<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-QSB
Mark One


[ X ]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
               EXCHANGE ACT OF 1934

             For the quarterly period ended      June 30, 1999
                                           ----------------------

[   ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

             For the transition period from __________  to __________

                        Commission File Number: 333-12293

                              Peoples Bancorp, Inc.
                    -----------------------------------------
        (Exact name of small business issuer as specified in its charter)

           Georgia                                         58-2265412
-------------------------------                      ----------------------
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                          Identification No.)

                 516 Bankhead Highway, Carrollton, Georgia 30117
               ---------------------------------------------------
                    (Address of principal executive offices)

                                 (770) 838-9608
                              --------------------
                           (Issuer's telephone number)

                                       N/A
 -------------------------------------------------------------------------------

(Former name, former address and former fiscal year, if changed since last
report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for 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 X  No
   ---   ---

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes X   No
   ---    ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 1, 1999:  800,000; $.01 par value.

Transitional Small Business Disclosure Format (Check One)  Yes       No X
                                                              ---      ---
<PAGE>

                      PEOPLES BANCORP, INC. AND SUBSIDIARY

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

                                      Index
                                      -----

                                                                           Page
                                                                           ----
PART I.   FINANCIAL INFORMATION

          Item 1.  Financial Statements

             Consolidated Balance Sheet - June 30, 1999......................3

             Consolidated Statements of Income and Comprehensive
              Income (Loss) - Three Months Ended June 30, 1999 and 1998
              and Six Months Ended June 30, 1999 and 1998....................4

             Consolidated Statement of Cash Flows - Six
              Months Ended June 30, 1999 and 1998............................5

             Notes to Consolidated Financial Statements......................6

          Item 2.  Management's Discussion and Analysis of
                        Financial Condition and Results of Operations........7


PART II.  OTHER INFORMATION

          Item 4 - Submission of Matters to a Vote of Security Holders......15

          Item 6 - Exhibits and Reports on Form 8-K.........................15

          Signatures........................................................16

                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION
                              FINANCIAL STATEMENTS

                      PEOPLES BANCORP, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1999
                                   (Unaudited)


                                  Assets
                                  ------

Cash and due from banks                                     $        1,084,075
Interest-bearing deposits in banks                                      99,000
Federal funds sold                                                   2,262,497
Securities available-for-sale, at fair value                        12,087,877

Loans                                                               22,883,077
Less allowance for loan losses                                         263,243
                                                            -------------------
          Loans, net                                                22,619,834
                                                            -------------------

Premises and equipment                                               2,658,727
Other assets                                                           404,227
                                                            -------------------

          Total assets                                      $       41,216,237
                                                            ===================


                   Liabilities and Stockholders' Equity
                   ------------------------------------
Deposits
    Demand                                                  $        1,884,593
    Interest-bearing demand                                         13,026,681
    Savings                                                            270,704
    Time                                                            17,816,210
                                                            -------------------
          Total deposits                                            32,998,188
Other liabilities                                                      296,888
                                                            -------------------
          Total liabilities                                         33,295,076
                                                            -------------------

Commitments and contingent liabilities

Stockholders' equity
    Preferred stock, par value $.01; 1,000,000 shares
       authorized; none issued or outstanding                                0
    Common stock, par value $.01; 10,000,000 shares
       authorized; 800,000 shares issued and outstanding                 8,000
    Capital surplus                                                  7,970,587
    Retained earnings                                                   28,501
    Accumulated other comprehensive loss                               (85,927)
                                                            -------------------
          Total stockholders' equity                                 7,921,161
                                                            -------------------

          Total liabilities and stockholders' equity        $       41,216,237
                                                            ===================

The accompanying notes are an integral part of these consolidated financial
statements.


