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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB



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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002

Commission File No. 333-65066



FCB FINANCIAL CORP.  (Name of Small Business Issuer in Its Charter)


|                                                                                       |  |                                                   
|-------------------------------------------------------------------------------------- |  | --------------------------------------------------
|Georgia
(State of Incorporation)                                                       |  | 58-2606457
(I.R.S. Employer Identification Number)
|                                                                                       |  |                                                   
|7401 Hodgson Memorial Drive
Savannah, Georgia
(Address of Principal Executive Offices) |  | 31406
(Zip Code)                                  

(912) 629-2900
(Issuers Telephone Number, Including Area Code)



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Securities registered under Section 12(b) of the Exchange Act:

|                    |  |                                      |     | 
|------------------- |  | ------------------------------------ | --- | 
|Title of Each Class |  | Name of Exchange on Which Registered
|                    |  |                                     
|None                |  |                                      | N/A | 

Securities registered under Section 12(g) of the Exchange Act:None

Check whether the issuer: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past
90 days.  Yes þ  No o

Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the issuers knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. þ

The issuers revenues for its most recent fiscal year were $2,968,923.

The aggregate market value of the common stock held by non-affiliates of
the issuer on March 1, 2003 was $10,625,000. As of such date, no organized
trading market existed for the Common Stock of the issuer. The aggregate
market value was computed by reference to the fair market value of the Common
Stock of the issuer based on the most recent sale of the Common Stock known to
the Company. For the purpose of this response, directors, officers and holders
of 5% or more of the issuers common stock are considered the affiliates of the
issuer at that date. Although directors and executive officers of the
registrant were assumed to be affiliates of the issuer for purposes of this
calculation, the classification is not to be interpreted as an admission of
such status.

As of March 1, 2003, 1,500,000 shares of the issuers common stock were
outstanding.

Transitional Small Business Disclosure Format (check
one): Yes o   No þ



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TABLE OF CONTENTS



|                              |  |  |  |  |  |  |  | 
|----------------------------- |  |  |  |  |  |  |  | 
|PART I                       
|PART II                      
|PART III                     
|PART IV                      
|CONSOLIDATED FINANCIAL REPORT
|SIGNATURES                   



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PART I

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements of FCB Financial Corp., a Georgia corporation (the
Company), in this Report, including matters discussed under the caption
Managements Discussion and Analysis of Financial Condition and Plan of
Operations, are forward-looking statements. Forward-looking statements
include statements about the competitiveness of the banking industry, potential
regulatory obligations, potential economic growth in the primary service area
of First Chatham Bank (the Bank), the business strategies of the Company and
the Bank, capital expenditures of the Company and the Bank, including
construction of additional offices, the Banks acquisition of the Savannah
branch office of The Tattnall Bank and other statements that are not historical
facts. The words anticipate, estimate, project, intend, expect,
believe, forecast and similar expressions are intended to identify the
forward-looking statements, but some of these statements may use other
phrasing. These forward-looking statements are not guarantees of future
performance and are subject to a number of risks, uncertainties and other
factors that could cause the Companys actual results, performance or
achievements to differ materially from those expressed or implied by these
forward-looking statements. These factors include, among other things (i)
increased competition from other financial institutions, (ii) lack of sustained
growth in the economy of Chatham County, Georgia, (iii) rapid fluctuations in
interest rates, (iv) departures of key personnel, and (v) changes in the
legislative and regulatory environment. Many of these factors are beyond the
Companys ability to control or predict, and readers are cautioned not to put
undue reliance on such forward-looking statements. The Company disclaims any
obligation to update or revise publicly or otherwise any forward-looking
statements to reflect subsequent events, new information or future
circumstances, except as required by law.

Item 1. Description of Business

FCB Financial Corp.

The Company was incorporated as a Georgia corporation on February 13,
2001, and owns all of the outstanding capital stock of the Bank. In an initial
public offering completed on January 11, 2002 (the Offering), the Company
sold and issued an aggregate of 1,500,000 shares of common stock, par value
$1.00 per share, at a price of $10.00 per share. On January 22, 2002, the
Company received approval from the Board of Governors of the Federal Reserve
System (the Federal Reserve) and the Georgia Department of Banking and
Finance (the Georgia Department) to become a bank holding company.
Accordingly, on January 22, 2002, the Company used $10,000,000 of the net
proceeds of Offering to purchase all of the common stock of the Bank.

The Company has been organized to make it easier for the Bank to serve its
customers. The holding company structure provides flexibility for expanding
the Companys banking business by possibly acquiring other financial
institutions and providing additional capital and banking-related services. A
holding company structure will make it easier for the Company to raise capital
for the Bank because the Company will be able to issue securities without the
need for prior banking regulatory approval and the proceeds of debt securities
issued by the Company can be invested in the Bank as primary capital.

At December 31, 2002, the assets of the Company consisted primarily of its
ownership of the capital stock of the Bank.

The Companys executive offices are located at 7401 Hodgson Memorial
Drive, Savannah, Georgia 31406, and its telephone number at such location is
(912) 629-2900. See Item 2. Description of Properties.





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First Chatham Bank

On May 22, 2001, the organizers of the Company and the Bank filed an
application with the Georgia Department and the Federal Deposit Insurance
Corporation (the FDIC) to organize the Bank as a state-chartered bank in
Chatham County, Georgia. On January 22, 2002, the Company purchased all of the
common stock of the Bank. The Bank received final approval of its charter
application on January 23, 2002.

On January 23, 2002, pursuant to a Purchase and Assumption Agreement,
dated October 22, 2001, the Bank acquired the performing loans and assumed
certain deposit and other liabilities of the Savannah branch office of The
Tattnall Bank, located at 7917 Abercorn Street, Savannah, Georgia (the Branch
Acquisition). In the Branch Acquisition, the Bank assumed approximately
$10,924,000 in deposit and other liabilities and acquired approximately
$9,869,000 in loans and other assets. The Bank paid a premium of $370,000 on
the deposit liabilities it assumed from The Tattnall Bank. Pursuant to the
terms of the Purchase and Assumption Agreement, the Bank received a cash
payment of approximately $413,000 at closing, the amount by which the deposit
and other liabilities assumed by the Bank exceeded the amount of the deposit
premium and the loans and other assets (including an additional amount of
approximately $272,000 representing vault cash and ATM cash) acquired by the
Bank.

On January 23, 2002, after completing the Branch Acquisition, the Bank
opened for business in the branch office facility formerly used by The Tattnall
Bank as its Savannah branch office.

The Bank performs banking services customary for full service banks of
similar size and character. Such services include making consumer loans, real
estate loans, commercial loans and commercial leases, providing other banking
services such as cash management services, travelers checks, and maintaining
deposit accounts such as checking accounts, money market accounts, and a
variety of certificates of deposit and IRA accounts.

Market Area and Competition

The Banks initial primary service area is Chatham County, Georgia. The
primary service area represents a geographic area that includes the City of
Savannah, Georgia.

The banking business is highly competitive. The Bank competes with other
commercial banks, savings and loan associations, credit unions, and money
market mutual funds operating in its primary service area. Chatham County is
served by 12 insured financial institutions operating a total of 72 retail
branches as of June 30, 2002, the latest date for which information is
available. A number of these competitors are well established in the Banks
primary service area.

According to the FDIC, bank and thrift deposits in Chatham County grew
from approximately $2.3 billion in June 1997 to approximately $2.8 billion in
June 2002, an increase of approximately 20.1%. This growing deposit base is
primarily controlled by large national and super-regional banks, which include
Wachovia, Bank of America, SunTrust and BB&T. Together, these banks held
approximately 82.0% of the total deposits in Chatham County, as of June 30,
2002. Although most of these large financial institutions are well established
in Chatham County, community banks have been successful in competing for
deposits. Community banks with a significant presence in Chatham County
include Savannah Bank & Trust, with approximately 8.48% of total deposits and
Coastal Bank with approximately 3.52% of total deposits, as of June 30, 2002.
No other community bank held more than 2.0% of the deposits in the Banks
primary service area as of June 30, 2002.

2



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The following table illustrates the deposit base and market share of the
financial institutions located in Chatham County as of June 30, 2002, the
latest date for which information is available.

Chatham County Deposit Base and Market Share Information

|                                 |                       |  |                       |  |   |  |      |  | 
|-------------------------------- | --------------------- |  | --------------------- |  | - |  | ---- |  | 
|                                 |                       |  | $                     |  | %
|                                 |                       |  |                       |  |  
|                                 |                       |  | (Dollars in millions)
|                                 | Financial Institution |  |                       |  |   |  |      |  | 
|Wachovia Bank                    |                       |  | 807.8                 |  |   |  | 28.9 | 
|Bank of America                  |                       |  | 634.6                 |  |   |  | 22.7 | 
|SunTrust Bank                    |                       |  | 613.0                 |  |   |  | 21.9 | 
|Savannah Bank                    |                       |  | 237.0                 |  |   |  | 8.5  | 
|Branch Banking and Trust Company |                       |  | 151.6                 |  |   |  | 5.4  | 
|National Bank of Commerce        |                       |  | 117.4                 |  |   |  | 4.2  | 
|Coastal Bank                     |                       |  | 98.5                  |  |   |  | 3.5  | 
|Darby Bank and Trust Company     |                       |  | 47.5                  |  |   |  | 1.7  | 
|First Chatham Bank               |                       |  | 45.1                  |  |   |  | 1.6  | 
|Carver State Bank                |                       |  | 24.2                  |  |   |  | 0.9  | 
|Atlantic Coast Federal           |                       |  | 17.0                  |  |   |  | 0.6  | 
|Heritage Bank                    |                       |  | 1.7                   |  |   |  | 0.1  | 



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| |  | 
| |  | 

The Bank competes directly with many of the institutions named above.
Additionally, the Bank anticipates further competition as existing institutions
in the market expand their branch networks or as institutions from other
markets branch into the Banks primary service area.

The Bank recognizes that most of its competitors have substantially
greater resources and lending limits than it has and provide other services,
such as extensive and established branch networks and trust services, that it
does not provide. As a result of these competitive factors, the Bank may have
to pay higher interest rates to attract depositors or extend credit with lower
interest rates to attract borrowers. However, the Bank attempts to minimize
these competitive factors and attract new banking relationships by offering its
customers a personalized approach to banking. As one of the locally-owned
community banks in Chatham County, the Bank differentiates itself from its
competitors primarily through active calling programs for directors and
officers, involvement in the communities it serves and the quality and
experience of its staff.

Lending Services

Lending Policy.The Bank was established to generally support Chatham
County; consequently, the Bank aggressively lends money to creditworthy
borrowers within this limited geographic area. The Bank emphasizes commercial
loans to small- and medium-sized businesses and professional concerns as well
as real estate-related loans, including construction loans for residential and
commercial properties, and primary and secondary mortgage loans for the
acquisition or improvement of personal residences. The Bank also emphasizes
consumer loans to individuals.

The Bank attempts to avoid concentrations of loans to a single industry or
based on a single type of collateral. To address the risks inherent in making
loans, the Bank maintains an allowance for loan losses based on, among other
things, an evaluation of the Banks loan loss experience, the amount of past
due and nonperforming loans, current and anticipated economic changes and the
values of certain loan collateral. Based upon such factors, management makes
various assumptions and judgments about the ultimate collectibility of the loan
portfolio and provides an allowance for potential loan losses based upon a
percentage of the outstanding balances and for specific loans. However,
because there are certain risks that cannot be precisely quantified,
managements judgment of the allowance is necessarily an approximation and
imprecise. The adequacy and methodology of the Banks allowance for loan
losses is subject to regulatory examination and compared to a peer group of
financial institutions identified by the Banks regulatory agencies.

3



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Loan Approval and Review.The Banks loan approval policies provide for
various levels of officer lending authority. When the amount of total loans to
a single borrower exceeds that individual officers lending authority, either
an officer with a higher lending limit or the Banks loan committee determines
whether to approve the loan request. The Bank does not make any loans to any
of its directors or executive officers unless the board of directors first
approves the loan, and the terms of the loan are no more favorable than would
be available to any comparable borrower.

Lending Limits.The Banks lending activities are subject to a variety of
lending limits imposed by law. Differing limits apply in some circumstances
based on the type of loan or the nature of the borrower, including the
borrowers relationship to the Bank. In general, however, the Bank is able to
loan any one borrower a maximum amount equal to either:



| |  |  | 15% of the Banks statutory capital base if the loan is not
fully secured; or                                                         
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 25% of the Banks statutory capital base if the entire amount
of the loan is fully secured by good collateral or other ample
security.

The Banks management team has not yet established any formal minimum or
maximum loan limits other than the statutory lending limits described above.
These limits will increase or decrease as the Banks capital increases or
decreases as a result of its earnings or losses, among other reasons. From
time to time, the Bank sells participations in its loans to other financial
institutions in order to meet all of the lending needs of loan customers.

Credit Risks.The principal economic risk associated with each category
of loans that the Bank makes is the creditworthiness of the borrower. Borrower
creditworthiness is affected by general economic conditions and the strength of
the relevant business market segment. General economic factors affecting a
borrowers ability to repay include interest, inflation and employment rates,
as well as other factors affecting a borrowers customers, suppliers and
employees.

With respect to real estate loans generally, the ability of a borrower to
repay a real estate loan will depend upon a number of economic factors,
including employment levels and fluctuations in the value of real estate. In
the case of a real estate purchase loan, the borrower may be unable to repay
the loans at the end of the loan term and may thus be forced to refinance the
loan at a higher interest rate, or, in certain cases, the borrower may default
as a result of its inability to refinance the loan. In either case, the risk
of nonpayment by the borrower is increased. In the case of a real estate
construction loan, there is generally no income from the underlying property
during the construction period, and the developers personal obligations under
the loan are typically limited. Each of these factors increases the risk of
nonpayment by the borrower. The Bank also faces additional credit risks to the
extent that the Bank engages in adjustable rate mortgage loans. In the case of
an adjustable rate mortgage loan, as interest rates increase, the borrowers
required payments increase, thus increasing the potential for default. The
marketability of all real estate loans, including adjustable rate mortgage
loans, is also generally affected by the prevailing level of interest rates.

The well established financial institutions in the Banks primary service
area make proportionately more loans to medium- to large-sized businesses than
the Bank makes. Many of the Banks commercial loans are made to small- to
medium-sized business that may be less able to withstand competitive, economic
and financial pressures than large borrowers. The Banks commercial loan
portfolio consists of loans to individual, partnership and corporate borrowers
that are primarily located in the Chatham County area. Accordingly, the Banks
commercial borrowers reflect the diversified businesses of the Banks primary
service area, and principally include retail trade, service and manufacturing
firms. The risks associated with commercial loans depend to a large extent
upon various economic factors, including the strength of the economy in the
Banks primary service area and the ability of the Banks commercial borrowers
to properly evaluate and respond to a changing marketplace. In addition, the
Banks commercial borrowers face risks related specifically to the unique
nature of their business. For example, retail trade and service firms may
incur risks associated with labor shortages and consumer preference changes,
while manufacturing firms may incur risks associated with raw material and
labor shortages, as well as currency fluctuations.

4



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Consumer loans generally involve more credit risks than other loans
because of the type and nature of the underlying collateral or because of the
absence of any collateral. Consumer loan repayments are dependent on the
borrowers continuing financial stability and are likely to be adversely
affected by job loss, divorce and illness. Furthermore, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans in
the case of default. In most cases, any repossessed collateral will not
provide an adequate source of repayment of the outstanding loan balance.
Although the underwriting process for consumer loans includes a comparison of
the value of the security, if any, to the proposed loan amount, the Bank cannot
predict the extent to which the borrowers ability to pay, and the value of the
security, will be affected by prevailing economic and other conditions.

Real Estate Loans.The Bank makes commercial real estate loans,
construction and development loans, and residential real estate loans. These
loans include some commercial loans where the Bank takes a security interest in
real estate out of an abundance of caution and not as the principal collateral
for the loan, but excludes home equity loans, which are classified as consumer
loans. As of December 31, 2002, real estate loans comprised 19.9% of the
Banks loan portfolio.



| |  |  | Commercial Real Estate.The Banks commercial real estate loan
terms generally are limited to five years or less, although payments may
be structured on a longer amortization basis. Interest rates may be
fixed or adjustable, with an origination fee generally being charged on
each loan funded. The Bank attempts to reduce credit risk on its
commercial real estate loans by emphasizing loans on owner-occupied
office and retail buildings where the ratio of the loan principal to the
value of the collateral as established by independent appraisal does not
exceed 80% and net projected cash flow available for debt service equals
115% of the debt service requirement. In addition, the Bank at times
requires personal guarantees from the principal owners of the property
supported by a review by its management of the principal owners personal
financial statements. Risks associated with commercial real estate loans
include fluctuations in the value of real estate, new job creation
trends, tenant vacancy rates and the quality of the borrowers
management. The Bank attempts to limit its risk by analyzing borrowers
cash flow and collateral value on an ongoing basis.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Construction and Development Loans.The Banks construction and
development loans are made both on a pre-sold and speculative basis. If
the borrower has entered into an agreement to sell the property prior to
beginning construction, then the loan is considered to be on a pre-sold
basis. If the borrower has not entered into an agreement to sell the
property prior to beginning construction, then the loan is considered to
be on a speculative basis. Construction and development loans are
generally made with a term of nine months and interest is paid
periodically. The ratio of the loan principal to the value of the
collateral as established by independent appraisal does not generally
exceed 80%. Additionally, speculative loans are based on the borrowers
financial strength and cash flow position. Loan proceeds are disbursed
based on the percentage of completion and only after the project has been
inspected by an experienced construction lender or appraiser. Risks associated with
construction loans include fluctuations in the value of real estate and
new job creation trends.                                                                                   
|
| |  |  | Residential Real Estate.The Banks residential real estate loans
consist of residential first and second mortgage loans and residential
construction loans. The Bank offers fixed and variable rates on its
mortgages with the amortization of first mortgages with maturity dates of
three years and beyond. These loans are made consistent with the Banks
appraisal policy and with the ratio of the loan principal to the value of
collateral as established by independent appraisal generally not to
exceed 85%. The Bank expects these loan to value ratios are sufficient
to compensate for fluctuations in real estate market value and to
minimize losses that could result from a downturn in the residential real
estate market. The Bank opened a mortgage department to process home
loans, which allows it to originate long term mortgages sold on the
secondary market. The Bank limits interest rate risk and credit risk on
these loans by locking in the interest rate for each loan with the
secondary market investor and receiving the investors underwriting
approval before funding the loan.                                                                                       

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Commercial Loans.A primary component of the Banks loan portfolio are
loans for commercial purposes. The Banks commercial loan portfolio consists
of loans principally to retail trade, service and manufacturing firms located
in its primary service area. The terms of these loans vary by purpose and by
type of underlying collateral, if any. The Bank typically makes equipment
loans for a term of five years or less at fixed or variable rates, with the
loan fully amortized over the term. Equipment loans generally are secured by
the financed equipment, and the ratio of the loan principal to the value of the
financed equipment or other collateral is generally 80% or less. Loans to
support working capital typically have terms not exceeding one year and are
usually secured by accounts receivable, inventory, or other collateral, as well
as personal guarantees of the principals of the business. For loans secured by
accounts receivable or inventory, principal is typically repaid as the assets
securing the loan are converted into cash, and for loans secured with other
types of collateral, principal is typically due at maturity. The quality of
the commercial borrowers management and its ability both to evaluate properly
changes in the supply and demand characteristics for its products and services
and to respond effectively to such changes are significant factors in a
commercial borrowers creditworthiness. As of December 31, 2002, commercial
loans comprised 59.6% of the Banks loan portfolios.

Consumer Loans.The Bank makes a variety of loans to individuals for
personal, family and household purposes, including secured and unsecured
installment and term loans, home equity loans and home equity lines of credit.
Consumer loan repayments depend upon the borrowers financial stability and are
more likely to be adversely affected by divorce, job loss, illness and personal
hardships. Because many consumer loans are secured by depreciable assets such
as boats, cars, and trailers, the loans are amortized over the useful life of
the asset. The borrower generally is required to be employed for at least 12
months prior to obtaining the loan. The loan officer reviews the borrowers
past credit history, past income level, debt history and, when applicable, cash
flow and determines the impact of all of these factors on the ability of the
borrower to make future payments as agreed. Consumer loans generally are made
at a fixed rate of interest. As of December 31, 2002, consumer loans comprised
20.5% of the Banks loan portfolio.

Deposit Services

The Bank seeks to establish solid core deposits, including checking
accounts, money market accounts, savings accounts, a variety of certificates of
deposit and IRA accounts. To attract deposits, the Bank employs an aggressive
marketing plan in its primary service area and features a broad product line
and competitive services. The primary sources of deposits are residents of,
and businesses and their employees located in, the Banks primary service area.
The Bank obtains these deposits through personal solicitation by its officers
and directors, direct mail solicitations and advertisements in the local media.
In order to attract its initial deposit base, the Bank offered higher interest
rates on various deposit accounts.

Private Banking Services

The Bank established a private banking group to offer personalized private
banking services to affluent individuals, professionals, entrepreneurs and
their business interests. The Banks private banking products and services
include commercial lending products such as lines of credit for working
capital, term loans, letters of credit to support commitments of its private
banking clients, as well as non-credit products such as cash concentration
accounts, merchant credit card processing, electronic funds transfer and other
cash management products. Individual private banking products and services
include interest bearing checking, money market deposit accounts, certificates
of deposit and secured and unsecured personal loans and lines of credit. All
of the Banks organizers are private banking clients and lend experience and
guidance to the development of its private banking products and services.

6



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Other Banking Services

Other banking services include cash management services, safe-deposit
boxes, travelers checks, direct deposit of payroll and social security checks,
automatic drafts, and overdraft protection. The Bank became associated with a
shared network of automated teller machines that its customers will be able to
use throughout Georgia and other regions. The Bank offers annuities, mutual
funds and other financial services through a third party service provider. The
Bank also offers Mastercard® and VISA® credit card services through a
correspondent bank as an agent for the Bank. The Bank will not exercise trust
powers during its early years of operation. The Bank may in the future offer a
full-service trust department, but cannot do so without the prior approval of
the Georgia Department.

