<PAGE> 1
                      U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C.  20549

                                    FORM 10-KSB

   [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934 [FEE REQUIRED]

   For the fiscal year ended December 31, 1996
                             -----------------

   Commission File Number 33-37078

                                 FNC BANCORP, INC.
                                 -----------------
            (Name of small business issuer as specified in its charter)

               Georgia                                           58-1910615     
   -------------------------------                           -------------------
   (State or other jurisdiction of                            (I.R.S. Employer  
   incorporation or organization)                            Identification No.)

   420 South Madison Avenue, Douglas, Georgia                      31533        
   ------------------------------------------                -------------------
   (Address of principal executive offices)                       (Zip Code)    

   Issuer's telephone number  (912) 384-1100
                              --------------

   Securities registered under Section 12(b) of the Exchange Act:   None
                                                                    -----
   Securities registered under Section 12(g) of the Exchange Act:   Common Stock
                                                                    ------------

   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  
       -----     -----

   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 registrant'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.  [X] Not Applicable

   Issuer's revenues for its most recent fiscal year were $4,151,234.

   The aggregate market value of the voting stock held by non-affiliates of





   issuer at March 25, 1997 was $3,418,470 based on the average price of known
   occasional private sales of its common stock during 1996, although there is
   no established trading market.

   The number of shares outstanding of issuer's class of common stock at March
   25, 1997 was 405,710 shares of common stock.

   Documents Incorporated by Reference:  None

   Transitional Small Business Disclosure Format (Check one):  Yes      No   X
                                                                   ---      ---
   <PAGE> 2

                                 FNC BANCORP, INC.

                           Annual Report on Form 10-KSB
                    For the Fiscal Year Ended December 31, 1996

                                 Table of Contents
                                 -----------------

            Item                                                      Page
           Number                                                    Number
           ------                                                    ------
                                      Part I

              1.  Description of Business  . . . . . . . . . . . . . .  3

              2.  Description of Property  . . . . . . . . . . . . . . 32

              3.  Legal Proceedings  . . . . . . . . . . . . . . . . . 32

              4.  Submission of Matters to a Vote of
                    Security Holders . . . . . . . . . . . . . . . . . 32

                                      Part II

              5.  Market for Registrant's Common Equity
                    and Related Stockholder Matters  . . . . . . . . . 33

              6.  Management's Discussion and Analysis
                    or Plan of Operation . . . . . . . . . . . . . . . 33

              7.  Financial Statements   . . . . . . . . . . . . . . . 40

              8.  Changes in and Disagreements with Accountants
                    on Accounting and Financial Disclosure . . . . . . 40

                                     Part III

              9.  Directors, Executive Officers, Promoters
                    and Control Persons; Compliance With
                    Section 16(a) of the Exchange Act  . . . . . . . . 61

             10.  Executive Compensation   . . . . . . . . . . . . . . 64

             11.  Security Ownership of Certain Beneficial
                    Owners and Management  . . . . . . . . . . . . . . 67

             12.  Certain Relationships and Related Transactions   . . 68

             13.  Exhibits and Reports on Form 8-K   . . . . . . . . . 69






                  Signatures   . . . . . . . . . . . . . . . . . . . . 70

   <PAGE> 3
                                      PART I

   ITEM 1. DESCRIPTION OF BUSINESS
   -------------------------------

   The Company
   -----------
     FNC Bancorp, Inc. (the "Company") was incorporated under the laws of
   Georgia on September 19, 1990 to serve as a bank holding company for First
   National Bank of Coffee County (In Organization) (the "Bank").  A charter for
   the Bank was issued by the Office of the Comptroller of the Currency (the
   "OCC") and the Bank commenced operations on September 23, 1991.

     The Company's offices are located at 420 South Madison Avenue, Douglas,
   Georgia and its telephone number is (912)384-1100.  The Company maintains its
   offices at the office of First National Bank of Coffee County at this
   address.

     On January 8, 1991, the Company commenced an offering of a minimum of
   360,000 and a maximum of 500,000 shares of its Common Stock, $1.00 par value
   per share, to the public at a price of $10.00 per share to raise funds to
   capitalize and acquire all of the stock of the Bank.  The Company completed
   its stock offering with the sale of 405,710 shares by December 31, 1991.  Of
   the proceeds of the stock sold, $3,500,000 was used to acquire all of the
   stock of the bank upon its being issued a charter and commencing operations. 
   The Company received all required federal and state regulatory approvals to
   become a bank holding company.

     The Company has been organized to facilitate the Bank's ability to serve
   its current and future customers' requirements for financial services.  The
   holding company structure provides flexibility for expansion of the Company's
   banking business through the possible acquisition of other financial
   institutions and the provision of additional banking-related services which a
   traditional commercial bank may not provide under present laws.  The holding
   company structure also affords additional flexibility in terms of capital
   formation and financing opportunities.  Nevertheless, the primary activity of
   the Company initially is to be ownership and operation of the Bank.  While
   the Company may seek in the future to acquire additional banks or bank
   holding companies or to engage in other activities appropriate for bank
   holding companies under appropriate circumstances as permitted by law, the
   Company currently has no plans, understandings or agreements concerning any
   other activities.  The results of operations and financial condition of the
   Company for the foreseeable future will be determined primarily by the
   results of operations and financial condition of the Bank.

   The Bank
   --------

   General
   -------
     On August 15, 1990, the Organizers of the Company and the Bank filed an
   application with the OCC to charter the Bank as a national banking
   association under the name "First National Bank of Coffee County" to conduct
   business in Douglas, Coffee County, Georgia and the surrounding area.  The
   Organizers of the Company and the Bank are Robert L. Cation, Milton G.
   Clements, William C. Ellis, Jr., Ralph G. Evans, A. Curtis Farrar, Jr.,
   Norman E. Fletcher and Timothy J. Palmer.  The Bank was authorized to
   commence its banking business by the OCC issuing a national bank charter for
   the Bank.  Operations commenced on September 23, 1991.  The OCC had granted 






   <PAGE> 4

   preliminary approval of the application on December 14, 1990.  Final approval
   of the application was subject to, among other conditions, capitalization of
   the Bank at a minimum of $3,500,000 prior to the Bank opening for business.

     The Bank's business consists primarily of attracting deposits from the
   general public and, with these and other funds, making real estate loans,
   consumer loans, business loans, residential and commercial construction loans
   and other investments.  In addition to deposits, sources of funds for the
   Bank's loans and other investments include amortization and prepayment of
   loans, sales of participation in loans, sales of investment securities and
   may include in the future, sales of loans.  The principal sources of income
   for the bank is interest and fees collected on loans and, to a lesser extent,
   interest and dividends collected on other investments.

     The Bank's earnings depend primarily on its "net interest income," which is
   the difference between the interest income it receives from its assets
   (primarily its loans and other investments) and the interest expense (or
   "cost of funds") which it pays on its liabilities (primarily its deposits). 
   Net interest income is a function of (i) the difference between rates of
   interest earned on interest-earning assets and rates of interest paid on
   interest-bearing liabilities (the "interest rate spread" or "net interest
   spread") and (ii) the relative amounts of interest-earning assets and
   interest-bearing liabilities.  When interest-earning assets approximate or
   exceed interest-bearing liabilities, any positive interest rate spread will
   generate net interest income.  The Bank adheres to an asset and liability
   management strategy intended to control the impact of interest rate
   fluctuations upon the Bank's earnings and to make the yields on its loan
   portfolio and other investments more responsive to its cost of funds, in part
   by closely matching the maturities of interest-earnings assets and interest-
   bearing liabilities, while still maximizing net interest income. 
   Nevertheless, the Bank is affected by changes in the levels of interest rates
   and other factors beyond its control.

   Philosophy and Strategy
   -----------------------
     The Bank serves as a community bank in a market dominated by large regional
   banks.  The philosophy and strategy of the Bank with regard to its initial
   operations is to emphasize its local ownership and management and its prompt
   and responsive personal service in order to attract customers and acquire a
   market share now controlled by other financial institutions in the Bank's
   market area.  Most of the shares sold in the Company's public offering were
   sold in the Coffee County area, and this local ownership has helped to
   provide an immediate customer base.  The Bank's President and the other
   Organizers also have significant contacts in Coffee County, which has
   provided additional customers and is expected to continue to do so.

     The Bank's strategy is to attract as customers small-to-medium size
   manufacturing, retail, professional and industrial businesses as well as
   middle-to-upper-income consumers and professionals.  These customers
   typically provide a higher level of profitability and a lower degree of risk
   than do customers of the larger banks and are prime customers of smaller
   banks.  As more and more small banks are merged out of existence, the
   opportunities to fill the void created by these mergers are enhanced for
   small de novo banks that have both adequate capital resources and experienced
   management.  The Bank's President has experience in servicing these types of
   customers at other financial institutions and uses that experience to
   continue to provide services to these types of customers.  See "Item 10. 
   Directors and Executive Officers of the Registrant."  Management of the Bank 

   <PAGE> 5






   also has an active officer and director call program to describe the
   products, services and philosophy of the Bank to both existing and
   prospective customers.

   Market Area
   -----------
     The Bank's primary service area ("PSA") is Coffee County, Georgia, and the
   Bank is located in Douglas, the county seat and largest city in the county. 
   The Bank's secondary service area includes the surrounding areas of Atkinson,
   Bacon, Ben Hill, Berrien, Irwin, Jeff Davis and Ware Counties.  Access to the
   area is provided by U.S. Highways 441 and 221 and State Highways 135 and 158,
   all intersecting in Douglas.  Douglas also has access to four interstate
   highway systems, I-10, I-16, I-75, and I-95, all within 100 miles of the
   city.  The area is comprised of a diversified mix of commercial, retail,
   industrial, agricultural and residential areas.

     Population in the PSA was approximately 26,894 in 1980 and was estimated at
   30,538 in 1989, an increase of almost 13.6% in nine years.  The population is
   projected to be 32,991 by 1994.  The population is well distributed by age
   and is slightly more than 52% female.  The median age of the population is
   29.8 years.

     It is estimated that 36.5% of the households in the PSA have an income
   level of over $25,000, a figure that is projected to reach 46.4% by 1994.  In
   addition, it is estimated that 22.2% of the households in the PSA had incomes
   over $35,000 and it is estimated that this will increase to 31.6% by 1994. 
   Aggregate household income has grown from $44,740,000 in 1970 to $123,320,000
   in 1980 to $279,990,000 in 1989, and is projected to reach approximately
   $391,800,000 by 1994.  The median family income is projected to grow from
   $10,942 in 1980 to $23,096 by 1994, an increase of over 111% in 14 years. 
   Continued growth in the population and income level of the PSA, however,
   cannot be assured.

     The estimates and projections set forth above were taken directly from the
   information set forth in an exhibit to the Company's application to the OCC
   for authority to organize the Bank.  Such exhibit to the OCC application was
   included as an exhibit to the Company's Registration Statement filed with the
   Securities and Exchange Commission in connection with the Company's public
   offering.

   Services
   --------
     Loan Portfolio.  As a full service commercial bank, the Bank offers a wide
   range of commercial loans, consumer loans and real estate loans consisting
   primarily of short and intermediate-term residential lot loans, residential
   construction loans, commercial construction loans, agricultural loans and
   permanent residential and commercial real estate loans.  Commercial loans
   consist of loans made to individual, corporate and partnership borrowers for
   a variety of business purposes and includes Small Business Administration
   loans.  Consumer loans consist primarily of installment loans to individuals
   for personal, family and household purposes, including loans for automobiles,
   home improvements and investments.

     A majority of the Bank's construction loans consists of residential
   construction loans.  These loans typically involve a higher degree of risk to
   the Bank than many other types of loans due to the borrower's greater
   sensitivity to the effect that changes in economic conditions may have on the
   success of a project.  The Bank intends to compensate for the increased risk
   in part by charging higher interest rates and fees on these types of loans. 
   The Bank also offers residential first mortgage loan products with fifteen
   year maximum terms.  Long-term fixed rate mortgage loans are originated by 

   <PAGE> 6





   the Bank for a correspondent Bank and are not held in the Bank's loan
   portfolio.  All construction, acquisition and development loans will be
   limited to 80% of the appraised value of the property upon completion and
   will be secured by the related real estate and construction property.

     The Bank intends to originate variable rate loans and short term fixed rate
   consumer loans of five years or less.  See "Asset and Liability Management"
   below.

     The Company's loans before reduction for the allowance for loan losses at
   December 31, 1996 totalled $27,345,643, or 64.5% of total earning assets, and
   representing approximately 1,496 loans.  At December 31, 1996, the Bank held
   353 commercial, financial and agricultural loans, 114 real estate
   construction loans, 279 real estate mortgage loans and 750 installment loans.

   Deposits.  The Bank offers a wide range of commercial and consumer deposit
   services that are typically available in most banks and savings institutions,
   including interest bearing and non-interest bearing checking accounts, money
   market checking accounts, negotiable order of withdrawal ("NOW") accounts and
   savings and other time deposits of various types ranging from daily money
   market accounts to longer-term certificates of deposit.  In addition,
   retirement accounts such as Individual Retirement Accounts are available. 
   All depositors are insured by the Federal Deposit Insurance Corporation (the
   "FDIC") up to the maximum amount permitted by law.  The Bank's depositors
   consist of individuals, businesses and their employees within the Bank's
   market area, obtained through personal solicitation by the Bank's officers
   and directors, direct mail solicitation and advertisement in the local
   media. The Bank pays competitive interest rates on deposits and has
   a service charge fee schedule competitive with other financial institutions
   in the Bank's market area, covering such matters as maintenance fees on
   checking accounts, per item processing fees on checking accounts, returned
   check charges and other similar fees.

     Checking, savings, money market accounts and other time deposits are the
   primary sources of the Bank's funds for loans and investments.  At December
   31, 1996, the Bank had a total of 5,387 deposit accounts consisting of 1,647
   demand deposit accounts, 1,979 interest-bearing NOW and savings accounts, 84
   money market accounts and 1,677 time accounts.  At that date, certificates of
   deposits of at least $100,000 represent 11.4% of total deposits, of which all
   were held by customers inside the Bank's primary service area.

   Other  Services.  The Bank provides other services such as official bank
   checks and money orders, MasterCard and Visa credit cards, safe deposit
   boxes, travelers' checks, bank by mail, direct deposit of payroll and social
   security checks, U.S. Savings Bonds, wire transfer of funds, a night
   depository and ATM access.  The Bank also provides an array of personalized
   banking services to middle-to upper-income individuals, with emphasis on
   knowledge of the individual financial needs and objectives of these customers
   and timely response.  The Bank seeks to promote long-term relationships with
   these types of customers.  

   Correspondent Banking
   ---------------------
     Correspondent banking involves the provision of services by one bank to
   another bank which cannot provide that service for itself from an economic or
   practical standpoint.  The Bank has correspondent banking relationships with
   larger commercial banks for investments, liquidity, federal funds lines, loan
   participation, check clearing services and consulting services.  These 

   <PAGE> 7

   include Georgia Bankers Bank (Atlanta, Georgia) First National Bank of
   Gainesville, Georgia, Trust Company Bank (Atlanta, Georgia) and CB&T





   (Columbus, Georgia).

     The Bank sells loan participation to one or more upstream regional
   correspondent banks with respect to loans that exceed the Bank's lending
   limit.

   Asset and Liability Management
   ------------------------------
     The primary assets of the Bank consists of its loan and investment
   portfolios.  The Bank's loan portfolio consists primarily of variable rate
   loans or fixed rate loans that mature in less than five years.  The majority
   of the Bank's securities investments consist of obligations of the United
   States, obligations guaranteed as to principal and interest by the United
   States, other taxable securities and certain obligations of states and
   municipalities.  The Bank engages in federal funds transactions with its
   principal correspondent banks and currently acts primarily as a net seller of
   such funds.  The sale of federal funds amounts to a short-term loan from the
   Bank to another bank.  Ultimately, the Bank will strive to maintain a loan
   portfolio equal to approximately 75% of assets and an investment portfolio
   equal to approximately 16% of the assets, with the remaining 9% of the Bank's
   assets consisting of cash, fixed assets and other assets.

     Deposit accounts, including transaction accounts, time deposits and
   certificates of deposit, represent the majority of the liabilities of the
   Bank.  The Bank does not seek brokered certificates of deposit or other types
   of brokered deposits.

     Efforts are made generally to match maturities and rates of the loan and
   investment portfolios with those deposits, although exact matching is not
   possible.  Substantially all of the loans with maturities in excess of one
   year are negotiated on a variable interest rate basis or with a demand
   repayment provision.  By pricing loans on a variable rate structure or by
   keeping the maturities of the loan and investment portfolios relatively short
   term, the Bank is able to negotiate loan rates or to reinvest securities
   proceeds at prevailing market rates, thereby helping maintain a generally
   consistent spread over the interest rates paid by the Bank on the deposits
   which are used to fund the loan and investment portfolios.

