Habersham, it is our
opinion as of December 31, 1994, that the proposed transaction is fair and
equitable to all Security shareholders from a financial point of view.

We hereby consent to the reference to our firm in the proxy statement or
prospectus related to the merger transaction and to the inclusion of our
opinion as an exhibit to the proxy statement or prospectus related to the
merger transaction.

Respectfully submitted,

ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
AUSTIN, TEXAS

By: /s/ Wade Schuessler
------------------------------
Wade Schuessler
Vice President

<PAGE> 198

APPENDIX D

TITLE 14, CHAPTER 2, ARTICLE 13 OF THE

GEORGIA BUSINESS CORPORATION CODE

RELATING TO RIGHTS OF DISSENTING SHAREHOLDERS

<PAGE> 199

PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

Section 14-2-1301. DEFINITIONS.

As used in this article, the term:

(1) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee as
the record shareholder.

(2) "Corporate action" means the issuer of shares held by
a dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.

(3) "Corporation" means the issuer of shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.

(4) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under Code Section 14-2-1302 and who
exercises that right when and in the manner required by Code Sections
14-2-1320 through 14-2-1327.

(5) "Fair value," with respect to a dissenter's shares,
means the value of the shares immediately before the effectuation of
the corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate action.

(6) "Interest" means interest from the effective date of
the corporate action until the date of payment, at a rate that is fair
and equitable under all the circumstances.

(7) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by a
nominee certificate on file with a corporation.

(8) "Shareholder" means the record shareholder or the
beneficial shareholder.

Section 14-2-1302. RIGHT TO DISSENT.

(a) A record shareholder of the corporation is entitled
to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:

(1) Consummation of a plan of merger to which the
corporation is a party:

(A) If approval of the shareholders of
the corporation is required for the merger by Code
Section 14-2-1103 or the articles of incorporation
and the shareholder is entitled to vote on the
merger; or

(B) If the corporation is a subsidiary
that is merged with its parent under Code Section
14-2-1104;

(2) Consummation of a plan of share exchange to
which the corporation is a party as the corporation whose
shares will be acquired, if the shareholder is entitled to
vote on the plan;
<PAGE> 200

(3) Consummation of a sale or exchange of all or
substantially all of the property of the corporation if a
shareholder vote is required on the sale or exchange pursuant
to Code Section 14-2-1202, but not including a sale pursuant
to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within one year after the
date of sale;

(4) An amendment of the articles of incorporation
that materially and adversely affects rights in respect of a
dissenter's shares because it:

(A) Alters or abolishes a preferential
right of the shares;

(B) Creates, alters, or abolishes a
right in respect of redemption, including a provision
respecting a sinking fund for the redemption or
repurchase, of the shares;

(D) Excludes or limits the right of the
shares to vote on any matter, or to cumulate votes,
other than a limitation by dilution through issuance
of shares or other securities with similar voting
rights;

(E) Reduces the number of shares owned
by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for
cash under Code Section 14-2-604; or

(F) Cancels, redeems, or repurchases all
or part of the shares of the class; or

(5) Any corporate action taken pursuant to a
shareholder vote to the extent that Article 9 of this chapter,
the articles of incorporation, bylaws, or a resolution of the
board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for
their shares.

(b) A shareholder entitled to dissent and obtain payment
for his shares under this article may not challenge the corporate
action creating his entitlement unless the corporate action fails to
comply with procedural requirements of this chapter or the articles of
incorporation or bylaws of the corporation or the vote required to
obtain approval of the corporate action was obtained by fraudulent and
deceptive means, regardless of whether the shareholder has exercised
dissenter's rights.

(c) Notwithstanding any other provision of this article,
there shall be no right of dissent in favor of the holder of shares of
any class or series which, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at a meeting at
which a plan of merger or share exchange or a sale or exchange of
property or an amendment of

-2-
<PAGE> 201

the articles of incorporation is to be acted on, were either listed on
a national securities exchange or held of record by more than 2,000
shareholders, unless:

(1) In the case of a plan of merger or share
exchange, the holders of shares of the class or series are
required under the plan of merger or share exchange to accept
for their shares anything except shares of the surviving
corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either
listed on a national securities exchange or held of record by
more than 2,000 shareholders, except for scrip or cash
payments in lieu of fractional shares; or

(2) The articles of incorporation or a resolution
of the board of directors approving the transaction provides
otherwise.

Section 14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.