The Bank offers its targeted commercial customers a courier service that
picks up non-cash deposits from the customers place of business and delivers
them to the Bank. Management believes that this is an important service for
the Banks customers because the Bank only has two office locations at the
present time.

Investments

In addition to loans, the Bank makes other investments primarily in
obligations of the United States or obligations guaranteed as to principal and
interest by the United States and other taxable securities. These investments
include U.S. Treasury bills with treasury notes, as well as investments in
securities of federally sponsored agencies, such as Federal Home Loan Bank
bonds. In addition, the Bank also invests in federal funds, negotiable
certificates of deposit, bankers acceptances, mortgage backed securities,
corporate bonds and municipal or other tax-free bonds. No investment in any of
those instruments exceeds any applicable limitation imposed by law or
regulation. The Banks Investment/Asset-Liability Committee reviews the
investment portfolio on an ongoing basis in order to ensure that the
investments conform to the Banks policy as set by its board of directors.

Asset and Liability Management

The Banks Investment/Asset-Liability Committee manages its assets and
liabilities and strives to provide an optimum and stable net interest margin, a
profitable after-tax return on assets and return on equity and adequate
liquidity. The committee conducts these management functions within the
framework of written loan and investment policies adopted by the Bank. The
committee attempts to maintain a balanced position between rate sensitive
assets and rate sensitive liabilities. Specifically, it charts assets and
liabilities on a matrix by maturity, effective duration and interest adjustment
period and attempts to manage any gaps in maturity ranges.

Marketing and Advertising

The Banks target customers are the residents and the small- to
medium-sized businesses and their employees located in its primary service
area.

The Bank develops its image as a community-oriented bank with an emphasis
on quality service and personal contact. The Bank uses a targeted marketing
approach through local newspapers, radio advertisements during peak driving
times, direct mail campaigns and television spots, as necessary. Additionally,
the Bank sponsors community activities on an active and ongoing basis.

Employees

As of December 31, 2002, the Bank had 31 full-time and two part-time
employees. The Company does not have any employees who are not also employees
of the Bank.

7



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Supervision and Regulation

The following discussion describes the material elements of the regulatory
framework that applies to banks and bank holding companies and provides certain
specific information related to the Company and the Bank.

Regulation of the Company

The Company is a bank holding company registered with the Federal Reserve
under the Bank Holding Company Act of 1956, as amended (the Bank Holding
Company Act). As a result, the Company and any future non-bank subsidiaries
are subject to the supervision, examination and reporting requirements of the
Bank Holding Company Act and the regulations of the Federal Reserve.

Acquisitions.The Bank Holding Company Act requires every bank holding
company to obtain the prior approval of the Federal Reserve before:



| |  |  | it may acquire direct or indirect ownership or control of any
voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than
5% of the voting shares of the bank;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | it or any of its subsidiaries, other than a bank, may acquire
all or substantially all the assets of any bank; or                                                                                                                     
|
| |  |  | it may merge or consolidate with any other bank holding
company.                                                                                                                                                                      

The Bank Holding Company Act further provides that the Federal Reserve may
not approve any acquisition that would result in monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any section of the United States, or the
effect of which may be substantially to lessen competition or to tend to create
a monopoly in any section of the United States, or that in any other manner
would be a restraint of trade, unless the anticompetitive effects of the
proposed transaction are clearly outweighed by the public interest in meeting
the convenience and needs of the community to be served. The Federal Reserve
is also required to consider the financial and managerial resources and future
prospects of the bank holding companies and banks concerned and the convenience
and needs of the community to be served. Consideration of financial resources
generally focuses on capital adequacy, which is discussed below.

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act, the
restrictions on interstate acquisitions of banks by bank holding companies were
repealed. As a result, the Company and other bank holding companies located in
Georgia are able to acquire banks located in any other state, and bank holding
companies located outside of Georgia can acquire any Georgia-based banks, in
either case subject to certain deposit percentage and other restrictions. The
legislation provides that unless an individual state has elected to prohibit
out-of-state banks from operating interstate branches within its territory,
adequately capitalized and managed bank holding companies are able to
consolidate their multistate banking operations into a single bank subsidiary
and to branch interstate through acquisitions. De novo branching by an
out-of-state bank is permitted only if it is expressly
permitted by the laws of the host state. Georgia does not permit de novo
branching by an out-of-state bank. Therefore, the only method by which an
out-of-state bank or bank holding company may enter Georgia is through an
acquisition. Georgia has adopted an interstate banking statute that removes
the existing restrictions on the ability of banks to branch interstate through
mergers, consolidations and acquisitions. However, Georgia law prohibits a
bank holding company from acquiring control of a financial institution until
the target financial institution has been in existence and continuously
operating as a bank for three years. As a result, no bank holding company may
acquire control of the Company until after the third anniversary of the Banks
commencement of operations.

Activities.The Bank Holding Company Act has generally prohibited a bank
holding company from engaging in activities other than banking or managing or
controlling banks or other permissible subsidiaries and from acquiring or
retaining direct or indirect control of any company engaged in any activities
other than those determined by the Federal Reserve to be closely related to
banking or managing or controlling banks as to be a proper incident

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thereto.
Provisions of the Gramm-Leach-Bliley Act, discussed below, have expanded the
permissible activities of a bank holding company and its subsidiaries. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity can be reasonably
expected to produce benefits to the public, such as a greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.

Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act implemented major
changes to the statutory framework for providing banking and other financial
services in the United States. The Gramm-Leach-Bliley Act, among other things,
eliminated many of the restrictions on affiliations among banks and securities
firms, insurance firms, and other financial service providers. A bank holding
company that qualifies as a financial holding company will be permitted to
engage in activities that are financial in nature or incidental or
complimentary to a financial activity. The activities that the
Gramm-Leach-Bliley Act expressly lists as financial in nature include insurance
activities, providing financial and instant advisory services, underwriting
securities and limited merchant banking activities.

To become eligible for these expanded activities, a bank holding company
must qualify as a financial holding company. To qualify as a financial holding
company, each insured depository institution controlled by the bank holding
company must be well-capitalized, well-managed, and have at least a
satisfactory rating under the Community Reinvestment Act. In addition, the
bank holding company must file a declaration with the Federal Reserve of its
intention to become a financial holding company. The Company presently has no
plans to become a financial holding company.

Although considered to be one of the most significant banking laws since
Depression-era statutes were enacted, because of the Companys small size and
recent organization, management does not expect the Gramm-Leach-Bliley Act to
materially affect the Companys initial products, services or other business
activities. Management does not believe that the Gramm-Leach-Bliley Act will
have a material adverse impact on the Companys operations. To the extent that
it allows banks, securities firms, and insurance firms to affiliate, the
financial services industry may experience further consolidation. The
Gramm-Leach-Bliley Act may have the result of increasing the amount of
competition that the Company faces from larger institutions and other companies
offering financial products and services, many of which may have substantially
more financial resources.

Support of Subsidiary Institutions.Under Federal Reserve policy, the
Company is expected to act as a source of financial strength for, and to commit
resources to support its banking subsidiaries. This support may be required at
times when, absent such Federal Reserve policy, the Company may not be inclined
to provide it. In addition, any capital loans by a bank holding company to its
banking subsidiaries are subordinate in right of payment to deposits and to
certain other indebtedness of such banks. In the event of a bank holding
companys bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.

Regulation of the Bank

As a Georgia state chartered bank, the Bank is examined and regulated by
the FDIC and the Georgia Department. 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 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 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 bank is an uninsured bank.

The Georgia Department regulates all areas of the Banks banking
operations, including mergers, establishment of branches, loans and reserves.
The Bank is also subject to Georgia banking and usury laws restricting the
amount of interest which it charges in making loans or other extensions of
credit. With respect to expansion, Georgia law permits, with required
regulatory approval, the establishment of de novo branches in an

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unlimited
number of counties within the State of Georgia by the subsidiary banks of bank
holding companies then engaged in the business of banking in Georgia.

Prompt Corrective Action.The Federal Deposit Insurance Corporation
Improvement Act establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, the federal
banking regulators are required to establish five capital categories (well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized) and are required to take
certain mandatory supervisory actions, and are authorized to take other
discretionary actions, with respect to institutions in the three
undercapitalized categories, the severity of which will depend upon the capital
category in which the institution is placed. Generally, subject to a narrow
exception, the banking regulator must appoint a receiver or conservator for an
institution that is critically undercapitalized. The federal banking
regulators have specified by regulation the relevant capital level for each
category.

An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking
regulator. A bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to certain limitations.
The obligation of a controlling holding company to fund a capital restoration
plan is limited to the lesser of 5% of an undercapitalized subsidiarys assets
or the amount required to meet regulatory capital requirements. An
undercapitalized institution is also generally prohibited from increasing its
average total assets, making acquisitions, establishing any branches, or
engaging in any new line of business, except in accordance with an accepted
capital restoration plan or with the approval of the FDIC. In addition, the
appropriate federal banking regulator may treat an undercapitalized institution
in the same manner as it treats significantly undercapitalized institutions if
it determines that those actions are necessary.

FDIC Insurance Assessments.The FDIC adopted a risk-based assessment
system for insured depository institutions that takes into account the risks
attributable to different categories and concentrations of assets and
liabilities. The system assigns an institution to one of three capital
categories: (i) well capitalized; (ii) adequately capitalized; and (iii)
undercapitalized. These three categories are substantially similar to the
prompt corrective action categories described above. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. An institutions insurance assessment rate is then determined based on
the capital category and supervisory category to which it is assigned. Under
the final risk-based assessment system, there are nine assessment risk
classifications to which different assessment rates are applied. Assessments
range from 0 to 27 cents per $100 of deposits, depending on the institutions
capital group and supervisory subgroup.

The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations, or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.

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Community Reinvestment Act.The Bank is subject to the provisions of the
Community Reinvestment Act (CRA), which requires the FDIC, in connection with
its regular examination of a bank, to assess the Banks record of meeting the
credit needs of the communities it serves, including low- and moderate-income
neighborhoods, consistent with safe and sound banking practices.

Regulations promulgated under the CRA are intended to set distinct
assessment standards for financial institutions. The regulations provide for
streamlined procedures for institutions with assets of less than $250 million.
The regulations contain the following three evaluation tests:



| |  |  | a lending test, which compares the institutions market share
of loans in low- and moderate-income areas to its market share of
loans in its entire service area;                                                                                                        
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a service test, which evaluates the provision of services
that promote the availability of credit to low- moderate-income
areas; and                                                                                                                                     
|
| |  |  | an investment test, which evaluates the institutions record
of investments in organizations designed to foster community
development, small- and minority-owed businesses and affordable
housing lending, including state and local government housing or
revenue bonds.

Institutions are required to make public disclosure of their written CRA
evaluations made by regulatory agencies. This promotes enforcement of CRA
requirements by providing the public with the status of a particular
institutions community investment record. In addition to public disclosure of
an institutions CRA assessment, regulatory authorities are required to
consider an institutions CRA assessment when an institution applies for
approval to establish a new branch which will accept deposits, to relocate an
existing branch or to merge with another federally regulated financial
institution.

Privacy.The Gramm-Leach-Bliley Act also contains provisions regarding
consumer privacy. These provisions require financial institutions to disclose
their policy for collecting and protecting confidential information. Customers
generally may prevent financial institutions from sharing personal financial
information with nonaffiliated third parties, other than third parties that
market the institutions products and services. Additionally, financial
institutions generally may not disclose consumer account numbers to any
nonaffiliated third party for use in telemarketing, direct mail marketing or
other marketing through electronic means to the consumer.

USA Patriot Act of 2001.On October 26, 2001, the USA Patriot Act of 2001
was signed into law. This act contains the International Money Laundering
Abatement and Financial Anti-Terrorism Act of 2001 (the IMLAFA). The IMLAFA
contains anti-money laundering measures affecting insured depository
institutions, broker-dealers and certain other financial institutions. The
IMLAFA requires U.S. financial institutions to adopt new policies and
procedures to combat money laundering and grants the Secretary of the Treasury
broad authority to establish regulations and to impose requirements and
restrictions on financial institutions operations. We do not expect that
compliance with the IMLAFA will have a material impact on our results of
operations or financial condition.

Payment of Dividends

The Company is a legal entity separate and distinct from the Bank. The
principal sources of revenue to the Company, including cash flow to pay
dividends to its shareholders, are dividends paid from the Bank to the Company.
There are statutory and regulatory limitations on the payment of dividends by
the Bank, as well as by the Company to its shareholders.

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If, in the opinion of the FDIC, the Bank was engaged in or about to engage
in an unsafe or unsound practice the FDIC may require, after notice and
hearing, that such institution cease and desist from such practice. The
federal banking regulators have indicated that paying dividends that deplete a
depository institutions capital base to an inadequate level would be unsafe
and unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act, a depository institution may not pay any dividend if payment
would cause it to become undercapitalized or if it already is undercapitalized.
Moreover, the federal banking regulators have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings. The payment of dividends by the
Company and its banking subsidiary may also be affected or limited by other
factors, such as the requirement to maintain adequate capital above regulatory
guidelines.

Georgia law provides additional restrictions on the payment of dividends
by the Bank to the Company. The Bank must have the approval of the Georgia
Department to pay cash dividends, unless at the time of such payment:



| |  |  | the total classified assets at the most recent examination of
the Bank do not exceed 80% of tier 1 capital plus allowance for loan
losses as reflected at such examination;                                 
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the aggregate amount of dividends declared or anticipated to
be declared in the calendar year does not exceed 50% of the net
profits, after taxes, but before dividends, for the previous
calendar year; and
|
| |  |  | the ratio of tier 1 capital to adjusted total assets will not
be less than 6%.                                                                                                                              

In light of these regulatory restrictions and the need for the Company to
retain and build capital, the board of directors of the Company plans to
reinvest earnings for the period of time necessary to support successful
operations. As a result, we do not plan to pay dividends until we recover any
losses incurred and become cumulatively profitable, and our future dividend
policy depends on the earnings, capital requirements and financial condition of
the Company and the Bank and on other factors that our board of directors
considers relevant. We do not expect to attain cumulative profitability before
our third year of operations, if at all. Consequently, we do not expect to pay
dividends to our shareholder in the near future.

Capital Adequacy

The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve, in the case of the Company, and
the FDIC, in the case of the Bank. The Federal Reserve has established two
basic measures of capital adequacy for bank holding companies: a risk-based
measure and a leverage measure. A bank holding company must satisfy all
applicable capital standards to be considered in compliance.

The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and
bank holding companies, to account for off-balance sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance sheet
items, such as letters of credit and unfunded loan commitments, are assigned to
broad risk categories, each with appropriate weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and
off-balance sheet items.

The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. At least half of total capital must comprise common stock,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets,
or tier 1 capital. The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves, or tier 2
capital.

In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of tier 1 capital to average assets, less goodwill and
certain other intangible assets, of 3% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a leverage
ratio of at least 3%, plus an additional cushion of 1% to 2%. The guidelines
also provide that bank holding companies experiencing internal growth, as will
be the case for the Company, or making acquisitions will be

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expected to
maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve has indicated that it will consider a bank holding companys
tier 1 capital leverage ratio, after deducting all intangibles, and other
indicators of capital strength in evaluating proposals for expansion or new
activities.

The Bank is subject to risk-based and leverage capital requirements
adopted by FDIC, which are substantially similar to those adopted by the
Federal Reserve for bank holding companies.

Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As
described above, substantial additional restrictions can be imposed on
FDIC-insured depository institutions that fail to meet applicable capital
requirements.

Restrictions on Transactions with Affiliates

The Company and the Bank are subject to the provisions of Section 23A of
the Federal Reserve Act. Section 23A places limits on the amount of:



| |  |  | a banks loans or extensions of credit to affiliates;                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a banks investment in affiliates;                                                                                             
|
| |  |  | assets a bank may purchase from affiliates, except for real
and personal property exempted by the Federal Reserve;             
|
| |  |  | the amount of loans or extensions of credit to third parties
collateralized by the securities or obligations of affiliates; and
|
| |  |  | a banks guarantee, acceptance or letter of credit issued on
behalf of an affiliate.                                           

The total amount of the above transactions is limited in amount, as to any
one affiliate, to 10% of a banks capital and surplus and, as to all affiliates
combined, to 20% of a banks capital and surplus. In addition to the
limitation on the amount of these transactions, each of the above transactions
must also meet specified collateral requirements. The Bank must also comply
with other provisions designed to avoid the making of low-quality loans or
investments.

The Company and the Bank are also subject to the provisions of Section 23B
of the Federal Reserve Act which, among other things, prohibits an institution
from engaging in the above transactions with affiliates unless the transactions
are on terms substantially the same, or at least as favorable to the
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies.

The Bank is also subject to restrictions on extensions of credit to its
executive officers, directors, principal shareholders and their related
interests. These extensions of credit (i) must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with third parties, and (ii) must not involve
more than the normal risk of repayment or present other unfavorable features.

Monetary Policy

The earnings of the Bank, as well as the Company, are affected by domestic
and foreign conditions (such as the potential war with Iraq), particularly by
the monetary and fiscal policies of the United States government and its
agencies. The Federal Reserve has had, and will continue to have, an important
impact on the operating results of commercial banks through its power to
implement national monetary policy in order, among other things, to mitigate
recessionary and inflationary pressures by regulating the national money
supply. The techniques used by the Federal Reserve include setting the reserve
requirements of member banks and establishing the discount rate on member

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bank borrowings. The Federal Reserve also conducts open market transactions in
United States government securities.

Item 2. Properties

On January 23, 2002, following completion of the Branch Acquisition, the
Bank began banking operations in the facility previously used by The Tattnall
Bank as its Savannah branch office. The Bank conducted banking operations in
this facility until construction of the Banks main office facility was
completed in November 2002. The term of the lease expired in December 2002.

The Banks main office is located at 7401 Hodgson Memorial Drive,
Savannah, Georgia, in the Oglethorpe Mall area of Chatham County. On August
1, 2001, the Company acquired the property for a purchase price of $785,000.
To pay for the property, the Company entered into a loan agreement with Nexity
Bank for an amount of $785,000. Each of the Companys organizers guaranteed a
pro-rata portion of the loan, which bore interest at 0.75% less than the prime
rate, as published in the Money Rates section of The Wall Street Journal,and
was scheduled to be repaid on August 1, 2002. In January 2002, the Company
repaid the loan in full using a portion of the proceeds of the Offering.

Construction of the Banks main office facility began in September 2001
and was completed in November 2002. The Banks main office facility consists
of approximately 6,400 square feet and includes one vault, eight offices, a
loan operations area, four teller stations, three drive-in windows, and one
automated teller machine. The costs of constructing the facility were
approximately $1,249,000, and the costs of furnishing and equipping the
facility were approximately $408,000.

In addition, the Company acquired a property, located at 196 Pooler
Parkway, Savannah, Georgia, for construction of a branch office facility. The
purchase price for the property was $975,000 and was funded through a loan from
Nexity Bank. Each organizer of the Company guaranteed a pro-rata portion of
the loan, which bore interest at 0.75% less than the prime rate, as published
in the Money Rates section of The Wall Street Journal,and was scheduled to be
repaid on June 25, 2002. In January 2002, the Company repaid the loan in full
using a portion of the proceeds of the Offering.

The Company began construction of this branch office facility in September
2001 and was completed in October 2002. This branch office facility consists
of approximately 3,200 square feet and includes one vault, four offices, four
teller stations, three drive-in windows, and one automated teller machine. The
estimated costs of constructing this branch office facility were $883,000, and
the estimated costs of furnishing and equipping the facility were $320,000.

Prior to completion of the branch office facility, the Company conducted
its organizational activities from a facility located at 401 Mall Boulevard,
Suite 101B, Savannah, Georgia. The initial term of the lease expired on August
31, 2001, at which time the lease became a month to month lease. The monthly
rental fee for this temporary office space is $2,167 per month. This temporary
facility is owned by Sylvan M. Byck, Jr., one of the Banks directors.

Item 3. Legal Proceedings

As of the date of this Report, there were no legal proceedings to which
we, or any of our properties, were subject.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

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PART II

Item 5. Market for Common Equity and Related Stockholder Matters

A.     Market Information

(i)  Market for Common Equity.There is no established trading market for
the Companys common stock, and an active public trading market is not expected
to develop in the near future.

(ii)  Holders of Common Stock.As of March 1, 2003, there were 296 record
holders of the Companys common stock.

(iii)  Dividends.To date, the Company has not paid any dividends on its
common stock. The Company initially has no source of income other than
dividends that the Bank pays to it. The Companys ability to pay dividends to
its shareholders will therefore depend on the Banks ability to pay dividends
to the Company. In the future, the Company may begin income-producing
operations independent from those of the Bank, which may provide another source
of income from which the Company could pay dividends to its shareholders.
However, the Company can give you no assurance as to when, if at all, these
operations may begin or whether they will be profitable.

Bank holding companies and national banks are both subject to significant
regulatory restrictions on the payment of cash dividends. In light of these
restrictions and the need for the Company and the Bank to retain and build
capital, the boards of directors of the Company and the Bank plan to reinvest
earnings for the period of time necessary to support successful operations. As
a result, the Company does not plan to pay dividends until it recovers any
losses incurred and becomes profitable, and its future dividend policy depends
on the earnings, capital requirements and financial condition of the Company
and the Bank and on other factors that the board of directors considers
relevant.

Additionally, regulatory authorities may determine, under circumstances
relating to the financial condition of the Company or the Bank, that the
payment of dividends would be an unsafe or unsound practice and may prohibit
dividend payment. See Item 1. Description of Business  Supervision and
Regulation  Payment of Dividends.

B.     Equity Compensation Plan Information

See Item 11  Security Ownership of Certain Beneficial Owners and
Management  Equity Compensation Plan Information for disclosure regarding the
Companys equity compensation plans.