     The Bank has established policies and procedures designed to ensure an
   acceptable asset/liability mix is monitored on a timely basis, with a report
   reflecting the interest-sensitive liabilities being prepared and presented to
   the Bank's Board of Directors on a monthly basis.  The objective of this
   policy is to control interest-sensitive assets and liabilities so as to
   minimize the impact of substantial movements in interest rates on the Bank's
   earnings.

     The Bank has developed an internal lending policy for the Bank, including
   appropriate lending limits for each officer of the Bank based upon such
   criteria as the experience of the individual officer.  Management has
   appropriate procedures pertaining to lending and has established a lending
   limit above which the approval of the Board of Directors is required. 
   Additionally, the Bank is subject to certain statutory requirements which
   generally provide that the Bank may grant loans and extensions of credit that
   are not fully secured to a single borrower up to $525,000 (15% of the Bank's
   unimpaired capital and surplus).  The Bank also may grant additional loans
   and extensions of credit to a single borrower up to $350,000 (10% of the
   bank's unimpaired capital and surplus), provided such additional loans and
   extensions of credit are fully secured.

   <PAGE> 8

     The Bank does not, as a matter of course, finance purchases of raw land or
   speculative commercial or industrial developments.  The Bank generally does





   not make loans outside of Coffee County and the surrounding seven county
   market area and seeks to obtain a broad diversification of loan customers. 
   The Bank will request correspondent banks to participate in loans when loan
   amounts exceed the Bank's legal limits or internal lending policies.  See
   "Correspondent Banking" above.

   Competition
   -----------
     Banks generally compete with other financial institutions through the
   banking products and services offered, the pricing of services, the level of
   service provided, the convenience and availability of services and the degree
   of expertise and the personal manner in which services are offered.  In the
   PSA, other than the Bank, there are three regional banks and three local
   banks.  These include Suntrust, NationsBank, Coffee County Bank, Southtrust,
   Southeastern Bank and Broxton State Bank.  The Bank is the newest in its PSA,
   and the Bank encounters competition from most of these financial
   institutions.  There are no longer any savings institutions in the PSA.  In
   the conduct of certain areas of its banking business, the Bank also competes
   with credit unions, consumer finance companies, insurance companies, money
   market mutual funds and other financial institutions, some of which are not
   subject to the same degree of regulation and restrictions imposed upon the
   Bank.

     Many of the Bank's competitors have substantially greater resources and
   lending limits than the Bank has and offer certain services, such as
   international banking services and trust services, that the Bank currently
   does not provide.  Moreover, many of these competitors have numerous branch
   offices and other facilities in the PSA, a competitive advantage that the
   Bank initially does not have.  Nevertheless, in evaluating the competition in
   the PSA, the management and the Board of Directors believe that there will be
   sufficient growth in banking activities for all of these institutions,
   including the Bank, to be successful, based in part on an average annual
   growth of approximately 5.7% in commercial bank deposits in the PSA over the
   last five years.  Furthermore, management and the Board of Directors believe
   that the extensive banking experience and contacts in the PSA of its
   President and the other board members will enable the Bank to compete
   effectively without offering unusually high interest rates for deposits or
   unusually low interest rates for loans.  The Bank's relatively small size
   permits it to offer more personalized service than its competitors, which is
   expected to provide the Bank with a competitive advantage.

   Employees
   ---------
     At December 31, 1996, the Bank employed twenty-three full-time employees
   and two part-time employees.  The Company has no employees.  Holding company
   duties are performed by bank employees and where such duties are significant,
   related compensation and benefit costs are allocated to and reimbursed by the
   holding company.  The Bank considers its relationship with its employees to
   be good.  To the extent possible, the Bank employs persons experienced in the
   banking profession and persons who are natives or long time residents of the
   Coffee County area.

   <PAGE> 9

   Supervision and Regulation
   --------------------------

   General
   -------
     As a bank holding company, the company is subject to regulation by the
   Board of Governors of the Federal Reserve System (the "Federal Reserve")
   pursuant to the federal Bank Holding Company Act (the "BHCA") and by the
   Georgia Department of Banking and Finance (the "Georgia Department") pursuant





   to the Georgia Bank Holding Company Act (the "GBHCA").  The Company also is
   required to file certain reports with, and otherwise comply with the rules
   and regulations of, the Securities and Exchange Commission (the "Commission")
   under the federal securities laws.

     The Bank is a national bank and is subject to the supervision of, and will
   be regularly examined by, the OCC.  In addition, the Bank's deposit accounts
   are insured up to applicable limits by the bank insurance fund of the Federal
   Deposit Insurance Corporation (the "FDIC") and the Bank, therefore, is
   subject to regulation by the FDIC.  As a member of the Federal Reserve
   System, the Bank also is subject to regulation by the Federal Reserve.

     FIRREA was signed into law on August 9, 1989.  FIRREA primarily affects the
   regulation of savings associations ("thrifts") and savings and loan holding
   companies rather than the regulation of national banks and bank holding
   companies such as the Bank and the Company.  However, FIRREA does contain
   certain provisions affecting banks and bank holding companies, including
   without limitation, provisions affecting deposit insurance premiums, thrift
   acquisitions, liability of commonly controlled depository institutions,
   receivership and conservatorship rights and procedures and substantially
   increased penalties for violation of banking statutes, regulations and
   orders.

     To the extent that the following information describes statutory and
   regulatory provisions, it is qualified in its entirety by reference to the
   particular statutory and regulatory provisions.  Any change in applicable law
   or regulation may have a material effect on the business and prospects of the
   Company and the Bank.

   Regulation of the Company
   -------------------------

   Federal Law
   -----------
     The Company is a bank holding company within the meaning of the BHCA and
   the GBHCA.  As a bank holding company, the Company is required to file with
   the Federal Reserve an annual report and such additional information as the
   Federal Reserve may require pursuant to the BHCA.  The Federal Reserve also
   may make examinations of the Company and each of its subsidiaries.

     The Federal Reserve has adopted capital adequacy guidelines for use in its
   examination and regulation of bank holding companies.  Prior to January 1,
   1991, the guidelines employed two measures of capital:  primary capital
   (which included, among other things, common stock, perpetual preferred stock,
   surplus, undivided profits and loan loss reserves and excluded most
   intangible assets) and total capital (primary capital plus certain forms of
   subordinated debt and limited life preferred stock).  The guidelines called
   for a minimum ratio of primary capital to total consolidated assets of 5.5%
   and a minimum ratio of total capital to total consolidated assets of 6.0%. 
   The Federal Reserve issued risk-based capital adequacy guidelines which went
   into effect in stages through 1992.


   <PAGE> 10

     Under the Federal Reserve's risk-based standards, an entity's assets and
   off-balance sheet activities are categorized into one of four risk
   categories, with either a 0%, 20%, 50% or 100% amount of capital to be held
   against those assets.  In addition, the guidelines divide capital instruments
   into Tier 1 (core) capital and Tier 2 (supplemental) capital.  The risk-based
   capital adequacy guidelines require that: (i) Tier 2 capital may not exceed
   100% of Tier 1 capital, although certain Tier 2 capital elements are subject
   to additional limitations; (ii) assets and off balance sheet items be





   weighted according to risk; and (iii) the total capital to risk-weighted
   assets ratio be 7.25% by the end of 1990, and 8% by the end of 1992.  The
   risk-based guidelines apply on a consolidated basis to only those bank
   holding companies with consolidated assets of $150 million or more.  For bank
   holding companies, like the Company, with less than $150 million in
   consolidated assets, the risk-based guidelines generally are applied on a
   bank-only basis.

     If the capital of a bank holding company falls below minimum required
   levels, the bank holding company may be denied approval to acquire or
   establish additional banks or non-bank businesses, as discussed below.  Bank
   holding companies may be compelled by bank regulatory authorities to invest
   additional capital in the event a subsidiary bank experiences either
   significant loan losses or rapid growth of loans or deposits.  In addition,
   the company may be required to provide additional capital to any additional
   banks it acquires as a condition to obtaining the approvals and consents of
   regulatory authorities in connection with such acquisitions.

     Bank holding companies are required by the BHCA to obtain approval from the
   Federal Reserve prior to acquiring, directly or indirectly, ownership or
   control of more than 5% of the outstanding shares of any class of voting
   stock of any bank or bank holding company.  Bank holding companies and their
   subsidiaries also are prohibited from acquiring any voting shares of, or
   interest in, any banks located outside of the state in which the operations
   of the bank holding company's subsidiaries are located unless the acquisition
   is authorized specifically by the statutes of the state in which the target
   is located.  Several southeastern states, including Georgia, have enacted
   reciprocal legislation that authorizes interstate acquisitions of banking
   organizations by bank holding companies within the southeastern United
   States, subject to certain conditions and restrictions.  As a result of this
   legislation, the company may become a candidate for acquisition by, or may
   itself seek to acquire, banking organizations located in those states that
   have enacted reciprocal legislation.  (See, however, certain restrictions on
   acquisitions imposed by the GBHCA discussed below).  Additionally, under the
   BHCA, as amended pursuant to FIRREA and as implemented by a recent amendment
   to the Federal Reserve regulations, a bank holding company may acquire a
   savings association, as defined in FIRREA, in any state without regard to
   whether the bank holding company can operate a bank in that state.

     The BHCA also prohibits bank holding companies, with certain exceptions,
   from acquiring more than 5% of the voting shares of any company that is not a
   bank and from engaging in any business other than banking or managing or
   controlling banks or other permissible subsidiaries.  The Federal Reserve is
   authorized to approve, among other things, the ownership of shares by a bank
   holding company in any company the activities of which the Federal Reserve
   has determined to be so closely related to banking or to managing or
   controlling banks as to be a proper incident thereto.  Notice to and review
   by the Federal Reserve of such activities would be necessary before the
   Company could engage in such activities.  The Federal Reserve is empowered to
   differentiate between activities that are initiated de novo by a bank holding
   company or a subsidiary and activities commenced by acquisition of a going
   concern.

   <PAGE> 11

     The Federal Reserve has been granted enforcement powers over bank holding
   companies and nonbanking subsidiaries to forestall activities that represent
   unsafe or unsound practices or constitute violations of law.  These powers
   may be exercised through the issuance of cease-and-desist orders or other
   actions.  The Federal Reserve also is empowered to assess civil money
   penalties against companies or individuals who violate the BHCA or orders or
   regulations thereunder, to order termination of non-banking activities of
   non-banking subsidiaries of bank holding companies and to order termination





   of ownership and control of a non-banking subsidiary by a bank holding
   company.  Certain violations may also result in criminal penalties.

     The status of the Company as a registered bank holding company under the
   BHCA does not exempt it from certain federal and state laws and regulations
   applicable to corporations generally, including, without limitation, certain
   provisions of the federal securities laws.

     The Bank and the Company is "affiliated" within the meaning of the Federal
   Reserve Act.  Certain provisions of the Federal Reserve Act establish
   standards for the terms of, limit the amount of and establish collateral
   requirements with respect to any loans or extensions of credit to, and
   investments in, affiliates by the Bank as well as set arms-length criteria
   for such transactions and for certain other transactions (including payment
   by the Bank for services and under any contract) between the Bank and its
   affiliates.  In addition, related provisions of the Federal Reserve Act and
   the Federal Reserve regulations limit the amounts of, and establish required
   procedures and credit standards with respect to, loans and other extensions
   of credit to officers, directors and principal shareholders of the Bank, the
   Company and any subsidiary of the Company, and to related interests of such
   persons.

     Under Section 106(b) of the Bank Holding Company Act Amendments of 1970 (12
   U.S.C.   1972), the Bank is prohibited from extending credit, selling or
   leasing property or furnishing any service to any customer on the condition
   or requirement that the customer (i) obtain any additional property, service
   or credit from the Company, the Bank or any other subsidiary of the Company,
   (ii) refrain from obtaining any property, credit or service from any
   competitor of the Company, the Bank or any subsidiary of the Company or (iii)
   furnish any credit, property or service to the Company, the Bank or any
   subsidiary of the Company.

     As a bank holding company, the Company is required to give the Federal
   Reserve prior written notice of any purchase or redemption of its outstanding
   equity securities if the gross consideration for the purchase or redemption,
   when combined with the net consideration paid for all such purchases or
   redemptions during the preceding 12 months, is equal to 10% or more of the
   Company's consolidated net worth.  The Federal Reserve may disapprove such a
   purchase or redemption if it determines that the proposal constitutes an
   unsafe or unsound practice, would violate any law, regulation, Federal
   Reserve order or directive or any condition imposed by, or written agreement
   with, the Federal Reserve.

     In November 1985, the Federal Reserve adopted its Policy Statement on Cash
   Dividends Not Fully Covered by Earnings.  The Policy Statement sets forth
   various guidelines that the Federal Reserve believes that a bank holding
   company should follow in establishing its dividend policy.  In general, the
   Federal Reserve stated that bank holding companies should not pay dividends
   except out of current earnings and unless the prospective rate of earnings 

   <PAGE> 12

   retention by the holding company appears consistent with its capital needs,
   asset quality and overall financial condition.

     The activities of the Company also are restricted by the provisions of the
   Glass-Steagall Act of 1933 (the "Act").  The Act prohibits the Company from
   owning subsidiaries engaged principally  in the issue, flotation,
   underwriting, public sale or distribution of securities.  The interpretation,
   scope and application of the provisions of the Act currently are being
   reviewed by regulators and legislators.  The outcome of the current
   examination and appraisal of the provisions in the Act and the effect of such
   outcome on the ability of bank holding companies to engage in securities-










   related activities cannot be predicted.

   Georgia Law
   -----------
     The Company also is a bank holding company within the meaning of the GBHCA,
   which provides that, without the prior approval of the Georgia Department, it
   is unlawful (i) for any bank holding company to acquire direct or indirect
   ownership or control of more than 5% of the voting shares of any bank, (ii)
   for any bank holding company or subsidiary thereof, other than a bank, to
   acquire all or substantially all of the assets of a bank or (iii) for any
   bank holding company to merge or consolidate with any other bank holding
   company.  It also is unlawful for any company to acquire direct or indirect
   ownership or control of more than 5% of the voting shares of any bank in
   Georgia unless such bank has been in existence and continuously operating as
   a bank for a period of five years or more prior to the date of application to
   the Georgia Department for approval of such acquisition.  One bank holding
   companies, such as the Company, are prohibited from acquiring another bank
   until their initial bank subsidiary has been incorporated for a period of two
   years.  The effect of these provisions is to negate the possibility that the
   Company or the Bank will be acquired by another company for a minimum of five
   years and to prohibit the Company from acquiring another bank for a period of
   two years.

     In addition, the Georgia Department has established a minimum level of
   capital to total assets of 5%, with certain adjustments, on a consolidated
   basis for bank holding companies.  The capital guidelines assume adequate
   liquidity and a moderate degree of risk in loan and investment portfolios
   as well as any off balance sheet activities.  In assessing compliance with
   the guidelines, therefore the Georgia Department reviews the relationship of
   on and off balance sheet risks to capital and requires those institutions
   with high or inordinate level of risk to adhere to higher capital standards. 
   Bank holding companies whose operations involve, or are exposed to high or
   inordinate degrees of risk are expected to hold additional capital to
   compensate for such risks.  In addition, bank holding companies engaging in
   significant nonbanking activities typically require higher capital ratios
   than do banks alone.

     The BHC Act, as amended by the interstate banking provisions of the Riegle-
   Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate
   Banking Act"), which became effective on September 29, 1995, repealed the
   prior statutory restrictions on interstate acquisitions of banks by bank
   holding companies, and a bank holding company located in Georgia may now
   acquire a bank located in any other state, and any bank holding company
   located outside Georgia may lawfully acquire a Georgia-based bank, regardless
   of state law to the contrary, in either case subject to certain deposit-
   percentage, aging requirements, and other restrictions.  The Interstate
   Banking Act also provides that, after June 1, 1997, national and state
   chartered banks may branch interstate through acquisitions of banks in other
   states.  By adopting legislation prior to that date, a state has the ability
   either to "opt in" (which Georgia has done) and accelerate the date after
   which interstate branching is permissible or "opt out" and prohibit
   interstate branching altogether.

   <PAGE> 13

   Regulation of the Bank
   ----------------------











     As a national banking association, the Bank is subject to supervision,
   examination and regulation by the OCC under the National Bank Act.  It also
   is a member of the Federal Reserve System and subject to regulation by the
   Federal Reserve under the Federal Reserve Act.  The deposits of the Bank are
   insured by the FDIC to the full extent provided by law and, therefore, the
   Bank pays insurance assessments to, and is subject to regulation and
   examination by the FDIC.