                                       3

<PAGE>
                      PEOPLES BANCORP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                         AND COMPREHENSIVE INCOME (LOSS)
                    THREE MONTHS ENDED JUNE 30, 1999 AND 1998
                   AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                        Three Months Ended                Six Months Ended
                                                                             June 30,                         June 30,
                                                           --------------------------------------- ---------------------------------

                                                                 1999                1998              1999               1998
                                                           ---------------    ---------------     ---------------    ---------------

<S>                                                        <C>                <C>                 <C>                <C>
Interest income
    Loans                                                  $      489,971     $      306,921      $      963,263     $       552,813
    Taxable securities                                            169,309            155,361             320,942             277,296
    Deposits in banks                                               1,200              2,970               3,554               3,960
    Federal funds sold                                             45,738             54,610              77,865             105,238
                                                           ---------------    ---------------     ---------------    ---------------
              Total interest income                               706,218            519,862           1,365,624             939,307
                                                           ---------------    ---------------     ---------------    ---------------

Interest expense on deposits                                      349,102            227,590             667,254            385,699
                                                           ---------------    ---------------     ---------------    ---------------

              Net interest income                                 357,116            292,272             698,370            553,608
Provision for loan losses                                          43,000             30,000              73,000             54,000
                                                           ---------------    ---------------     ---------------    ---------------
              Net interest income after
                provision for loan losses                         314,116            262,272             625,370            499,608
                                                           ---------------    ---------------     ---------------    ---------------

Service charges on deposit accounts                                14,890             10,485              30,556             18,640
Gain on sales of securities available-for-sale                     15,950             10,234              15,950             15,330
Other operating income                                             34,785             45,863              74,677             64,902
                                                           ---------------    ---------------     ---------------    ---------------
              Total other income                                   65,625             66,582             121,183             98,872
                                                           ---------------    ---------------     ---------------    ---------------

Other expenses
    Salaries and employee benefits                                164,537            153,907             328,450            291,214
    Occupancy and equipment expenses                               30,284             17,658             (17,367)            32,301
    Other operating expenses                                       98,362            107,045             225,390            197,436
                                                           ---------------    ---------------     ---------------    ---------------
              Total other expenses                                293,183            278,610             536,473            520,951
                                                           ---------------    ---------------     ---------------    ---------------

              Income before income taxes                           86,558             50,244             210,080             77,529

Income tax expense                                                 24,862                  0              36,232                  0
                                                           ---------------    ---------------     ---------------    ---------------

              Net income                                           61,696             50,244             173,848             77,529
                                                           ---------------    ---------------     ---------------    ---------------

Other comprehensive loss:
    Unrealized gains (losses) on securities
      available-for-sale arising during period, net of tax        (89,361)             1,383            (127,180)             7,231
       Less: reclassification adjustment
          for gains included in net income , net of tax           (10,527)           (10,234)            (10,527)           (15,330)
                                                           ---------------    ---------------     ---------------    ---------------
    Total other comprehensive loss                                (99,888)            (8,851)           (137,707)            (8,099)
                                                           ---------------    ---------------     ---------------    ---------------

              Comprehensive income (loss)                  $      (38,192)    $       41,393      $       36,141     $       69,430
                                                           ===============    ===============     ===============    ===============

Basic and diluted earnings per common share                $         0.08     $         0.06      $         0.22     $         0.10
                                                           ===============    ===============     ===============    ===============

Weighted average shares outstanding (basic
   and diluted)                                                   800,000            800,000             800,000            800,000
                                                           ===============    ===============     ===============    ===============

Cash dividends per common share                            $            0     $            0      $            0     $            0
                                                           ===============    ===============     ===============    ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                       4
<PAGE>
                      PEOPLES BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 1999 AND 1998
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                      1999                       1998
                                                                              --------------------    ------------------------
<S>                                                                           <C>                     <C>
OPERATING ACTIVITIES
    Net income                                                                $             173,848     $                77,529
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation and amortization                                                        73,820                      32,054
        Provision for loan losses                                                            73,000                      54,000
        Gain on sale of securities available-for-sale                                       (15,950)                    (15,330)
        Increase in interest receivable                                                     (23,651)                    (61,396)
        Increase in interest payable                                                         30,829                      42,379
        Other operating activities                                                            5,771                       7,781
                                                                              ----------------------    ------------------------