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Item 6. Managements Discussion and Analysis of Financial Condition and Plan of Operation

Managements discussion and analysis is provided to assist in the
understanding and evaluation of the Companys financial condition and its
results of operations. The following discussion should be read in conjunction
with the Companys financial statements and related notes which also are
included in this Report.

Critical Accounting Policies.The Companys financial statements are
prepared in accordance with accounting principles generally accepted in the
United States (GAAP). The notes to the audited consolidated financial
statements included in the Companys Annual Report on Form 10-KSB for the year
ended December 31, 2002 contain a summary of its significant accounting
policies. Management believes the Companys policies with respect to the
methodology for the determination of the allowance for loan losses, and asset
impairment judgments, such as the recoverability of intangible assets, involve
a higher degree of complexity and require management to make difficult and
subjective judgments that often require assumptions or estimates about highly
uncertain matters. Accordingly, the Company considers the policies related to
those areas as critical.

The allowance for loan losses is an estimate of the losses that may be
sustained in the Companys loan portfolio. The allowance is based on two basic
principles of accounting: (i) Statement of Financial Accounting Standards
(SFAS) 5, Accounting for Contingencies, which requires that losses be accrued
when they are probable of occurring and estimable, and (ii) SFAS 114,
Accounting by Creditors for Impairment of a Loan, which requires that losses be
accrued based on the differences between the value of collateral, present value
of future cash flows or values that are observable in the secondary market, and
the loan balance.

The Companys allowance for loan losses has three basic components: (i)
the formula allowance, (ii) the specific allowance, and (iii) the unallocated
allowance. Each of these components is determined based upon estimates that
can and do change when the actual events occur. The formula allowance uses an
historical loss view as an indicator of future losses and, as a result, could
differ from the loss incurred in the future. However, since this history is
updated periodically with the most recent loss information, the differences
that might otherwise accumulate over time are mitigated. The specific
allowance uses various techniques to arrive at an estimate of loss. Historical
loss information, expected cash flows and fair market value of collateral are
used to estimate these losses. The use of these values is inherently
subjective and our actual losses could be greater or less than the estimates.
The unallocated allowance captures losses that are attributable to various
economic events, industry or geographic sectors whose impact on the portfolio
have occurred but have yet to be recognized in either the formula or specific
allowance.

Accounting for intangible assets is as prescribed by SFAS 142, Goodwill
and Other Intangible Assets. The Company accounts for recognized intangible
assets based on their estimated useful lives. Intangible assets with finite
useful lives are amortized while intangible assets with an indefinite useful
life are not amortized. Currently, the Companys recognized intangible assets
consist primarily of purchased core deposit intangible assets, having estimated
useful lives of 10 years, and are being amortized. The useful life is the
period over which the assets are expected to contribute directly or indirectly
to future cash flows.

Estimated useful lives of intangible assets are based on an analysis of
pertinent factors, including (as applicable):



| |  |  | the expected use of the asset;                                                                                                                      
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the expected useful life of another asset or a group of
assets to which the useful life of the tangible asset may relate;                           
|
| |  |  | any legal, regulatory, or contractual provisions that may
limit the useful life;                                                                    
|
| |  |  | any legal, regulatory, or contractual provisions that
enable renewal or extension of the assets legal or contractual
life without substantial cost;

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| |  |  | the effects of obsolescence, demand, competition, and other
economic factors; and                      
| | - |  | -------------------------------------------------------------------------------------------------------
|
| |  |  | the level of maintenance expenditures required to obtain
the expected future cash flows from the asset.

Straight-line amortization is used to expense recognized amortizable
intangible assets since a method that more closely reflects the pattern in
which the economic benefits of the intangible assets are consumed cannot
reliably be determined. Intangible assets are not written off in the period of
acquisition unless they become impaired during that period.

The Company evaluates the remaining useful life of each intangible asset
that is being amortized each reporting period to determine whether events and
circumstances warrant a revision to the remaining period of amortization. If
the estimate of the intangible assets remaining useful life is changed, the
remaining carrying amount of the intangible asset shall be amortized
prospectively over that revised remaining useful life.

If an intangible asset that is being amortized is subsequently determined
to have an indefinite useful life, the asset will be tested for impairment.
That intangible asset will no longer be amortized and will be accounted for in
the same manner as intangible assets that are not subject to amortization.

Intangible assets that are not subject to amortization are reviewed for
impairment and tested annually, or more frequently if events or changes in
circumstances indicate that the asset might be impaired. The impairment test
consists of a comparison of the fair value of the intangible asset with its
carrying amount. If the carrying amount of the intangible asset exceeds its
fair value, an impairment loss is recognized in an amount equal to that excess.
After an impairment loss is recognized, the adjusted carrying amount of the
intangible asset becomes its new accounting basis. Subsequent reversal of a
previously recognized impairment loss is not allowed. Based on the
aforementioned testing, the Company has determined that its recorded intangible
assets are not impaired.

Net Interest Income.Net interest income, the principal source of
income for the Company and the Bank, is the amount of income generated by
earning assets (primarily loans and investment securities) less the interest
expense incurred on interest-bearing liabilities (primarily deposits used to
fund earning assets). Changes in the volume and mix of interest-earning assets
and interest-bearing liabilities, as well as their respective yields and rates,
have a significant impact on the level of net interest income.

During 2002, interest income increased to $2.6 million. The increase in
2002 was due to the Bank opening for business. Average earning assets were
$49.7 million during 2002. Yields on interest-earning assets during 2002 were
5.48%.

Interest rates charged on loans vary with the degree of risk, maturity and
amount of the loan. Competitive pressures, money market rates, availability of
funds, and government regulation also influence interest rates. On average,
loans yielded 6.66%. Interest expense was $1.1 million in 2002. Average
interest-bearing liabilities were $37.3 million during 2002. The average rate
paid on these liabilities amounted to 2.90% in 2002. Net interest income
totaled $1.6 million in 2002.

The following table presents the average balances of total
interest-earning assets and total interest-bearing liabilities for the periods
indicated, showing the average distribution of assets, liabilities and
stockholders equity, and the related income, expense, and corresponding
weighted average yields and costs. The average balances used for the purposes
of this table and other statistical disclosures were calculated by using the
daily average balances.

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Table 1. Net Interest Income and Average Balances (dollars in thousands)

|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |   |      |   |      |  
|------------------------------------------ | ----------------- | ----------------------------- | ----------------------- | --------------------- | ------ | ----------------- | ------ | ---------------- | ----- | ----------- | ----- | - | ---- | - | ---- | -
|                                           |                   |                               |                         |                       |        | Year Ended       
|                                           |                   |                               |                         |                       |        | December 31, 2002
|                                           |                   |                               |                         |                       |        |                  
|                                           |                   |                               |                         |                       |        | Average Balance   |        | Interest Inc/Exp |       | Yield/ Cost
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |            
|                                           |                   | Interest earning assets:      |                         |                       |        |                   |        |                  |       |             |       |   |      |  
|                                           |                   |                               |                         | Loans                 |        | $                 | 32,617 |                  |       | $           | 2,173 |   |      |   | 6.66 | %
|                                           |                   |                               |                         | Investment Securities |        |                   | 9,697  |                  |       |             | 362   |   |      |   | 3.74 | %
|                                           |                   |                               |                         | Federal funds sold    |        |                   | 6,204  |                  |       |             | 113   |   |      |   | 1.96 | %
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|                                           |                   | Total interest-earning assets |                         |                       | 48,518 |                   |        |                  | 2,648 |             |       |   | 5.48 | %
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|                                           |                   | Noninterest-earning assets:   |                         |                       |        |                   |        |                  |       |             |       |   |      |  
|                                           |                   |                               | Cash and due from banks |                       |        | 1,766             |        |                  |       |             |       |   |      |   |     
|                                           |                   |                               | Property and equipment  |                       |        | 2,920             |        |                  |       |             |       |   |      |   |     
|                                           |                   |                               | Other assets            |                       |        | 4,667             |        |                  |       |             |       |   |      |   |     
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|                                           |                   | Total assets                  |                         | $                     | 57,871 |                   |        |                  |       |             |       |   |      |  
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|                                           |                   | Interest-bearing liabilities: |                         |                       |        |                   |        |                  |       |             |       |   |      |  
|                                           |                   |                               |                         | Demand deposits       |        | $                 | 24,136 |                  |       |             | 645   |   |      |   | 2.62 | %
|                                           |                   |                               |                         | Savings deposits      |        |                   | 101    |                  |       |             | 1     |   |      |   | 1.09 | %
|                                           |                   |                               |                         | Time deposits         |        |                   | 12,622 |                  |       |             | 437   |   |      |   | 3.46 | %
|                                           |                   |                               |                         | FHLB advances         |        |                   | 483    |                  |       |             | 16    |   |      |   | 3.23 | %
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|Total interest-bearing liabilities         |                   |                               | 37,342                  |                       |        |                   | 1,099  |                  |       |             | 2.90  | %
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|Noninterest bearing liabilities:           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|                                           | Demand deposits   |                               |                         | 2,605                 |        |                   |        |                  |       |             |       |   |     
|                                           | Other liabilities |                               |                         | 4,657                 |        |                   |        |                  |       |             |       |   |     
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|Total liabilities                          |                   |                               | 44,604                  |                       |        |                   |        |                  |       |             |       |  
|Stockholders equity                       |                   |                               | 13,267                  |                       |        |                   |        |                  |       |             |       |  
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|Total liabilities and stockholders equity |                   | $                             | 57,871                  |                       |        |                   |        |                  |       |             |       |  
|                                           |                   |                               |                         |                       |        |                   |        |                  |       |             |       |  
|Net interest income                        |                   |                               |                         |                       |        | $                 | 1,549  |                  |       |             |       |  
|Net interest spread                        |                   |                               |                         |                       |        |                   |        |                  |       |             | 2.58  | %
|Net interest margin (1)                    |                   |                               |                         |                       |        |                   |        |                  |       |             | 3.19  | %



---

|(1) |  | Net interest margin is taxable equivalent net interest income
divided by average earning assets.
|--- |  | ------------------------------------------------------------------------------------------------

As the Company began operations in early 2002, an analysis of the relative
impact of net interest income changes in the average balances and volume of
earning assets and interest bearing liabilities and rates earned and paid by
the Company on such assets and liabilities is not available for the 2002.

Analysis of Financial Condition.It is managements continued intent to
grow the Companys balance sheet by first growing its loan portfolio, rather
than growing its liability base first and investing in lower yielding assets
until loans can be produced. Management believes this to be the most cost
effective strategy for profitable growth. Management does expect internally
generated loan growth to moderate in 2003 as credit standards and underwriting
criteria are tightened somewhat, in light of current economic conditions.
However, as the Companys geographic market area continues to expand, access to
high quality loans is expected to continue to drive overall
growth.

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Net Interest Income.The Companys primary source of income is net
interest income. It is defined as the difference between income generated by
the earning assets less expense incurred on its interest bearing liabilities.
Table 1 summarizes the major components of net interest income for the year
ended December 31, 2002. During 2002, net interest income increased as a
result of overall increases in balance sheet volume. The decline in net
interest margin was considered by management to be more correlated to liability
pricing than asset pricing. With interest rates at their lowest point in
decades, deposit rates became increasingly difficult to lower during the year
and still retain these deposits. Accordingly, deposit rates declined less than
asset yields and adversely impacted margins. This was mitigated to some degree
by adjusting the Companys asset mix and increasing the percentage of earning
assets comprised of the highest yielding asset class, loans. In addition to
retail deposits generated through its branch network, management added
wholesale deposits and FHLB advances to the Companys menu of funding sources.
These wholesale sources of funding allow for greater flexibility in managing
the Companys liability structure as well as providing additional tools for
interest rate management.

Provision for Credit Losses and Asset Quality.As a result of the
continued rapid growth of the Companys loan portfolio, the Companys provision
for loan losses remains one of its largest ongoing expenses. During 2002, the
the Bank provided $732,000 million for possible loan losses. This provision,
made to the Companys allowance for credit losses to provide for possible
future losses are charged directly against the Companys current earnings. On
at least a quarterly basis, management and the Board of Directors evaluates the
allowance for loan losses to determine its adequacy to meet any known or
anticipated future losses based on current and projected conditions. Factors
considered in determining the adequacy of the allowance include the estimated
collectability of past due loans, the volume of new loans, composition of the
loan portfolio, industry standards and current as well as projected economic
conditions. Specific reserves for individual loans are established in addition
to the basic reserve as deemed necessary based on evaluation of individual
credits. Generally, specific reserves are allocated to individual credits
following review by the Companys loan review personnel. Loans are selected
for this review process as a result of one or more events. Reviews normally
are triggered as a result of the delinquency of a credit, some change in the
status of the borrower (including a change in the borrower or guarantors
financial condition as indicated by receipt of interim financial statements),
or as the result of random selection in the normal course of the Companys
ongoing loan review function. Upon review, if the credit is considered to have
deteriorated to a point that additional and ongoing attention is necessary, the
credit will be graded into one of five non-standard categories. These
categories include, in order of increasing severity, watch, OAEM or special
mention, substandard, doubtful or loss. Once reviewed and classified, each
loan is assigned a risk allocation based on the estimated risk of loss
determined during the review. Loans that are not classified are assigned to
general categories, generally based on their type of collateral, and are
assigned a risk weighting by class or category. This risk weighting is based
both on the Companys historical loss ratios and on industry standards since
the Companys portfolio is relatively young and has limited loss history.

The Companys loan portfolio will become more seasoned and historical
trends will provide more pertinent data for evaluation. However, with
continued growth and expansion into new markets, estimates of future portfolio
performance remain quite subjective. Therefore, while it is the opinion of
management and the Board of Directors that the Banks allowance for loan losses
is adequate to absorb any anticipated loan losses as of the report date, no
assurances can be made that any future losses may not be significant and may
require additional provisions. At December 31, 2002 allowance for loan losses
totaled $732,000, representing 1.10% of gross loans.

While the Company has experienced no credit losses to date, the rapid
growth of its loan portfolio, unknown future economic conditions and industry
standards indicate future credit losses are to be expected in the normal course
of business. It is managements intent to control and limit such losses
through adherence to current policies and procedures which are intended to
maintain a high level of credit quality.

Since its organization during 2002, the Company has experienced
substantial growth in its loan portfolio, deposit base and overall balance
sheet. As a result of exceptionally rapid loan growth, the Companys
provisions for loan losses have been well above peer group averages and have
been the primary factor in the increase in the Companys allowance for loan
losses. Management expects loan growth to slow on a percentage basis during
future periods. As loan growth slows, management expects the Companys
provisions for loan losses to slow as well and to more closely resemble peer group averages.

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Because the Company is a new organization with no historical data,
charge-off history or non-performing assets on which to base assumptions, no
allocation of its allowance for loan losses has been made during 2002, the
first year of operation. The provision for loan losses made during this
period, totaling $732,000 resulted from growth in the Companys loan portfolio
and accepted, general industry standards for such loan portfolios.

Since the Company began applying its current methodology for analyzing the
adequacy of its allowance for loan losses, the Company has not experienced any
material changes in actual loan losses as compared with those projected and
allocated for in its analysis. Therefore, only minor modifications have been
made to the Companys methodology for determining the adequacy of the
allowance. It should be noted, however, that the Company still is a relatively
young company with relatively limited seasoning associated with its loan
portfolio. As a result, management expects the Company to maintain a higher
ratio of allowance to loans than that which might be expected for a more
mature, more slowly growing company with a seasoned static loan portfolio.

Other Income.In addition to net interest income, the Company derives
revenues from a variety of financial products and services offered to its
customer base. The majority of noninterest income results from from service
charges on deposit accounts including charges for insufficient funds, check
sales, and fees charged for nondeposit services and from premiums generated
through the sale of credit related insurance products. Additionally, the
Company may sell various assets from time to time including loans or securities
which may produce either gains or losses when sold. During 2002, these
transactions resulted in non-recurring gains totaling $36 thousand. Increases
in the Companys asset and customer bases accounted for the majority of fees
collected during 2002. Table 2 describes non-interest income for the year
ended December 31, 2002.

Table 2. Sources of Noninterest Income (dollars in thousands)

|                                    |  |                                    |     |      |  |  |   | 
|----------------------------------- |  | ---------------------------------- | --- | ---- |  |  | - | 
|                                    |  | For the periods ended December 31,
|                                    |  |                                   
|                                    |  | 2002                               |     | 2001
|                                    |  |                                    |     |     
|Service charges on deposit accounts |  | $                                  | 67  |      |  |  |  | 
|Securities gains                    |  |                                    | 36  |      |  |  |  | 
|Other service charges and fees      |  |                                    | 13  |      |  |  |  | 
|Other income                        |  |                                    | 205 |      |  |  |  | 
|                                    |  |                                    |     |      |  |  |   | 
|                                    |  | $                                  | 321 |      |  |  |  | 
|                                    |  |                                    |     |      |  |  |   | 

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Non-interest Expense.Table 3 describes the major components of
non-interest expense for the years ended December 31, 2002 and 2001.

Table 3. Sources of Noninterest Expense (dollars in thousands)

|                                    |  |                                    |       |      |  |  |     | 
|----------------------------------- |  | ---------------------------------- | ----- | ---- |  |  | --- | 
|                                    |  | For the periods ended December 31,
|                                    |  |                                   
|                                    |  | 2002                               |       | 2001
|                                    |  |                                    |       |     
|Salaries and employee benefits      |  | $                                  | 1,459 |      |  |  | 511 | 
|Occupancy expense                   |  |                                    | 393   |      |  |  | 1   | 
|Legal and professional              |  |                                    | 310   |      |  |  |    | 
|Advertising                         |  |                                    | 160   |      |  |  |    | 
|Data processing and network support |  |                                    | 127   |      |  |  |    | 
|Amortization of intangibles         |  |                                    | 23    |      |  |  |    | 
|Other miscellaneous                 |  |                                    | 356   |      |  |  |    | 
|                                    |  |                                    |       |      |  |  |     | 
|                                    |  | $                                  | 2,828 |      |  |  | 512 | 
|                                    |  |                                    |       |      |  |  |     | 

Income Taxes.Income tax expense is based on amounts reported in the
statements of income (after adjustments for non-taxable income and
non-deductible expenses) and consists of taxes currently due plus deferred
taxes on temporary differences in the recognition of income and expense for tax
and financial statement purposes. The deferred tax assets and liabilities
represent the future Federal income tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.

The Companys deferred income tax benefits and liabilities are the result
of temporary differences in loss carryforwards, provisions for loan losses,
valuation reserves, depreciation, deferred income, and investment security
discount accretion. Net deferred income tax assets at December 31, 2002 are
offset by a valuation allowance. Accordingly, no income tax expense or benefit
was reported during the past year. Management expects the Company to begin to
incur income tax expense during 2003.

Loans.The Company makes both consumer and commercial loans to borrowers
in all neighborhoods within its market area, including the low- and
moderate-income areas. The Banks market area is generally defined to be all
or portions of Chatham County, Georgia and the Cities of Savannah and Pooler,
Georgia. The Bank emphasizes consumer based installment loans, commercial
loans to small and medium sized businesses and real estate loans.

Net loans consist of total loans less unearned income and the allowance
for loan losses. Average net loans increased to $33.0 million during 2002.
The increase in average net loans outstanding during the past year is due to
the efforts of the Banks management, increases in loan demand, the two new
banking facilities and the Banks growing reputation in the community.

A significant portion of the loan portfolio,
$39.2 million or 59.3%, is
made up of loans secured by commercial and industrial purposes. Total loans
secured by one to four family residential properties represented 13.0% of total
loans at the end of 2002. The amounts of loans outstanding by type at December
31, 2002 are shown

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in the following table.

Table 4. Loan Portfolio Summary (dollars in thousands)

|             |                                 |   |            |           |            |  |       |      | 
|------------ | ------------------------------- | - | ---------- | --------- | ---------- |  | ----- | ---- | 
|             |                                 |   | Amount     |           | Percentage
|             |                                 |   |            |           |           
|Commercial   |                                 | $ | 34,803,074 |           |            |  | 52.8  | %   
|Real estate: |                                 |   |            |           |            |  |       |     
|             | Commercial and land development |   |            | 4,395,116 |            |  |       | 6.6  | 
|             | Residential, 1-4 families       |   |            | 8,575,105 |            |  |       | 13.0 | 
|             | Residential, 5 or more families |   |            | 2,135,224 |            |  |       | 0.1  | 
|             | Farmland                        |   |            | 287,885   |            |  |       | 0.4  | 
|             | Nonfarm, nonresidential         |   |            | 5,088,008 |            |  |       | 7.7  | 
|Consumer     |                                 |   | 10,217,870 |           |            |  | 15.4  |     
|Other        |                                 |   | 600,121    |           |            |  | 4.0   |     
|             |                                 |   |            |           |            |  |       |     
|Total        |                                 | $ | 66,102,403 |           |            |  | 100.0 | %   
|             |                                 |   |            |           |            |  |       |     

Investment Securities.The Company uses its investment portfolio to
provide liquidity for unexpected deposit decreases, to fund loans, to meet
interest rate sensitivity goals, and to generate income.

The Companys rapid growth since its inception and with continuing growth
expected by management, the need to manage liquidity through the investment
portfolio has been acknowledged by classifying all of its investment securities
as available for sale. Accordingly, these securities may be sold from time to
time to increase liquidity or re-balance the interest rate sensitivity profile
of the Companys balance sheet as deemed necessary. At December 31, 2002, the
market value of the investment portfolio was $15.6 million, representing market
appreciation of approximately $200,000 as compared to book value at that date.
The following table shows the carrying value of the Companys securities as of
December 31, 2002:

Table 5. Investment Portfolio Summary

|                                    |                              |   |            |           | 
|----------------------------------- | ---------------------------- | - | ---------- | --------- | 
|                                    |                              |   | 2002      
|                                    |                              |   |           
|Securities available for sale:      |                              | $ |            |          
|                                    | U.S. Government agencies     |   |            | 5,204,179 | 
|                                    | Mortgage backed securities   |   |            | 8,551,284 | 
|                                    | Other                        |   |            | 1,500,000 | 
|                                    | Restricted equity securities |   |            | 337,319   | 
|                                    |                              |   |            |          
|Total securities available for sale |                              | $ | 15,592,782 |          
|                                    |                              |   |            |          

Restricted equity securities consist of investments in stock of the
Federal Home Loan Bank of Atlanta (FHLB) and Community Financial Services,
Inc. (parent to The Bankers Bank). The FHLB requires financial

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institutions to
make equity investments in the FHLB in order to borrow from it. The Company is
required to hold that stock so long as it borrows from the FHLB. The Companys
stock in The Bankers Bank is restricted only in the fact that the stock may
only be repurchased by The Bankers Bank or sold to another of its member banks.