     The FDIC currently insures the deposits of each member bank to a maximum of
   $100,000 per depositor.  For this protection, the Bank will pay a semi-annual
   statutory assessment and will be subject to the rules and regulations of the
   FDIC.  The FDIC has the authority to prevent the continuance or development
   of unsound and unsafe banking practices.  The FDIC is also authorized, among
   other things, to approve conversions, mergers, consolidations and assumption
   of deposit liability transactions between insured banks and uninsured banks
   or institutions, and to prevent capital or surplus diminution in such
   transactions where the resulting, continuing, or assumed bank is an insured
   nonmember state bank.  The FDIC premium rate is set by the Financial
   Institutions Reform Recovery and Enforcement Act ("FIRREA") which was signed
   into law on August 9, 1989.  FIRREA primarily affects the regulation of
   savings associations and savings and loan holding companies rather than the
   regulation of commercial banks and bank holding companies.  However, FIRREA
   does contain certain provisions affecting banks and bank holding companies,
   including without limitation, provisions affecting deposit insurance
   premiums, thrift acquisitions, liability of commonly controlled depository
   institutions, receivership and conservatorship rights and procedures and
   substantially increased penalties for violation of banking statutes,
   regulations and orders.

     In 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991
   (Act) was enacted.  The Act affects all federally insured banks, savings
   banks and thrifts.  The Act contains a $70 billion recapitalization of the
   Bank Insurance Fund (BIF) by significantly increasing the amount that the
   FDIC can borrow from the Treasury.  The FDIC must assess premiums that are
   sufficient to give the BIF reserves of $1.25 for each $100 of insured
   deposits.  Additional significant provisions of the Act include: requiring
   prompt corrective action by regulators if minimum capital standards are not
   met; establishing early intervention procedures for "significantly"
   undercapitalized (to be defined by the FDIC) institutions; limiting FDIC
   reimbursement of uninsured deposits when large banks fail; requiring an
   annual regulatory examination; and imposing new auditing and accounting
   requirements, effective for fiscal years beginning on or after January 1,
   1993, including management and auditor reporting on internal controls over
   financial reporting and on compliance with laws and regulations.

     Effective for fiscal years beginning on or after January 1, 1993, the Act
   requires FDIC-insured depository institutions with assets in excess of $150
   million to file an "annual report" with the federal regulatory agencies that
   will be available for public inspection.  This requirement can be satisfied
   for subsidiaries of a bank holding company by an audit of the consolidated
   financial statements of the holding company.  In addition, the Act requires
   that the annual report must include an auditor's report on management's
   assertions regarding the effectiveness of internal controls pertaining to
   financial reporting and on agreed upon procedures concerning compliance with
   specific laws and regulations designated by federal regulatory agencies.  The
   management and auditor reporting requirements may be satisfied at the holding
   company level, depending upon various criteria for asset levels and CAMEL
   ratings of the individual subsidiaries.  However, all FDIC-insured depository










   <PAGE> 14

   institutions over $9 billion will require the additional management and
   auditor reports.

     Federal and Georgia laws regulate many aspects of the Bank's operations,
   including branch offices, remote facilities, lending limits, borrowing,
   permitted investments, declaration of dividends, mergers and acquisitions,
   electronic funds transfers, deposits reserve requirements and interest rates
   payable on deposits and chargeable on loans.  The Bank is subject to
   applicable Georgia laws that do not conflict with, or are not preempted by,
   federal banking laws, including Georgia laws limiting the maximum allowable
   rates of interest on loans and extensions of credit to customers of the Bank.

     Similar to the Federal Reserve's former capital requirements applicable to
   the Company, prior to January 1, 1991, the OCC required Banks to maintain
   minimum primary capital equal to 5.5% of total assets and total capital equal
   to 6% of total assets, each as defined and adjusted pursuant to the OCC's
   regulations.  Also like the Federal Reserve, the OCC has issued risk-based
   capital rules requiring (i) at least 50% of a national bank's total capital
   to consist of common and certain other equity capital; (ii) assets and off
   balance sheet items to be weighted according to risk; (iii) Tier 1 capital to
   equal or exceed 4% of total assets (see below); and (iv) the total capital to
   risk-weighted assets ratio to be 7.25% by the end of 1990 and 8% by the end
   of 1992.  The OCC recently announced that its requirement that Tier 1 capital
   equal 4% of a bank's total assets will apply only to those banks that receive
   the highest regulatory rating from the OCC based upon the OCC's routine
   examination process.  Banks receiving lower regulatory ratings will be
   required to maintain Tier 1 capital in an amount that is at least 100 to 200
   basis points higher than 4% of total assets.

     Under the National Bank Act, if the capital stock of a national bank is
   impaired by losses or otherwise, the OCC is authorized to require payment of
   the deficiency by assessment upon the bank's shareholders.  To the extent
   necessary, if any such assessment is not paid by any shareholder after
   notice, the OCC is authorized to sell the stock of such shareholder to
   satisfy the deficiency.  National banks also are subject to legal limitations
   on the amount of dividends they can pay.  The prior approval of the OCC is
   required if the total of all dividends declared by a national bank in any
   calendar year will exceed such bank's net profits (as defined by statute) for
   that year combined with its retained net profits for the preceding two years,
   less any required transfers to surplus or to a fund for the retirement of any
   preferred stock.  Other rules that are administered by the OCC and that are
   applicable to national banks relate to issuance of securities, establishment
   of branches, limitations on credit to subsidiaries and other aspects of the
   business and activities of such subsidiaries.  The OCC has broad authority to
   prohibit national banks from engaging in unsafe or unsound banking practices
   and periodically examines national banks to determine their compliance with
   applicable law and regulations.  National banks also must make periodic
   reports of their condition to the OCC.

     Certain federal legislation, including the Depository Institutions
   Deregulation and Monetary Control Act of 1980 and the Garn-St. Germain
   Depository Institutions Act of 1982, has had a significant impact upon
   competition among financial institutions.  In particular, banking laws and
   regulations enacted since 1980 have increased substantially the ability of
   savings institutions to compete with commercial banks for deposits.











   <PAGE> 15

   Prompt Corrective Action
   ------------------------
     The Federal Deposit Insurance Corporation Improvement Act of 1991
   ("FDICIA") establishes a system of prompt corrective action to resolve the
   problems of undercapitalized institutions.  Under this system, which became
   effective in December 1992, the federal banking regulators are required to
   establish five capital categories (well capitalized, adequately capitalized,
   undercapitalized, significantly undercapitalized, and critically
   undercapitalized) and 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, FDICIA requires the banking regulator to
   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.

     Under the final agency rules implementing the prompt corrective action
   provisions an institution that (i) has a Total Risk-Based Capital Ratio of
   10% or greater, a Tier 1 Risk-Based Capital Ratio of 6% or greater, and a
   Leverage Ratio of 5% or greater and (ii) is not subject to any written
   agreement, order, capital directive, or prompt corrective action directive
   issued by the appropriate federal banking regulator is deemed to be well
   capitalized.  An institution with a Total Risk-Based Capital Ratio of 8% or
   greater, a Tier 1 Risk-Based Capital Ratio of 4% or greater, an a Leverage
   Ratio of 4% or greater is considered to be adequately capitalized.  A
   depository institution that has a Total Risk-Based Capital Ratio of less than
   8%, a Tier 1 Risk-Based Capital Ratio of less than 4%, or a Leverage Ratio of
   less than 4% is considered to be undercapitalized.  A depository institution
   that has a Total Risk-Based Capital Ratio of less than 6%, a Tier 1 Risk-
   Based Capital Ratio of less than 3%, or a Leverage Ratio of less than 3%, is
   considered to be significantly undercapitalized, and an institution that has
   a tangible equity capital to assets ratio equal to or less than 2% is deemed
   to be critically undercapitalized.  For purposes of the regulation, the term
   "tangible equity" includes core capital elements counted as Tier 1 Capital
   for purposes of the risk-based capital standards, plus the amount of
   outstanding cumulative perpetual preferred stock (including related surplus),
   minus all intangible assets with certain exceptions.  A depository
   institution may be deemed to be in a capitalized category that is lower than
   is indicated by its actual capital position if it receives an unsatisfactory
   examination rating.

     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.  Under FDICIA, 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
   under FDICIA 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 is given authority with respect to any undercapitalized depository










   institution to take any of the actions it is required to or may take with
   respect to a significantly undercapitalized institution as described below if
   it determines "that those actions are necessary to carry out the purpose" of
   FDICIA.

   <PAGE> 16

     For those institutions that are significantly undercapitalized or
   undercapitalized and either fail to submit an acceptable capital restoration
   plan or fail to implement an approved capital restoration plan, the
   appropriate federal banking regulator must require the institution to take
   one or more of the following actions:  (i) sell enough shares, including
   voting shares, to become adequately capitalized; (ii) merge with (or be sold
   to) another institution (or holding company), but only if grounds exist for
   appointing a conservator or receiver; (iii) restrict certain transactions
   with banking affiliates as if the "sister bank" exception to the requirements
   of Section 23A of the Federal Reserve Act did not exist; (iv) otherwise
   restrict transactions with bank or non-bank affiliates; (v) restrict interest
   rates that the institution pays on deposits to "prevailing rates" in the
   institution's "region;" (vi) restrict asset growth or reduce total assets;
   (vii) alter, reduce, or terminate activities; (viii) hold a new election of
   directors; (ix) dismiss any director or senior executive officer who held
   office for more than 180 days immediately before the institution became
   undercapitalized, provided that in requiring dismissal of a director or
   senior officer, the regulator must comply with certain procedural
   requirements, including the opportunity for an appeal in which the director
   or officer will have the burden of proving his or her value to the
   institution; (x) employ "qualified" senior executive officers; (ix) cease
   accepting deposits from correspondent depository institutions; (xii) divest
   certain nondepository affiliates which pose a danger to the institution; or
   (xiii) be divested by a parent holding company.  In addition, without the
   prior approval of the appropriate federal banking regulator, a significantly
   undercapitalized institution may not pay any bonus to any senior executive
   officer or increase the rate of compensation for such officer.

     At December 31, 1996, the Company's bank subsidiary had the requisite
   capital levels to qualify as well capitalized.

   FDIC Insurance Assessments
   --------------------------
     Pursuant to FDICIA, the FDIC adopted a new 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 new system, which went into effect on January 1, 1994,
   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, with the "undercapitalized" category including
   institutions that are undercapitalized, significantly undercapitalized, and
   critically undercapitalized for prompt corrective action purposes.  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 (i.e., combinations of
   capital groups and supervisory subgroups) to which different assessment rates
   are applied.  Assessment rates for members of both the Bank Insurance Fund
   ("BIF") and the Savings Association Insurance Fund ("SAIF") for the first










   half of 1995 ranged from 23 basis points (0.23% of deposits) for an
   institution in the highest category (i.e., "well capitalized" and "healthy")
   to 31 basis points (0.31% of deposits) for an institution in the lowest
   category (i.e., "undercapitalized" and "substantial supervisory concern"). 
   These rates were established for both funds to achieve a designated ratio of
   reserves to insured deposits (i.e., 1.25%) within a specified period of time.

   <PAGE> 17

     Once the designated ratio for the BIF was reached in May 1995, the FDIC was
   authorized to reduce the minimum assessment rate below the 23 basis points
   and to set future assessment rates at such levels that would maintain the
   fund's reserve ratio at the designated level.  In August 1995, the FDIC
   adopted regulations reducing the assessment rates for BIF-member banks. 
   Subsequently, on November 14, 1995, the FDIC announced that, beginning in
   1997, it would further reduce the deposit insurance premiums for 92% of all
   BIF members that are in the highest capital and supervisory categories to
   $2,000 per year, regardless of deposit size.

     Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
   finding 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.

   Safety and Soundness Standards
   ------------------------------
     The FDIA, as amended by FDICIA and the Riegle Community Development and
   Regulatory Improvement Act of 1994, requires the federal bank regulatory
   agencies to prescribe standards, by regulations or guidelines, relating to
   internal controls, information systems and internal audit systems, loan
   documentation, credit underwriting, interest rate risk exposure, asset
   growth, asset quality, earnings, stock valuation and compensation, fees and
   benefits, and such other operational and managerial standards as the agencies
   deem appropriate.  The federal bank regulatory agencies have adopted,
   effective August 9, 1995, a set of guidelines prescribing safety and
   soundness standards pursuant to FDICIA, as amended.  The guidelines establish
   general standards relating to internal controls and information systems,
   internal audit systems, loan documentation, credit underwriting, interest
   rate exposure, asset growth and compensation, fees, and benefits.  In
   general, the guidelines require, among other things, appropriate systems and
   practices to identify and manage the risks and exposures specified in the
   guidelines.  The guidelines prohibit excessive compensation as an unsafe and
   unsound practice and describe compensation as excessive when the amounts paid
   are unreasonable or disproportionate to the services performed by an
   executive officer, employee, director, or principal shareholders.  The
   federal banking agencies determined that stock valuation standards were not
   appropriate.  In addition, the agencies adopted regulations that authorize,
   but do not require, an agency to order an institution that has been given
   notice by an agency that it is not satisfying any of such safety and
   soundness standards to submit a compliance plan.  If, after being so
   notified, an institution fails to submit an acceptable compliance plan or
   fails in any material respect to implement an accepted compliance plan, the
   agency must issue an order directing action to correct the deficiency and may
   issue an order directing other actions of the types to which an
   undercapitalized association is subject under the "prompt corrective action"
   provisions of FDICIA.  If an institution fails to comply with such an order,
   the agency may seek to enforce such order in judicial proceedings and to
   impose civil money penalties.  The federal bank regulatory agencies also










   proposed guidelines for asset quality and earnings standards.

   <PAGE> 18

       The following table presents the Bank's capital ratios as of December 31,
   1996 compared to the required ratios as of that date.

   <TABLE>
   <CAPTION>

                                                                 TO BE WELL
                                                                 CAPITALIZED
                                                                    UNDER
                                                                   PROMPT
                                                                 CORRECTIVE
                                               FOR CAPITAL         ACTION
                                ACTUAL      ADEQUACY PURPOSES    PROVISIONS
                           ----------------  ---------------- ----------------
                             AMOUNT   RATIO   AMOUNT    RATIO   AMOUNT   RATIO
                           ---------- ----- ----------  ----- ---------- -----
   <S>                     <C>        <C>   <C>        <C>    <C>        <C>
   As of December 31, 1995
     Total Capital
        (to Risk Weighted
        Assets)            $3,877,311  11.5% 2,694,097   8.0%  3,367,621  10.0%
     Tier I Capital
        (to Risk Weighted
        Assets)             3,491,951  10.4% 1,347,048   4.0%  2,020,573   6.0%
     Tier I Capital
        (to Average Assets) 3,491,951   7.4% 1,898,320   4.0%  2,372,900   5.0%

   As of December 31, 1996
     Total Capital
        (to Risk Weighted
        Assets)             3,310,365  11.3% 2,342,089   8.0%  2,927,611  10.0%
     Tier 1 Capital
        (to Risk Weighted
        Assets)             2,944,414  10.1% 1,171,044   4.0%  1,756,566   6.0%
     Tier 1 Capital
        (to Average Assets) 2,944,414   6.2% 1,914,080   4.0%  2,392,600   5.0%

   </TABLE>

     The Bank is in compliance with the regulatory capital requirements as of
   December 31, 1996 and 1995.

     Federal banking regulations applicable to all banks, among other things,
   (i) provide federal bank regulatory agencies with powers to prevent unsafe
   and unsound banking practices; (ii) restrict preferential loans by banks to
   "insiders" of banks; (iii) require banks to keep information on loans to
   principal shareholders and executive officers; and (iv) prohibit certain
   director and officer interlocks between financial institutions.

     While the affects on the operations of the Bank and the Company as a result
   of the regulatory changes previously discussed cannot be quantified,
   increases in FDIC insurance rates and the additional costs of complying with
   additional regulatory requirements will result in significant additional
   costs to the Company and the Bank.  Management plans to recover such










   increases through modifications to its fee structure as necessary.

   Monetary Policy
   ---------------
     Banking is a business that depends on interest rate differentials.  In
   general, the difference between the interest rates paid by the Bank on its
   deposits and other borrowings and the interest rates received on loans
   extended to its customers and on securities held in its portfolios comprises
   the major portion of the Bank's earnings.

     The earnings and growth of the Bank and of the Company are affected not
   only by general economic conditions, both domestic and foreign, but also by
   the monetary and fiscal policies of the United States and its agencies,
   particularly the Board.  The Board implements national monetary policy (as
   opposed to fiscal policy), such as seeking to curb inflation and combat
   recession, by its open market operations in the United States government
   securities, adjustments in the amount of industry reserves that banks and
   other financial institutions are required to maintain and adjustments to the
   discount rates applicable to borrowings by banks from the Federal Reserve
   System.  The actions of the Board in these areas influence the growth of bank
   loans, investments and deposits and also affect interest rates charged and
   paid on deposits.  The nature and impact of any future changes in monetary
   policies cannot be predicted with certainty.