A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one beneficial
shareholder and notifies the corporation in writing of the name and
address of each person on whose behalf he asserts dissenters' rights.
The rights of a partial dissenter under this Code section are
determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.

PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

Section 14-2-1320. NOTICE OF DISSENTERS' RIGHTS.

(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders
are or may be entitled to assert dissenters' rights under this article
and be accompanied by a copy of this article.

(b) If corporate action creating dissenters' rights under
Code Section 14-2-1302 is taken without a vote of shareholders, the
corporation shall notify in writing all shareholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenters' notice described in Code Section 14-2-1322 no later than
ten days after the corporate action was taken.

Section 14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.

(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, a record shareholder who wishes to assert
dissenters' rights:

(1) must deliver to the corporation before the
vote is taken written notice of his intent to demand payment
for his shares if the proposed action is effectuated; and

-3-
<PAGE> 202

(2) must not vote his shares in favor of the
proposed action.

(b) A record shareholder who does not satisfy the
requirements of subsection (a) of this Code section is not entitled to
payment for his shares under this article.

Section 14-2-1322. DISSENTERS' NOTICE.

(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to
all shareholders who satisfied the requirements of Code Section
14-2-1321.

(b) The dissenters' notice must be sent no later than ten
days after the corporate action was taken and must:

(1) State where the payment demand must be sent
and where and when certificates for certificated shares must
be deposited;

(2) Inform holders of uncertificated shares to
what extent transfer of the shares will be restricted after
the payment demand is received;

(3) Set a date by which the corporation must
receive the payment demand, which date may not be fewer than
30 nor more than 60 days after the date the notice required in
subsection (a) of this Code section is delivered; and

(4) Be accompanied by a copy of this article.

Section 14-2-1323. DUTY TO DEMAND PAYMENT.

(a) A record shareholder sent a dissenters' notice
described in Code Section 14-2-1322 must demand payment and deposit
his certificates in accordance with the terms of the notice.

(b) A record shareholder who demands payment and deposits
his shares under subsection (a) of this Code section retains all other
rights of a shareholder until these rights are cancelled or modified
by the taking of the proposed corporate action.

(c) A record shareholder who does not demand payment or
deposit his share certificates where required, each by the date set in
the dissenters' notice, is not entitled to payment for his shares
under this article.

Section 14-2-1324. SHARE RESTRICTIONS.

(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the
restrictions released under Code Section 14-2-1326.

-4-
<PAGE> 203

(b) The person for whom dissenters' rights are asserted
as to uncertificated shares retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the
proposed corporate action.

Section 14-2-1325. OFFER OF PAYMENT.

(a) Except as provided in Code Section 14-2-1327, within
ten days of the later of the date the proposed corporate action is
taken or receipt of a payment demand, the corporation shall by notice
to each dissenter who complied with Code Section 14-2-1323 offer to
pay to such dissenter the amount the corporation estimates to be the
fair value of his or her shares, plus accrued interest.

(b) The offer of payment must be accompanied by:

(1) The corporation's balance sheet as of the end
of a fiscal year ending not more than 16 months before the
date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;

(2) A statement of the corporation's estimate of
the fair value of the shares;

(3) An explanation of how the interest was
calculated;

(4) A statement of the dissenter's right to
demand payment under Code Section 14-2-1327; and

(5) A copy of this article.

(c) If the shareholder accepts the corporation's offer by
written notice to the corporation within 30 days after the
corporation's offer or is deemed to have accepted such offer by
failure to respond within said 30 days, payment for his or her shares
shall be made within 60 days after the making of the offer or the
taking of the proposed corporate action, whichever is later.

Section 14-2-1326. FAILURE TO TAKE ACTION.

(a) If the corporation does not take the proposed action
within 60 days after the date set for demanding payment and depositing
share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on
uncertificated shares.

(b) If, after returning deposited certificates and
releasing transfer restrictions, the corporation takes the proposed
action, it must send a new dissenters' notice under Code Section
14-2-1322 and repeat the payment demand procedure.

-5-
<PAGE> 204

Section 14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
PAYMENT OR OFFER.

(a) A dissenter may notify the corporation in writing of
his own estimate of the fair value of his shares and amount of
interest due, and demand payment of his estimate of the fair value of
his shares and interest due, if:

(1) The dissenter believes that the amount
offered under Code Section 14-2-1325 is less than the fair
value of his shares or that the interest due is incorrectly
calculated; or

(2) The corporation, having failed to take the
proposed action, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated
shares within 60 days after the date set for demanding
payment.