              Net cash provided by operating activities                                     317,667                     137,017
                                                                              ----------------------    ------------------------

INVESTING ACTIVITIES
    Purchases of securities available-for-sale                                           (3,745,158)                 (8,439,658)
    Proceeds from sales of securities available-for-sale                                  1,200,872                   2,512,969
    Proceeds from maturities of securities available-for-sale                             1,577,797                     685,760
    Net (increase) decrease in interest-bearing deposits in banks                            99,000                    (198,000)
    Net (increase) decrease in Federal funds sold                                          (812,339)                    783,692
    Net increase in loans                                                                (4,845,995)                 (3,430,029)
    Purchase of premises and equipment                                                     (353,386)                     (9,055)
                                                                              ----------------------    ------------------------

              Net cash used in investing activities                                      (6,879,209)                 (8,094,321)
                                                                              ----------------------    ------------------------

FINANCING ACTIVITIES
    Net increase in deposits                                                              6,607,047                   8,753,483
                                                                              ----------------------    ------------------------

              Net cash provided by financing activities                                   6,607,047                   8,753,483
                                                                              ----------------------    ------------------------

Net increase  in cash and due from banks                                                     45,505                     796,179

Cash and due from banks, beginning of period                                              1,038,570                     451,967
                                                                              ----------------------    ------------------------

Cash and due from banks, end of period                                        $           1,084,075     $             1,248,146
                                                                              ======================    ========================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
    Cash paid (received) during period for:
        Interest                                                              $             636,245     $               343,320

        Income taxes                                                                         68,922     $                (3,056)

NONCASH TRANSACTION
    Net unrealized losses on securities available-for-sale                    $             208,075     $                 8,099

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                       5

<PAGE>

                     PEOPLES BANCORP, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)




NOTE 1.  BASIS OF PRESENTATION

         The consolidated financial information included herein is unaudited;
         however, such information reflects all adjustments (consisting solely
         of normal recurring adjustments) which are, in the opinion of
         management, necessary for a fair statement of results for the interim
         period.

         The results of operations for the six month period ended June 30, 1999
         are not necessarily indicative of the results to be expected for the
         full year.


NOTE 2.  CURRENT ACCOUNTING DEVELOPMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
         133, "Accounting for Derivative Instruments and Hedging Activities".
         The effective date of this statement has been deferred by SFAS No. 137
         until fiscal year beginning after June 15, 2000. However, the statement
         permits early adoption as of the beginning of any fiscal quarter after
         its issuance. The Company expects to adopt this statement effective
         January 1, 2000. SFAS No. 133 requires the Company to recognize all
         derivatives as either assets or liabilities in the balance sheet at
         fair value. For derivatives that are not designated as hedges, the gain
         or loss must be recognized in earnings in the period of change. For
         derivatives that are designated as hedges, changes in the fair value of
         the hedged assets, liabilities, or firm commitments must be recognized
         in earnings or recognized in other comprehensive income until the
         hedged item is recognized in earnings, depending on the nature of the
         hedge. The ineffective portion of a derivative's change in fair value
         must be recognized in earnings immediately. Management has not yet
         determined what effect the adoption of SFAS No. 133 will have on the
         Company's earnings or financial position.

         There are no other recent accounting pronouncements that have had, or
         are expected to have, a material effect on the Company's financial
         statements.

                                       6
<PAGE>

                      PEOPLES BANCORP, INC. AND SUBSIDIARY




Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

         The following is management's discussion and analysis of certain
         significant factors which have affected the financial position and
         operating results of the Company and its bank subsidiary, Peoples Bank
         of West Georgia, during the periods included in the accompanying
         consolidated financial statements.

         SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

         Certain of the statements made herein under the caption "Management's
         Discussion and Analysis of Financial Condition and Results of
         Operations" ("MD&A") are forward-looking statements for purposes of the
         Securities Act of 1933, as amended (the "Securities Act") and the
         Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
         as such may involve known and unknown risks, uncertainties and other
         factors which may cause the actual results, performance or achievements
         of the Company to be materially different from future results,
         performance or achievements expressed or implied by such
         forward-looking statements. Such forward looking statements include
         statements using the words such as "may," "will," "anticipate,"
         "should," "would," "believe," "contemplate," "expect," "estimate,"
         "continue," "may," "intend," or other similar words and expressions of
         the future. Our actual results may differ significantly from the
         results we discuss in these forward-looking statements.

         These forward-looking statements involve risks and uncertainties and
         may not be realized due to a variety of factors, including, without
         limitation: the effects of future economic conditions; governmental
         monetary and fiscal policies, as well as legislative and regulatory
         changes; the risks of changes in interest rates on the level and
         composition of deposits, loan demand, and the values of loan
         collateral, securities, and other interest-sensitive assets and
         liabilities; interest rate risks; the effects of competition from other
         commercial banks, thrifts, mortgage banking firms, consumer finance
         companies, credit unions, securities brokerage firms, insurance
         companies, money market and other mutual funds and other financial
         institutions operating in the Company's market area and elsewhere,
         including institutions operating regionally, nationally, and
         internationally, together with such competitors offering banking
         products and services by mail, telephone, computer, and the Internet;
         the possible effects of the Year 2000 issues on the Company.

                                       7
<PAGE>

         Management's current assessment and estimates with respect to the
         Company's Year 2000 compliance efforts and the impact of Year 2000
         issues on the Company's business and operations have been included in
         the MD&A. Various factors could cause actual plans and results to
         differ materially from those contemplated by such assessments,
         estimates and forward-looking statements, many of which are beyond the
         control of the Company. Some of these factors include, but are not
         limited to representations by the Company's vendors and counterparties,
         technological advances, economic considerations, and consumer
         perceptions. The Company's Year 2000 compliance program is an ongoing
         process involving continual evaluation and may be subject to change in
         response to new developments.

         Liquidity and Capital Resources

         As of June 30, 1999, the liquidity ratio of the Bank, as determined
         under guidelines established by regulatory authorities, was
         satisfactory.

         At June 30, 1999, the capital ratios of the Company and the Bank were
         adequate based on regulatory minimum capital requirements. The minimum
         capital requirements and the actual capital ratios for the Company and
         the Bank are as follows:

<TABLE>
<CAPTION>

                                                     Actual
                                          ---------------------------
                                                          Peoples Bank
                                             Peoples        of West       Regulatory
                                          Bancorp, Inc.     Georgia       Requirement
        <S>                               -------------  ------------     -----------
                                          <C>             <C>            <C>
         Leverage capital ratios            20.64 %        15.66 %        4.00 %
         Risk-based capital ratios:
            Core capital                    32.36          24.56          4.00
            Total capital                   33.43          25.62          8.00

</TABLE>
         As the Company continues to grow, the capital ratios will decrease
         rapidly to levels closer to, but still in excess of regulatory minimum
         requirements.

                                       8
<PAGE>

Financial Condition

Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
                                      June 30,          December 31,
                                        1999                1998                  Increase (Decrease)
                                    --------------     ----------------     --------------------------------
                                          (Dollars in Thousands)                Amount           Percent
                                    -----------------------------------     --------------    --------------
<S>                                 <C>                <C>                  <C>                <C>
Cash and due from banks             $       1,084      $         1,039      $          45          4.33 %
Interest-bearing deposits in banks             99                  198                (99)       (50.00)
Securities                                  2,262                1,450                812         56.00
Federal funds sold                         12,088               11,313                775          6.85
Loans, net                                 22,620               17,847              4,773         26.74
Premises and equipment                      2,659                2,379                280         11.77
Other assets                                  404                  297                107         36.03
                                    --------------     ----------------     --------------
                                    $      41,216      $        34,523      $       6,693         19.39
                                    ==============     ================     ==============