   <PAGE> 19

   Other Regulatory Matters
   ------------------------
     The Board, in 1985, issued a policy statement on the payment of cash
   dividends by bank holding companies.  In the statement, the Board expressed
   its view that a bank holding company experiencing earnings weakness should
   not pay cash dividends exceeding its net income or that can be funded only in
   ways that weaken the holding company's financial health, such as by
   borrowing.

     The United States Congress and the Georgia General Assembly have
   periodically considered and adopted legislation that has resulted in, and
   could further result in deregulation of both banks and other financial
   institutions.  Such legislation could modify or eliminate geographic
   restrictions on banks and bank holding companies and current prohibitions
   against banks engaging in certain non-banking activities.  Such legislative
   changes could place the Company in more direct competition with other
   financial institutions, including mutual funds, securities brokerage firms,
   insurance companies and investment banking firms.  The effect of any such
   legislation on the business of the company cannot be accurately predicted. 
   The Company cannot predict what other legislation might be enacted or what
   other regulations might be adopted, or if enacted or adopted, the effect
   thereof.

   Taxation
   --------

   General
   -------
     In general, the Company and the Bank is taxed in the same manner as other
   corporations under the Internal Revenue Code of 1986, as amended (the
   "Code"), although the Code contains certain rules which may affect the
   taxation of banks to a greater degree than other corporations.  The general










   rate structure and certain of these special rules are discussed below.

   Rates
   -----
     Corporation income is subject to graduated federal income tax rates,
   beginning at 15% of the corporation's first $50,000 of taxable income, and
   increasing to a maximum rate of 34% with respect to taxable income in excess
   of $75,000.  However, taxable income that falls between $100,000 and $335,000
   is subject to an additional 5% surcharge, up to a maximum surcharge of
   $11,750.

   Bad Debt Reserves
   -----------------
     The use of the reserve method of computing the bad debt deduction is no
   longer available to any bank which, either alone or in combination with all
   members of its parent-subsidiary controlled group, has an average adjusted
   basis in its total combined assets of in excess of $500 million.  Such a bank
   must use the specific charge-off method of deducting bad debts.  Because the
   company has assets of less than $500 million, it is eligible to use the
   reserve method, but is limited to the experience method of calculating
   additions to its bad debt reserve.  The experience method measures the ratio
   of actual bad debts to total outstanding loans based on a six-year moving
   average.

   Interest Expense on Tax-Exempt Obligations
   ------------------------------------------
     In general, a bank is not permitted to deduct that portion of its interest
   expense allocable to tax-exempt interest income.  The allocation of a bank's
   interest expense to tax-exempt interest income is based on the relative
   proportion of the bank's total average adjusted basis in its tax-exempt
   obligations to its total average adjusted basis in all of its assets.  There
   is an exception to this disallowance rule for interest expense allocable to 
   "qualified tax-exempt obligations," which must be designated as such by the
   issuer and which are not private activity bonds.

   <PAGE> 20

   Net Operating Losses
   --------------------
     Net operating losses of a bank generally may be carried back three taxable
   years and carried forward 15 taxable years.  An exception to the general rule
   permits the portion of a net operating loss incurred after 1986 and before
   1994 which is attributable to bad debt losses to be carried back ten years
   and forward at least five years.

   Alternative Minimum Tax
   -----------------------
     All corporations, including banks, are subject to the corporate alternative
   minimum tax.  For corporations, the alternative minimum tax rate is 20% of
   the alternative minimum taxable income ("AMTI") in excess of certain
   exemption amounts ($40,000, phased out when AMTI exceeds $150,000).  The
   alternative minimum tax is payable to the extent it exceeds regular tax
   liability.  It is possible for a taxpayer such as the Company to be liable
   for alternative minimum tax even if its regular tax liability is zero.

     In computing AMTI, a taxpayer must include certain items not included in
   the computation of regular taxable income.  Financial institutions must
   include in AMTI the difference between the amount added to the bad debt










   reserve for the year and the amount which would have been deducted for bad
   debts using the actual experience method.  For all corporations, AMTI
   includes certain tax-exempt income and 75% of the difference between the
   corporation's "current adjusted earnings" and its AMTI (determined without
   regard to this item).  A corporation's "current adjusted earnings" means it
   AMTI (determined without regard to this item), with certain adjustments,
   including the addition of tax-exempt income.


   <PAGE> 21
   <TABLE>
   Average Balance Sheets
   ----------------------
     The following table presents average balance sheets for the years ended
   December 31, 1995 and 1996.
   <CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                       -----------------------
                                      ASSETS                1995       1996
                                      ------             ---------- ----------
                                                           ($ In Thousands)
   <S>                                                  <C>        <C>       
   Cash and Due From Banks                              $    4,180      4,415
   Interest-Bearing Deposits in Banks                          -0-        134
   Investment Securities                                     5,871      5,837
   Federal Funds Sold and
     Securities Purchased Under Agreements to Resell         3,307      5,106
   Loans, Net of Allowance for Loan Losses and Unearned
     Interest                                               28,643     30,192
   Bank Premises and Equipment                               1,733      1,680
   Property Acquired in Settlement of Loans                     18         34
   Accrued Interest Receivable                                 642        788
   Other Assets                                                170        480
                                                        ---------- ----------
       Total Assets                                     $   44,564     48,666
                                                        ========== ==========

                       LIABILITIES AND STOCKHOLDERS' EQUITY
                       ------------------------------------

   Deposits:
     Demand                                             $    7,209      7,929
     NOW                                                     7,595      7,306
     Savings                                                 2,275      2,002
     Time                                                   22,784     25,006
                                                        ---------- ----------
                                                            39,863     42,243

   Federal Funds Purchased                                     223        -0-
   Advances from Federal Home Loan Bank                        103      2,151
   Accrued Interest                                            388        522
   Other Liabilities                                           102        204
                                                        ---------- ----------
       Total Liabilities                                    40,679     45,120
                                                        ---------- ----------

   Stockholders' Equity:
     Common Stock                                              406        406










     Additional Paid in Capital                              3,611      3,611
     Retained Earnings (Deficit)                              (132)      (471)
                                                        ---------- ----------
                                                             3,885      3,546
                                                        ---------- ----------
       Total Liabilities and Stockholders' Equity       $   44,564     48,666
                                                        ========== ==========
   </TABLE>

   <PAGE> 22

   Average Yields Earned and Rates Paid
   ------------------------------------
     The following table presents the average balances, average yields and
   interest earned on interest-earning assets and average rates and interest
   paid on interest-bearing liabilities for the years ended December 31, 1995
   and 1996.
   <TABLE>
   <CAPTION>
                                         YEAR ENDED DECEMBER 31,
                              ---------------------------------------------
                                       1995                    1996
                              ----------------------  ----------------------
                              AVERAGE   INC/ YLDS/     AVERAGE   INC/ YLDS/
                             BALANCES   EXP  RATES    BALANCES   EXP  RATES
                             --------  ----- -----    --------  ----- -----
                                             ($ In Thousands)
   <S>                       <C>       <C>   <C>      <C>       <C>   <C>   
   Average yield on
     loans (1) (2)           $ 29,064  2,856  9.83%     31,215  3,058  9.80%
   Average yield on
     taxable investment
     securities                 5,912    316  5.34       5,847    320  5.48
   Average yield on
     interest-bearing
     deposits in banks            -0-    -0-   .00         134      5  3.37
   Average yield on
     Federal Funds sold
     and securities
     purchased under
     agreement to resell        3,307    182  5.50       5,106    275  5.39
                             --------  ----- -----    --------  ----- -----
   Average yield on all
     interest-earning assets $ 38,283  3,354  8.76%     42,302  3,658  8.65%
                             ========  ===== =====    ========  ===== =====
   Average rate paid
     on NOW account deposits $  7,595    206  2.71%      7,306    192  2.63%
   Average rate paid
     on savings deposits        2,275     69  3.02       2,002     62  3.12
   Average rate paid
     on time deposits          22,784  1,368  6.00      25,006  1,541  6.16
   Average rate paid
     on federal funds
     purchased                    223     12  5.50         -0-    -0-   .00
   Average rate paid
     on advances from
     Federal Home Loan Bank       103      5  5.50       2,151    136  6.32
                             --------  ----- -----    --------  ----- -----










   Average rate paid
     on all interest-
     bearing liabilities     $ 32,980  1,660  5.03%     36,465  1,931  5.30%
                             ========  ===== =====    ========  ===== =====

   Average net yield on
     interest-earning assets
     (net interest income as
     a percentage of average
     interest-earning assets)                 4.42%                    4.08%
                                             =====                    =====
   </TABLE>

   Non-accruing loans have been included in the "average amount outstanding" and
   average loans have not been reduced by the allowance for loan losses.

   (1) Loan fees included in interest income amounted to approximately $134,722
       in 1995 and $66,660 in 1996.
   (2) Average balances were computed over the term in which the related
       interest was earned or incurred.

   <PAGE> 23

     The table below sets forth certain information regarding changes in
   interest income and interest expense for the periods indicated.  For each
   category of interest-earning assets and interest-bearing liability,
   information is provided on changes attributable to (1) changes in volume
   (changes in volume multiplied by old rate); (2) changes in rates (change in
   rate multiplied by old volume); (3) changes in rate-volume (changes in rate
   multiplied by the change in volume).  The net change attributable to both
   volume and rate, which cannot be segregated, has been allocated
   proportionately to change due to volume and change due to rate.
   <TABLE>
   <CAPTION>
                                             YEAR ENDED DECEMBER 31,
                                     ---------------------------------------
                                        1994 VS. 1995       1995 VS. 1996
                                      ------------------  -----------------
                                     INCREASE (DECREASE) INCREASE (DECREASE)
                                            DUE TO              DUE TO
                                      ------------------  -----------------
                                      VOLUME  RATE   NET  VOLUME  RATE   NET 
                                      ------ -----  ----- ------ -----  -----
                                                   (In Thousands)
   <S>                                <C>    <C>    <C>    <C>   <C>    <C>  
   Interest Income:
     Loans                            $  523   306    829    211    (9)   202
     Taxable investment securities        20    23     43     (3)    7      4
     Interest-bearing deposits
      in banks                            (4)   (3)    (7)     5   -0-      5
     Federal Funds Sold and
      securities purchased
      under agreement to resell           45    23     68     97    (4)    93
                                       ----- -----  -----  ----- -----  -----
      Total                              584   349    933    310    (6)   304
                                       ----- -----  -----  ----- -----  -----
   Interest Expense:
     NOW account deposits                 14    29     43     (8)   (6)   (14)










     Savings deposits                    (20)   (6)   (26)   (10)    3     (7)
     Time deposits                       237   308    545    136    37    173
     Federal funds purchased              10   -0-     10     (6)   (6)   (12)
     Advances from Federal
      Home Loan Bank                       5   -0-      5    130     1    131
                                       ----- -----  -----  ----- -----  -----
      Total                              246   331    577    242    29    271
                                       ----- -----  -----  ----- -----  -----
   Net Interest Income                 $ 338    18    356     68   (35)    33
                                       ===== =====  =====  ===== =====  =====
   </TABLE>

   Investment Portfolio
   --------------------
     The following table presents the book value of investments and obligations
   of (1) U.S. Treasury and other U.S. government agencies and corporations, (2)
   states of the U.S. and political subdivisions and (3) other securities as of
   December 31, 1995 and 1996.
   <TABLE>
   <CAPTION>
                                                 DECEMBER 31,
                                  -----------------------------------------
                                          1995                 1996
                                   ------------------  --------------------
                                 SECURITIESSECURITIES  SECURITIESSECURITIES
                                 AVAILABLE- HELD-TO-   AVAILABLE- HELD-TO- 
                                  FOR-SALE  MATURITY    FOR-SALE  MATURITY 
                                 --------------------  --------------------
                                                (In Thousands)
   <S>                            <C>       <C>         <C>       <C>      
     U.S. Treasury and other U.S.
      government agencies and 
      corporations                $   4,253       703       7,367       -0-
     Other securities                   237       -0-         459       -0-
                                  --------- ---------   --------- ---------
        Total                         4,490       703       7,826       -0-
     Unrealized losses on available-
      for-sale securities                (1)     (-0-)          3       -0-
                                  --------- ---------   --------- ---------
      Total                       $   4,489       703       7,829       -0-
                                  ========= =========   ========= =========
   </TABLE>

   <PAGE> 24

     Securities available-for-sale are carried at market value and securities
   held-to-maturity are carried at amortized cost.

     The following table presents the book value of investments and obligations
   of (1) U.S. Treasury and other U.S. government agencies and corporations, (2)
   states of the U.S. and political subdivisions and (3) other securities as of
   December 31, 1996 that are due (1) in one year or less, (2) after one year
   through five years, (3) after five years through ten years and (4) after ten
   years.  In addition, the table provides the weighted average yield for each
   range of maturities.
   <TABLE>
   <CAPTION>
                                 AMOUNT AT DECEMBER 31, 1996 DUE IN










                      ---------------------------------------------------------
                                 AFTER ONE  AFTER FIVE
                     ONE YEAR     THROUGH    THROUGH      AFTER
                      OR LESS   FIVE YEARS  TEN YEARS   TEN YEARS      TOTAL
                    ----------- ---------------------- -----------  -----------
                   AMOUNT YIELDAMOUNT YIELDAMOUNTYIELD AMOUNTYIELD AMOUNTYIELD
                   ------ ----------- ---------------- ----------- -----------
                                          ($ In Thousands)
   <S>             <C>    <C>  <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
   U.S. Treasury
     and other
     U.S. Govern-
     ment Agencies
     and Corpora-
     tions         $1,728   5.33%
                                5,489  5.90   -0-  0.00   150  7.29 7,367  5.80

   States of the
     U.S. and
     Political
     Subdivisions
     (1) (2)          -0-   0.00  -0-  0.00   -0-  0.00   -0-  0.00   -0-  0.00

   Other securities
     (2) (3)          -0-   0.00  -0-  0.00   -0-  0.00   459  7.54%  459  7.54%
                   ------ ----------- ---------------- ----------- -----------
      Total        $1,728   5.33%
                                5,489  5.90%  -0-  0.00%  609  7.48%7,826  5.90%
                   ====== =========== ================ =========== ===========
   </TABLE>

   -----------------------------------------
   (1)  Yields on tax exempt obligations have not been computed on a tax
        equivalent basis.

   (2)  As of December 31, 1996, there was no aggregate book values of any
        issuer which exceeded 10% of stockholders' equity.

   (3)  Yield represents yield earned for 1996.

   Loan Portfolio
   --------------
     The loan portfolio totalled approximately $27.3 million at December 31,
   1996, which was a decrease of approximately $4.6 million from December 31,
   1995. During the year ended December 31, 1996, average loans before reduction
   for the allowance for loan losses were approximately $31.2 million and $29.1
   million during the year ended December 31, 1995.

   <PAGE> 25

     The following table sets forth information summarizing the composition of
   the loan portfolio at December 31, 1995 and 1996:
   <TABLE>
   <CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1995       1996   
                                                         ---------- ----------
                                                            ($ In Thousands)
   <S>                                                   <C>        <C>       










   Commercial, financial and agricultural                $    9,037      8,071
   Real estate - construction                                 1,291      1,246
   Real estate - mortgage                                    14,198     12,618
   Installment loans to individuals and other                 6,786      4,517
   Loans secured by deposits                                    322        864
   Overdrafts                                                   284         29
   Foreign loans                                                -0-        -0-
   All Other                                                    -0-        -0-
                                                         ---------- ----------
                                                             31,918     27,345
   Unearned interest and fees                                   -0-        -0-
                                                         ---------- ----------
                                                             31,918     27,345
   Allowance for loan losses                                   (385)    (1,520)
                                                         ---------- ----------
     Loans, Net                                          $   31,533     25,825
                                                         ========== ==========
   </TABLE>

     The following table sets forth certain information at December 31, 1996
   regarding the dollar amount of loans for the categories indicated maturing
   based on their contractual terms to maturity.  Demand loans, loans having no
   stated schedule of repayments and no stated maturity and overdrafts are
   reported as due in one year or less.
   <TABLE>
   <CAPTION>

                                      AMOUNTS AT DECEMBER 31, 1996 DUE IN
                                  -------------------------------------------
                                              AFTER ONE
                                                 YEAR
                                    ONE YEAR   THROUGH   DUE AFTER
                                     OR LESS  FIVE YEARS FIVE YEARS TOTAL
                                  ---------- ---------- ---------- ----------
                                                ($ In Thousands)
   <S>                            <C>        <C>        <C>        <C>       
   Commercial, financial and
     agricultural                 $    5,724      1,947        400      8,071
   Real estate - construction          1,246        -0-        -0-      1,246
   Loans secured by deposits             864        -0-        -0-        864
   Overdrafts                             29        -0-        -0-         29
                                  ---------- ---------- ---------- ----------
      Total                       $    7,863      1,947        400     10,210
                                  ========== ========== ========== ==========
   </TABLE>

     The following table presents the total amount of loans shown in the
   preceding table which are due after one year and which have fixed interest
   rates and have variable interest rates.
   <TABLE>
   <S>                                       <C>        <C>       
     Loans maturing after one year with:
       Fixed interest rates                  $    1,128        400
       Variable interest rates                      819        -0-
                                             ---------- ----------
        Total                                $    1,947        400
                                             ========== ==========
   </TABLE>










   <PAGE> 26

     The following table presents information concerning outstanding balances of
   nonperforming loans at December 31, 1995 and 1996.  Nonperforming loans
   consists of loans which have been placed on nonaccrual status or are past due
   more than ninety days with respect to principal or interest.
   <TABLE>
   <CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1995       1996   
                                                         ---------- ----------
                                                            ($ In Thousands)
   <S>                                                   <C>        <C>       
   Loans accounted for on a nonaccrual basis (1)         $      177      1,038
   Accruing loans which are contractually past
     due 90 days or more as to principal or
     interest payments (1)                                      -0-          5
   Other loans which are "troubled debt
     restructurings" (1)                                        -0-        -0-
   </TABLE>

     A loan is placed on non-accrual status when it is determined by management
   that it is reasonably possible that full collection of principal and interest
   will not be received.