(b) A dissenter waives his or her right to demand payment
under this Code section and is deemed to have accepted the
corporation's offer unless he or she notifies the corporation of his
or her demand in writing under subsection (a) of this Code section
within 30 days after the corporation offered payment for his or her
shares, as provided in Code Section 14-2-1325.

(1) The shareholder may demand the information
required under subsection (b) of Code Section 14-2-1325, and
the corporation shall provide the information to the
shareholder within ten days after receipt of a written demand
for the information; and

(2) The shareholder may at any time, subject to
the limitations period of Code Section 14-2-1332, notify the
corporation of his own estimate of the fair value of his
shares and the amount of interest due and demand payment of
his estimate of the fair value of his shares and interest due.

PART 3. JUDICIAL APPRAISAL OF SHARES

Section 14-2-1330. COURT ACTION.

(a) If a demand for payment under Code Section 14-2-1327
remains unsettled, the corporation shall commence a proceeding within
60 days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the 60 day period,
it shall pay each dissenter whose demand remains unsettled the amount
demanded.

(b) The corporation shall commence the proceeding, which
shall be a nonjury equitable valuation proceeding, in the superior
court of the county where a corporation's registered office is
located. If the surviving corporation is a foreign corporation
without a registered office in this state, it shall commence the
proceeding in the county in this state where the registered office of
the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.

-6-
<PAGE> 205

(c) The corporation shall make all dissenters, whether or
not residents of this state, whose demands remain unsettled parties to
the proceeding, which shall have the effect of an action quasi in rem
against their shares. The corporation shall serve a copy of the
petition in the proceeding upon each dissenting shareholder who is a
resident of this state in the manner provided by law for the service
of a summons and complaint, and upon each nonresident dissenting
shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.

(d) The jurisdiction of the court in which the proceeding
is commenced under subsection (b) of this Code section is plenary and
exclusive. The court may appoint one or more persons as appraisers to
receive evidence and recommend decision on the question of fair value.
The appraisers have the powers described in the order appointing them
or in any amendment to it. Except as otherwise provided in this
chapter, Chapter 11 of Title 9, known as the "Georgia Civil Practice
Act," applies to any proceeding with respect to dissenters' rights
under this chapter.

(e) Each dissenter made a party to the proceeding is
entitled to judgment for the amount which the court finds to be the
fair value of his shares, plus interest to the date of judgment.

Section 14-2-1331. COURT COSTS AND COUNSEL FEES.

(a) The court in an appraisal proceeding commenced under
Code Section 14-2-1330 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of
attorneys and experts for the respective parties. The court shall
assess the costs against the corporation, except that the court may
assess the costs against all or some of the dissenters, in amounts the
court finds equitable, to the extent the court finds the dissenters
acted arbitrarily, vexatiously, or not in good faith in demanding
payment under Code Section 14-2-1327.

(b) The court may also assess the fees and expenses of
attorneys and experts for the respective parties, in amounts the court
finds equitable:

(1) Against the corporation and in favor of any
or all dissenters if the court finds the corporation did not
substantially comply with the requirements of Code Sections
14-2-1320 through 14-2-1327; or

(2) Against either the corporation or a
dissenter, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.

(c) If the court finds that the services of attorneys for
any dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should not be
assessed against the corporation, the court may award to these
attorneys reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.

-7-
<PAGE> 206

Section 14-2-1332. LIMITATION OF ACTIONS.

No action by any dissenter to enforce dissenters' rights shall
be brought more than three years after the corporate action was taken,
regardless of whether notice of the corporate action and of the right
to dissent was given by the corporation in compliance with the
provisions of Code Section 14-2-1320 and Code Section 14-2-1322.

-8-
<PAGE> 207
APPENDIX E

SECURITY BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints C. MICKLE MOYE and JEFFREY K. ROACH as
Proxies, each with the power to appoint his substitute, and hereby authorizes
either one or both of them to represent and to vote, as designed below, all the
shares of Common Stock of Security Bancorp, Inc. ("Security") held of record by
the undersigned on ______________, 1995 at the Special Meeting of Shareholders
to be held at _________ a.m./p.m. on _____________, 1995 at Security's main
office, located at 1600 Marietta Highway, Canton, Georgia 30114.