Deposits                            $      32,998      $        26,391      $       6,607         25.04 %
Other liabilities                             297                  247                 50         20.24
Stockholders' equity                        7,921                7,885                 36          0.46
                                    --------------     ----------------     --------------
                                    $      41,216      $        34,523      $       6,693         19.39
                                    ==============     ================     ==============
</TABLE>

As indicated in the above table, the Company's total assets grew at a rate of
19.39%. Continued strong deposit growth of 25.04% was invested primarily in
loans. The Company's loan to deposit ratio has increased from 68.44% at December
31, 1998 to 69.34% at June 30, 1999. The Company's total equity was increased by
year-to-date earnings of $174,000 which has put the Company in a cumulatively
profitable position. The Company's total equity was decreased by $138,000 due to
unrealized losses on securities in its portfolio that have maturities greater
than one year.

                                       9
<PAGE>

Results of Operations For The Three Months Ended June 30, 1999 and 1998 and for
the Six Months Ended June 30, 1999 and 1998

Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
                                    Three Months Ended
                                         June 30,
                                1999                1998                  Increase (Decrease)
                            --------------     ----------------     --------------------------------
                                  (Dollars in Thousands)                Amount           Percent
                            -----------------------------------     --------------    --------------
<S>                         <C>                <C>                  <C>               <C>
Interest income             $         706      $           520      $         186         35.77 %
Interest expense                      349                  228                121         53.07
Net interest income                   357                  292                 65         22.26
Provision for loan losses              43                   30                 13         43.33
Other income                           66                   67                 (1)        (1.49)
Other expense                         293                  279                 14          5.02
Income tax expense                     25                    -                 25             -
Net income                             62                   50                 12         24.00
<CAPTION>
                                     Six Months Ended
                                         June 30,
                                1999                1998                  Increase (Decrease)
                            --------------     ----------------     --------------------------------
                                  (Dollars in Thousands)                Amount           Percent
                            -----------------------------------     --------------    --------------

Interest income             $       1,365      $           939      $         426         45.37 %
Interest expense                      667                  385                282         73.25
Net interest income                   698                  554                144         25.99
Provision for loan losses              73                   54                 19         35.19
Other income                          121                   99                 22         22.22
Other expense                         536                  521                 15          2.88
Income tax expense                     36                    -                 36             -
Net income                            174                   78                 96        123.08
</TABLE>

As indicated in the above table, the Company's net interest income has increased
by $65,000 and $144,000 for the second quarter and first six months of 1999 as
compared to the same periods in 1998. The Company's net interest margin
decreased to 4.13% during the first six months of 1999 as compared to 4.35% for
the previous year. The increase in net interest income is due primarily to the
increased volume of average interest-earning assets. The decrease in the net
interest margin is due to the significant deposit growth that has outpaced new
loan demand.

                                       10
<PAGE>

The provision for loan losses increased by $13,000 and by $19,000 for the second
quarter and first six months of 1999 as compared to the same periods in 1998.
The overall increase is due primarily to the net loan growth. The Company's
allowance for loan losses amounted to 1.15% at June 30, 1999 as compared to
1.19% at December 31, 1998. The allowance for loan losses is maintained at a
level that is deemed appropriate by management to adequately cover all known and
inherent risks in the loan portfolio. Management's evaluation of the loan
portfolio includes a continuing review of loan loss experience, current economic
conditions which may affect the borrower's ability to repay and the underlying
collateral value.

Information with respect to nonaccrual, past due and restructured loans at June
30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
                                                                                          June 30,
                                                                            ---------------------------------
                                                                                 1999              1998
                                                                            ---------------   ---------------
                                                                                 (Dollars in Thousands)
                                                                            ---------------------------------
<S>                                                                         <C>               <C>
Nonaccrual loans                                                            $           30    $            -
Loans contractually past due ninety days or more as to interest
   or principal payments and still accruing                                              2                 -
Restructured loans                                                                       -                 -
Loans, now current about which there are serious doubts as to the
   ability of the borrower to comply with loan repayment terms                           -                 -
Interest income that would have been recorded on nonaccrual
   and restructured loans under original terms                                           1                 -
Interest income that was recorded on nonaccrual and restructured loans                   -                 -
</TABLE>

It is the policy of the Bank to discontinue the accrual of interest income when,
in the opinion of management, collection of such interest becomes doubtful. This
status is accorded such interest when (1) there is a significant deterioration
in the financial condition of the borrower and full repayment of principal and
interest is not expected and (2) the principal or interest is more than ninety
days past due, unless the loan is both well-secured and in the process of
collection.

Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.

                                       11
<PAGE>

Information regarding certain loans and allowance for loan loss data through
June 30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>                                                                     Six Months Ended
                                                                                    June 30,
                                                                        ---------------------------------
                                                                              1999            1998
                                                                        ---------------  ----------------
                                                                             (Dollars in Thousands)
                                                                        ---------------------------------
<S>                                                                     <C>               <C>
Average amount of loans outstanding                                     $       19,168    $       10,614
                                                                        ===============   ===============

Balance of allowance for loan losses at beginning of period             $          215    $          101
                                                                        ---------------   ---------------
Loans charged off
   Commercial and financial                                                         18                 -
   Real estate mortgage                                                              -                 -
   Instalment                                                                        7                 5
                                                                        ---------------   ---------------
                                                                                    25                 5
                                                                        ---------------   ---------------
Loans recovered
   Commercial and financial                                                          -                 -
   Real estate mortgage                                                              -                 -
   Instalment                                                                                          5
                                                                        ---------------   ---------------
                                                                                     -                 5
                                                                        ---------------   ---------------
Net charge-offs                                                                     25                 -
                                                                        ---------------   ---------------
Additions to allowance charged to operating expense during period                   73                54
                                                                        ---------------   ---------------
Balance of allowance for loan losses at end of period                   $          263    $          155
                                                                        ===============   ===============
Ratio of net loans charged off during the period to
   average loans outstanding                                                      .13%                -%
                                                                        ===============   ===============
</TABLE>

Other income decreased by $1,000 during the second quarter of 1999 as compared
to the same period in 1998 due to increased service charges of $4,000 and
increased gains on sales of securities of $6,000 being offset by a decrease in
other operating income of $11,000, primarily mortgage origination fees.

Other income increased by $22,000 during the first six months of 1999 as
compared to the same period in 1998 due to increased service charges of $12,000
and increased other operating income of $10,000, primarily mortgage loan
origination fees.

Other expenses increased during the second quarter and first six months of 1999
as compared to the same periods in 1998 by $14,000 and $15,000 due to normal
increased operating costs associated with the Bank's growth. These increases
were substantially offset by reduced net equipment and occupancy expenses. The
Company purchased in 1998 an existing 24,000 square foot building in downtown
Carrollton, Georgia for its future banking facilities. The sellers of the
building occupied the building during the first quarter of 1999 and paid the
Company $62,000 in rents. The sellers have now vacated the premises. The Company
expects to generate rent of $3,000 to $5,000 during the remainder of 1999 from
other tenants.

                                       12
<PAGE>

The Company is now anticipating moving into its new facilities during the third
quarter of 1999. The Company has also entered into a contractual agreement to
sell its current banking facilities with an independent third party for
$332,000. This agreement will have no significant effect on earnings.

The Company has recorded income tax provisions of $24,000 and $36,000 for the
second quarter and first six months of 1999 due to the utilization of the net
operating loss carryover.

Capability of the Bank's Processing Software to Accommodate the Year 2000
-------------------------------------------------------------------------

Project Summary: Senior management and all employees formed the Project Team for
---------------
Year 2000. The project manager is the chief operating officer, which reports to
the Executive Committee and Board. This team has been charged with the
responsibility of assessing the problem, overseeing corrective action, as well
as testing the Year 2000 readiness of all equipment, software, and applications
after upgrades have been made.