     As of December 31, 1996, in the opinion of management, there are no problem
   loans of significance which are not now disclosed under information
   concerning non-accrual, past due and restructured loans.

     As of December 31, 1996, there are no loan concentrations exceeding 10% of
   total loans which are not otherwise disclosed previously as a category of
   loans.

     As of December 31, 1996, there are no other interest-bearing assets that
   would be required to be disclosed as nonaccrual, past due or restructured
   loans if such assets were loans.

   ----------------------------------------
   (1)  There are no foreign loans.


   Reserve For Possible Loan Losses
   --------------------------------
     An allowance for loan losses is established through a provision for loan
   losses charged to expenses.  Loans are charged against the allowance for loan
   losses when management believes that the collectibility of the principal is
   unlikely.  The allowance is an amount that management believes will be
   adequate to absorb possible losses on existing loans that may become
   uncollectible based on evaluations of the collectibility of loans and prior
   loan loss experience (when sufficient time elapses to establish experience). 
   The evaluations take into consideration such factors as changes in the nature
   and volume of the loan portfolio, overall portfolio quality, review of
   specific problem and/or impaired loans and current economic conditions that
   may affect the borrowers' ability to pay.


   <PAGE> 27










     The reserve for possible loan losses was approximately 5.6% and 1.2% of
   outstanding loans at December 31, 1996 and 1995, respectively.  Management
   believes that the reserve for loan losses of approximately $1.5 million at
   December 31, 1996 is adequate due to the fact that approximately $13.9
   million or 50.7% of the Bank's loan portfolio consisted of loans secured by
   real estate and approximately $1.4 million of loans were charged off during
   1996.

     The following table sets forth an analysis of loss experience for the
   periods indicated:
   <TABLE>
   <CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1995       1996   
                                                         ---------- ----------
                                                            ($ In Thousands)
   <S>                                                   <C>        <C>       
   Balance at beginning of period                        $      404        385
                                                         ---------- ----------
   Charge-Off's:
     Domestic:
      Commercial, financial and agricultural                     25        397
      Real estate - construction                                -0-         12
      Real estate - mortgage                                    -0-        489
      Installment loans to individuals                          150        552
      Loans secured by deposits                                 -0-        -0-
      Overdrafts                                                159        -0-
     Foreign                                                    -0-        -0-
                                                         ---------- ----------
                                                                334      1,450
                                                         ---------- ----------
   Recoveries:
     Domestic:
      Commercial, financial and agricultural                    -0-         24
      Real estate, construction                                 -0-          1
      Real estate - mortgage                                    -0-          5
      Installment loans to individuals                           11        155
      Loans secured by deposits                                 -0-        -0-
      Overdrafts                                                -0-         95
     Foreign                                                    -0-        -0-
                                                         ---------- ----------
                                                                 11        280
                                                         ---------- ----------
   Net Charge-Off's                                             323      1,170
                                                         ---------- ----------
   Additions charged to operations                              304      2,305
                                                         ---------- ----------
   Balance at end of period                              $      385      1,520
                                                         ========== ==========
   Ratio of net charge-off's during the period to
     average loans outstanding during the period                1.11%     3.75%
                                                         ========== ==========
   </TABLE>

   <PAGE> 28

     The Bank has allocated the reserve for possible loan losses according to










   the amounts deemed to be reasonably necessary at each year end to provide for
   the possibility of losses being incurred within the categories of loans set
   forth in the table below based on management's evaluation of the loan
   portfolio.  The amounts of such components of the reserve for possible loan
   losses at December 31, 1995 and 1996 and the percent of loans in each
   category to total loans are presented below.
   <TABLE>
   <CAPTION>
                                                  DECEMBER 31,
                                    ----------------------------------------
                                           1995                  1996
                                    -------------------  -------------------
                                               PERCENT              PERCENT
                                              OF LOANS              OF LOANS
                                               IN EACH              IN EACH
                                             CATEGORY TO          CATEGORY TO
                                     AMOUNT  TOTAL LOANS   AMOUNT  
                                                                  TOTAL LOANS
                                  ---------- ---------- ---------- ----------
                                                 ($ In Thousands)
   <S>                            <C>         <C>       <C>        <C>    
   Domestic:
     Commercial, financial and
      agricultural                $      110       28.31%      449      29.52%
     Real estate - construction           16        4.04        69       4.56
     Real estate - mortgage              173       44.48       701      46.14
     Installment loans to
      individuals                         83       21.26       299      16.52
     Loan secured by deposits            -0-        1.01       -0-       3.16
     Overdrafts                            3         .90         2        .10
     Other                               -0-         .00       -0-        .00
   Foreign                               -0-         .00       -0-        .00
   Unallocated                           -0-         .00       -0-        .00
                                  ---------- ---------- ---------- ----------
                                  $      385      100.00%    1,520     100.00%
                                  ========== ========== ========== ==========
   </TABLE>

     The following table sets forth an analysis of the average amount
   outstanding and the average rate paid for all deposits for the categories and
   periods indicated.
   <TABLE>
   <CAPTION>
                                                  DECEMBER 31,
                                    ----------------------------------------
                                           1995                  1996
                                    -------------------  -------------------
                                    AVERAGE    AVERAGE    AVERAGE   AVERAGE
                                     AMOUNT   RATE PAID    AMOUNT  RATE PAID
                                  ---------- ---------- ---------- ----------
                                                 ($ In Thousands)
   <S>                            <C>         <C>       <C>        <C>    
   Deposits in domestic bank
     offices:
     Noninterest-bearing demand
      deposits                    $    7,209         .00%    7,929        .00%
     Interest-bearing demand
      deposits                         7,595        2.71     7,306       2.63
     Savings deposits                  2,275        3.02     2,002       3.12










     Time deposits                    22,784        6.00    25,006       6.16
   Deposits in foreign banking
     offices                             -0-         .00       -0-        .00
                                  ----------            ----------
      Total                       $   39,863                42,243
                                  ==========            ==========
   </TABLE>

   <PAGE> 29

   Deposit Maturities
   ------------------
     The principal sources of funds for the Bank's loans and investments are
   demand, time, savings and other deposits and borrowings.  The Bank offers a
   variety of deposit accounts including checking and NOW accounts, savings and
   time accounts, certificates of deposit and money market accounts.  As of
   December 31, 1996, total deposits were approximately $42.5 million.  Although
   in some instances time deposits greater than $100,000 may be more sensitive
   to changes in interest rates, substantially all the Bank's deposits are
   derived from within its primary service areas which management believes are
   not as interest rate sensitive as are more urban service areas.  The Bank
   does not have any brokered deposits.

     The following table summarizes maturity information for time deposits
   greater than $100,000 at December 31, 1996.
   <TABLE>
   <CAPTION>
                                                               ($In Thousands)
                                                               --------------
   <S>                                                         <C>           
            Three months or less                               $        2,251
            Over three through six months                               2,270
            Over six through twelve months                                224
            Over twelve months                                            637
                                                               --------------
             Total                                             $        5,382
                                                               ==============
   </TABLE>

   Advances From The Federal Home Loan Bank
   ----------------------------------------
     The following table shows the Company's borrowings from the Federal Home
   Loan Bank and the weighted average interest rates thereon at the end of each
   of the last two years.  Also provided are the maximum amount of borrowings
   and the average amounts outstanding as well as weighted average interest
   rates for the last two years.
   <TABLE>
   <S>                                                         <C>           
   Balance at December 31:
            1996                                               $    2,485,000
            1995                                                      595,000

   Weighted Average Interest Rate At Year End:
            1996                                                         5.55%
            1995                                                         6.16

   Maximum Amount Outstanding At Any Month's End:
            1996                                               $    2,595,000










            1995                                                      595,000

   Average Amount Outstanding During The Year:
            1996                                               $    2,151,000
            1995                                                      103,000

   Weighted Average Interest Rate During The Year:
            1996                                                         6.32%
            1995                                                         5.50
   </TABLE>

   Interest Rate Sensitivity
   -------------------------
     The relative interest rate sensitivity of the Bank's assets and liabilities
   indicates the extent to which the Bank's net interest income may be affected 

   <PAGE> 30

   by interest rate movements.  The Bank's ability to reprice assets and
   liabilities in the same dollar amounts and at the same time minimizes
   interest rate risks.  One method of measuring the impact of interest rate
   changes on net interest income is to measure, in a number of time frames, the
   interest-sensitivity gap, by subtracting interest-sensitive liabilities from
   interest-sensitive assets, as reflected in the following table.  Such
   interest-sensitivity gap represents the risk, or opportunity, in repricing. 
   If more assets than liabilities are repriced at a given time in a rising rate
   environment, net interest income improves; in a declining rate environment,
   net interest income deteriorates.  Conversely, if more liabilities than
   assets are repriced while interest rates are rising, net interest income
   deteriorates; if interest rates are falling, net interest income improves.

   The following table presents the interest sensitivity gap of the company as
   of December 31, 1996.
   <TABLE>
   <CAPTION>
                                          OVER      OVER   
                                    3    
                                        3 MONTHS   1 YEAR  
                                  MONTHS THROUGH   THROUGH    OVER  
                                 OR LESS 
                                        12 MONTHS  5 YEARS  5 YEARS   TOTAL  
                                 ----------------  -------- -------- --------
                                                ($ In Thousands)
   <S>                           <C>     <C>       <C>      <C>      <C>     
   Interest-earning assets:
     Loans                       $  9,238   7,276    10,080      751   27,345
     Investment securities          1,146     732     5,489      459    7,826
     Federal funds sold             7,249     -0-       -0-      -0-    7,249
                                 ----------------  -------- -------- --------
      Total interest-
        earning assets             17,633   8,008    15,569    1,210   42,420
                                 ----------------  -------- -------- --------
   Interest-bearing liabilities:
     NOW, savings and money
      market accounts (1)             -0-     -0-       -0-      -0-      -0-
     Time deposits                  5,292  12,206     6,606      -0-   24,104
     Notes payable to
      Directors                       500     -0-       -0-      -0-      500
     Advances from Federal
      Home Loan Bank                1,000      78     1,372       35    2,485










                                 ----------------  -------- -------- --------
      Total interest-bearing
        liabilities                 6,792  12,284     7,978       35   27,089

                                 ----------------  -------- -------- --------
   Interest-sensitivity gap      $ 10,841  (4,276)    7,591    1,175   15,331
                                 ================  ======== ======== ========
   Cumulative interest
     sensitivity gap             $ 10,841   6,565    14,156   15,331
                                 ================  ======== ========
   </TABLE>

   ----------------------------------------
   (1)  Not considered rate sensitive.


   Impact of Inflation and Changing Prices
   ---------------------------------------
     The majority of assets and liabilities of a financial institution are
   monetary in nature and therefore differ greatly from most commercial and
   industrial companies that have significant investments in fixed assets, such
   as property, plant and equipment, and inventories and therefore are primarily
   impacted by interest rates rather than changing prices.  While the general
   level of inflation underlies most interest rates, interest rates react more
   to change in the expected rate of inflation and to changes in monetary and 

   <PAGE> 31

   fiscal policy.  Net interest income and the interest rate spread are good
   measures of the company's ability to react to changing interest rates.  This
   information is presented in further detail in the section entitled "Average
   Yields Earned and Rates Paid".

   <PAGE> 32

   ITEM 2.  DESCRIPTION OF PROPERTY
   --------------------------------
     The Company's principal executive offices are located at 420 South Madison
   Avenue, Douglas, Georgia.  This location is in the southern portion of
   downtown Douglas, which is believed to be the most rapidly growing section of
   Douglas.  This location was chosen because of its convenience to both the
   central downtown area and the retail and professional expansion on the south
   side of Douglas.  In addition, this site offers good visibility to the one-
   way south-bound traffic on Peterson Avenue and provides access to customers
   from Cherry Street and Madison Avenue.  The Board of Directors are dedicated
   to maintaining the viability of the downtown Douglas area and believe that
   the new Bank building will add an attractive building to the downtown area
   while avoiding traffic congestion.

     The Organizers formed a partnership, the CEF Partnership, which obtained an
   option to purchase a 3.46 acre site at the above location at a purchase price
   of $330,000, which is approximately $20,000 below the appraised value of the
   property.  On December 28, 1990, the CEF Partnership exercised its option to
   purchase the property from the seller, Douglas Peanut and Grain Co., whose
   president, Ralph G. Evans, is an Organizer of the Company and the Bank.  The
   purchase price for the option was $31,800, all of which was credited toward
   the purchase price of the property.  The Bank used $330,000 of the proceeds
   from the sale of its stock to the Company to reimburse the Organizers for the










   payment of the purchase price of the option and to complete the purchase of
   the site from the CEF Partnership.

     During 1992, the Bank completed construction of its headquarters building
   on the site purchased from the Partnership.  Construction cost and furniture,
   fixtures and equipment totalled approximately $1.3 million.

     Until construction was completed on the Bank's permanent headquarters, the
   Bank's offices were located in a temporary modular office purchased by the
   CEF Partnership from a nonaffiliated third party for $26,000.  This office
   was located at the Bank's permanent site in Douglas.  Upon the opening of the
   Bank, the Bank purchased the temporary modular office from the CEF
   Partnership for the same price the CEF Partnership paid.  The Bank spent
   approximately $15,000 to prepare the site for the temporary facility.  The
   Bank sold the temporary office facility in 1993.

   ITEM 3.  LEGAL PROCEEDINGS
   --------------------------
     There are no pending legal proceedings to which the Company is a party or
   to which any of its property is subject.  From time to time in the future,
   the Bank may be a party to legal proceedings in the ordinary course of its
   business.

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   ------------------------------------------------------------
     No matters were submitted by the Company to a vote of its security holders
   during the fourth quarter of the year ended December 31, 1996.


   <PAGE> 33
                                      PART II

   ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
   MATTERS
   ----------------------------------------------------------------------
     There has been no established public market for the Company's common stock
   since its public stock offering which was concluded on December 31, 1991. 
   The Company is aware of occasional private sales of its common stock at $12
   in 1992, at prices ranging from $12 to $14 in 1993, at prices averaging
   $13.73 in 1994 (based on three transactions ranging from $12 to $15 per share
   and totalling 2,600 shares) and at prices averaging $13.50 in 1996 (based on
   three transactions ranging from $10.00 to $15.50 per share and totalling 300
   shares). There was no sale transactions during 1995.  Common stock was issued
   by the Company in its stock offering in 1991 at $10 per share.

     As of December 31, 1996, 405,710 shares of common stock had been issued and
   were held of record by approximately 357 holders.

     The Company has never declared or paid cash dividends but expects to do so
   in the near future.  The payment of dividends by national banks is restricted
   by statute and regulation.  See "Item 1.  Description of Business -
   Supervision and Regulation."

   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
   ------------------------------------------------------------------

   Results of Operations
   ---------------------










     The Company, including the operation of its subsidiary bank, reported a
   consolidated net loss of $(1,146,332) for the year ended December 31, 1996
   compared to a net income of $313,176 for the year ended December 31, 1995. 
   Net interest income after provision for loan losses was a loss of $(578,805)
   and $1,389,293 for the years ended December 31, 1996 and 1995, respectively. 
   The provision for loan losses was $2,305,174 and $304,288 for the years ended
   December 31, 1996 and 1995, respectively.  Non-interest income totalled
   $493,908 and $396,352 for the years ended December 31, 1996 and 1995,
   respectively, and non-interest expenses totalled $1,652,367 and $1,387,180
   for the years ended December 31, 1996 and 1995, respectively.