A mortgage-backed security relies on the underlying mortgage pools of
loans to provide a cash flow of principal and interest. The actual maturities
of these securities will differ from the contractual maturities because the
loans underlying the security may prepay with or without prepayment penalties.
Decreases in interest rates will generally cause an acceleration of prepayment
levels. In a declining interest rate environment, proceeds may not be able to
be reinvested in assets that have comparable yields. At December 31, 2002, 55%
of the total investment securities portfolio was invested in mortgage backed
pass-through securities, all of which are issued or backed by Federal agencies.

Federal Funds Sold.Federal funds represent the most liquid portion of
the Companys invested funds and generally the lowest yielding portion of
earning assets. Management has made an effort to maintain Federal funds at the
lowest level possible consistent with prudent interest rate risk management
strategies and liquidity needs. Average Federal funds sold totaled $6.2 million
during 2002.

Deposits.The primary goal of the Companys expansion of its geographic
market area is the ability to attract and access additional deposits. Retail
deposits gathered through the Companys branch network are the principal source
of funding. Management believes that generation of quality loan assets can be
materially impacted by the level of service provided to the customer, but that
a significant portion of depositors are viewed as more rate sensitive than
service oriented. Therefore, the Companys primary advertising and mass media
marketing efforts are geared toward attracting deposits and it remains the
Companys primary deposit gathering strategy to provide these customers with
both competitive rates and exceptional service.

The Companys balance sheet growth is largely determined by the
availability of deposits in its markets, the cost of attracting the deposits,
and the prospects of profitably utilizing the available deposits by increasing
the loan or investment portfolios. Market conditions have resulted in
depositors shopping for better deposit rates more than in the past. An
increased customer awareness of interest rates adds to the importance of rate
management. The Companys management continuously monitors market pricing,
competitors rates, and internal interest rate spreads to maintain the
Companys growth and profitability. The Company attempts to structure rates so
as to promote deposit and asset growth while at the same time increasing the
overall profitability of the Company.

Average total interest bearing deposits were $37.3 million during 2002.
Average core deposits were $28.5 million in 2002. The percentage of
the Banks average deposits that are interest-bearing was 93.5% during 2002.
Average demand deposits which earn no interest totaled $2.6 million in 2002.

The average certificates of deposit issued in denominations of $100,000 or
more totaled $7.6 million in 2002. Average certificates of deposit issued in
denominations of $100,000 or more as a percentage of total average deposits
were 18.97% for the year ended December 31, 2002.

Large municipal deposits from local governments were $10.9 million at
December 31, 2002. Management believes that the Bank is paying market rates for
these deposits. Managements strategy has been to support loan and investment
growth with core deposits and not to aggressively solicit the more volatile,
large denomination certificates of deposit. Large denomination certificates of
deposit and large municipal deposits are particularly sensitive to changes in
interest rates. Management considers these deposits to be volatile and invests
them in order to minimize liquidity and interest rate risks.

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##### Table of Contents



Average deposits for the year ended December 31, 2002 are summarized in
the following table.

Table 6. Deposit Portfolio Summary (dollars in thousands)

|                           |                                  |                                 |        |                   |        |         |       |      |      | 
|-------------------------- | -------------------------------- | ------------------------------- | ------ | ----------------- | ------ | ------- | ----- | ---- | ---- | 
|                           |                                  |                                 |        | December 31, 2002
|                           |                                  |                                 |        |                  
|                           |                                  |                                 |        | Average Balance   |        | Percent
|                           |                                  |                                 |        |                   |        |        
|Interest bearing deposits: |                                  |                                 |        |                   |        |         |       |     
|                           | NOW accounts                     |                                 | $      | 2,073             |        |         |       | 5.1  | %   
|                           | Money market                     |                                 |        | 22,548            |        |         |       | 56.3 |     
|                           | Savings                          |                                 |        | 101               |        |         |       | 2.5  |     
|                           | Other time deposits              |                                 |        | 5,044             |        |         |       | 12.6 |     
|                           | Large denomination time deposits |                                 |        | 7,576             |        |         |       | 19.0 |     
|                           |                                  |                                 |        |                   |        |         |       |      |     
|                           |                                  | Total interest bearing deposits |        |                   | 37,342 |         |       |      | 93.5 | 
|                           | Demand deposits                  |                                 |        | 2,605             |        |         |       | 6.5  |     
|                           |                                  |                                 |        |                   |        |         |       |      |     
|Total deposits             |                                  | $                               | 39,947 |                   |        |         | 100.0 | %   
|                           |                                  |                                 |        |                   |        |         |       |      |     

Capital Adequacy.Regulatory guidelines relating to capital adequacy
provide minimum risk-based ratios which assess capital adequacy while
encompassing all credit risks, including those related to off-balance sheet
activities. Capital ratios under these guidelines are computed by weighing the
relative risk of each asset category to derive risk-adjusted assets. The
risk-based capital guidelines require minimum ratios of core (Tier I) capital
(common stockholders equity and qualifying preferred stockholders equity,
less intangible assets) to risk-weighted assets of 4.0% and total regulatory
capital (core capital plus allowance for loan losses up to 1.25% of
risk-weighted assets and qualifying subordinated debt) to risk-weighted assets
of 8.0%. See Supervision and Regulation.

In addition, a minimum leverage ratio of average Tier I capital to average
total assets for the previous quarter, ranging from 3% to 5%, is required by
federal bank regulators subject to the regulators evaluation of the Banks
overall safety and soundness. As of December 31, 2002, the Bank had a ratio of
year-end Tier I capital to average total assets for the fourth quarter of
12.7%. The Bank exceeds all required regulatory capital ratios and is
considered well capitalized.

Shareholders
equity was $12.5 million at year-end 2002 which was an
increase of $0.7 million over 2001. This increase was due to proceeds from the
sale of common stock and the increase in the market value of investment
securities of $96,200, offset by 2002s net loss of $1.9 million.

At December 31, 2002 the Bank had a ratio of Tier I capital to
risk-weighted assets of 14.1% and a ratio of total regulatory capital to
risk-weighted assets of 15.1%, well above the regulatory minimum of 4.0% and
8.0%, respectively.

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The analysis of capital at December 31, 2002 is presented in the following
table.

Table 7. Risk-Based Capital (dollars in thousands)

|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |       |  
|------------------ | ---------------------------------------- | ------------------ |  | ------ | ------ | ----------------- |  | ----------------- | ---- | ----- |  | -------------------- | ----- | ----------------------- |  |  | ---- | - |  | ---------------------- | ----- |  |  |  | ----- | -
|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  | To Be Well Capitalized
|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  | Required For Capital |       | Under Prompt Corrective
|                   |                                          |                    |  | Actual |        | Adequacy Purposes |  | Action Provisions
|                   |                                          |                    |  |        |        |                   |  |                  
|                   |                                          |                    |  | Amount |        | Ratio             |  | Amount            |      | Ratio |  | Amount               |       | Ratio                  
|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                        
|December 31, 2002: |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  | 
|                   | Total Capital (to Risk Weighted Assets)  |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |      
|                   |                                          | Consolidated       |  | $      | 12,582 |                   |  |                   | 16.7 | %     |  | $                    | 6,023 |                         |  |  | >8.0 | % |  | $                      | 7,530 |  |  |  | >10.0 | %
|                   |                                          | First Chatham Bank |  | $      | 11,135 |                   |  |                   | 14.8 | %     |  | $                    | 6,023 |                         |  |  | >8.0 | % |  | $                      | 7,530 |  |  |  | >10.0 | %
|                   | Tier 1 Capital (to Risk Weighted Assets) |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |      
|                   |                                          | Consolidated       |  | $      | 11,850 |                   |  |                   | 15.7 | %     |  | $                    | 3,011 |                         |  |  | >4.0 | % |  | $                      | 4,518 |  |  |  | >6.0  | %
|                   |                                          | First Chatham Bank |  | $      | 10,403 |                   |  |                   | 13.8 | %     |  | $                    | 3,011 |                         |  |  | >4.0 | % |  | $                      | 4,518 |  |  |  | >6.0  | %
|                   | Tier 1 Capital (to Average Assets)       |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |      
|                   |                                          | Consolidated       |  | $      | 11,850 |                   |  |                   | 14.5 | %     |  | $                    | 3,269 |                         |  |  | >4.0 | % |  | $                      | 4,086 |  |  |  | >5.0  | %
|                   |                                          | First Chatham Bank |  | $      | 10,403 |                   |  |                   | 12.7 | %     |  | $                    | 3,269 |                         |  |  | >4.0 | % |  | $                      | 4,086 |  |  |  | >5.0  | %



---

|(1) |  | The regulatory designation of well capitalized under prompt corrective action regulations is not applicable
to the Company (a bank holding company). However, Regulation Y defines well capitalized for a bank holding
company for the purpose of determining eligibility for a streamlined review process for acquisition
proposals. For such purposes; well capitalized requires the Company to maintain a minimum Tier I
risk-based capital ratio of 6% and a minimum total risk-based capital ratio of 10%.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Common Stock Outstanding.There were 1,500,000 common shares outstanding
at December 31, 2002. Approximately 296 shareholders of record hold these
shares.

Nonperforming and Problem Assets.Credit risks are inherent in making
loans, particularly commercial and consumer loans. Management prudently
assesses these risks and attempts to manage them effectively. The Bank also
attempts to reduce repayment risks by adhering to internal credit policies and
procedures. These policies and procedures include officer and customer limits,
periodic loan documentation review and follow up on exceptions to credit
policies.

The allowance for loan losses is maintained at a level adequate to absorb
probable losses. Some of the factors which management considers in determining
the appropriate level of the allowance for credit losses are: past loss
experience, an evaluation of the current loan portfolio, identified loan
problems, the loan volume outstanding, the present and expected economic
conditions in general, regulatory policies, and in particular, how such
conditions relate to the market areas that the Bank serves. Bank regulators
also periodically review the Banks loans and other assets to assess their
quality. Loans deemed uncollectible are charged to the allowance. Provisions
for loan losses and recoveries on loans previously charged off are added to the
allowance.

The accrual of interest on loans is discontinued on a loan when, in the
opinion of management, there is an indication that the borrower may be unable
to meet payments as they become due. Upon such discontinuance, all unpaid
accrued interest is reversed.

As there were no prior balances in the allowance for loan losses, and no
charge offs during 2002, the ending balance of $732,000 and the provision for
2002 are the same.

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##### Table of Contents



Liquidity and Sensitivity.The principal goals of the Banks asset and
liability management strategy are the maintenance of adequate liquidity and the
management of interest rate risk. Liquidity is the ability to convert assets
to cash in order to fund depositors withdrawals or borrowers loans without
significant loss. Interest rate risk management balances the effects of
interest rate changes on assets that earn interest against liabilities on which
interest is paid, to protect the Bank from wide fluctuations in its net
interest income which could result from interest rate changes.

Management must ensure that adequate funds are available at all times to
meet the needs of its customers. On the asset side of the balance sheet,
maturing investments, loan payments, maturing loans, federal funds sold, and
unpledged investment securities are principal sources of liquidity. On the
liability side of the balance sheet, liquidity sources include core deposits,
the ability to increase large denomination certificates, Federal funds lines
from correspondent banks, borrowings from the Federal Reserve Bank, as well as
the ability to generate funds through the issuance of long-term debt and
equity.

Interest rate risk is the effect that changes in interest rates would have
on interest income and interest expense as interest-sensitive assets and
interest-sensitive liabilities either reprice or mature. Management attempts
to maintain the portfolios of earning assets and interest-bearing liabilities
with maturities or repricing opportunities at levels that will afford
protection, to the extent practical, from erosion of net interest margin due to
changes in interest rates.

The table below shows the sensitivity of the Companys balance sheet at
the repricing dates indicated, but is not necessarily indicative of the
position on other dates. The table below was prepared assuming mortgage backed
securities will reprice according to schedule. Historically, mortgage back
securities have repriced sooner than scheduled.

Table 8. Interest Rate Sensitivity (dollars in thousands)

|                                                              |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |        |        |        | 
|------------------------------------------------------------- | ----- | ----- | ----------------------- | ------ | --------------------------------------------------------------- | ------ | ------ | ----- | ------- | ----- | ------- | ------ | ------ | ------ | ----- | - | ----- | ----- | ----- | ------ | ------ | ------ | 
|                                                              |       |       |                         |        | December 31, 2002 Asset and Liability Maturities and Repricings
|                                                              |       |       |                         |        |                                                                
|                                                              |       |       |                         |        | 1 - 3                                                           |        | 4 - 12 |       | 13 - 60 |       | Over 60 |        |        |        |      
|                                                              |       |       |                         |        | Months                                                          |        | Months |       | Months  |       | Months  |        | Total 
|                                                              |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |       
|Interest earning assets:                                      |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |       
|                                                              |       |       | Loans                   |        |                                                                 | 54,051 |        |       |         | 3,751 |         |        |        | 7,286  |       |   |       | 1,014 |       |        |        | 66,102 | 
|                                                              |       |       | Investment securities   |        |                                                                 | 2,010  |        |       |         | 1,121 |         |        |        | 3,739  |       |   |       | 8,723 |       |        |        | 15,593 | 
|                                                              |       |       | Federal funds sold      |        |                                                                 | 950    |        |       |         |      |         |        |        |       |       |   |       |      |       |        |        | 950    | 
|                                                              |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |        |        |        | 
|                                                              |       | Total |                         |        | 57,011                                                          |        |        |       | 4,872   |       |         |        | 11,025 |        |       |   | 9,737 |       |       |        | 82,645 |       
|                                                              |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |        |        |        | 
|Interest-bearing liabilities:                                 |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |       
|                                                              |       |       | NOW accounts            |        |                                                                 | 5,217  |        |       |         |      |         |        |        |       |       |   |       |      |       |        |        | 5,217  | 
|                                                              |       |       | Money market            |        |                                                                 | 44,663 |        |       |         |      |         |        |        |       |       |   |       |      |       |        |        | 44,663 | 
|                                                              |       |       | Savings                 |        |                                                                 | 182    |        |       |         |      |         |        |        |       |       |   |       |      |       |        |        | 182    | 
|                                                              |       |       | Certificates of deposit |        |                                                                 | 5,786  |        |       |         | 9,845 |         |        |        | 13,002 |       |   |       |      |       |        |        | 28,633 | 
|                                                              |       |       | FHLB advances           |        |                                                                 |       |        |       |         |      |         |        |        | 1,500  |       |   |       |      |       |        |        | 1,500  | 
|                                                              |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |        |        |        | 
|                                                              | Total |       |                         | 55,848 |                                                                 |        |        | 9,845 |         |       |         | 14,502 |        |        |       |  |       |       |       | 80,195 |       
|                                                              |       |       |                         |        |                                                                 |        |        |       |         |       |         |        |        |        |       |   |       |       |       |        |        |        | 
|Interest sensitivity gap                                      |       |       | 1,163                   |        |                                                                 |        | (4,973 | )     |         |       | (3,477  | )      |        |        | 9,737 |   |       |       | 2,450 |       
|Cumulative interest sensitivity gap                           |       |       | 1,163                   |        |                                                                 |        | (3,810 | )     |         |       | (7,287  | )      |        |        | 2,450 |   |       |       | 2,450 |       
|Ratio of sensitive assets to
sensitive liabilities            |       |       | 102.1                   | %      |                                                                 |        | 49.5   | %     |         |       | 76.0    | %      |        | NA     |       |   | 103.1 | %    
|Cumulative ratio of sensitive
assets to sensitive liabilities |       |       | 102.1                   | %      |                                                                 |        | 94.2   | %     |         |       | 90.9    | %      |        |        | 103.1 | % |       |       | 103.1 | %     

At December 31, 2002 the Company was cumulatively asset-sensitive (earning
assets subject to interest rate changes exceeded interest-bearing liabilities
subject to changes in interest rates). NOW, savings and money market account
repricing within three months were $50.0 million, which historically have not
been as interest-sensitive as other types of interest-bearing deposits.
Removing the impact of NOW and money market accounts,
the Bank is

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##### Table of Contents



asset sensitive in the three month or less time period, with the
four to twelve months time period being liability-sensitive, the thirteen to
sixty months time period being asset-sensitive and the over sixty months time
period being asset-sensitive.

Certificates of deposit in denominations of $100,000 or more and large
municipal deposits are especially susceptible to interest rate changes. These
deposits are matched with short-term investments. Matching sensitive positions
alone does not ensure that the Bank has no interest rate risk. The repricing
characteristics of assets are different from the repricing characteristics of
funding sources. Thus, net interest income can be impacted by changes in
interest rates even if the repricing opportunities of assets and liabilities
are perfectly matched.

Effects of Inflation.Interest rates are affected by inflation, but the
timing and magnitude of the changes may not coincide with changes in the
consumer price index. Management actively monitors the Banks interest rate
sensitivity in order to minimize the effects of inflationary trends on the
Banks operations. Other areas of non-interest expenses may be more directly
affected by inflation.

Table 9. Key Financial Ratios

|                         |  |                                    |        |      |  |    |   | 
|------------------------ |  | ---------------------------------- | ------ | ---- |  | -- | - | 
|                         |  | For the periods ended December 31,
|                         |  |                                   
|                         |  | 2002                               |        | 2001
|Return on average assets |  |                                    | (3.30  | %)   |  | NA
|Return on average equity |  |                                    | (14.30 | %)   |  | NA
|Equity to assets         |  |                                    | 12.84  | %    |  |    |  | 

Item 7. Financial Statements

The consolidated financial statements of the Company, including notes
thereto, and the report of independent certified public accountants are
included in this Report beginning at page F-1 and are incorporated herein by
reference.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Nothing occurred that requires a response to this Item.




PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act

Directors of the Company serve staggered terms, which means that one-third
of the directors are elected each year at the Companys annual meeting of
shareholders. The initial term of the Class I directors expired in 2002, the
initial term of the Class II directors expires in 2003 and the initial term of
the Class III directors expires in 2004. At the 2003 Annual Meeting of the
Companys shareholders, two Class I directors will be elected to serve terms
that will expire in 2005 and two Class II directors will be elected to serve
terms that expire in 2006. Thereafter, each director will serve for a term of
three years. The Companys officers are appointed by the Board of Directors
and hold office at the will of the Board of Directors.

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Directors of the Company

Jack L. Forehand, age 65, has served as a Class I director of the Company
since May 31, 2001. Mr. Forehand serves as the president of Savannah
Professional Maintenance, and has held this position for more than five years.
Mr. Forehand is a member of the Building Service Contractors Association
International and was previously a board member of the Bethesda Home for Boys.

Brian R. Foster, age 54, has served as a Class I director of the Company
since May 31, 2001 and is also a director of the Bank. Mr. Foster also serves
as president and chief executive officer of the Company, and is the president
and chief executive officer of the Bank. Mr. Foster served in a variety of
banking positions with Bank of America and its predecessors for approximately
31 years before retiring in August 2000. From 1999 through August 2000, Mr.
Foster served as director of marketing strategy for business banking
nationally. From 1996 through 1999, he served as president of Arkansas
operations and also as midwest regional executive for business banking and
premier banking. Mr. Foster served as president of Savannah operations from
1988 through 1996, as well as South Georgia regional community banking
executive and statewide executive for business banking and professional and
executive banking. Mr. Foster graduated from the University of Georgia in 1971
and from the Stonier Graduate School of Banking at Rutgers University. Mr.
Foster served as the chairman of the Savannah Area Chamber of Commerce, the
Savannah Development and Renewal Authority, the United Way of the Coastal
Empire Board and Candler Hospital Foundation, and was also a member of a number
of other business and civic organizations in the Savannah area, including the
Savannah Economic Development Authority and the Savannah Rotary Club. Mr.
Foster was also a board member of the Georgia Bankers Association and the
Georgia State Ethics Commission.

Stephen S. Green, age 54, has served as a Class II director of the Company
since May 31, 2001 and is also a director of the Bank. Mr. Green serves as the
president of Stephen Green Properties, Inc., and has held this position for
more than five years. Mr. Green is a graduate of the University of Georgia.
Mr. Green serves as a commissioner of the Savannah Airport Commission, as the
president of the board of directors of Armstrong Atlantic State University
Foundation, as a member of the board of directors and executive committee of
the Savannah Area Chamber of Commerce, and is a member of the commissioners
steering group of the Airport Council International.

G.     Edison Holland, age 50, has served as a Class II director of the
Company since May 31, 2001. Mr. Holland has served as General Counsel and
Executive Vice President of The Southern Company since May of 2001. From 1997
through May 2001, Mr. Holland served as the president and chief executive
officer of Savannah Electric & Power Co. From 1994 through 1997, Mr. Holland
served as vice president of generation and transmission and corporate counsel
of Gulf Power Co. in Pensacola, Florida. Mr. Holland graduated from Auburn
University in 1975 and received his law degree from the University of Virginia
in 1978. Mr. Holland served as the vice chairman of the Savannah Economic
Development Authority and is a member of the board of directors of the
Southeastern Electric Exchange, the Edison Electric Institute and the Electric
Power Research Institute. Mr. Holland has previously served on the Savannah
advisory board of SunTrust Bank.