Readiness: The team distinguished between critical and non critical systems.
---------
Mission critical systems have priority attention. These systems are: core
processing system, both hardware and software; automated new accounts and loan
document preparation software; ATM processor; network server, and personal
computers. As of December 31, 1998, all personal computers and network server
located within the Bank have been tested and certified by an outside firm to be
Year 2000 ready. The Bank outsources the core processing (checks, deposits,
loans) with an outside firm, The InterCept Group, Thomson, Georgia. Testing
began in early 1998 and covered all future dates identified by the FFIEC as
being potential problem dates. Testing has been completed successfully.

The Bank relies on other outside vendors for many services such as electricity,
phone service, water, gas, bond accounting, accounts payable, and other forms.
The Bank can make no representations about third parties; however, the Bank is
making a coordinated effort to help vendors and customers to be aware of the
Year 2000 issue.

Contingency Plans: Due to the critical nature of our core processing system and
-----------------
our automated platform for new accounts and loan document preparation, we have
developed contingency plans and also adopted the contingency plan of the outside
provider. Contingency plans have also been developed in the event of disruption
of service due to power outage, etc. These plans are in process of testing and
will be ongoing throughout the remainder of 1999. An independent review of the
plan has been completed and the Board is updated monthly on the contingency
testing and any other matter regarding Year 2000.

Costs: After the assessment phase, the Board of Directors approved a budget of
-----
$35,000 to address the Year 2000 Issue, mainly new hardware. This budget is
subject to continuous review and amendment. Management does not expect the cost
of remediation to vary significantly from the present budget.

Customer Awareness and Preparedness: The Bank took an early stance in
-----------------------------------
communicating with our customers and the community in general about the Year
2000 Issues. We have sponsored a Y2K conference addressing present state of
compliance, impact on small business, and legal and insurance issues. Messages
and brochures have been sent to our customers. This will be a continued
concentration throughout 1999. The Bank's web site allows customers to attach to
the FFIEC's Y2K information regarding awareness and fraud prevention.

                                       13
<PAGE>

Credit Risk: Loan customers could also experience business interruptions which
-----------
could affect their ability to repay debts owed to the Bank resulting in adverse
bank performance. Action has been taken by the Bank's senior credit officer to
evaluate the current commercial relationships and is continuing with the
assessment of each new commercial relationship.

The Company is not aware of any known trends, events or uncertainties, other
than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. The Company is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.

                                       14
<PAGE>

                          PART II - OTHER INFORMATION





ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         (a) The annual meeting of the stockholders of the Company was held on
April 20, 1999.

         (b) The following directors were elected at the meeting to serve terms
through the year indicated:

         William P. Johnson         2002
         Phillip Kauffman           2002
         Charles J. Puckett         2002
         Timothy I. Warren          2002

         (c) Mauldin & Jenkins, LLC was approved as the Company's certified
public accountants.

         The shares represented at the meeting (657,273 shares or 82.16%) voted
as follows:

                                                Item (b)           Item (c)
                                                  # of               # of
                                                 Shares             Shares
                                             ---------------    ---------------

For                                                 654,208            655,273
Withheld authority                                    3,065                  -
Against                                                   -              2,000
                                             ---------------    ---------------

Total                                               657,273            657,273
                                             ===============    ===============



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)     Exhibits.

                 27.  Financial Data Schedule.  (For SEC use only.)

         (b)     Reports on Form 8-K.

                 None.

                                       15
<PAGE>

                                  SIGNATURES




                  In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                             PEOPLES BANCORP, INC.
                                 (Registrant)


DATE:  August 12, 1999        BY:  /s/ Timothy I. Warren
       ---------------             ---------------------------------------------
                                   Timothy I. Warren. President and C.E.O.
                                         (Principal Executive Officer)


DATE:  August 12, 1999        BY:  /s/ Elaine B. Lovvorn
       ---------------             ---------------------------------------------
                                   Elaine B. Lovvorn, Secretary and Treasurer
                                   (Principal Financial and Accounting Officer)

                                       16