   The following table summarizes the results of operations of the Company  for
   the two years ended December 31, 1996.
   <TABLE>
   <CAPTION>

                                                     YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                       1995           1996   
                                                    ----------     ----------
                                                           ($ In Thousands)
   <S>                                              <C>            <C>       
   Interest income                                  $    3,354          3,657
   Interest expense                                     (1,660)        (1,931)
                                                    ----------     ----------
   Net interest income                                   1,694          1,726
   Provision for loan losses                              (304)        (2,305)
   Non-interest income                                     396            494
   Non-interest expense                                 (1,388)        (1,652)
                                                    ----------     ----------
   Income (Loss) before taxes                              398         (1,737)
   Income taxes (Benefit)                                   85           (591)
                                                    ----------     ----------
   Net income (Loss)                                $      313         (1,146)
                                                    ==========     ==========
   Return on assets (net income 
     divided by average total assets)                      .70%        (2.35)%
   Return on equity (net income 
     divided by average equity)                           8.06        (32.32)
   Equity to assets ratio (average 
     equity divided by average total 
     assets)                                              8.72           7.29

   </TABLE>

   <PAGE> 34

   Comparison of Years Ended December 31, 1996 and 1995
   ----------------------------------------------------
     Operations for the year ended December 31, 1996 resulted in a net loss of
   approximately $(1,146,000) compared to a net income of approximately $313,000
   for the year ended December 31, 1995.  

   Interest Income
   ---------------
     Total interest income increased approximately $303,000 for 1996 compared to
   1995.  This increase is attributed to the factors explained in the following
   paragraphs.










     Interest earned on loans increased from approximately $2,857,000 in 1995 to
   approximately $3,058,000 in 1996, an increase of $201,000.  This increase was
   the combined effect of an increase in the average loan portfolio balance from
   approximately $29.1 million in 1995 to $31.2 million in 1996 and an increase
   in the rate earned on the loan portfolio from 9.83% in 1995 to 9.80% in 1996.

     Interest earned on investment securities increased from approximately
   $317,000 in 1995 to approximately $320,000 in 1996, an increase of $3,000. 
   This increase was the net effect of a decrease in the average investment
   portfolio balance from approximately $5.9 million in 1995 to approximately
   $5.8 million in 1996 and an increase in the rate earned on the investment
   portfolio from 5.34% in 1995 to 5.48% in 1996.

     Interest earned on interest-bearing deposits in banks increased from $-0-
   in 1995 to approximately $5,000 in 1996, an increase of $5,000.  This
   increase was the effect of an increase in the average interest-bearing
   deposit balances from $.0 million in 1995 to approximately $.1 in 1996.  The
   average rate was 3.37%.

     Interest earned on federal funds sold increased from approximately $182,000
   in 1995 to approximately $275,000 in 1996, an increase of $93,000.  This
   increase was the net effect of an increase in the average federal funds sold
   balance from approximately $3.3 million in 1995 to approximately $5.1 million
   in 1996 and a decrease in the rate earned on the federal funds sold from
   5.50% in 1995 to 5.39% in 1996.

   Interest Expense
   ----------------
     Total interest expense increased approximately $271,000 in 1996 compared to
   1995.  

     This increase was the combined effect of an increase in the average balance
   of interest-bearing deposits from approximately $32.7 million in 1995 to
   approximately $34.3 million in 1996 and an increase in the average rate paid
   on deposits from 5.03% in 1995 to 5.23% in 1996.

     Interest expense on federal funds purchased decreased from approximately
   $12,000 in 1995 to approximately $-0- in 1996, a decrease of $12,000.  This
   decrease was the effect of a decrease in the average balance of federal funds
   purchased from approximately $223,000 in 1995 to $-0- in 1996.  The average
   rate on the federal funds purchased was 5.50% in 1995.

     Interest expense on advances from the Federal Home Loan Bank increased from
   approximately $5,000 in 1995 to approximately $136,000 in 1996, an increase
   of $131,000.  This increase was the combined effect of an increase in the 

   <PAGE> 35

   average balance of federal funds sold from approximately $.1 million in 1995
   to approximately $2.2 million in 1996 and an increase in the rate paid on the
   advances from 5.50% in 1995 to 6.32% in 1996.

   Provision for Loan Losses
   -------------------------
     The provision for loan losses for the year ended December 31, 1996 as
   compared to 1995 increased approximately $2.0 million.  The balance of the
   allowance for loan losses was approximately $1.5 million at December 31, 1996
   and approximately $385,000 at December 31, 1995.  Actual loan charge-offs net










   of recoveries were approximately $1.2 million for the year ended December 31,
   1996 and $323,000 for the year ended December 31, 1995.  Non-accrual loans
   were approximately $1.1 million at December 31, 1996.  Loans ninety days or
   more past due and still accruing amounted to approximately $5,000 at December
   31, 1996.  In determining an adequate level of loan loss reserves, such loans
   were included in such consideration.  The amount of the provision for loan
   losses is a result of the amount of loans charged off, the amount of loans
   recovered and management's conclusion concerning the level of the allowance
   for loan losses.  The level of the allowance for loan losses is based upon a
   number of factors including the bank's past loan loss experience,
   management's evaluation of the collectibility of loans, the review of
   specific impaired loans, the general state of the economy and other relevant
   factors.  

   For a further discussion concerning loans and the allowance for loan losses,
   refer to "financial condition".

   Non-Interest Income
   -------------------
     The following table presents the principal components of non-interest
   income for the two years ended December 31, 1996. 
   <TABLE>
   <CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                               ----------------------
                                                  1995       1996   
                                               ---------- ----------
                                                   (In Thousands)

   <S>                                         <C>        <C>       
    Service charges on deposit accounts        $      299        366
    Insurance commissions                              26         18
    Gains (Loss) on sale of assets                      5        -0-
    Fees on mortgage loans originated for sale         22         22
    Gain (Loss) on sale of securities                 -0-          1
    Other income                                       44         87
                                               ---------- ----------
      Total Non-Interest Income                $      396        494
                                               ========== ==========
   </TABLE>

   Non-interest income for the year ended December 31,1996 as compared to 1995,
   increased approximately $98,000. Service charges on deposit accounts for the
   year ended December 31, 1996 as compared to 1995 increased approximately
   $67,000. This increase was related primarily to an increase in the volume of
   transaction deposit accounts.  Fees generated from loans originated for sale
   amounted to approximately $22000 and $22000 in 1996 and 1995, respectively. 
   All other non-interest income increased from approximately $75,000 for the
   year ended December 31, 1995 to approximately $106,000 for the year ended
   December 31, 1996.


   <PAGE> 36

   Non-Interest Expenses
   ---------------------
    The following table presents the principal components of non-interest
   expenses for the two years ended December 31, 1996.  










   <TABLE>
   <CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                               ---------------------
                                                  1995       1996   
                                               ---------- ----------
                                                   (In Thousands)
   <S>                                         <C>        <C>       
    Salaries                                   $      563        578
    Other personnel expenses                          104        294
    Occupancy expense of bank premises                103        105
    Furniture and equipment expense                    87        100
    Data processing                                    56         66
    Printing and office supplies                       69         61
    Amortization                                       22         15
    Advertising                                        45         61
    FDIC insurance                                     44          2
    Other operating expenses                          295        370
                                               ---------- ----------
        Total Non-Interest Expenses            $    1,388      1,652
                                               ========== ==========
   </TABLE>

    Increases in non-interest expenses for the year ended December 31, 1996 as
   compared to the year ended December 31, 1995 amounted to approximately
   $264,000 or 19.0%.  Compensation and other personnel expenses increased
   approximately $205,000 reflecting an increase in the number of employees, in
   wage levels and in the cost of employee benefits.  Additionally, the increase
   in salaries and employee benefits over 1995 reflected the payment of a
   termination amount upon the termination of the employment agreement with the
   Bank's President and the costs of a temporary interim management team. 
   Excluding federal deposit insurance, all other expenses increased
   approximately $101,000 or 14.9%.  This increase is primarily attributable to
   the additional cost associated with a larger volume of business. 
   Additionally, federal deposit insurance amounted to approximately $2,000 in
   1996 and $44,000 in 1995, reflecting industry wide savings on FDIC insurance.

   Income Taxes
   ------------
    A tax credit was accrued for the year ended December 31, 1996 based upon the
   loss incurred of approximately $1.7 million before taxes.

   The effective tax rate for the year ended December 31, 1995 was 21.4%.  This
   rate is lower that the expected tax provision of approximately 34% due to the
   utilization of an alternative minimum tax credit carryover and the
   utilization of remaining net operating losses accumulated prior to 1993.

   Interest Rate Sensitivity
   -------------------------
    As of December 31, 1996, the Company has a positive interest-sensitivity gap
   up to one year in the amount of $6.6 million.  Within one year, a falling
   rate environment of approximately 200 basis points over the year would result
   in a reduction of net interest income of approximately $76,000.

   <PAGE> 37

   Financial Condition
   -------------------










    The Company, including its subsidiary bank, reported consolidated total
   assets of approximately $49.1 million at December 31, 1996 and $50.5 million
   at December 31, 1995 representing a decrease of approximately $1.4 million
   for the year ended December 31, 1996.  During the year ended December 31,
   1996, cash and due from banks decreased approximately $2.5 million, loans
   decreased approximately $3.3 million, proceeds of loans from Directors were
   $.5 million, advances from the Federal Home Loan Bank increased approximately
   $1.9 million and operations generated approximately $.5 million.  These funds
   were used to increase investments by $2.6 million, acquire additional
   equipment of approximately $.1 million, increase federal funds sold by $3.4
   million and decrease deposits by $2.6 million.  

   The reduction in total assets of approximately $1.4 million included the
   reduction in loans of approximately $3.3 million.  The reduction in loans was
   due to the charge-off of approximately $1.4 million during the year and the
   overall reduction in the loan portfolio resulting from the strengthening of
   underwriting standards and procedures.  Approximately mid-year, an internal
   loan review was performed by the new senior lending officer which concluded
   that the underwriting procedures were inadequate.  During the quarter ended
   September 30, 1996, the Bank received over 100 bankruptcy notices. 
   Additionally, the reduction in assets was for the purpose of managing the
   capital requirements of the Bank for which the Company increased the capital
   by $1 million during the year ended December 31, 1996.  Based upon the
   ongoing loan review program of the Bank, the Bank increased its allowance for
   loan losses from approximately $385,000 at December 31, 1995 to approximately
   $1.5 million at December 31, 1996.

   Interest rates as previously discussed are reflective of interest rates in
   general, market conditions and competition.  Changes in short-term funds
   including cash and due from banks, federal funds sold, interest-bearing
   deposits and investment securities are reflective of the liquidity position
   of the Company.

   The Company's capital to assets ratio as of December 31, 1996 was 6.0%.

   In 1988, the Bank regulatory agencies adopted risk-based capital guidelines
   which are being phased in between 1990 and 1992.  Such guidelines establish a
   uniform minimum capital level as a percentage of risk-weighted assets plus
   off-balance sheet exposures.  Under the guidelines, one of four risk weights
   is applied to the different balance sheet assets, primarily based on the
   relative credit risk of the counter party.  Off-balance sheet items, such as
   loan commitments, are also applied a risk weight, after applying one of four
   credit conversion factors to these items to determine a balance sheet
   equivalent amount.  The credit conversion factors are primarily based on the
   likelihood of the off-balance sheet item becoming an asset.  The risk weights
   and credit conversion factors are 0%, 20%, 50% and 100%.

   There are two categories of capital under the guidelines.  Tier one capital
   includes common stockholders' equity and qualifying preferred stock, less
   certain intangible assets (substantially goodwill).  Tier two capital
   generally includes preferred stock not qualifying as tier one capital,
   mandatory convertible debt, subordinated and unsecured senior debt and the
   allowance for loan losses, all subject to limitations by the guidelines. 
   Tier two capital is limited to the amount of tier one capital.

   The guidelines require a minimum total risk-based capital ratio of 8.00% by
   the end of 1992, with at least half of the total capital in the form of tier











   one capital.

   <PAGE> 38

   In early 1990, regulators proposed a new minimum leverage ratio which would
   represent the minimum capital to total assets standards for banking
   organizations.  The minimum leverage ratio is 3% for the highest rated
   organizations which are not undertaking significant expansion programs.  An
   additional 1% to 2% may be required, depending on a bank's regulatory ratings
   and expansion plans.  The ratio consists of tier  one capital based  on the
   1992  risk-based capital  guidelines, divided by total assets (excluding
   intangible assets that were deducted to arrive at tier one capital).  The
   leverage ratio is expected to be used in tandem with the risk-based capital
   ratios, thereby eliminating the 5.50% primary and 6.00% total capital to
   assets ratios as the minimum capital standards for banking organizations
   after year-end 1990.

    The following table presents the Bank's capital ratios as of December 31,
   1996 compared to the required ratios as of that date.

   <TABLE>
   <CAPTION>

                                                                 TO BE WELL
                                                                 CAPITALIZED
                                                                    UNDER
                                                                   PROMPT
                                                                 CORRECTIVE
                                               FOR CAPITAL         ACTION
                                ACTUAL      ADEQUACY PURPOSES    PROVISIONS
                           ----------------  ---------------- ----------------
                             AMOUNT   RATIO   AMOUNT RATIO   AMOUNT    RATIO
                           ---------- ----- ----------
                                                     -----
                                                         ----------    -----
   <S>                     <C>        <C>   <C>        <C>    <C>        <C>
   As of December 31, 1995
     Total Capital
        (to Risk Weighted
        Assets)            $3,877,311  11.5% 2,694,097   8.0%  3,367,621  10.0%
     Tier I Capital
        (to Risk Weighted
        Assets)             3,491,951  10.4% 1,347,048   4.0%  2,020,573   6.0%
     Tier I Capital
        (to Average Assets) 3,491,951   7.4% 1,898,320   4.0%  2,372,900   5.0%

   As of December 31, 1996
     Total Capital
        (to Risk Weighted
        Assets)             3,310,365  11.3% 2,342,089   8.0%  2,927,611  10.0%
     Tier 1 Capital
        (to Risk Weighted
        Assets)             2,944,414  10.1% 1,171,044   4.0%  1,756,566   6.0%
     Tier 1 Capital
        (to Average Assets) 2,944,414   6.2% 1,914,080   4.0%  2,392,600   5.0%

   </TABLE>

     The Bank is in compliance with the regulatory capital requirements as of











   December 31, 1996 and 1995.


   Liquidity and Capital Resources
   -------------------------------
     Liquidity management involves the matching of the cash flow requirements of
   customers, either depositors withdrawing funds or funding additional loans,
   and the ability of the Bank to meet those requirements.  Management monitors
   and maintains appropriate levels of assets and liabilities so that maturities
   of assets are such that adequate funds are provided to meet estimated
   customer withdrawals and loan requests.

     The Bank's liquidity position depends primarily upon the liquidity of its
   assets relative to its need to respond to short-term demand for funds caused
   by withdrawals from deposit accounts and loan funding commitments.  Primary
   sources of liquidity are scheduled payments on its loans and interest on the
   Bank's investments.  The Bank may also utilize its cash and due from banks,
   short-term deposits with financial institutions, federal funds sold and
   investment securities to meet liquidity requirements.  At December 31, 1996,
   the Bank's cash and due from Banks were approximately $4.8 million (after
   reduction for its required reserves of $.2 million), and its federal funds
   sold were $7.2 million.  All of the above can be converted to cash on short
   notice.  The sale of investments which had a market value of approximately
   $7.8 million at December 31, 1996, can also be used to meet liquidity
   requirements to the extent the investments are not pledged to secure public
   funds on deposit as required by law.  Securities with a market value of $3.9
   million were pledged as of December 31, 1996.

   <PAGE> 39

     The Bank is a member of the Federal Home Loan Bank of Atlanta and as such
   has the ability to secure advances therefrom, although the cost of such
   advances exceed lower cost alternatives such as deposits from the local
   community.  The Bank had advances outstanding from the Federal Home Loan Bank
   of Atlanta of $2.5 million at December 31, 1996 at an average rate of 5.55%. 
   The Bank also has the ability, on a short-term basis, to borrow and purchase
   federal funds from other financial institutions.

     The Bank's funding needs are based primarily on the volume of lending.  The
   primary funding source is from new deposits.  The Bank seeks to attract new
   deposits by paying rates of interest on deposit accounts which are
   competitive in its primary service area.  The Bank generally does not pay
   brokers' commissions in connection with the obtaining of deposits or have
   deposits outside the primary service area.  The Bank does  not pay premiums
   to attract deposits.  As of December 31, 1996, the average cost for deposit
   liabilities was approximately 5.0%.  The Bank continues to expect that new
   deposits will serve as its primary funding source.