1. PROPOSAL TO: approve the Agreement and Plan of Merger, dated as of
January 16, 1995 (the "Merger Agreement"), by and between Security and
Habersham Bancorp ("Habersham"), pursuant to which, among other
matters, (a) Security will merge with and into Habersham (the
"Merger") and (b) the shares of Security Common Stock will be
converted into the right to receive either shares of Habersham Common
Stock or cash, as described in the Proxy Statement/Prospectus dated
____________, 1995.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.

Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.

If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
DATED:
---------------------------------

---------------------------------------
Signature

---------------------------------------
Signature if held jointly

<PAGE> 208

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The provisions of the Georgia Business Corporation Code (the "Georgia
Code") and the Registrant's Bylaws set forth the extent to which the
Registrant's directors and officers may be indemnified against liabilities they
may incur while serving in such capacities. Under the Registrant's Bylaws, the
Registrant is required to indemnify its officers and directors against
reasonable expenses (including attorneys' fees) incurred by them in the defense
of any action, suit or proceeding to which they were made a party, or in
defense of any claim, issue or matter therein, by reason of the fact that they
are or were officers or directors of the Registrant or who, while officers or
directors of the Registrant, are or were serving at the Registrant's request as
directors, officers, partners, trustees, employees or agents of another entity,
to the extent that they have been successful, on the merits or otherwise, in
such defense. The Registrant's Bylaws also require indemnification of its
directors and officers against any liability incurred in connection with any
threatened, pending or completed action, suit or proceeding by reason of the
fact that they are or were directors or officers of the Registrant or who,
while directors or officers of the Registrant, are or were serving at the
Registrant's request as directors, officers, partners, trustees, employees or
agents of another entity, if they acted in a manner they believed in good faith
to be in, or not opposed to, the best interests of the Registrant, or, with
respect to any criminal proceeding, had no reasonable cause to believe their
conduct was unlawful, if a determination has been made that they have met these
standards of conduct. Such indemnification in connection with a proceeding by
or in the right of the Registrant, however, is limited to reasonable expenses,
including attorneys' fees, incurred in connection with the proceeding. The
Registrant must also provide advancement of expenses incurred by any director
or officer in defending any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such officer or director to repay such advances
unless it is ultimately determined that he or she is not entitled to
indemnification by the Registrant.

The Registrant may not indemnify a director or officer in connection
with a proceeding by or in the right of the Registrant in which the director or
officer was adjudged liable to the Registrant, or in connection with a
proceeding in which he was adjudged liable on the basis that he improperly
received a personal benefit.

The indemnification provisions of the Georgia Code are essentially
identical to those set forth above, except that indemnification is permitted,
but not required, for directors and officers who are not successful on the
merits. In addition, the Georgia Code permits, but does not require, a
corporation to advance expenses under the circumstances for such payments
described above.

The Registrant maintains an insurance policy insuring the Registrant
and its directors and officers against certain liabilities, including
liabilities under the Securities Act of 1933.

II-1
<PAGE> 209

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits (See exhibit index immediately preceding the exhibits for
the page number where each exhibit can be found)

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS

2(a) -- Agreement and Plan of Merger, dated as of January 16, 1995, by and
between Habersham and Security (included in Appendix A to the Proxy
Statement/Prospectus and incorporated by reference herein)

2(b) -- Form of Letter Agreement Regarding Stock Options, dated as of
January 16, 1995, among Habersham, Security and the Security Option
Holders named therein (included in Appendix B to the Proxy
Statement/Prospectus and incorporated by reference herein)

3(a) -- Amended and Restated Articles of Incorporation (included as Exhibit
3.1 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1988, previously filed with the Commission and
incorporated by reference herein) (Commission File No. 0-13153)

3(b) -- Bylaws (included as Exhibit 3.2 to the Registrant's Form 10-K for
the fiscal year ended December 31, 1989, previously filed with the
Commission and incorporated by reference herein), together with an
amendment thereto (included as Exhibit 3.2 to the Registrant's Form
10-K for the fiscal year ended December 31, 1990, previously filed
with the Commission and incorporated by reference herein)
(Commission File No. 0-13153)

4(a) -- See Exhibits 3(a) and 3(b) for provisions of the Articles of
Incorporation and Bylaws of the Registrant defining rights of
holders of Common Stock of the Registrant

5 -- Opinion of Powell, Goldstein, Frazer & Murphy, including consent*

8 -- Opinion of Powell, Goldstein, Frazer & Murphy, including consent*

11 -- Statement Regarding Computation of Per Share Earnings

23(a) -- Consent of Powell, Goldstein, Frazer & Murphy*

23(b) -- Consent of Deloitte & Touche LLP

23(c) -- Consent of Joseph Decosimo and Company

23(d) -- Consent of Alex Sheshunoff & Co. Investment Banking

24 -- Power of Attorney (see signature page to the Registration
Statement)

27 -- Financial Data Schedule

99 -- Form of Proxy (included in Appendix E to the Proxy
Statement/Prospectus and incorporated by reference herein)

___________________
*To be filed by amendment.

II-2
<PAGE> 210

(b) Financial Statement Schedules

Schedules are omitted because they are not required or are not
applicable, or the required information is shown in the financial statements or
notes thereto.