Walter N. Lewis, age 49, has served as a Class III director of the Company
since May 31, 2001. Mr. Lewis serves as vice president of J.C. Lewis Motor
Co., a position he has held for more than five years. Mr. Lewis is a graduate
of the University of Georgia. Mr. Lewis presently serves as a director of the
Bethesda Home for Boys and has previously served as a director of the Georgia
Automobile Dealers Association and as president of the Savannah Automobile
Dealers Association. Mr. Lewis previously served as a director of Savannah
Bank & Trust prior to First Unions acquisition of the bank.

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Directors of the Bank

Sylvan M. Byck,Jr., age 73, has served as director of the Bank since the
completion of its organization. Mr. Byck operates Byck Management Company, a
real estate management firm, and has held this position for more than five
years. Mr. Byck is a graduate of the University of Alabama. Mr. Byck serves
as the president of the Savannah Waterfront Association and is a member of the
Georgia Lottery Board. Mr. Byck has previously served as vice-chairman of the
Georgia Ports Authority, and as chairman of the Metropolitan Planning
Commission.

Robert M. Chu, age 51, has served as director of the Bank since the
completion of its organization. Mr. Chu serves as the chief executive officer
of Aimi, Inc., dba Chus Convenience Marts, and has held this position for more
than five years. Mr. Chu is a graduate of the
Terry College of Business of the University of Georgia. Mr. Chu is a board
member of the Savannah Area Chamber of Commerce, is an Advisory Council member
of the Business Outreach Services of the University of Georgia, and was
previously a member of the board of directors of the Small Business Assistance
Corp., a non-profit small business development organization.

Benny H. Curl, age 56, has served as director of the Bank since the
completion of its organization. Mr. Curl has been the owner of Byrd Cookie
Company since 1988, and presently serves as its president and chief executive
officer. From 1975 through 1993, Mr. Curl a certified public accountant, was
the owner and a manager of an Atlanta based public accounting firm which
emphasized tax planning for high income individuals. Mr. Curl is a graduate of
the University of Georgia. Mr. Curl serves as the treasurer and as a director
of the National Association of Specialty Foods Trade, and has previously served
as president and as a board member of the Georgia Specialty Food and Wine
Association. In addition, Mr. Curl has served on a number of state and
national boards and committees relating to the accounting profession.

Dexter E. Elliot, age 52, has served as director of the Bank since the
completion of its organization. Mr. Elliot serves as the president of Southern
Paper Recovery, Inc., a paper recycling firm, and has held this position for
more than five years. Mr. Elliot is a graduate of the University of Florida,
where he received a B.S. in Accounting. Mr. Elliot is a member of the Savannah
Area Chamber of Commerce.

William L. Grainger, age 56, has served as director of the Bank since the
completion of its organization. Mr. Grainger presently serves as president of
Grainger Companies, Inc., an automotive sales company, and has held this
position for more than five years. In addition, Mr. Grainger previously served
as president of Grainger Honda, Inc. Mr. Grainger presently is a member of the
Savannah Economic Development Authority Advisory Board in Savannah, and
previously was a member of the board of directors of AmeriBank, a member of the
Savannah advisory board of Bank of America, and was a trustee and executive
board member of the Savannah College of Art & Design.

Robert L. Harrison, age 63, has served as director of the Bank since the
completion of its organization. Mr. Harrison served as the president and chief
executive officer of Stevens Shipping & Terminal Co. until May
2002, and held this
position for more than five years. Mr. Harrison is a graduate of Princeton
University. Mr. Harrison serves as a director of the Imperial Sugar Company
and serves as a director, Secretary and Treasurer of the Savannah
Economic Development Authority, past president and a
director of Savannah Music Festival, as a trustee of the Savannah Country Day School,
and as the co-chair and trustee of the Savannah Employers & ILA Pension/Welfare
Fund. Mr. Harrison previously served on the Savannah advisory board of Bank of
America.

Donald A. Kole, age 72, has served as director of the Bank since the
completion of its organization. Mr. Kole presently serves as the chief
executive officer of Kole Investment Co., and has held this position for more
than five years. Mr. Kole is a graduate of Boston University. Mr. Kole
presently serves as the vice-chairman of the Union Mission, board chairman of
the Hospice Savannah Foundation and state treasurer of the Georgia Historical
Society. Mr. Kole has previously served as president of the Savannah Jewish
Federation, president of WSVH Radio, chairman of the Savannah Development and
Renewal Authority, president of the Jewish Educational Alliance. Mr. Kole is
also a member of the Savannah Housing Authority and the Armstrong Atlantic
State Foundation Board. Mr. Kole previously served as a member of the Savannah
advisory board of Bank of America.

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James T. Turner, Jr., age 52, has served as director of the Bank since the
completion of its organization. Mr. Turner has served as president of the J.T.
Turner Construction Co., Inc. since 1976. From 1974 through 1976, Mr. Turner
served as loan officer and branch manager of Home Federal Savings and
Loan in Savannah. Mr. Turner is a graduate of Mercer University. Mr. Turner
previously served on the Savannah advisory boards of both Ameribank
and Bank South. He is on the following boards: Memorial Hospital
Health Trust, Metro YMCA and Historic Savannah.

Committees of the Boards of Directors

The business and affairs of the Company are under the direction of the
Companys board of directors, which held five meetings during 2002. Given its
small number of directors, the Companys full board of directors acts on all
matters. Accordingly, the board of directors of the Company has not
established any committees. During 2002, each director attended at least 75%
or more of the aggregate number of meetings held by the board of directors.
All directors have served continuously since their first election.

The business and affairs of the Bank are under the direction of the Banks
board of directors, which held 13 meetings during 2002. The board of directors
of the Bank has established the committees set forth below. During 2002, each
member of the board of directors of the Bank attended at least 75% or more of
the aggregate number of meetings held by the board of directors or any
committee on which he served, except that Mr. Grainger attended less than 75%
of the meetings as a result of injuries suffered in an automobile accident.

Personnel and Compensation Committee.The Banks personnel and
compensation committee sets compensation levels for officers of the Bank,
reviews management organization and development, reviews significant employee
benefit programs and establishes and administers executive compensation
programs, including a stock option plan. The members of the committee are
Stephen S. Green, Donald A. Kole and James T. Turner, Jr. During 2002, the
committee held no meetings.

Audit and Compliance Committee.The Banks audit and compliance committee
recommends to the board of directors the independent public accountants
selected to audit the annual financial statements and approves any special
assignments given to the independent public accountants. The committee also
reviews the planned scope of the annual audit, any changes in accounting
principles and the effectiveness and efficiency of Banks internal accounting
staff. Additionally, the committee provides oversight to the Banks compliance
staff for adherence with regulatory rules and regulations, including the
Community Reinvestment Act. The committee has established appropriate levels
of directors and officers insurance and blanket bond insurance. The members of
the committee are Sylvan M. Byck, Jr., Benny H. Curl and Donald A. Kole.
During 2002, the committee held three meetings.

Loan Committee.The Banks loan committee reviews any loan request made
by a potential borrower over an established credit threshold for compliance
with the Banks lending policies and federal and state rules and regulations
governing extensions of credit. After making this review, the committee
decides whether to extend credit to the potential borrower. In addition, the
committee has the responsibility for establishing and approving, in conjunction
with management, all major policies and procedures pertaining to loan policy.
The committee also reviews all past due reports, non-accrual reports, and other
indicators of overall loan portfolio quality, and establishes measurements for
determining the adequacy of the Banks loan loss reserve. The members of the
loan committee are Sylvan M. Byck, Jr., Robert M. Chu, William L. Grainger,
Stephen S. Green and Robert L. Harrison. During 2002, the committee held 16
meetings.

Investment/Asset-Liability Committee.The Banks
investment/asset-liability committee provides guidance to the board of
directors in balancing the yields and maturities of the Banks loans and
investments to those of its deposits. Additionally, the committee works
closely with the board of directors to plan annual budgets and develop three to
five year strategic plans. The members of the committee are Benny H. Curl,
Dexter E. Elliot and James T. Turner, Jr. During 2002, the committee held
three meetings.

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Additional Executive Officers of the Company

William M. Austin, age 66, has served as the chief operating officer of
the Company and is the Bank since March 1, 2001. Mr. Austin served in a number
of banking positions over his 35 year career with Bank of America and its
predecessors, including senior administrative officer, responsible for human
resources, comptroller, proof, bookkeeping, properties and bank security. Mr.
Austin attended Armstrong State College and is a graduate of the University of
Wisconsin School of Banking. Mr. Austin has served as president of the
Savannah Chapter of Bank Administration Institute, as the chairman of the
Marshland Foundation and as a board member of the Savannah Vocational School.

Ann B. Crowder, age 60, has served as the senior credit officer of the
Company and the Bank since March 1, 2001. Ms. Crowder served in a number of
banking positions over her 22 year career with Bank of America and its
predecessors. From 1998 through 2000, Ms. Crowder served as market president
for Hall County, Georgia, where she was responsible for all lines of business
in Hall County. From 1992 through 1998 she managed a loan portfolio of private
bank clients and led a team of 12 lenders, trust officers and administrators.
From 1982 to 1992 she managed a commercial loan portfolio, and from 1978 to
1982 she was responsible for credit analysis and review of the Savannah loan
portfolio. Ms. Crowder is a graduate of Winthrop College, the graduate program
at the University of South Carolina, and the executive program in finance and
credit analysis at Stanford University. Ms. Crowder has served on the boards
of the Savannah Economic Development Authority, the Savannah Chamber of
Commerce, the Boy Scouts of America, the Savannah Food Bank. Ms. Crowder
served on the Savannah/Chatham Board of Public Education for eight years, and
served as president from 1988 to 1990. She currently is a member of
Savannah Rotary East; sits on the Grants Committee of the Savannah
Fund for Excellence in Public Education; the School Council of White
Bluff Elementary School; the Finance Committee and Board of the
United Way of the Coastal Empire; and the Executive Board for the
Winthrop University Alumnae Association. While in Hall County, she served on the boards of
the Brenau University Foundation, as treasurer of the Gainesville College
Advisory Board, as president of the Quinlan Visual Arts Center, as
vice-president of the American Red Cross, the Elachee Nature Science Center, as
chairperson of the Success by Six Program of the United Way of Hall County, and
was the chairperson of the Hall County Commission on Children and Families.

Michael E. Viers, age 40, has served as the senior lending officer of the
Company and is the Bank since April 26, 2001. Mr. Viers served in a number of
banking positions over a 15 year career with Bank of America and its
predecessors. From 1995 through April 2001, Mr. Viers was the senior vice
president and market manager for Small Business and Premier Banking for its
Georgia Market outside of Atlanta. From 1997 to 1998, he served as president
of First Federal Savings Bank, Brunswick, Georgia, a wholly owned subsidiary of
Bank of America. From 1993 through August 1995, Mr. Viers worked in the
commercial banking group. From 1987 through 1992, Mr. Viers worked in the
large corporate loan processing office in Chicago, Illinois. He began his
career with the bank in 1985 in the corporate management training program. Mr.
Viers is a graduate of the University of Georgia, Leadership Georgia and
Leadership Savannah. He is a board member of the Candler Foundation, Savannah
Sports Council, Community Housing Services Agency, Downtown Rotary Club and
Team Savannah.

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Item 10. Executive Compensation

The following table sets forth a summary of compensation paid to or
accrued on behalf of the Chief Executive Officer and the other executive
officers of the Company whose aggregate compensation exceeded $100,000 for
services rendered during the 2002 fiscal year.

|                                      |  |        |      |            |  |              |         |            |  |  |   |  |  |                     |        |    
|------------------------------------- |  | ------ | ---- | ---------- |  | ------------ | ------- | ---------- |  |  | - |  |  | ------------------- | ------ | ---
|                                      |  |        |      |            |  |              |         |            |  |  |   |  |  | Long Term          
|                                      |  |        |      |            |  |              |         |            |  |  |   |  |  | Compensation Awards
|                                      |  |        |      |            |  |              |         |            |  |  |   |  |  |                    
|                                      |  |        |      |            |  | Annual       |         | Securities
|                                      |  |        |      |            |  | Compensation |         | Underlying
|                                      |  | Fiscal |      |            |  | Options     
|Name and Principal Position           |  | Year   |      | Salary ($) |  | Bonus ($)    |         | (#)       
|                                      |  |        |      |            |  |              |         |           
|Brian R. Foster                       |  |        | 2002 |            |  |              | 175,000 |            |  |  |  |  |  |                     |       |    
|President and Chief Executive Officer |  |        | 2001 |            |  |              | 131,247 | (2)        |  |  |  |  |  |                     | 75,000 | (1)
|William M. Austin                     |  |        | 2002 |            |  |              | 100,000 |            |  |  |  |  |  |                     |       |    
|Executive Vice President              |  |        | 2001 |            |  |              | 83,333  | (2)        |  |  |  |  |  |                     | 6,000  | (3)
|Ann B. Crowder                        |  |        | 2002 |            |  |              | 100,000 |            |  |  |  |  |  |                     |       |    
|Executive Vice President              |  |        | 2001 |            |  |              | 83,333  | (2)        |  |  |  |  |  |                     | 6,000  | (3)
|Michael E. Viers                      |  |        | 2002 |            |  |              | 100,000 |            |  |  |  |  |  |                     |       |    
|Executive Vice President              |  |        | 2001 |            |  |              | 67,775  | (4)        |  |  |  |  |  |                     | 6,000  | (5)



---

|(1) |  | Consists of a grant of an incentive stock option for 75,000 shares
of the Companys common stock on March 1, 2001. The option vests over
five years, with 40% becoming exercisable on the first anniversary of
the grant date, and 20% becoming exercisable for each of the next three
years of continued employment.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents salary from March 1, 2001 through December 31, 2001. See
Employment Agreements below.                                                                                                                                                                                                                   
|   
|(3) |  | Consists of a grant of an incentive stock option for 6,000 shares
of the Companys common stock on March 1, 2001. The option vests over
three years, with one-third of the option becoming exercisable on each
anniversary of continued employment.                                                                  
|   
|(4) |  | Represents salary from April 26, 2001 through December 31, 2001.
See Employment Agreements below.                                                                                                                                                                                                                  
|   
|(5) |  | Consists of a grant of an incentive stock option for 6,000 shares
of the Companys common stock on April 26, 2001. The option vests over
three years, with one-third of the option becoming exercisable on each
anniversary of continued employment.                                                                 

Employment Agreements

Brian R. Foster.Effective March 1, 2001, the Company entered into an
employment agreement with Brian R. Foster regarding Mr. Fosters employment as
president and chief executive officer of the Company and the Bank. Under the
terms of the agreement, Mr. Foster receives a base salary of $175,000 per year,
subject to annual increases in an amount the Companys board of directors shall
determine appropriate of not less than 5% per year. The agreement provides
that at the end of each year, Mr. Foster will be entitled to receive a cash
bonus, to be awarded by the Banks board of directors, based on the Banks
performance. The agreement also provided for the grant to Mr. Foster of an
incentive stock option to purchase up to 75,000 shares of the Companys common
stock following the completion of the Offering in January 2002, at an exercise
price of $10.00 per share. The option will vest over four years, with 40%
becoming exercisable on the one-year anniversary of Mr. Fosters employment,
and with 20% becoming exercisable for each of the next three years of continued
employment. Mr. Foster is also provided with an automobile allowance of $600
per month and initiation fees and monthly dues for two social clubs.

32



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The initial term of the employment agreement commenced on March 1, 2001,
and will continue for a period of five years. At the end of the initial term
of the agreement, and at the end of each year thereafter, the agreement will be
extended for a successive one-year period unless one of the parties to the
agreement notifies the other parties of his or its intent not to extend the
agreement. Employment under the agreement may be terminated:



| |  |  | by the Bank for cause (as defined in the employment agreement);                                                                                               
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | by Mr. Foster if the Bank breaches any material provision of
the employment agreement or there is a material diminution in his
duties or responsibilities; and
|
| |  |  | upon Mr. Fosters death or disability.                                                                                                                        

If the Bank terminates Mr. Fosters employment without cause or if Mr.
Foster terminates employment due to a material breach by the Bank, the Bank
will be required to pay the compensation and provide the health and dental
insurance coverage due under the agreement for a period of 12 months after the
date of termination. If the employment of Mr. Foster is terminated for any
reason other than by non-renewal of the agreement by the Company or the Bank,
Mr. Foster will be prohibited from competing with the Bank or soliciting its
customers or employees within the 50-mile radius of the Banks main office for
two years after the date of termination.

In the event of a change in control of the Company, Mr. Foster will be
entitled, for a period of 90 days after the change of control, and at his
election, to deliver notice to the Company of the termination of the employment
agreement, whereupon the Company will be required to make a lump sum payment to
Mr. Foster in an amount equal to two times his then current compensation and
benefits, including salaries, bonuses and all perquisites.

William M. Austin, Ann B. Crowder, Michael E. Viers.On March 1, 2001,
the Company entered into an employment agreement with William M. Austin,
regarding Mr. Austins service as executive vice president and chief operating
officer of the Company and the Bank, and an employment agreement with Ann B.
Crowder, regarding Ms. Crowders service as executive vice president and senior
credit officer of the Company and the Bank. In addition, on April 26, 2001 the
Company entered into an employment agreement with Michael E. Viers regarding
Mr. Viers service as executive vice president and senior lending officer of
the Company and the Bank. Ms. Crowders and Mr. Viers employment agreements
have initial terms of five years, while Mr. Austins employment agreement has
an initial term of three years. Following the expiration of its initial term,
each employment agreement will be extended for successive one-year terms unless
one of the parties provides notice of his or her intent not to extend the
agreement. Under their respective employment agreements, each of Messrs.
Austin and Viers and Ms. Crowder are entitled to receive an initial annual base
salary of $100,000, subject to annual increases in the discretion of the
Companys board of directors. In addition, under their respective employment
agreements, each of Messrs. Austin and Viers and Ms. Crowder received an option
to purchase up to 6,000 shares of the Companys common stock. The options will
vest over three years, with one-third of the option becoming exercisable on
each anniversary of continued employment. The remainder of the employment
agreements are substantially similar to the Companys employment agreement with
Mr. Foster.

FCB Financial Corp. Stock Option Plan

In May 2001, the Company adopted the FCB Financial Corp. Stock Option Plan
(the Plan) to promote equity ownership of the Company by key senior officers,
key officers and other key employees of the Company and the Bank. A total of
150,000 shares are available for issuance upon the exercise of awards granted
under the Plan. The Plan provides for the grant of options at the discretion
of the board of directors or a committee thereunder. The option exercise price
must be at least 100% (110% in the case of a holder of 10% or more of the
Companys common stock) of the fair market value of the Companys common stock on the
date the option is granted and the options are exercisable by the holder
thereof in full at any time prior to their expiration in accordance with the
terms of the Plan. Stock options granted pursuant to the Plan expire on or
before the date which is the tenth anniversary of the date the option is
granted, or until the expiration of 90 days (or such lesser period as board of
directors or a committee thereunder may determine) from the date on which the
person to whom they were granted ceases to be employed by the Company or the
Bank. As of March 1, 2003, options to acquire an aggregate of 119,950 shares
of Company

33



---



##### Table of Contents



common stock had been granted under the Plan.

During the fiscal year ending December 31, 2002, the Company granted a
total of 26,950 options to 19 employees. There were no stock option grants to
any of the persons named in the foregoing executive compensation table, as
those individuals received grants of options during the 2001 fiscal year in
connection with their employment agreements. Further, no individual exercised
any of the Companys outstanding options during the fiscal year ending December
31, 2002. The following table sets forth certain information regarding the
value of options held by the persons named in the foregoing executive
compensation table at the end of the fiscal year ending December 31, 2002.

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

|                  |  |                           |               |                           |  |  |                | 
|----------------- |  | ------------------------- | ------------- | ------------------------- |  |  | -------------- | 
|                  |  | Number of Securities      |               | Value of Unexercised     
|                  |  | Underlying Unexercised    |               | In-the-Money Options     
|                  |  | Options at FY-End (#)     |               | at FY-End ($)            
|Name              |  | Exercisable/Unexercisable |               | Exercisable/Unexercisable
|                  |  |                           |               |                          
|Brian R. Foster   |  |                           | 30,000/45,000 |                           |  |  | 75,000/112,500 | 
|William M. Austin |  |                           | 2,000/4,000   |                           |  |  | 5,000/10,000   | 
|Ann B. Crowder    |  |                           | 2,000/4,000   |                           |  |  | 5,000/10,000   | 
|Michael E. Viers  |  |                           | 2,000/4,000   |                           |  |  | 5,000/10,000   | 



---

|(1) |  | Dollar values calculated by determining the difference between the
estimated fair market value of the Companys common stock at December
31, 2002 ($12.50) and the exercise price of such options. Because no
organized trading market exists for the Companys common stock, the
fair market value was computed by reference to the most recent sale of
the Companys common stock known to the Company.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Director Compensation

The directors of the Company and the Bank will not be compensated
separately for their services as directors until the Bank becomes cumulatively
profitable. Thereafter, the Company and the Bank will adopt compensatory
policies for their directors that conform to applicable law.