     The Company's needs for additional capital will depend to a great extent
   upon the capital needs of the Bank, which in turn will depend upon the level
   of deposits and total assets of the Bank.  Based upon the projected
   performance of the Bank, the organizers believe that the net proceeds of the
   public offering concluded on December 31, 1991 should be sufficient to meet
   the capital requirements of the Company and the Bank for at least the first
   five years of operation (see capital ratios as of December 31, 1994 and
   regulatory capital requirements discussed previously under "Financial
   Condition".  The projected performance of the Bank is based upon a variety of











   factors such as (i) the initial capitalization of the Bank, (ii) an analysis
   of the prospective market in the Bank's service area, (iii) the projected
   operating expenses of the Bank, including pre-opening expenses, cost of the
   Bank site, construction cost, cost of the Bank's temporary facility, cost of
   furniture, fixtures and equipment, personnel expenses, provision for loan
   losses, general and administrative expenses and interest on deposits and (iv)
   the projected earnings of the Bank, including earnings from the Bank's loan
   and investment portfolios.  If the Bank were to grow at a more rapid rate
   than anticipated by the organizers, the Company may need to raise additional
   capital to meet the Bank's capital needs.  Management believes that
   sufficient sources of capital, such as bank lines of credit, directors loans
   and additional equity capital derived from the exercise of warrants or from
   private equity offerings, are available should the need for additional
   capital arise.

     During the year ended December 31, 1996, the Company made an additional
   capital contribution to the Bank in the amount of $1 million, of which
   $500,000 was funded by loans from directors of the Company.

     The average loan to deposit ratio of the Company at December 31, 1996 was
   64.3% compared to 70.6% at December 31, 1995.

     Management is not aware of any trends, events or uncertainties that will
   have or that are reasonably likely to have a material effect on the Company's
   liquidity, capital resources or operations including recommendations by
   regulatory authorities which would have such an effect.  However, a
   regulatory examination concluded in the fourth quarter of 1996 indicated that
   a continuation of losses as experienced in 1996 could subject the Bank to a
   memorandum of understanding with regulatory authorities.


   <PAGE> 40

   ITEM 7.  FINANCIAL STATEMENTS
   -----------------------------
     The financial statements, notes thereto and auditor's report thereon,
   included on the following pages, are incorporated herein by reference.

                    Index to Consolidated Financial Statements
                    ------------------------------------------
   Financial Statements                                               Page
                                                                      ____
   --------------------
   Independent Auditor's Report  . . . . . . . . . . . . . . . . . . . 41

   Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . 42

   Consolidated Statements of Income . . . . . . . . . . . . . . . . . 43

   Consolidated Statement of Stockholders' Equity  . . . . . . . . . . 44

   Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . 45

   Notes to Financial Statements . . . . . . . . . . . . . . . . . . . 46

   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
   FINANCIAL DISCLOSURE
   ------------------------------------------------------------------------











              None.

   <PAGE> 41







                           INDEPENDENT AUDITORS' REPORT
                           ----------------------------



   To the Board of Directors and Stockholders
   FNC Bancorp, Inc. and Subsidiary
   Douglas, Georgia

   We have audited the accompanying consolidated balance sheets of FNC Bancorp,
   Inc., and Subsidiary as of December 31, 1996 and 1995, and the related
   consolidated statements of income, stockholders' equity and cash flows for
   the two years ended December 31, 1996.  These consolidated financial
   statements are the responsibility of the Company's management.  Our
   responsibility is to express an opinion on these consolidated financial
   statements based on our audits.

   We conducted our audits in accordance with generally accepted auditing
   standards.  Those standards require that we plan and perform the audit to
   obtain reasonable assurance about whether the consolidated financial
   statements are free of material misstatement.  An audit includes examining,
   on a test basis, evidence supporting the amounts and disclosures in the
   consolidated financial statements.  An audit also includes assessing the
   accounting principles used and significant estimates made by management, as
   well as evaluating the overall financial statement presentation.  We believe
   that our audits provide a reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
   present fairly, in all material respects, the consolidated financial position
   of FNC Bancorp, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
   consolidated results of their operations and their consolidated cash flows
   for the two years ended December 31, 1996 in conformity with generally
   accepted accounting principles.



   STEWART, FOWLER & STALVEY, P.C.         
   ----------------------------------------

   Valdosta, Georgia
   February 6, 1997

   <PAGE> 42

   <TABLE>
   <CAPTION>
                         FNC BANCORP, INC. AND SUBSIDIARY











                            CONSOLIDATED BALANCE SHEETS
                            ---------------------------
                                      ASSETS
                                      ______
                                                           DECEMBER 31,     
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Cash and Cash Equivalents:
     Cash and due from banks                        $ 4,917,622     7,434,011
     Federal funds sold                               7,249,000     3,820,000
                                                    -----------   -----------
         Total Cash and Cash Equivalents             12,166,622    11,254,011
   Investment securities (Fair value of
     $7,829,126 in 1996 and $5,196,885
     in 1995), Notes 1 and 2                          7,829,126     5,191,927
   Loans, net of allowance for loan losses and
     unearned interest, Notes 1 and 4                25,825,258    31,532,756
   Bank premises and equipment, Notes 1 and 3         1,682,081     1,694,013
   Accrued interest receivable                          757,467       686,724
   Property acquired in settlement of loans, Note 1      68,400        13,677
   Organization costs, net of amortization, Note 1          -0-        15,240
   Other assets                                         790,072       129,941
                                                    -----------   -----------
       Total Assets                                 $49,119,026    50,518,289
                                                    ===========   ===========

                       LIABILITIES AND STOCKHOLDERS' EQUITY
                       ------------------------------------
   Deposits:
     Demand                                         $ 9,409,021     9,965,771
     NOW accounts                                     7,253,382     7,976,781
     Savings                                          1,778,551     2,040,414
     Time, $100,000 and over                          5,381,660     6,629,345
     Other time                                      18,721,987    18,573,233
                                                    -----------   -----------
       Total Deposits                                42,544,601    45,185,544

   Notes payable to directors, Note 13                  500,000           -0-
   Advances from Federal Home Loan Bank, Note 5       2,485,000       595,000
   Accrued interest                                     546,773       577,420
   Income taxes payable                                     -0-        55,195
   Other liabilities                                    109,080        27,743
                                                    -----------   -----------
       Total Liabilities                             46,185,454    46,440,902
                                                    -----------   -----------
   Stockholders' Equity:
     Preferred stock, 10,000,000 shares
       authorized, no shares issued                         -0-           -0-
     Common stock, $1 par value, 10,000,000
       shares authorized, 405,710 shares
       issued and outstanding                           405,710       405,710
     Additional paid in capital                       3,610,541     3,610,541

   The accompanying  notes to consolidated financial statements  are an integral
   part of this statement.












     Retained earnings (deficit)                     (1,084,329)       62,003
     Unrealized gains (losses) on available-
       for-sale securities, Net of applicable
       deferred income taxes                              1,650          (867)
                                                    -----------   -----------
       Total Stockholders' Equity                     2,933,572     4,077,387
                                                    -----------   -----------
       Total Liabilities and Stockholders' Equity   $49,119,026    50,518,289
                                                    ===========   ===========
   </TABLE>

   <PAGE> 43

   <TABLE>
   <CAPTION>
                         FNC BANCORP, INC. AND SUBSIDIARY
                         CONSOLIDATED STATEMENTS OF INCOME
                         --------------------------------

                                                     YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Interest Income:
     Interest and fees on loans, Note 1             $ 3,057,854     2,856,716
     Interest on investment securities:
       Taxable                                          320,422       315,512
     Interest on federal funds sold                     274,544       180,737
     Interest on deposits in banks                        4,506            12
     Interest on securities purchased under
       agreements to resell                                 -0-         1,042
                                                    -----------   -----------
       Total                                          3,657,326     3,354,019
                                                    -----------   -----------
   Interest Expense:
     Interest on deposits                             1,795,263     1,642,503
     Interest on federal funds purchased                      9        12,253
     Interest on advances from Federal Home
       Loan Bank                                        135,685         5,682
                                                    -----------   -----------
       Total                                          1,930,957     1,660,438
                                                    -----------   -----------
   Net Interest Income                                1,726,369     1,693,581

   Provision For Loan Losses, Notes 1 and 4           2,305,174       304,288
                                                    -----------   -----------
   Net Interest Income After Provision For
     Loan Losses                                       (578,805)    1,389,293
                                                    -----------   -----------
   Other Income:
     Service charges on deposit accounts                366,116       299,224
     Insurance commissions                               18,392        26,135

   The accompanying  notes to consolidated financial statements  are an integral
   part of this statement.












     Gain (Loss) on sale of assets                          -0-         5,191
     Gain (Loss) on sale of securities                      761           -0-
     Fees on mortgage loans originated for sale          21,564        22,052
     Other income                                        87,075        43,750
                                                    -----------   -----------
       Total                                            493,908       396,352
                                                    -----------   -----------
   Other Expenses:
     Salaries                                           577,854       563,097
     Other personnel expenses, Note 6                   293,986       103,804
     Occupancy expense of bank premises                 105,261       103,415
     Furniture and equipment expense                    100,048        86,533
     Data processing                                     66,284        55,726
     Printing and office supplies                        60,865        68,893
     Amortization, Note 1                                15,240        22,369
     Advertising, Note 1                                 60,891        44,529
     FDIC insurance                                       2,000        43,839
     Other operating expenses                           369,938       294,975
                                                    -----------   -----------
       Total                                          1,652,367     1,387,180
                                                    -----------   -----------
   Income (Loss) Before Taxes                        (1,737,264)      398,465
   Income Taxes (Benefit), Note 7                      (590,932)       85,289
                                                    -----------   -----------
   Net Income (Loss)                                $(1,146,332)      313,176
                                                    ===========   ===========
   Earnings (Loss) Per Common and Common Equivalent
     Share, Note 1                                  $     (2.83)          .70
                                                    ===========   ===========
   </TABLE>

   <PAGE> 44

   <TABLE>
   <CAPTION>
                         FNC BANCORP, INC. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         TWO YEARS ENDED DECEMBER 31, 1996
                         ---------------------------------

                                                          UNREALIZED
                                                        GAINS (LOSSES)
                                                        ON AVAILABLE-
                                                           FOR-SALE
                                                         SECURITIES,
                                                            NET OF
                                                          APPLICABLE
                     COMMON STOCK       
                                     ADDITIONAL  RETAINED  DEFERRED
                  NUMBER OF    PAR     PAID IN   EARNINGS   INCOME
                   SHARES     VALUE   
                                        CAPITAL  
                                                 (DEFICIT)
                                                             TAXES    
                                                                       TOTAL  
                --------- --------- --------- ---------   ---------
                                                                  ---------

   The accompanying notes to consolidated  financial statements are an  integral
   part of this statement.

                                      Page 45











   <S>          <C>      <C>       <C>       <C>        <C>       
                                                                 <C>       
   Balances,
    December 31,
    1994          405,710$  405,710 3,610,541  (251,173)   (74,805)
                                                                  3,690,273

   Net Income         -0-       -0-       -0-   313,176        -0-  313,176

   Change in
    unrealized
    gains/losses
    on available-
    for-sale
    securities,
    net of
    applicable
    deferred
    income
    taxes             -0-       -0-       -0-       -0-     73,938   73,938
                 --------  --------  --------  --------   -------- --------
   Balances,
    December 31,
    1995          405,710   405,710 3,610,541    62,003       (867)
                                                                  4,077,387

   Net Income
    (Loss)            -0-       -0-       -0-(1,146,332)       -0-
                                                                 (1,146,332)

   Change in
    unrealized
    gains/losses
    on available-
    for-sale
    securities,
    net of
    applicable
    deferred
    income
    taxes             -0-       -0-       -0-       -0-      2,517    2,517
                --------- --------- --------- ---------  ------------------
   Balances,
    December 31,
    1996          405,710 $ 405,710 3,610,541(1,084,329)     1,6502,933,572
                ========= ========= ========= =========  ==================
   </TABLE>

   <PAGE> 45

   <TABLE>
   <CAPTION>
                         FNC BANCORP, INC. AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                       -------------------------------------


   The accompanying notes to consolidated  financial statements are an  integral
   part of this statement.

                                      Page 46











                                                     YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Cash Flows From Operating Activities:
     Net Income (Loss)                              $(1,146,332)      313,176
     Adjustments to reconcile net income or
       loss to net cash provided by operating
         activities:
         Depreciation                                   108,536       101,466
         Amortization                                    15,240        22,369
         Deferred income taxes (benefit)               (469,677)         (522)
         (Gain) Loss sale of assets                         -0-        (5,191)
         (Gain) Loss on sale of securities                 (761)          -0-
         Provision for loan losses                    2,305,174       304,288
         Securities (accretion) amortization            (31,305)      (36,624)
     Change in assets and liabilities:
       (Increase) Decrease in accrued interest
         receivable                                     (70,743)     (122,450)
       Increase (Decrease) in accrued interest
         payable                                        (30,647)      328,094
       (Increase) Decrease in other assets             (191,751)      (20,786)
       Increase (Decrease) in other liabilities          81,337       (19,181)
       Increase (Decrease) in income taxes
         payable                                        (55,195)       41,274
                                                    -----------   -----------
     Net cash provided (used) by operating
       activities                                       513,876       905,913
                                                    -----------   -----------
   Cash Flows From Investing Activities:
     Capital expenditures                               (96,604)      (35,867)
     Net (increase) decrease in loans                 3,347,601    (4,490,467)
     (Increase) Decrease in interest-
       bearing deposits                                     -0-           122
     Proceeds from sale of fixed assets                     -0-        12,850
     Proceeds from sale of available-
       for-sale securities                              500,000           -0-
     Proceeds from maturity of available-
       for-sale securities                            3,780,000     2,250,000
     Proceeds from maturity of held-to-
       maturity securities                              710,000     3,250,000
     Purchase of available-for-sale securities       (7,657,138)   (2,651,880)
     Purchase of held-to-maturity securities                -0-      (758,402)
     Maturity (Purchase) of securities
       purchased under agreements to resell                 -0-     1,250,000
     Payments received on mortgage-backed
       securities                                        65,819        90,922
                                                    -----------   -----------
     Net cash provided (used) by investing
       activities                                       649,678    (1,082,722)
                                                    -----------   -----------

   The accompanying notes to consolidated  financial statements are an  integral
   part of this statement.

                                      Page 47











   Cash Flows From Financing Activities:
     Proceeds from notes payable                        500,000           -0-
     Proceeds of advances from Federal
       Home Loan Bank                                 2,000,000       595,000
     Payments on advances from Federal
       Home Loan Bank                                  (110,000)          -0-
     Increase (Decrease) in time deposits            (1,098,931)    5,459,366
     Increase (Decrease) in other deposits           (1,542,012)     (338,633)
                                                    -----------   -----------
     Net cash provided (used) by financing
       activities                                      (250,943)    5,715,733
                                                    -----------   -----------
   Net increase (decrease) in cash
     and cash equivalents                               912,611     5,538,924

   Cash and Cash Equivalents at
     Beginning of Year                               11,254,011     5,715,087
                                                    -----------   -----------
   Cash and Cash Equivalents at
     End of Year                                    $12,166,622    11,254,011
                                                    ===========   ===========
   Supplemental Disclosures of Cash
     Flow Information
   --------------------------------
   Cash paid during the year for:
     Interest                                       $ 1,961,604     1,332,344
                                                    ===========   ===========
     Income taxes                                   $   121,555        44,537
                                                    ===========   ===========
   Schedule of Non-Cash Investing and
     Financing Activities
   ----------------------------------
   Total increase (decrease) in unrealized
     losses on securities available-for-sale        $    (3,814)     (112,028)
                                                    ===========   ===========
   </TABLE>

   <PAGE> 46
                         FNC BANCORP, INC. AND SUBSIDIARY

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    ------------------------------------------

   Note 1 - Summary of Significant Accounting Policies
   ---------------------------------------------------
   Nature of operations:  FNC Bancorp., Inc. is engaged in the activity of
   providing traditional banking services through its banking subsidiary, First
   National Bank of Coffee County.  The Bank is a national bank with one banking
   office located in Douglas, Georgia.  The Bank primarily grants agri-business,
   commercial, consumer and real estate loans with a market area that includes
   predominately South Georgia.  The composition of the loan portfolio is
   detailed in Note 4 of these financial statements.  Investments are

   The accompanying notes to consolidated  financial statements are an  integral
   part of this statement.

                                      Page 48











   predominately limited to U.S. Treasury obligations, obligations of other U.S.
   Government agencies and corporations and obligations of state and political
   subdivisions.  The Bank also purchases time deposits with other banks and
   sells federal funds to correspondent banks.

   Consolidated financial statements:  The consolidated financial statements
   include the accounts of FNC Bancorp, Inc. and its sole subsidiary, First
   National Bank of Coffee County.  All intercompany transactions have been
   eliminated in consolidation.