ITEM 22. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this Registration
Statement;

(i) To include any Prospectus required by
Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the Prospectus any
facts or events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the Registration Statement;

(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;

(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
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.

(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.

(4) That prior to any public reoffering of the
securities registered hereunder through use of a Prospectus which is a part of
this Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering Prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.

(5) That every Prospectus (i) that is filed
pursuant to paragraph (4) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
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-3
<PAGE> 211

(6) 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 (See Item 20), or otherwise, the Registrant has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 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 of whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.

(b) The undersigned Registrant hereby undertakes to
respond to requests for information that is incorporated by reference into the
Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.

(c) The undersigned Registrant hereby undertakes to
supply by means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not the
subject of and included in the Registration Statement when it became effective.

II-4
<PAGE> 212

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on March 1, 1995.

HABERSHAM BANCORP

By: /s/ David D. Stovall
-------------------------------------
David D. Stovall
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas A. Arrendale, Jr. and David D.
Stovall, and each of them, his attorneys in fact, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any amendment to this Registration Statement on Form S-4,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby ratifies and
confirms all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 1, 1995.

<TABLE>
<S> <C>
SIGNATURE TITLE
--------- -----
/s/ Thomas A. Arrendale, Jr. Chairman of the Board and Director
-------------------------------
Thomas A. Arrendale, Jr.

/s/ Thomas A. Arrendale, III Vice Chairman of the Board and Director
-------------------------------
Thomas A. Arrendale, III

/s/ David D. Stovall President, Chief Executive Officer and Director
------------------------------- (Principal Executive, Financial and Accounting Officer)
David D. Stovall

/s/ James Holcomb Director
-------------------------------
James Holcomb

/s/ James A. Stapleton, Jr. Director
-------------------------------
James A. Stapleton, Jr.

/s/ Calvin R. Wilbanks Director
-------------------------------
Calvin R. Wilbanks
</TABLE>

II-5
<PAGE> 213

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF SEQUENTIAL
NUMBER EXHIBITS PAGE NO.
<S> <C>
2(a) Agreement and Plan of Merger, dated as of January 16, 1995,
by and between Habersham and Security (included in Appendix
A to the Proxy Statement/Prospectus and incorporated by
reference herein)

2(b) Form of Letter Agreement Regarding Stock Options, dated as of
January 16, 1995, among Habersham, Security and the Security Option
Holders named therein (included in Appendix B to the Proxy
Statement/Prospectus and incorporated by reference herein)

3(a) Amended and Restated Articles of Incorporation (included as
Exhibit 3.1 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1988, previously filed with the Commission and
incorporated by reference herein) (Commission File No.
0-13153)

3(b) Bylaws, as amended (included as Exhibit 3.2 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1989,
previously filed with the Commission and incorporated by reference
herein), together with an amendment thereto (included as
Exhibit 3.2 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1990, previously filed with the Commission
and incorporated by reference herein) (Commission File No.
0-13153)

4(a) See Exhibits 3(a) and 3(b) for provisions of the Articles of
Incorporation and Bylaws of the Registrant defining rights of holders of
Common Stock of the Registrant

5 Opinion of Powell, Goldstein, Frazer & Murphy, including
consent*

8 Opinion of Powell, Goldstein, Frazer & Murphy, including
consent*

11 Statement Regarding Computation of Per Share Earnings

23(a) Consent of Powell, Goldstein, Frazer & Murphy*

23(b) Consent of Deloitte & Touche LLP

23(c) Consent of Joseph Decosimo and Company

23(d) Consent of Alex Sheshunoff & Co. Investment Banking

24 Power of Attorney (see signature page to the Registration
Statement)

27 Financial Data Schedule

99 Form of Proxy (included in Appendix E to the Proxy Statement/Prospectus
and incorporated by reference herein)
</TABLE>
___________________
*To be filed by amendment.