34



---



##### Table of Contents



Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding the shares of
the Companys common stock owned as of March 1, 2003, (i) by each person who
beneficially owned more than 5% of the shares of the Companys common stock,
(ii) by each of the Companys directors and the Companys executive officers
named in the summary compensation table above, and (iii) by all of the
Companys directors and executive officers as a group.

|                                                |  |                    |         |                       |  |  |     | 
|----------------------------------------------- |  | ------------------ | ------- | --------------------- |  |  | --- | 
|                                                |  | Shares of Common   |         |                       |  | 
|                                                |  | Stock Beneficially |         | Percent of           
|Beneficial Owner                                |  | Owned(1)           |         | Outstanding Shares(1)
|                                                |  |                    |         |                      
|5% Beneficial Owners                            |  |                    |         |                       |  |  |     | 
|Sylvan M. Byck, Jr.                             |  | $                  | 133,333 | (2)                   |  |  | 8.7 | 
|2 E. Perry Lane                                 |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31401                         |  |                    |         |                       |  |  |     | 
|Benny H. Curl                                   |  |                    | 133,333 | (2)                   |  |  | 8.7 | 
|704 View Point Drive                            |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31406                         |  |                    |         |                       |  |  |     | 
|Robert S. Jepson, Jr.                           |  |                    | 102,083 | (3)                   |  |  | 6.8 | 
|8 Shellworth Crossing                           |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31411                         |  |                    |         |                       |  |  |     | 
|Directors and Executive Officers of the Company |  |                    |         |                       |  |  |     | 
|Jack L. Forehand                                |  |                    | 20,000  | (4)                   |  |  | 1.3 | 
|3 Wymberly Point Road                           |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31406                         |  |                    |         |                       |  |  |     | 
|Brian R. Foster                                 |  |                    | 85,000  | (5)                   |  |  | 5.5 | 
|305 E. Charlton Street                          |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31401                         |  |                    |         |                       |  |  |     | 
|Stephen S. Green                                |  |                    | 70,000  | (6)                   |  |  | 4.6 | 
|306 E. Charlton Street                          |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31401                         |  |                    |         |                       |  |  |     | 
|G. Edison Holland, Jr.                          |  |                    | 13,333  | (7)                   |  |  | *   | 
|104 Johston Street                              |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31401                         |  |                    |         |                       |  |  |     | 
|Walter N. Lewis                                 |  |                    | 33,333  | (8)                   |  |  | 2.2 | 
|9505 Abercorn Street                            |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31406                         |  |                    |         |                       |  |  |     | 
|William M. Austin                               |  |                    | 14,000  | (9)                   |  |  | *   | 
|2827 Whitemarsh Way                             |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31410                         |  |                    |         |                       |  |  |     | 
|Ann B. Crowder                                  |  |                    | 48,000  | (9)                   |  |  | 3.2 | 
|1600 Walthour Road                              |  |                    |         |                       |  |  |     | 
|Savannah, Georgia 31410                         |  |                    |         |                       |  |  |     | 

35



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##### Table of Contents



|                                                            |  |                    |         |                       |  |  |      |  
|----------------------------------------------------------- |  | ------------------ | ------- | --------------------- |  |  | ---- | -
|                                                            |  | Shares of Common   |         |                       |  | 
|                                                            |  | Stock Beneficially |         | Percent of           
|Beneficial Owner                                            |  | Owned(1)           |         | Outstanding Shares(1)
|                                                            |  |                    |         |                      
|Michael E. Viers                                            |  |                    | 9,000   | (9)                   |  |  | *    |  
|129 East 50th Street                                        |  |                    |         |                       |  |  |      |  
|Savannah, Georgia 31405                                     |  |                    |         |                       |  |  |      |  
|All directors and executive officers as a group
(9 Persons) |  |                    | 271,666 |                       |  |  | 17.2 | %



---

|*   |  | Less than 1%                                                                                                                                                                                                                                                                                                             
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | Determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the Exchange Act). Information with respect to
beneficial ownership is based upon information furnished by each owner.                                                                                                 
|   
|(2) |  | Includes 33,333 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days.                                                                                                                                                             
|   
|(3) |  | Includes 2,083 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days.                                                                                                                                                              
|   
|(4) |  | Includes 5,000 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days.                                                                                                                                                              
|   
|(5) |  | Includes 10,000 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days, and 45,000 shares that may be acquired upon the exercise of stock
options that are presently exercisable or will become exercisable within
the next 60 days.
|   
|(6) |  | Includes 20,000 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days.                                                                                                                                                             
|   
|(7) |  | Includes 3,333 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days.                                                                                                                                                              
|   
|(8) |  | Includes 8,333 shares that may be acquired upon the exercise of warrants
that are presently exercisable or will become exercisable within the next
60 days.                                                                                                                                                              
|   
|(9) |  | Includes 4,000 shares that may be acquired upon the exercise of stock
options that are presently exercisable or will become exercisable within
the next 60 days.                                                                                                                                                         

36



---



##### Table of Contents



Equity Compensation Plan Information

The following table gives information about shares of the Companys common
stock that may be issued upon the exercise of options, warrants and rights
under all existing equity compensation plans as of December 31, 2002.

Equity Compensation Plan Information

|                                                           |  |                         |         |                   |  |                         |     |                       |  |                         |        | 
|---------------------------------------------------------- |  | ----------------------- | ------- | ----------------- |  | ----------------------- | --- | --------------------- |  | ----------------------- | ------ | 
|                                                           |  |                         |         |                   |  |                         |     |                       |  | Number of securities   
|                                                           |  |                         |         |                   |  |                         |     |                       |  | remaining available for
|                                                           |  |                         |         |                   |  | Weighted-average        |     | future issuance under
|                                                           |  | Number of securities to |         | exercise price of |  | equity compensation    
|                                                           |  | be issued upon exercise |         | outstanding       |  | plans (excluding       
|                                                           |  | of outstanding options, |         | options, warrants |  | securities reflected in
|Plan Category                                              |  | warrants and rights     |         | and rights        |  | 1st column)            
|                                                           |  |                         |         |                   |  |                        
|Equity compensation
plans approved by
security holders(1)  |  |                         | 119,950 |                   |  | $                       |    |                       |  |                         | 30,050 | 
|Equity compensation
plans not approved by security holders |  |                         |        |                   |  | $                       |    |                       |  |                         |       | 
|                                                           |  |                         |         |                   |  |                         |     |                       |  |                         |        | 
|Total                                                      |  |                         | 119,950 |                   |  |                         | N/A |                       |  |                         | 30,050 | 
|                                                           |  |                         |         |                   |  |                         |     |                       |  |                         |        | 



---

|(1) |  | Includes securities available for future issuance under the FCB Financial
Corp. Stock Option Plan.
|--- |  | --------------------------------------------------------------------------------------------------

Item 12. Certain Relationships and Related Transactions

The Company expects to enter into banking and other business transactions
in the ordinary course of business with its organizers, directors and officers,
including members of their families or corporations, partnerships or other
organizations in which these organizers, directors and officers have a
controlling interest. If transactions between the Company or the Bank and any
of its organizers, directors or officers occur, the transaction:



| |  |  | will be on substantially the same terms, including price or
interest rate and collateral, as those prevailing at the time for
comparable transactions with unrelated parties, and any banking
transactions will not be expected to involve more than the normal risk
of collectibility or present other unfavorable features to us;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | will be on terms no less favorable than could be obtained from an
unrelated third party; and                                                                                                                                                                                                                                       
|
| |  |  | will be approved by a majority of the directors, including a
majority of the directors who do not have an interest in the
transaction.                                                                                                                                                                                             

John G. Lientz, a shareholder and corporate secretary of the Company and
the Bank, is a partner in the law firm of Bouhan, Williams & Levy LLP. Bouhan,
Williams & Levy LLP provided legal services to the Company and the Bank in
connection with its organization and is expected to continue to provide legal
services to the Company and the Bank during the next fiscal year.

In addition, the Company has contracted with J.T. Turner Construction Co.,
Inc., a construction company owned by James T. Turner, Jr., a director of the
Bank, to construct the Banks main office and branch office
facilities described in Item 2.  Properties above. The Company accepted
bids for the construction of these facilities and selected Mr. Turners company
as a result of it submitting the lowest bid. During the fiscal year ending
December

37



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##### Table of Contents



31, 2002, the Company made payments of $2,705,527 to Mr. Turners firm
in connection with the construction of these facilities.




PART IV

Item 13. Exhibits, List and Reports on Form 8-K

(a)  Exhibits. Periodic reports, registration statements and other
information filed by the Company with the SEC pursuant to the informational
requirements of the Securities Act of 1993, as amended and the Securities
Exchange Act of 1934, as amended may be inspected and copied at the SECs
Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site
(http://www.sec.gov) that makes available reports, proxy statements and other
information regarding the Company.

|        |  |                                                                                                                                                                                                                                                                                                                                
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                
|Number  |  | Description                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                
|3.1     |  | Articles of Incorporation (incorporated by reference to Exhibit
3.1 to the Companys Current Report on Form 8-K, filed with the
Commission on February 7, 2002).                                                                                                                                                               
|3.2     |  | Bylaws (incorporated by reference to Exhibit 3.2 of the
Companys Registration Statement on Form SB-2 (File No. 333-65066)).                                                                                                                                                                                                   
|4.1     |  | Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 of the Companys Registration Statement on Form SB-2
(File No. 333-65066)).                                                                                                                                                                        
|4.2     |  | See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the Common
Stock                                                                                                                                                                                             
|4.3     |  | Form of Organizer Warrant Agreement (incorporated by reference
to Exhibit 4.3 of the Companys Registration Statement on Form SB-2
(File No. 333-65066)).                                                                                                                                                                      
|10.1    |  | Lease Agreement, dated February 12, 2001, by and between
Southpoint Building, LLC and the Company (Temporary Office)
(incorporated by reference to Exhibit 10.1 of the Companys
Registration Statement on Form SB-2 (File No. 333-65066)).                                                                                    
|10.2    |  | Assignment Agreement, dated as of June 14, 2001, by and among the
Company, Robert M. Chu and Paul Yao, relating to that certain Real
Estate Purchase Agreement by and between Robert M. Chu and Paul Yao
(incorporated by reference to Exhibit 10.2 of the Companys
Registration Statement on Form SB-2 (File No. 333-65066)).
|10.3    |  | Employment Agreement, dated March 1, 2001, by and among the Bank,
the Company and Brian R. Foster (incorporated by reference to Exhibit
10.3 of the Companys Registration Statement on Form SB-2 (File No.
333-65066)).*                                                                                                      
|10.4    |  | Employment Agreement, dated March 1, 2001, by and among the Bank,
the Company and William M. Austin (incorporated by reference to
Exhibit 10.4 of the Companys Registration Statement on Form SB-2
(File No. 333-65066)).*                                                                                                    
|10.5    |  | Employment Agreement, dated March 1, 2001, by and among the Bank,
the Company and Ann B. Crowder (incorporated by reference to Exhibit
10.5 of the Companys Registration Statement on Form SB-2 (File No.
333-65066)).*                                                                                                       

38



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                            
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                            
|Number  |  | Description                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                            
|10.6    |  | Employment Agreement, dated April 26, 2001, by and among the
Bank, the Company and Michael E. Viers (incorporated by reference to
Exhibit 10.6 of the Companys Registration Statement on Form SB-2
(File No. 333-65066)).*                                                
|10.7    |  | Organizing Line of Credit, dated February 15, 2001, by and among
the Company, as Borrower, Nexity Bank, as Lender, and the Organizers,
as Guarantors (incorporated by reference to Exhibit 10.7 of the
Companys Registration Statement on Form SB-2 (File No. 333-65066)).
|10.8    |  | Stock Option Plan (incorporated by reference to Exhibit 10.8 of
the Companys Registration Statement on Form SB-2 (File No.
333-65066)).*                                                                                                                                  
|10.9    |  | Form of Incentive Stock Option (incorporated by reference to
Exhibit 10.9 of the Companys Registration Statement on Form SB-2
(File No. 333-65066)).*                                                                                                                     
|10.10   |  | Form of Non-Qualified Stock Option (incorporated by reference to
Exhibit 10.10 of the Companys Registration Statement on Form SB-2
(File No. 333-65066)).*                                                                                                                
|10.11   |  | Form of Escrow Agreement, by and between the Company and The
Bankers Bank (incorporated by reference to Exhibit 10.11 of the
Companys Registration Statement on Form SB-2 (File No. 333-65066)).                                                                          
|10.12   |  | Form of Organizer Warrant Agreement (contained in Exhibit 4.3)                                                                                                                                                                                                             
|10.13   |  | Real Estate Purchase Agreement, dated April 26, 2001, by and
between DPD Enterprises, Inc. and the Company (incorporated by
reference to Exhibit 10.13 of the Companys Registration Statement on
Form SB-2 (File No. 333-65066)).                                         
|10.14   |  | Loan Agreement, by and among the Company, as Borrower, Nexity
Bank, as Lender, and the Organizers, as Guarantors (incorporated by
reference to Exhibit 10.14 of the Companys Registration Statement on
Form SB-2 (File No. 333-65066)).                                   
|10.15   |  | Loan Agreement, by and among the Company, as Borrower, Nexity
Bank, as Lender, and the Organizers, as Guarantors (incorporated by
reference to Exhibit 10.15 of the Companys Registration Statement on
Form SB-2 (File No. 333-65066)).                                   
|10.16   |  | Letter of Intent, dated September 21, 2001, by and among the
Company, Tattnall Bancshares, Inc. and The Tattnall Bank (incorporated
by reference to Exhibit 10.16 of the Companys Registration Statement
on Form SB-2 (File No. 333-65066)).                              
|10.17   |  | Purchase and Assumption Agreement, dated October 22, 2001, between
the Company and The Tattnall Bank (incorporated by reference to Exhibit
99.1 to Companys Current Report on Form 8-K, filed with the Commission
on November 6, 2001).                                   
|21.1    |  | Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 of the Companys Annual Report on Form 10-KSB for the year
ended December 31, 2001).                                                                                                             
|24.1    |  | Power of Attorney (contained in the signature page of this Report)                                                                                                                                                                                                         



---

|* |  | Compensation Plan or Arrangement required to be listed as an exhibit to Form
10-KSB.
|- |  | ------------------------------------------------------------------------------------

(b)  Reports on Form 8-K.

No reports on Form 8-K were required to be filed by the Company during the
fourth quarter of 2002.

39



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Item 14. Controls and Procedures

Within the 90-day period prior to the filing of this Annual Report on Form
10-KSB, an evaluation was carried out under the supervision and with the
participation of management, including the principal executive and financial
officer, of the effectiveness of the Companys disclosure controls and
procedures. Based on that evaluation, the principal executive and financial
officer has concluded that the Companys disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. Subsequent to this
evaluation, there were no significant changes in the Companys internal
controls or in other factors that could significantly affect the disclosure
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

40



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FCB FINANCIAL CORP.
AND SUBSIDIARY




CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001

AND ACCOUNTANTS REPORT

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##### Table of Contents



REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS

To the Board of Directors of
FCB Financial Corp.

We
have audited the accompanying consolidated balance sheets of FCB
Financial Corp. (a Georgia Corporation) and its subsidiary,
First Chatham Bank, as of December 31, 2002 and 2001, and the related
consolidated statements of operations, changes in stockholders
equity and comprehensive loss and cash flows for the two years ended
December 31, 2002. These consolidated financial statements are the
responsibility of FCB Financial Corp.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 in the United States of America. Those standards require
that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
 provides a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of FCB Financial Corp. and its subsidiary, First
Chatham Bank, as of December 31, 2002 and 2001, and the results of
their operations and their cash flows for the two years ended
December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.

Respectfully submitted,

| | /s/ Hancock, Askew & Co.
| | ------------------------

Savannah, Georgia
March 27, 2003

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FCB FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended December 31, 2002 and 2001

|                                            |                                          |                                                     |                       |           |            |           |      |         |          |        | 
|------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | --------------------- | --------- | ---------- | --------- | ---- | ------- | -------- | ------ | 
|                                            |                                          |                                                     |                       |           | 2002       |           | 2001
|                                            |                                          |                                                     |                       |           |            |           |     
|Interest income:                            |                                          |                                                     |                       |           |            |           |      |        
|                                            | Loans, including fees                    |                                                     | $                     | 2,172,577 |            |           | $    |        |         
|                                            | Investment securities                    |                                                     |                       | 362,365   |            |           |      |        |         
|                                            | Federal funds sold and deposits in banks |                                                     |                       | 112,875   |            |           |      | 30,074  |         
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          |                                                     | Total interest income |           |            | 2,647,817 |      |         |          | 30,074 | 
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|Interest expense:                           |                                          |                                                     |                       |           |            |           |      |        
|                                            | Deposits                                 |                                                     |                       | 1,073,814 |            |           |      |        |         
|                                            | FHLB advances and other borrowings       |                                                     |                       | 15,630    |            |           |      | 55,535  |         
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Total interest expense                              |                       |           | 1,089,444  |           |      |         | 55,535   |       
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Net interest income                                 |                       |           | 1,558,373  |           |      |         | (25,461  | )     
|Provision for loan losses                   |                                          |                                                     | 732,000               |           |            |           |     |        
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Net interest income after provision for loan losses |                       |           | 826,373    |           |      |         | (25,461  | )     
|Non-interest income:                        |                                          |                                                     |                       |           |            |           |      |        
|                                            | Service charges and fees                 |                                                     |                       | 48,569    |            |           |      |        |         
|                                            | Securities gains, net                    |                                                     |                       | 35,608    |            |           |      |        |         
|                                            | Other                                    |                                                     |                       | 236,929   |            |           |      |        |         
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Total non-interest income                           |                       |           | 321,106    |           |      |         |         |       
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|Non-interest expense:                       |                                          |                                                     |                       |           |            |           |      |        
|                                            | Salaries and employee benefits           |                                                     |                       | 1,458,771 |            |           |      | 510,538 |         
|                                            | Occupancy                                |                                                     |                       | 393,205   |            |           |      | 1,407   |         
|                                            | Other                                    |                                                     |                       | 1,192,850 |            |           |      |        |         
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Total non-interest expense                          |                       |           | 3,044,826  |           |      |         | (511,945 | )     
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Loss before income taxes                            |                       |           | (1,897,347 | )         |      |         | (537,406 | )     
|Income taxes                                |                                          |                                                     |                      |           |            |           |     |        
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|                                            |                                          | Net loss                                            |                       | $         | (1,897,347 | )         |      | $       | (537,406 | )     
|                                            |                                          |                                                     |                       |           |            |           |      |         |         
|Loss per common share:                      |                                          |                                                     |                       |           |            |           |      |        
|                                            |                                          | Basic                                               |                       | $         | (1.33      | )         |      | NA     
|                                            |                                          | Diluted                                             |                       |           | (1.33      | )         |      | NA     
|Weighted average common shares outstanding: |                                          |                                                     |                       |           |            |           |      |        
|                                            |                                          | Basic                                               |                       |           | 1,422,852  |           |      | NA     
|                                            |                                          | Diluted                                             |                       |           | 1,422,852  |           |      | NA     

See accompanying notes to consolidated financial statements.

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FCB FINANCIAL CORP. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 2002 and 2001

|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |            |            | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | ---------- | 
|                                     |                                                                                                                                                        |                                            |            | 2002       |            | 2001
|                                     |                                                                                                                                                        |                                            |            |            |            |     
|Assets                              
|Cash and due from banks              |                                                                                                                                                        | $                                          | 10,338,426 |            |            | $    | 12,433,432 |           
|Federal funds sold                   |                                                                                                                                                        |                                            | 950,000    |            |            |      |           |           
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     | Cash and cash equivalents                                                                                                                              |                                            |            | 11,288,426 |            |      |            | 12,433,432 |           
|Securities available for sale        |                                                                                                                                                        |                                            | 15,592,782 |            |            |      |           |           
|Loans, net of allowance of $732,000  |                                                                                                                                                        |                                            | 65,370,403 |            |            |      |           |           
|Premises and equipment, net          |                                                                                                                                                        |                                            | 4,250,690  |            |            |      | 2,034,465  |           
|Interest receivable                  |                                                                                                                                                        |                                            | 325,668    |            |            |      |           |           
|Other assets                         |                                                                                                                                                        |                                            | 430,830    |            |            |      | 477,423    |           
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     |                                                                                                                                                        | Total assets                               |            | $          | 97,258,799 |      |            | $          | 14,945,320 | 
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|Liabilities and Stockholders Equity
|Liabilities:                         |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     | Deposits:                                                                                                                                              |                                            |            |            |            |      |            |            |           
|                                     |                                                                                                                                                        | Non-interest bearing                       |            | $          | 54,032,031 |      |            | $          |           | 
|                                     |                                                                                                                                                        | Interest-bearing                           |            |            | 28,814,710 |      |            |            |           | 
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     |                                                                                                                                                        | Total deposits                             |            |            | 82,846,741 |      |            |            |           | 
|                                     | Accrued expenses and other liabilities                                                                                                                 |                                            |            | 418,381    |            |      |            | 113,666    |           
|                                     | Federal Home Loan Bank advances                                                                                                                        |                                            |            | 1,500,000  |            |      |            |           |           
|                                     | Other borrowings                                                                                                                                       |                                            |            |           |            |      |            | 3,015,000  |           
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     |                                                                                                                                                        | Total liabilities                          |            |            | 84,765,122 |      |            |            | 3,128,666  | 
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|Stockholders equity:                |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     | Common stock, $1 par value; 100,000,000 shares
authorized; 1,500,000 and 100 shares issued and
outstanding at December 31, 2002 and 2001,
respectively |                                            |            | 1,500,000  |            |      |            | 100        |           
|                                     | Capital surplus                                                                                                                                        |                                            |            | 13,332,193 |            |      |            | 900        |           
|                                     | Accumulated deficit                                                                                                                                    |                                            |            | (2,434,753 | )          |      |            | 11,815,654 |           
|                                     | Accumulated other comprehensive income                                                                                                                 |                                            |            | 96,237     |            |      |            |           |           
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     |                                                                                                                                                        | Total stockholders equity                 |            |            | 12,493,677 |      |            |            | 11,816,654 | 
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           
|                                     |                                                                                                                                                        | Total liabilities and stockholders equity |            | $          | 97,258,799 |      |            | $          | 14,945,320 | 
|                                     |                                                                                                                                                        |                                            |            |            |            |      |            |           

See accompanying notes to consolidated financial statements.

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FCB FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders Equity and Comprehensive Loss
For the Years Ended December 31, 2002 and 2001

|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |            |            |            |  
|-------------------------- | ---------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------ | --------- | ------ |  | ---------- | ---------- | ----------- |  | ------------- | - | ------------ | - | ------ | - | ----------- |  | ---------- | ---------- | - |  | ----------- | ---------- | ---------- | ---------- | -
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   | Accumulated |  |            |            |   |  |             |            |           
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   | Other       |  |            |            |   |  |             |            |           
|                           |                                                            |                                                                                     |                          |           | Common |  | Capital    |            | Accumulated |  | Comprehensive |   | Common Stock |   |        |   |            
|                           |                                                            |                                                                                     |                          |           | Stock  |  | Surplus    |            | Deficit     |  | Income (loss) |   | Subscribed   |   | Total 
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |       
|Balance, December 31, 2000 |                                                            |                                                                                     |                         |           |        |  |           |            |             |  |              |   |              |   |       |   |             |  |           |            |   |  |            |           
|                           | Comprehensive
income (loss):                               |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |            |           
|                           |                                                            | Net loss                                                                            |                          |           |       |  |            |            |            |  |               |   | (537,406     | ) |        |   |            |  |            |            |  |  |             |            | (537,406   | )         
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |           
|                           |                                                            |                                                                                     | Total comprehensive loss |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |            |            | (537,406   | )
|                           | Proceeds from sale of stock to organizers                  |                                                                                     |                          | 100       |        |  |            | 900        |             |  |               |  |              |   |        |  |             |  |            |           |   |  |             | 1,000      |           
|                           | Proceeds from sale of common
stock (subscribed)            |                                                                                     |                          |          |        |  |            |           |             |  |               |  |              |   |        |  |             |  |            | 12,353,060 |   |  |             | 12,353,060 |           
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |           
|Balance, December 31, 2001 |                                                            |                                                                                     | 100                      |           |        |  | 900        |            |             |  | (537,406      | ) |              |   |       |   |             |  | 12,353,060 |            |   |  | (11,816,654 | )         
|                           | Comprehensive income:                                      |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |            |           
|                           |                                                            | Net loss                                                                            |                          |           |       |  |            |            |            |  |               |   | (1,897,347   | ) |        |   |            |  |            |            |  |  |             |            | (1,897,347 | )         
|                           |                                                            | Change in unrealized holding gain
on investment
securities, net of taxes of $49,600 |                          |           |       |  |            |            |            |  |               |   |             |   |        |   | 96,237      |  |            |            |  |  |             |            | 96,237     |           
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |           
|                           |                                                            |                                                                                     | Total comprehensive loss |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |            |            | (1,801,110 | )
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |           
|                           | Reimbursement of initial stock to organizers               |                                                                                     |                          | (100      | )      |  |            | (900       | )           |  |               |  |              |   |        |  |             |  |            |           |   |  |             | (1,000     | )         
|                           | Reclassification of common stock
subscribed to outstanding |                                                                                     |                          | 1,235,306 |        |  |            | 11,117,754 |             |  |               |  |              |   |        |  |             |  |            | 12,353,060 |   |  |             |           |           
|                           | Proceeds from sale of common stock, net of costs           |                                                                                     |                          | 264,694   |        |  |            | 2,214,439  |             |  |               |  |              |   |        |  |             |  |            |           |   |  |             | 2,479,133  |           
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |           
|Balance, December 31, 2002 |                                                            | $                                                                                   | 1,500,000                |           |        |  | 13,332,193 |            |             |  | (2,434,753    | ) |              |   | 96,237 |   |             |  |           |            |   |  | 12,493,677  |           
|                           |                                                            |                                                                                     |                          |           |        |  |            |            |             |  |               |   |              |   |        |   |             |  |            |            |   |  |             |           

See accompanying notes to consolidated financial statements.

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##### Table of Contents



FCB FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2002 and 2001

|                                           |                                                                             |                                                |             |             |            |      |            |            |            |  
|------------------------------------------ | --------------------------------------------------------------------------- | ---------------------------------------------- | ----------- | ----------- | ---------- | ---- | ---------- | ---------- | ---------- | -
|                                           |                                                                             |                                                |             | 2002        |            | 2001
|                                           |                                                                             |                                                |             |             |            |     
|Operating activities:                      |                                                                             |                                                |             |             |            |      |            |           
|                                           | Net loss                                                                    |                                                | $           | (1,897,347  | )          |      | $          | (537,406   | )         
|                                           | Adjustments to reconcile net loss to net cash used in
operating activities: |                                                |             |             |            |      |            |            |           
|                                           | Depreciation, amortization and accretion                                    |                                                |             | 110,715     |            |      |            | 600        |           
|                                           | Provision for loan losses                                                   |                                                |             | 732,000     |            |      |            |           |           
|                                           | Gain on sale of securities available for sale                               |                                                |             | (35,608     | )          |      |            |           |           
|                                           | Change in assets and liabilities, net of effects of purchase
transaction:   |                                                |             |             |            |      |            |            |           
|                                           |                                                                             | Other assets and accrued interest receivable   |             |             | (360,764   | )    |            |            | (477,423   | )
|                                           |                                                                             | Accrued expenses and other liabilities         |             |             | 304,715    |      |            |            | 113,666    |  
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Net cash used in operating activities      |                                                                             |                                                | (1,146,289  | )           |            |      | (900,563   | )         
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Investing activities:                      |                                                                             |                                                |             |             |            |      |            |           
|                                           | Purchases of securities available for sale                                  |                                                |             | (23,422,672 | )          |      |            |           |           
|                                           | Proceeds from maturities and calls of securities available for
sale         |                                                |             | 6,989,147   |            |      |            |           |           
|                                           | Proceeds from sales of securities available for sale                        |                                                |             | 960,305     |            |      |            |           |           
|                                           | Net increase in loans                                                       |                                                |             | (66,102,403 | )          |      |            |           |           
|                                           | Purchases of premises and equipment                                         |                                                |             | (2,232,968  | )          |      |            | (2,035,065 | )         
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Net cash used in investing activities      |                                                                             |                                                | (83,808,591 | )           |            |      | (2,035,065 | )         
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Financing activities:                      |                                                                             |                                                |             |             |            |      |            |           
|                                           |                                                                             | Net increase in deposits                       |             |             | 82,846,741 |      |            |            |           |  
|                                           |                                                                             | Proceeds from FHLB advances                    |             |             | 1,500,000  |      |            |            |           |  
|                                           |                                                                             | Proceeds
(Repayments) of short term borrowings |             |             | (3,015,000 | )    |            |            | 3,015,000  |  
|                                           |                                                                             | Proceeds from common stock offering            |             |             | 2,478,133  |      |            |            | 12,354,060 |  
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Net cash provided by financing activities  |                                                                             |                                                | 83,809,874  |             |            |      | 15,369,060 |           
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Net change in cash and cash equivalents    |                                                                             |                                                | (1,145,006  | )           |            |      | 12,433,432 |           
|                                           | Cash and cash equivalents at beginning of period                            |                                                |             | 12,433,432  |            |      |            |           |           
|                                           |                                                                             |                                                |             |             |            |      |            |            |           
|Cash and cash equivalents at end of period |                                                                             | $                                              | 11,288,426  |             |            | $    | 12,433,432 |           
|                                           |                                                                             |                                                |             |             |            |      |            |            |           

See accompanying notes to consolidated financial statements.

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(1) Summary of Significant Accounting Policies

The accounting principles followed by FCB Financial Corp. (the Parent) and
its wholly owned subsidiary First Chatham Bank (the Bank) and the methods of
applying these principles conform with accounting principles generally accepted
in the United States of America and with general practices within the banking
industry. The following is a description of the more significant of those
policies.

Organization

The Parent was incorporated as a Georgia corporation on February 13, 2001, and
owns all of the outstanding capital stock of the Bank. In an initial public
offering completed on January 11, 2002 (the Offering), the Parent sold and
issued an aggregate of 1,500,000 shares of common stock, par value $1.00 per
share, at a price of $10.00 per share. On January 22, 2002, FCB received
approval from the Board of Governors of the Federal Reserve System (the
Federal Reserve) and the Georgia Department of Banking and Finance (the
Georgia Department) to become a bank holding company. Accordingly, on
January 22, 2002, FCB used $10,000,000 of the net proceeds of Offering to
purchase all of the common stock of the Bank

The Bank currently serves Chatham county and surrounding areas through two full
service banking offices. As a state chartered bank which is not a member of the
Federal Reserve, the Bank is subject to regulation by the State of Georgia
Department of Banking & Finance and the Federal Deposit Insurance Corporation.

The Parent is a bank holding company whose business is conducted by its
wholly-owned subsidiary, First Chatham Bank (the Bank). The Parent and the
Bank are collectively referred to as FCB. The Bank is a commercial bank located
in Savannah, Georgia and provides a full range of banking services in its
primary market area of Chatham County and surrounding counties. The Banks
deposits are insured and subject to the regulation of the Federal Deposit
Insurance Corporation (FDIC).

Organization and Basis of Presentation

The Bank provides a full range of retail and commercial banking services for
consumers and small to medium size businesses primarily in coastal Georgia.
Lending and investing activities are funded primarily by deposits gathered
through its retail branch office network. Lending is concentrated in mortgage,
commercial and consumer loans to local borrowers. The Bank has a high
concentration of real estate loans; however, these loans are well
collateralized and, in managements opinion, do not pose an unacceptable level
of credit risk. In addition, the balance of the loan portfolio is sufficiently
diversified to avoid significant concentration of credit risk. Although the
Bank has a diversified loan portfolio, a substantial portion of borrowers
ability to honor their contracts is dependent upon the viability of the real
estate economic sector.

The success of FCB is dependent, to a certain extent, upon the economic
conditions in the geographic markets it serves. No assurance can be given that
the current economic conditions will continue. Adverse changes in the economic
conditions in these geographic markets would likely have a material adverse
effect on FCBs results of operations and financial condition. The operating
results of FCB depend primarily on its net interest income. Accordingly,
operations are subject to risks and uncertainties surrounding the exposure to
changes in the interest rate environment.

Use of Estimates

In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as
of the dates of the balance sheet and revenue and expenses for the years then
ended. Actual results could differ significantly from those estimates. Material
estimates that are particularly susceptible to significant change relate to the
determination of the allowance for loan losses and the valuation of real estate
that is used as collateral for a substantial portion of FCBs loans and real
estate acquired in connection with foreclosures or in satisfaction of loans. In
connection with these valuations, management obtains independent appraisals for
significant properties.

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Cash and Cash Equivalents

Cash equivalents include amounts due from banks, interest bearing deposits in
banks, and federal funds sold. Generally, federal funds are sold for one-day
periods and interest bearing deposits in banks mature within a period less than
90 days.

Investment Securities

FCB classifies its securities in one of three categories: held to maturity,
available for sale, or trading. Trading securities are bought and held
principally for the purpose of selling them in the near term. FCB does not have
investments classified in the held to maturity or the trading categories. Held
to maturity securities are those securities for which FCB has the ability and
intent to hold until maturity. All other securities are classified as available
for sale. At December 31, 2002 all securities were available for sale.

Available for sale securities are recorded at fair value. Unrealized holding
gains and losses, net of the related tax effect, on securities available for
sale are excluded from earnings and are reported in other comprehensive income
as a separate component of stockholders equity until realized. These
unrealized holding gains or losses are amortized into earnings over the
remaining life of the security as an adjustment to the yield in a manner
consistent with the amortization or accretion of the original purchase premium
or discount on the associated security.

A decline in the fair value of investments below cost that is deemed other than
temporary is charged to earnings and establishes a new cost basis for the
security.

Premiums and discounts are amortized or accreted over the life of the related
security as an adjustment to the yield. Realized gains and losses for
securities classified as available for sale and held to maturity securities are
included in earnings and are derived using the specific identification method
for determining the cost of the securities sold.

Loans and Allowance for Loan Losses

All loans are stated at principal amount outstanding, net of any unearned
revenue. Interest on loans is primarily calculated by using the simple interest
method on daily balances of the principal amount outstanding.

Except for installment and revolving credit loans, accrual of interest is
discontinued on a loan when a loan becomes 90 days past due and is not both
well collateralized and in the process of collection, or when management
believes, after considering economic and business conditions and collection
efforts, that the principal or interest will not be collectible in the normal
course of business. When a loan is placed on nonaccrual status, previously
accrued and uncollected interest is charged to interest revenue on loans.
Generally, payments received on nonaccrual loans are applied to principal.
Interest is accrued on revolving credit loans until payments become 180 days
past due, at which time the outstanding principal balance and accrued interest
is charged off. For installment loans and other closed-end consumer loans, the
accrual of interest is discontinued when the loan becomes 120 days past due, at
which time the outstanding principal and accrued interest is charged off.

A loan is impaired when, based on current information and events, it is
probable that all amounts due, according to the contractual terms of the loan,
will not be collected. Impaired loans are measured based on the present value
of expected future cash flows, discounted at the loans effective interest
rate, or at the loans observable market price, or the fair value of the
collateral if the loan is collateral dependent. Interest revenue on impaired
loans is recognized using the cash-basis method of accounting during the time
within the period in which the loans were impaired.

The allowance for loan losses is established through a provision for loan
losses charged to earnings. Loans are charged against the allowance for loan
losses when available information confirms that the collectibility of the
principal is unlikely. The allowance represents an amount, which, in
managements judgment, is adequate to absorb probable losses on existing loans
as of the date of the balance sheet.

Managements judgment in determining the adequacy of the allowance is based on
evaluations of the collectibility of loans. These evaluations take into
consideration such factors as changes in the nature and volume of the loan
portfolio, historical loss experience as adjusted for current economic
conditions that may affect the borrowers ability to pay, overall portfolio
quality, and review of specific problem loans. In determining the adequacy of
the
allowance for loan losses, management uses a loan grading system consistent
with those applied by bank regulatory agencies. Management prepares a quarterly
analysis of the allowance for loan losses and material deficiencies are
adjusted by

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increasing the provision for loan losses. Management has an
internal loan review department that is independent of the lending function to
challenge and corroborate the loan grading system and provide additional
analysis in determining the adequacy of the allowance for loan losses.

Management believes the allowance for loan losses is adequate at December 31,
2002. While management uses available information to recognize losses on loans,
future additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review FCBs allowance for loan losses.
Such agencies may require FCB to recognize additions to the allowance based on
their judgment of information available to them at the time of their
examination.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed primarily using the straight-line method over the
estimated useful lives of the related assets. Costs incurred for maintenance
and repairs are expensed as incurred. The range of estimated useful lives for
buildings and improvements is 15 to 40 years, and for furniture and equipment,
3 to 10 years.

Income Taxes

Deferred tax assets and liabilities are recorded for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Future tax benefits, such as net operating loss carry forwards, are
recognized to the extent that realization of such benefits is more likely than
not. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which the assets and
liabilities are expected to be recovered or settled. The effect of a change in
tax rates on deferred tax assets and liabilities is recognized in income taxes
during the period that includes the enactment date.

In the event the future tax consequences of differences between the financial
reporting bases and the tax bases of FCBs assets and liabilities results in
deferred tax assets, an evaluation of the probability of being able to realize
the future benefits indicated by such asset is required. A valuation allowance
is provided for the portion of the deferred tax asset when it is more likely
than not that some or all of the deferred tax asset will not be realized. In
assessing the realizability of the deferred tax assets, management considers
the scheduled reversals of deferred tax liabilities, projected future taxable
earnings and tax planning strategies.

Reclassifications

Certain 2001 amounts have been reclassified to conform to the 2002
presentation.

Accumulated Other Comprehensive Loss

Accounting principles generally accepted in the United States of America
normally require that recognized revenues, expenses, gains and losses be
included in net income. Although certain changes in assets and liabilities,
such as unrealized gains and losses on available for sale securities, are
reported as a separate component of the equity section of the consolidated
balance sheets, such items with net income, are components of comprehensive
income. FCB presents comprehensive income as a component of the statement of
changes in stockholders equity.

Earnings (Loss) Per Share

FCB is required to report on the face of the
statement of operations, earnings per
common share with and without the dilutive effects of potential common stock
issuances from instruments such as options, convertible securities and
warrants. Basic earnings per common share is based on the weighted average
number of common shares
outstanding during the period while the effects of potential common shares
outstanding during the period are included in diluted earnings per common
share.

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The following table sets forth the computation of basic and diluted loss per
common share for the year ended December 31:

|                                          |         |         |            |           |       |      |           | 
|----------------------------------------- | ------- | ------- | ---------- | --------- | ----- | ---- | --------- | 
|                                          |         |         |            |           |       | 2002
|                                          |         |         |            |           |       |     
|Net loss available to common shareholders |         | $       | (1,897,347 | )        
|                                          |         |         |            |          
|Diluted net earnings                      |         | $       | (1,897,347 | )        
|                                          |         |         |            |          
|Loss per common share:                    |         |         |            |          
|                                          |         | Basic   |            | $         | (1.33 | )   
|                                          |         | Diluted |            |           | (1.33 | )   
|Weighted average common shares            |         |         |            |          
|                                          |         |         |            | Basic     |       |      | 1,422,852 | 
|Effect of dilutive securities:            |         |         |            |          
|                                          |         |         |            |          
|                                          | Diluted |         |            | 1,422,852 |      
|                                          |         |         |            |          

(2) Recent Accounting Pronouncements

Accounting for Business Combinations

In July 2001, the FASB issued SFAS No. 141, Business Combinationsand SFAS No.
142, Goodwill and Other Intangible Assets. These standards change the
accounting for business combinations by, among other things, prohibiting the
prospective use of pooling-of-interests accounting and requiring companies to
stop amortizing goodwill, which is the excess of the purchase price over the
fair value of the net identifiable assets of the acquired company. Instead,
goodwill and intangible assets deemed to have an indefinite useful life will be
subject to an annual review for impairment. The new standards generally were
effective for FCB in the first quarter of 2002 and have been effective for
business combinations consummated after June 30, 2001. Deposit premiums
associated with business combinations and branch acquisitions will continue to
be amortized over the estimated useful life of the deposit base, generally not
more than 15 years.

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(3) Investment Securities

Debt and equity securities have been classified in the balance sheets according
to managements intent. The carrying amounts of securities (all available for
sale) and their approximate fair values at December 31, 2002 were as follows:

|                               |                              |           |   |            |            |            |  |        |         |       |  |        |        |  |  |           |            | 
|------------------------------ | ---------------------------- | --------- | - | ---------- | ---------- | ---------- |  | ------ | ------- | ----- |  | ------ | ------ |  |  | --------- | ---------- | 
|                               |                              |           |   |            |            |            |  | Gross  |         | Gross |  |        |        | 
|                               |                              |           |   | Unrealized |            | Unrealized |  | Fair  
|As of December 31, 2002        |                              | Amortized |   | Gains      |            | Losses     |  | Value 
|                               |                              |           |   |            |            |            |  |       
|Available for sale securities: |                              |           |   |            |            |            |  |        |         |       |  |        |        |  |  |          
|                               | U.S. Government agencies     |           | $ | 5,104,459  |            |            |  | 99,720 |         |       |  |       |        |  |  | 5,204,179 |           
|                               | Mortgage-backed securities   |           |   | 8,513,650  |            |            |  | 54,957 |         |       |  | 17,323 |        |  |  | 8,551,284 |           
|                               | Other                        |           |   | 1,500,000  |            |            |  |       |         |       |  |       |        |  |  | 1,500,000 |           
|                               | Restricted equity securities |           |   | 328,860    |            |            |  | 8,459  |         |       |  |       |        |  |  | 337,319   |           
|                               |                              |           |   |            |            |            |  |        |         |       |  |        |        |  |  |           |           
|                               |                              | Total     |   | $          | 15,446,969 |            |  |        | 163,136 |       |  |        | 17,323 |  |  |           | 15,592,782 | 
|                               |                              |           |   |            |            |            |  |        |         |       |  |        |        |  |  |           |           

Restricted equity securities consist of investments in stock of the Federal
Home Loan Bank of Atlanta (FHLB) and Community Financial Services, Inc.
(Parent of The Bankers Bank, Atlanta, Georgia). Both of these entities are
upstream correspondents of the Bank. The FHLB requires financial institutions
to make equity investments in the FHLB in order to borrow from it. The Bank is
required to hold FHLB stock so long as it borrows funds from the FHLB. The
Banks investment in Community Financial Services is restricted only in the
fact that the stock may only be purchased by Community Financial Services or
sold to another of its member banks.

The scheduled maturities of investment securities at December 31, 2002 were as
follows:

|                                       |  |           |            |       |  |   |            | 
|-------------------------------------- |  | --------- | ---------- | ----- |  | - | ---------- | 
|                                       |  | Amortized |            | Fair 
|                                       |  | Cost      |            | Value
|                                       |  |           |            |      
|Due in one year or less                |  | $         | 1,001,434  |       |  | $ | 1,003,751  | 
|Due after one year through five years  |  |           | 6,205,078  |       |  |   | 6,294,186  | 
|Due after five years through ten years |  |           | 6,407,032  |       |  |   | 6,456,132  | 
|Due after ten years                    |  |           | 1,504,563  |       |  |   | 1,501,394  | 
|Restricted equity securities           |  |           | 328,860    |       |  |   | 337,319    | 
|                                       |  |           |            |       |  |   |            | 
|                                       |  | $         | 15,446,967 |       |  | $ | 15,592,782 | 
|                                       |  |           |            |       |  |   |            | 

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(4) Loans

The major components of loans in the balance sheet at December 31, 2002 are as
follows:

|                          |                                 |   |            |           | 
|------------------------- | ------------------------------- | - | ---------- | --------- | 
|                          |                                 |   | 2002      
|                          |                                 |   |           
|Commercial                |                                 | $ | 34,803,074 |          
|Real estate:              |                                 |   |            |          
|                          | Commercial and land development |   |            | 4,395,116 | 
|                          | Residential, 1-4 families       |   |            | 8,575,105 | 
|                          | Residential, 5 or more families |   |            | 2,135,224 | 
|                          | Farmland                        |   |            | 287,885   | 
|                          | Nonfarm, nonresidential         |   |            | 5,088,008 | 
|Agricultural              |                                 |   |           |          
|Consumer                  |                                 |   | 10,217,870 |          
|Other                     |                                 |   | 600,121    |          
|                          |                                 |   |            |          
|                          |                                 |   | 66,102,403 |          
|Allowance for loan losses |                                 |   | (732,000   | )        
|                          |                                 |   |            |          
|Loans, net                |                                 | $ | 65,370,403 |          
|                          |                                 |   |            |          

As there were no loans charged off or balances recovered since inception, the
ending balance of $732,000 is consistent with the provision charged to
operations for the year ended December 31, 2002.