II-6

<PAGE> 1

EXHIBIT 11

HABERSHAM BANCORP

Statement Re: Compilation of Per Share Earnings

For the Years Ended December 31, 1994, 1993 and 1992
and Pro Forma for the year ended December 31, 1994

<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------------------- ----------
1994 1993 1992 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $1,658,385 $1,557,718 $1,410,497 $1,784,650
---------- ---------- ---------- ----------

Weighted average number of shares
outstanding 332,277 330,448 329,847 332,277

Effect of outstanding stock options
using the treasury stock method 5,645 3,965 2,887 5,645

Shares assumed to be issued in the
acquisition 124,379
---------- ---------- ---------- ----------

Number of common and common
equivalent shares outstanding 337,922 334,413 332,734 462,301
========== ========== ========== ==========

Net income per share $ 4.91 $ 4.66 $ 4.24 $ 3.86
========== ========== ========== ==========

</TABLE>

II-7

<PAGE> 1

EXHIBIT 23(b)

CONSENT OF DELOITTE & TOUCHE LLP

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Habersham Bancorp on
Form S-4 of our report dated January 27, 1995, appearing in the Prospectus,
which is part of this Registration Statement. We also consent to the reference
to us under the heading "Experts" in such Prospectus.

Deloitte & Touche LLP
Deloitte & Touche LLP

Atlanta, Georgia
March 2, 1995

II-8

<PAGE> 1

EXHIBIT 23(c)

CONSENT OF INDEPENDENT ACCOUNTANTS

CONSENT OF JOSEPH DECOSIMO AND COMPANY

To the Board of Directors
Security Bancorp, Inc.

We consent to the inclusion in this registration statement on Form S-4 of our
report dated January 19, 1995, on our audit of the financial statements of
Security Bancorp, Inc. We also consent to the reference to our firm under the
caption "Experts."

JOSEPH DECOSIMO AND COMPANY

Atlanta, Georgia
March 2, 1995

II-9

<PAGE> 1

EXHIBIT 23(d)

CONSENT OF ALEX SHESHUNOFF & CO. INVESTMENT BANKING

In connection with the proposed merger of Security Bancorp, Inc.,
Canton, Georgia and Habersham Bancorp, Inc., Cornelia, Georgia, the
undersigned, acting as an independent financial analyst to the common
shareholders of Security Bancorp, Inc., hereby consents to the reference to our
firm in the proxy statement and to the inclusion of our fairness opinion as an
exhibit to the proxy statement.

February 24, 1995

ALEX SHESHUNOFF & CO. INVESTMENT BANKING
AUSTIN, TEXAS

By: /s/Wade Schuessler
------------------------------------
Wade Schuessler
Vice President

II-10

<ARTICLE> 9
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 4,450,912
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,020,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,529,679
<INVESTMENTS-CARRYING> 21,619,504
<INVESTMENTS-MARKET> 21,092,769
<LOANS> 100,848,483
<ALLOWANCE> 1,744,335
<TOTAL-ASSETS> 161,326,984
<DEPOSITS> 141,615,495
<SHORT-TERM> 1,001,742
<LIABILITIES-OTHER> 2,500,104
<LONG-TERM> 0
<COMMON> 875,000
0
0
<OTHER-SE> 14,975,587
<TOTAL-LIABILITIES-AND-EQUITY> 161,326,984
<INTEREST-LOAN> 9,580,514
<INTEREST-INVEST> 2,724,523
<INTEREST-OTHER> 129,640
<INTEREST-TOTAL> 12,434,677
<INTEREST-DEPOSIT> 4,697,846
<INTEREST-EXPENSE> 4,800,932
<INTEREST-INCOME-NET> 7,633,745
<LOAN-LOSSES> 208,096
<SECURITIES-GAINS> 25,128
<EXPENSE-OTHER> 6,619,905
<INCOME-PRETAX> 2,012,859
<INCOME-PRE-EXTRAORDINARY> 2,012,859
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,658,385
<EPS-PRIMARY> 4.91
<EPS-DILUTED> 4.91
<YIELD-ACTUAL> 5.08
<LOANS-NON> 568,822
<LOANS-PAST> 196,017
<LOANS-TROUBLED> 1,318,790
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,601,902
<CHARGE-OFFS> 125,144
<RECOVERIES> 59,481
<ALLOWANCE-CLOSE> 1,744,335
<ALLOWANCE-DOMESTIC> 1,744,335
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0

</TABLE>