(5) Premises and Equipment

Premises and equipment at December 31, 2002 and 2001:

|                                |                             |   |           |           |      |   |           |           | 
|------------------------------- | --------------------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                                |                             |   | 2002      |           | 2001
|                                |                             |   |           |           |     
|Land and land improvements      |                             | $ | 1,923,949 |           |      | $ | 1,783,513 |          
|Buildings                       |                             |   | 2,096,757 |           |      |   |          |          
|Furniture and equipment         |                             |   | 240,338   |           |      |   | 2,791     |          
|Construction in progress        |                             |   | 6,389     |           |      |   | 248,761   |          
|                                |                             |   |           |           |      |   |           |          
|                                |                             |   | 4,267,433 |           |      |   | 2,035,065 |          
|Less  accumulated depreciation |                             |   | 16,743    |           |      |   | 600       |          
|                                |                             |   |           |           |      |   |           |          
|                                | Premises and equipment, net |   | $         | 4,250,690 |      |   | $         | 2,034,465 | 
|                                |                             |   |           |           |      |   |           |          

Depreciation expense was approximately $16,100 and $600 for 2002 and 2001,
respectively. The Bank leases certain of its furniture and equipment under
agreements accounted for as operating leases. These leases will expire between
January 2005 and January 2006. Rental expense under operating leases was
$85,800 for 2002. Future minimum commitments under non-cancelable leases are as
follows:

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|     |  |   |         | 
|---- |  | - | ------- | 
|2003 |  | $ | 334,100 | 
|2004 |  |   | 352,100 | 
|2005 |  |   | 266,300 | 
|2006 |  |   | 18,000  | 
|     |  |   |         | 
|     |  | $ | 970,500 | 
|     |  |   |         | 

(6) Time Deposits

The aggregate amount of time deposit accounts with a minimum denomination of
$100,000 was approximately $13.7 million at December 31, 2002. At December 31,
2002, the scheduled maturities of time deposits are as follows:

|                              |  |   |        | 
|----------------------------- |  | - | ------ | 
|Maturing In                   |  |   |        | 
|                              |  |   |        | 
|Zero to three months          |  | $ | 5,968  | 
|Four to six months            |  |   | 1,531  | 
|Seven to twelve months        |  |   | 8,314  | 
|Thirteen to thirty-six months |  |   | 8,377  | 
|Thereafter                    |  |   | 4,625  | 
|                              |  |   |        | 
|                              |  | $ | 28,815 | 
|                              |  |   |        | 

(7) Federal Home Loan Bank Advances

FCB has an advance from the Federal Home Loan Bank (FHLB) with monthly
interest payments and principal due at maturity and a fixed interest rate of
3.32% for the first twelve months, convertible to 3 month LIBOR for the
remaining term, callable quarterly. The FHLB advance is collateralized by
first mortgage loans, mortgage-backed securities and FHLB stock.

(8) Branch Acquisition

On January 23, 2002, pursuant to a Purchase and Assumption Agreement, dated
October 22, 2001, the Bank acquired the performing loans and assumed certain
deposit and other liabilities of the Savannah branch office of The Tattnall
Bank (the Branch Acquisition). In the Branch Acquisition, the Bank assumed
approximately $10,924,000 in deposit and other liabilities and acquired
approximately $9,869,000 in loans and other assets. The Bank paid a premium of
$370,000 on the deposit liabilities it assumed from The Tattnall Bank. Pursuant
to the terms of the Purchase and Assumption Agreement, the Bank received a cash
payment of approximately $413,000 at closing, the amount by which the deposit
and other liabilities assumed by the Bank exceeded the amount of the deposit
premium and the loans and other assets (including an additional amount of
approximately $272,000 representing vault cash and ATM cash) acquired by the
Bank.

(9) Stock Offering

In an initial public offering completed on January 11, 2002 (the Offering),
FCB sold and issued an aggregate of 1,500,000 shares of common stock, par value
$1.00 per share, at a price of $10.00 per share. The proceeds were used to
purchase 100% of the outstanding common stock of First Chatham Bank and for
other corporate purposes.

(10) Stock Option Plan

The Company sponsors various stock option plans
covering certain key personnel. There are 119,500 incentive stock
options under this plan at December 31, 2002 with an exercise
price of $10.00 per share. The grant price, exercise period and
vesting schedule for each option is determined at the date of grant
by the Board of Directors. There were no options exercised or
forfeited at December 31, 2002. The weighted-average fair value
of all options grant is $.95.

(11) Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by
federal banking agencies. Failure to

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

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital to risk-weighted assets, and of Tier I
capital to average assets, as all those terms are defined in the regulations.
Management believes, as of December 31, 2002, that the Bank meets all capital
adequacy requirements to which it is subject.

As of December 31, 2002, the Bank met the criteria to be considered adequately
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized the Bank must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the
following table.

FCB and Banks actual capital amounts and ratios are also presented in the
following table (in thousands).

|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |       |  
|------------------ | ---------------------------------------- | ------------------ |  | ------ | ------ | ----------------- |  | ----------------- | ---- | ----- |  | -------------------- | ----- | ----------------------- |  |  | ---- | - |  | ---------------------- | ----- |  |  |  | ----- | -
|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  | To Be Well Capitalized
|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  | Required For Capital |       | Under Prompt Corrective
|                   |                                          |                    |  | Actual |        | Adequacy Purposes |  | Action Provisions
|                   |                                          |                    |  |        |        |                   |  |                  
|                   |                                          |                    |  | Amount |        | Ratio             |  | Amount            |      | Ratio |  | Amount               |       | Ratio                  
|                   |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                        
|December 31, 2002: |                                          |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  | 
|                   | Total Capital (to Risk Weighted Assets)  |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |      
|                   |                                          | Consolidated       |  | $      | 12,582 |                   |  |                   | 16.7 | %     |  | $                    | 6,023 |                         |  |  | >8.0 | % |  | $                      | 7,530 |  |  |  | >10.0 | %
|                   |                                          | First Chatham Bank |  | $      | 11,135 |                   |  |                   | 14.8 | %     |  | $                    | 6,023 |                         |  |  | >8.0 | % |  | $                      | 7,530 |  |  |  | >10.0 | %
|                   | Tier 1 Capital (to Risk Weighted Assets) |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |      
|                   |                                          | Consolidated       |  | $      | 11,850 |                   |  |                   | 15.7 | %     |  | $                    | 3,011 |                         |  |  | >4.0 | % |  | $                      | 4,518 |  |  |  | >6.0  | %
|                   |                                          | First Chatham Bank |  | $      | 10,403 |                   |  |                   | 13.8 | %     |  | $                    | 3,011 |                         |  |  | >4.0 | % |  | $                      | 4,518 |  |  |  | >6.0  | %
|                   | Tier 1 Capital (to Average Assets)       |                    |  |        |        |                   |  |                   |      |       |  |                      |       |                         |  |  |      |   |  |                        |       |  |  |  |      
|                   |                                          | Consolidated       |  | $      | 11,850 |                   |  |                   | 14.5 | %     |  | $                    | 3,269 |                         |  |  | >4.0 | % |  | $                      | 4,086 |  |  |  | >5.0  | %
|                   |                                          | First Chatham Bank |  | $      | 10,403 |                   |  |                   | 12.7 | %     |  | $                    | 3,269 |                         |  |  | >4.0 | % |  | $                      | 4,086 |  |  |  | >5.0  | %



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | The regulatory designation of well capitalized under prompt corrective action regulations is not applicable
to FCB (a bank holding company). However, Regulation Y defines well capitalized for a bank holding company
for the purpose of determining eligibility for a streamlined review process for acquisition proposals. For
such purposes; well capitalized requires FCB to maintain a minimum Tier I risk-based capital ratio of 6%
and a minimum total risk-based capital ratio of 10%.

Cash, Dividend, Loan and Other Restrictions

At December 31, 2002, the Bank was not required by the Federal Reserve Bank to
maintain reserve balances. Federal and state banking regulations place certain
restrictions on dividends paid by the Bank to the Parent.

The Federal Reserve Act requires that extensions of credit by the Parent to
certain affiliates, including the Bank, be secured by specific collateral, that
the extension of credit to any one affiliate be limited to 10% of capital and
surplus (as defined), and that extensions of credit to all such affiliates be
limited to 20% of capital and surplus.

(12) Commitments and Contingencies

The Parent and the Bank are parties to financial instruments with
off-balance-sheet risk in the normal course of business to meet the financing
needs of their customers. These financial instruments include commitments to
extend credit, letters of credit and financial guarantees. These instruments
involve, to varying degrees, elements of credit

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risk in excess of the amount
recognized in the balance sheet. The contract amounts of these instruments
reflect the extent of involvement FCB have in particular classes of financial
instruments.

The exposure to credit loss in the event of nonperformance by the other party
to the financial instrument for commitments to extend credit, letters of credit
and financial guarantees written is represented by the contractual amount of
these instruments. FCB uses the same credit policies in making commitments and
conditional obligations as for on-balance-sheet instruments. In most cases,
collateral or other security is required to support financial instruments with
credit risk.

The following table summarizes, as of December 31, 2002, the contract amount of
off-balance sheet instruments:

|                                                                    |                              |  |      |            | 
|------------------------------------------------------------------- | ---------------------------- |  | ---- | ---------- | 
|                                                                    |                              |  | 2002
|                                                                    |                              |  |     
|Financial instruments whose contract amounts
represent credit risk: |                              |  |      |           
|                                                                    | Commitments to extend credit |  | $    | 11,501,000 | 
|                                                                    | Standby letters of credit    |  |      | 1,117,000  | 

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. FCB evaluates each customers creditworthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary,
upon extension of credit is based on managements credit evaluation. Collateral
held varies, but may include unimproved and improved real estate, certificates
of deposit, personal property or other acceptable collateral.

Standby letters of credit and financial guarantees written are conditional
commitments issued by FCB to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to local businesses. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. FCB hold real estate,
certificates of deposit, equipment and automobiles as collateral supporting
those commitments for which collateral is deemed necessary. The extent of
collateral held for those commitments varies.

(13) Fair Value of Financial Instruments

FCB uses the following methods to estimate the fair value of financial
instruments:

For financial instruments that have quoted market prices, those quotes are used
to determine fair value. Financial instruments that have no defined maturity,
have a remaining maturity of 180 days or less, or reprice frequently to a
market rate, are assumed to have a fair value that approximates reported book
value, after taking into consideration any applicable credit risk. If no
market quotes are available, financial instruments are valued by discounting
the expected cash flows using an estimated current market interest rate for the
financial instrument. For off-balance sheet derivative instruments, fair value
is estimated as the amount that FCB would receive or pay to terminate the
contracts at the reporting date, taking into account the current unrealized
gains or losses on open contracts.

The short maturity of FCBs assets and liabilities results in having a
significant number of financial instruments whose fair value equals or closely
approximates reported balance sheet value. Such financial instruments are
reported in the following balance sheet captions: cash and cash equivalents,
mortgage loans held for sale, securities sold under repurchase agreements, and
federal funds purchased. Fair value of securities available for sale equals
the balance sheet value.

Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect the premium or discount on any particular financial
instrument that could result from the sale of FCBs entire holdings. Because no
market exists for a significant portion

F-15



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of FCBs financial instruments, fair
value estimates are based on many judgments. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. Significant assets and liabilities that are not
considered financial instruments include the mortgage banking operation,
brokerage network, deferred income taxes, premises and equipment and goodwill.
In addition, the tax ramifications related to the realization of the unrealized
gains and losses can have a significant effect on fair value estimates and have
not been considered in the estimates.

The carrying amount and fair values for other balance sheet options at December
31, 2002 are as follows

|                                        |                                |  |          |            |       |  |   |            | 
|--------------------------------------- | ------------------------------ |  | -------- | ---------- | ----- |  | - | ---------- | 
|                                        |                                |  | Carrying |            | Fair 
|                                        |                                |  | Amount   |            | Value
|                                        |                                |  |          |            |      
|Financial assets:                       |                                |  |          |            |       |  |   |           
|                                        | Cash and cash equivalents      |  | $        | 11,288,426 |       |  | $ | 11,288,426 | 
|                                        | Federal funds sold             |  |          | 950,000    |       |  |   | 950,000    | 
|                                        | Securities, available for sale |  |          | 15,255,463 |       |  |   | 15,255,463 | 
|                                        | Restricted equity securities   |  |          | 337,319    |       |  |   | 337,319    | 
|                                        | Loans, net                     |  |          | 65,370,403 |       |  |   | 65,930,000 | 
|Financial liabilities:                  |                                |  |          |            |       |  |   |           
|                                        | Deposits                       |  | $        | 82,846,741 |       |  | $ | 84,712,000 | 
|                                        | FHLB Advances                  |  |          | 1,500,000  |       |  |   | 1,500,000  | 
|Off-balance sheet assets (liabilities): |                                |  |          |            |       |  |   |           

F-16



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##### Table of Contents



(14) Condensed Financial Statements of FCB Financial Corp. (Parent Only)

Statements of Operations
For the Years Ended December 31, 2002 and 2001

|                                           |                                                        |   |            |            |      |   |         |          |  
|------------------------------------------ | ------------------------------------------------------ | - | ---------- | ---------- | ---- | - | ------- | -------- | -
|                                           |                                                        |   | 2002       |            | 2001
|                                           |                                                        |   |            |            |     
|Dividends
from Subsidiary                  |                                                        | $ |           |            |      | $ |        |         
|Other                                      |                                                        |   | 110,754    |            |      |   | 30,074  |         
|                                           |                                                        |   |            |            |      |   |         |         
|                                           | Total income                                           |   |            | 110,754    |      |   |         | 30,074   |  
|Interest                                   |                                                        |   |           |            |      |   | 55,535  |         
|Other                                      |                                                        |   | 496,156    |            |      |   | 511,945 |         
|                                           |                                                        |   |            |            |      |   |         |         
|                                           | Total expense                                          |   |            | 496,156    |      |   |         | 567,480  |  
|Income tax benefit                         |                                                        |   |           |            |      |   |        |         
|                                           |                                                        |   |            |            |      |   |         |         
|                                           | Loss before equity in undistributed loss of subsidiary |   |            | (385,402   | )    |   |         | (537,406 | )
|Equity in undistributed loss of subsidiary |                                                        |   | (1,511,945 | )          |      |   |        |         
|                                           |                                                        |   |            |            |      |   |         |         
|                                           | Net loss                                               |   | $          | (1,897,347 | )    |   | $       | (537,406 | )
|                                           |                                                        |   |            |            |      |   |         |         

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Balance Sheets
As of December 31, 2002 and 2001

|                                     |                                            |   |            |            |      |  |            |            | 
|------------------------------------ | ------------------------------------------ | - | ---------- | ---------- | ---- |  | ---------- | ---------- | 
|                                     |                                            |   | 2002       |            | 2001
|                                     |                                            |   |            |            |     
|Assets                              
|Cash                                 |                                            | $ | 1,368,957  |            |      |  | 12,433,432 |           
|Investment in subsidiary             |                                            |   | 11,046,886 |            |      |  |           |           
|Other assets                         |                                            |   | 77,834     |            |      |  | 2,511,888  |           
|                                     |                                            |   |            |            |      |  |            |           
|                                     | Total assets                               |   | $          | 12,493,677 |      |  |            | 14,945,320 | 
|                                     |                                            |   |            |            |      |  |            |           
|Liabilities and Stockholders Equity
|Other liabilities                    |                                            | $ |           |            |      |  | 113,666    |           
|Other borrowings                     |                                            |   |           |            |      |  | 3,015,000  |           
|                                     |                                            |   |            |            |      |  |            |           
|                                     | Total liabilities                          |   |            |           |      |  |            | 3,128,666  | 
|Stockholders equity                  |                                            |   | 12,493,677 |            |      |  | 11,816,654 |           
|                                     |                                            |   |            |            |      |  |            |           
|                                     | Total liabilities and stockholders equity |   | $          | 12,493,677 |      |  |            | 14,945,320 | 
|                                     |                                            |   |            |            |      |  |            |           

F-18



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##### Table of Contents



(14) Condensed Financial Statements of FCB Financial Corp. (Parent Only), continued

Statements of Cash Flows
For the Years Ended December 31, 2002 and 2001

|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |   |            |  
|------------------------- | --------------------------------------------------- | ----------------------------------------------- | ---------- | ------------------------------------------------ | ---------- | ---- | ----------- | ---------- | -------- | - | ---------- | -
|                          |                                                     |                                                 |            |                                                  |            | 2002 |             | 2001      
|                          |                                                     |                                                 |            |                                                  |            |      |             |           
|Operating activities:     |                                                     |                                                 |            |                                                  |            |      |             |           
|                          |                                                     | Net loss                                        |            | $                                                | (1,897,347 | )    |             | $          | (537,406 | )
|                          |                                                     | Adjustments to reconcile net income to net cash |            |                                                  |            |      |             |            |          |  
|                          |                                                     | Provided (used) by operating activities:        |            |                                                  |            |      |             |            |          |  
|                          |                                                     | Equity in undistributed loss of subsidiary      |            |                                                  | 1,511,945  |      |             |            |         |  
|                          |                                                     | Depreciation, amortization and accretion        |            |                                                  |           |      |             |            | 600      |  
|                          |                                                     |                                                 | Change in: |                                                  |            |      |             |            |          |   |           
|                          |                                                     |                                                 |            | Other assets                                     |            |      | 436,995     |            |          |   | (477,423   | )
|                          |                                                     |                                                 |            | Other liabilities                                |            |      | (113,666    | )          |          |   | 113,666    |  
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|                          |                                                     |                                                 |            | Net cash used by operating
activities            |            |      | (62,073     | )          |          |   | (900,563   | )
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|Investing activities:     |                                                     |                                                 |            |                                                  |            |      |             |           
|                          | Transfer (Purchase) of premises and equipment       |                                                 |            | 2,034,465                                        |            |      |             | (2,035,065 | )       
|                          | Investment in subsidiary                            |                                                 |            | (12,500,000                                      | )          |      |             |           |         
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|                          |                                                     |                                                 |            | Net cash used in investing activities            |            |      | (10,465,535 | )          |          |   | (2,035,065 | )
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|Financing activities:     |                                                     |                                                 |            |                                                  |            |      |             |           
|                          | Proceeds from (repayments of) short term borrowings |                                                 |            | (3,015,000                                       | )          |      |             | 3,015,000  |         
|                          | Proceeds from common stock offering                 |                                                 |            | 2,478,133                                        |            |      |             | 12,354,060 |         
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|                          |                                                     |                                                 |            | Net cash (used) provided by financing
activities |            |      | (536,867    | )          |          |   | 15,369,060 |  
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|                          |                                                     |                                                 |            | Net change in cash                               |            |      | (11,064,475 | )          |          |   | 12,433,432 |  
|Cash at beginning of year |                                                     |                                                 | 12,433,432 |                                                  |            |      |            |           
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  
|                          |                                                     |                                                 |            | Cash at end of year                              |            | $    | 1,368,957   |            |          | $ | 12,433,432 |  
|                          |                                                     |                                                 |            |                                                  |            |      |             |            |          |  

F-19



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

|                      |  |                     |  |                                                                                              
|--------------------- |  | ------------------- |  | ---------------------------------------------------------------------------------------------
|                      |  | FCB FINANCIAL CORP.
|                      |  |                     |  |                                                                                              
|Dated: March 28, 2003 |  | By:                 |  | /s/ Brian R. Foster                                                                          
|                      |  |                     |  |                                                                                              
|                      |  |                     |  | Brian R. Foster                                                                              
|                      |  |                     |  | President and Chief Executive Officer
(Principal Executive, Financial and Accounting
Officer)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Brian R. Foster and William M. Austin and each
of them, as his true and lawful attorneys-in-fact and agents, with full powers
of substitution and resubstitution for him, in his name place and stead, in any
and all capacities, to sign any and all amendments to this Annual Report on
Form 10-KSB, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf
of the Registrant, in the capacities and on the dates indicated.

|                                       |  |                                                                                                         |  |               
|-------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | --------------
|Signature                              |  | Title                                                                                                   |  | Date          
|                                       |  |                                                                                                         |  |               
|/s/ Jack L. ForehandJack L. Forehand   |  | Director                                                                                                |  | March 28, 2003
|                                      
|/s/ Brian R. FosterBrian R. Foster     |  | Director, President and Chief
Executive Officer
(principal executive, financial
and accounting officer) |  | March 28, 2003
|                                      
|/s/ Stephen S. GreenStephen S. Green   |  | Director                                                                                                |  | March 28, 2003
|                                      
|/s/ G. Edison HollandG. Edison Holland |  | Director                                                                                                |  | March 28, 2003
|                                      
|/s/ Walter N. LewisWalter N. Lewis     |  | Director                                                                                                |  | March 28, 2003





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##### Table of Contents



CERTIFICATIONS

I, Brian R. Foster, certify that:



|1. |  | I have reviewed this annual report on Form 10-KSB of FCB Financial Corp.;                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this annual
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial information included in this
annual report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this annual report;                   
|  
|4. |  | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:                                                                                                                                                



| | a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report my conclusions about the effectiveness of the
disclosure controls and procedures based on my evaluation as of the Evaluation
Date;                                                                                                                          



|5. |  | I have disclosed, based on the registrants most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons performing the equivalent function):
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                        



|6. |  | I have indicated in this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls subsequent to the date
of the registrants most recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |  |     |  |                                                                                                        
|-------------------- |  | --- |  | -------------------------------------------------------------------------------------------------------
|Date: March 28, 2003 |  | By: |  | /s/ Brian R. Foster                                                                                    
|                     |  |     |  |                                                                                                        
|                     |  |     |  | Brian R. Foster                                                                                        
|                     |  |     |  | Director, President and Chief
Executive Officer
(principal executive,
financial and accounting
officer)