   Investment securities:  Effective January 1, 1994, debt securities that
   management has the ability and intent to hold to maturity are classified as
   held-to-maturity and carried at cost adjusted for amortization of premiums
   and accretion of discounts using methods approximating the interest method. 
   Other securities are classified as available-for-sale and are carried at fair
   value.  Unrealized gains and losses on securities available-for-sale are
   recognized as direct increases or decreases in stockholders' equity.  Cost of
   securities sold is determined using the specific identification method.

   Bank premises and equipment and related depreciation:  Depreciation of bank
   premises and equipment is computed using the straight line method over the
   estimated useful lives of the assets.  Expenditures for maintenance, repairs,
   removals and betterments which do not materially prolong the useful lives of
   the assets are charged to income as incurred.  The cost of property retired
   or sold, and the related accumulated depreciation, is removed from the
   accounts, and any gain or loss, after taking into consideration proceeds from
   sale, is transferred to income.

   Loans and allowance for losses on loans:  Loans are stated at the amount of
   the unpaid principal, reduced by unearned interest and an allowance for loan
   losses.  Interest income on loans is calculated primarily by using the simple
   interest method on daily balances of the principal amount outstanding.  The
   Bank provides for loan losses based on management's evaluation of the
   collectibility of loans and other relevant factors.  Allowances for impaired
   loans are generally determined based on collateral values or the present
   value of estimated cash flows.  Fees for originating loans which exceed the
   direct origination cost are deferred net of origination costs and amortized
   by the level yield method over the term of the related loans.  Accrual of
   interest is discontinued when management believes that the borrowers'
   financial condition is such that collection of interest is doubtful.

   <PAGE> 47

   Property acquired in settlement of loans:  Real estate and other property
   acquired in settlement of loans is initially recorded at market value at
   acquisition less estimated costs to sell and subsequently carried at the
   lower of cost or market value less estimated costs to sell.

   Organizational costs and pre-opening expenses:  The company capitalized
   organizational costs and pre-opening expenses incurred during the development
   stage in accordance with applicable accounting pronouncements and policies. 
   Organizational costs are being amortized over a five-year period using the
   straight-line method beginning with the opening of the bank.  Other pre-
   opening expenses were charged off as an expense during the first quarter
   after opening the bank.

                                      PAGE 49











   Income taxes:  The tax effects of transactions are recognized in the same
   period as they are reported for financial statement purposes, regardless of
   the period in which such items are recognized for tax purposes.

   Cash and cash equivalents:  For purposes of reporting cash flows, cash and
   cash equivalents include cash on hand, amounts due from banks and federal
   funds sold.

   Off-balance sheet financial instruments:  In the ordinary course of business,
   the Bank has entered into off-balance sheet instruments consisting of
   commitments to extend credit and standby letters of credit.  Such financial
   instruments are recorded in the financial statements when they become
   payable.

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

   Certain significant estimates:  Material estimates that are particularly
   susceptible to significant change relate to the determination of the
   allowance for losses on loans and the valuation of real estate acquired in
   connection with foreclosures or in satisfaction of loans.  In connection with
   the determination of allowances for losses on loans and the valuation of
   foreclosed real estate, management obtains independent appraisals for
   significant properties.

   While management uses available information to recognize losses on loans and
   foreclosed real estate, future additions to the allowances may be necessary
   based on changes in local economic conditions.  In addition, regulatory
   agencies, as an integral part of their examination process, periodically
   review the Bank's allowances for losses on loans and foreclosed real estate. 
   Such agencies may require the Bank to recognize additions to the allowances
   based on their judgements about information available to them at the time of
   their examination.  It is at least reasonably possible that the allowances
   for losses on loans and foreclosed real estate may change in the near term.

   Advertising costs:  The Bank follows the policy of charging the costs of
   advertising to expense as incurred.  Advertising costs were $60,891 and
   $44,529 for the years ended December 31, 1996 and 1995, respectively.

   <PAGE> 48

   Stock-based compensation:  In October 1995, the Financial Accounting
   Standards Board issued Statement of Financial Accounting Standards (SFAS) No.
   123, Accounting for Stock-Based Compensation.  The Company has elected to
   disclose the proforma effect on net income as if the fair value based method
   of accounting for stock options had been used.

   Fair values of financial instruments:  Statement of Financial Accounting
   Standards No. 107, Disclosures about Fair Value of Financial Instruments,
   requires disclosure of fair value information about financial instruments,

                                      PAGE 50











   whether or not recognized in the statement of financial condition.  In cases
   where quoted market prices are not available, fair values are based on
   estimates using present value or other valuation techniques.  Those
   techniques are significantly affected by the assumptions used, including the
   discount rate and estimates of future cash flows.  In that regard, the
   derived fair value estimates cannot be substantiated by comparison to
   independent markets, and, in many cases, could not be realized in immediate
   settlement of the instruments.  Statement No. 107 excludes certain financial
   instruments and all nonfinancial instruments from its disclosure
   requirements.  Accordingly, the aggregate fair value amounts presented do not
   represent the underlying value of the Bank.

   The following methods and assumptions were used by the Bank in estimating its
   fair value disclosures for financial instruments:

     Cash and cash equivalents:  The carrying amounts reported in the balance
     sheet for cash and cash equivalents approximate those assets' fair values.

     Time deposits:  Fair values for time deposits are estimated using a
     discounted cash flow analysis that applies interest rates currently being
     offered on certificates to a schedule of aggregated contractual maturities
     on such time deposits.

     Investment securities:  Fair values for investment securities are based on
     quoted market prices, where available.  If quoted market prices are not
     available, fair values are based on quoted market prices of comparable
     instruments.

     Loans:  For variable-rate loans that reprice frequently and with no
     significant change in credit risk, fair values are based on carrying
     amounts.  The fair values for other loans (for example, fixed rate
     commercial real estate and rental property mortgage loans and commercial
     and industrial loans) are estimated using discounted cash flow analysis,
     based on interest rates currently being offered for loans with similar
     terms to borrowers of similar credit quality.  Loan fair value estimates
     include judgements regarding future expected loss experience and risk
     characteristics.  The carrying amount of accrued interest receivable
     approximates its fair value.

     Deposits:  The fair values disclosed for demand deposits (for example,
     checking accounts, interest-bearing checking accounts and savings accounts)
     are, by definition, equal to the amount payable on demand at the reporting
     date (that is, their carrying amounts).  The fair values for certificates
     of deposit are estimated using a discounted cash flow calculation that
     applies interest rates currently being offered on certificates to a
     schedule of aggregated contractual maturities on such time deposits.  The
     carrying amount of accrued interest payable approximates fair value.

   <PAGE> 49

     Short-term borrowings, notes payable and advances from Federal Home Loan
     Bank:  The carrying amounts of short-term borrowings, notes payable and
     advances from the Federal Home Loan Bank approximate their fair values.

     Other liabilities:  Commitments to extend credit were evaluated and fair

                                      PAGE 51











     value was estimated using the terms for similar agreements, taking into
     account the remaining terms of the agreements and the present
     creditworthiness of the counterparties.  For fixed-rate loan commitments,
     fair value also considers the difference between current levels of interest
     rates and the committed rates.

   Earnings per common and common equivalent share:  Earnings per common and
   common equivalent share were computed by dividing net income by the weighted
   average number of shares of common stock and common stock equivalents
   outstanding during the year using the modified treasury stock method.  Common
   stock equivalents include shares issuable on the exercise of warrants and
   stock options.  Under the modified treasury stock method, the number of
   common shares outstanding was increased by the net additional shares which
   would be issued assuming that the shares issuable as a result of the exercise
   of warrants and stock options were actually issued at the agreed-upon price
   and the resulting proceeds were used to reacquire 20% of the outstanding
   common shares at the average price of the common stock during the year and
   the remaining funds were used to reduce indebtedness or invested in U.S.
   Government securities and the resulting income effect (net of taxes) applied
   as an adjustment of net income.  For 1996, the modified treasury stock method
   was not used because its application would be anti-dilutive.  Instead, the
   1996 earnings per share were computed by dividing the net loss by the actual
   weighted average number of shares of common stock outstanding during the
   year.  For 1995, the modified treasury stock method reflects that 153,426
   additional shares would be issued at $10 per share, that 81,142 shares would
   be reacquired at $12 per share, that $560,556 would be invested in U.S.
   Government securities at an assumed rate of 6% which, at an assumed tax rate
   of 34%, would result in an increase in net income of $22,198.  Weighted
   average shares used in the computation of earnings per common and common
   equivalent share were as follows:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
     Weighted average shares outstanding                405,710       405,710
     Weighted average of common equivalent shares           -0-        72,284
                                                     ----------    ----------
       Total                                            405,710       477,994
                                                     ==========    ==========
   </TABLE>

   New accounting standards:  Several new accounting standards were effective in
   1995 or 1996 including Statement of Financial Accounting Standards No. 114
   (Accounting by Creditors for Impairment of a Loan), Statement No. 118
   (Accounting by Creditors for Impairment of a Loan - Income Recognition and
   Disclosures), Statement No. 119 (Disclosure About Derivative Financial
   Instruments and Fair Value of Financial Instruments), Statement No. 121
   (Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
   to be Disposed Of) and Statement No. 122 (Accounting for Mortgage Servicing
   Rights).  The new accounting standards are either not currently relevant to
   the Company or have an immaterial effect upon its financial statements.



                                      PAGE 52











   <PAGE> 50

   Note 2 - Investment Securities
   ------------------------------
   Investment securities are carried in the accompanying balance sheets as
   follows:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Available-for-sale                                $7,829,126     4,489,015
   Held-to-maturity                                         -0-       702,912
                                                     ----------    ----------
                                                     $7,829,126     5,191,927
                                                     ==========    ==========
   </TABLE>

   Securities available-for-sale consist of the following:
   -------------------------------------------------------
   As of December 31, 1996:
   <TABLE>
   <CAPTION>

                                              GROSS       GROSS  
                                AMORTIZED  UNREALIZED  UNREALIZED    MARKET  
                                  COST        GAINS      LOSSES       VALUE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   U.S. Treasury Obligations   $4,718,408       7,302       3,349   4,722,361
   Obligations of other U.S.
     government agencies and
     corporations               2,498,865       1,129       6,309   2,493,685
   Mortgage-backed securities     150,753       3,727         -0-     154,480
   Federal Home Loan Bank stock   338,600         -0-         -0-     338,600
   Federal Reserve stock          120,000         -0-         -0-     120,000
                               ----------  ----------  ----------  ----------
                               $7,826,626      12,158       9,658   7,829,126
                               ==========  ==========  ==========  ==========
   </TABLE>

   As of December 31, 1995:
   <TABLE>
   <CAPTION>

                                              GROSS       GROSS  
                                AMORTIZED  UNREALIZED  UNREALIZED    MARKET  
                                  COST        GAINS      LOSSES       VALUE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   U.S. Treasury Obligations   $  952,927         214         417     952,724
   Obligations of other U.S.
     government agencies and
     corporations               3,082,955       3,598       6,603   3,079,950

                                      PAGE 53











   Mortgage-backed securities     217,245       1,896         -0-     219,141
   Federal Home Loan Bank stock   132,200         -0-         -0-     132,200
   Federal Reserve stock          105,000         -0-         -0-     105,000
                               ----------  ----------  ----------  ----------
                               $4,490,327       5,708       7,020   4,489,015
                               ==========  ==========  ==========  ==========
   </TABLE>

   <PAGE> 50

   Securities held-to-maturity consist of the following:
   -----------------------------------------------------
   As of December 31, 1995:
   <TABLE>
   <CAPTION>

                                              GROSS       GROSS  
                                AMORTIZED  UNREALIZED  UNREALIZED    MARKET  
                                  COST        GAINS      LOSSES       VALUE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   Obligations of other U.S.
     Government agencies and
     corporations              $  702,912       4,958         -0-     707,870
                               ==========  ==========  ==========  ==========
   </TABLE>

   The amortized cost and estimated market value of debt securities at December
   31, 1996, by contractual maturity, are shown below.  Expected maturities will
   differ from contractual maturities because borrowers may have the right to
   call or prepay obligations with or without call or prepayment penalties.

   <TABLE>
   <CAPTION>

                                     SECURITIES              SECURITIES
                                  HELD-TO-MATURITY       AVAILABLE-FOR-SALE
                               ----------------------  ----------------------
                                              MARKE                  MARKET  
                                  COST        VALUE        COS        VALUE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   Due in one year or less     $      -0-         -0-   1,728,601   1,727,608
   Due after one year through
     five years                       -0-         -0-   5,488,672   5,488,438
   Due after five years through
     ten years                        -0-         -0-         -0-         -0-
   Due after ten years                -0-         -0-         -0-         -0-
   Mortgage-backed securities         -0-         -0-     150,753     154,480
                               ----------  ----------  ----------  ----------
                               $      -0-         -0-   7,368,026   7,370,526
                               ==========  ==========  ==========  ==========
   </TABLE>

   Proceeds from sale of available-for-sale securities were $500,000 with gains

                                      PAGE 54











   realized of $761 for the year ended December 31, 1996.  There were no sales
   of securities during 1995.  

   Securities with a book value of approximately $3,851,485 and $4,419,437
   (market value of approximately $3,851,150 and $4,423,834 at December 31, 1996
   and 1995, respectively) at December 31, 1996 and 1995, respectively, were
   pledged to secure public monies as required by law or for other purposes.


   <PAGE> 51

   Note 3 - Bank Premises and Equipment
   ------------------------------------
   Bank premises and equipment are stated at cost less accumulated depreciation,
   and include the following:
   <TABLE>
   <CAPTION>
                                               DECEMBER 31,     
                                          --------------------      ESTIMATED
                                             1996        1995     USEFUL LIVES
                                          ----------  ----------  ------------
   <S>                                    <C>         <C>        <C>
     Land                                 $  372,676     372,676
     Building and improvements             1,064,078   1,064,078  10-40 years
     Furniture, fixtures and equipment       687,590     590,986  3-5 years
     Vehicles                                 16,467      16,467  5 years
                                          ----------  ----------
                                           2,140,811   2,044,207
     Less accumulated depreciation           458,730     350,194
                                          ----------  ----------
         Total                            $1,682,081   1,694,013
                                          ==========  ==========
   </TABLE>

   Depreciation expense amounted to $108,536 and $101,466 for the years ended
   December 31, 1996 and 1995, respectively.


   Note 4 - Loans
   --------------
   Major classifications of loans are as follows:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
     Agricultural                                   $ 2,971,355     3,381,657
     Commercial and industrial                        5,099,676     5,655,678
     Real estate - mortgage                          12,618,490    14,197,650
     Real estate - construction                       1,246,122     1,291,215
     Loans to individuals for household,
       family and other personal expenditures         5,380,851     7,108,386
     Overdrafts                                          29,149       283,530
                                                    -----------   -----------

                                      PAGE 55











                                                     27,345,643    31,918,116
     Unearned interest                                      -0-           -0-
                                                    -----------   -----------
                                                     27,345,643    31,918,116
     Allowance for loan losses                       (1,520,385)     (385,360)
                                                    -----------   -----------

     Loans, net                                     $25,825,258    31,532,756
                                                    ===========   ===========
   </TABLE>

   Loans on which the accrual of interest has been discontinued or reduced
   amounted to approximately $1,038,212 and $177,200 at December 31, 1996 and
   1995, respectively.  If interest on those loans had been accrued, such income
   would have approximated $76,457 and $18,643 for 1996 and 1995, respectively. 
   Interest income on those loans, which is recorded only when received,
   amounted to approximately $-0- and $10,376 in 1996 and 1995, respectively. 
   The Bank did not have any loans classified as impaired at December 31, 1996
   or 1995.

   First mortgage loans on residential (one-to-four units) real estate are
   pledged to secure advances from the Federal Home Loan Bank (See Note 5).  The
   advances must be fully secured after discounting the qualifying loans at 75%
   of the principal balances outstanding.

   <PAGE> 53

   Transactions in the allowance for loan losses were as follows:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
     Balance, beginning of year                      $  385,360       403,800
     Provision for losses charged
       to operating expenses                          2,305,174       304,288
     Loans charged off                               (1,449,603)     (335,077)
     Recoveries                                         279,454        12,349
                                                     ----------    ----------
     Balance, end of year                            $1,520,385       385,360
                                                     ==========    ==========
   </TABLE>

   Note 5 - Advances From Federal Home Loan Bank
   ---------------------------------------------
   Advances from the Federal Home Loan Bank consist of the following:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Advances payable, interest payable
     monthly, fixed rates which averaged

                                      PAGE 56











     5.55% at December 31, 1996 (6.16% in 1995),
     various repayment options, maturities
     through May 16, 2005.                           $2,485,000       595,000
                                                     ==========    ==========
   </TABLE>

   Maturities of the advances for the succeeding five years are as follows:
   <TABLE>
   <CAPTION>
                    YEAR ENDING
                   DECEMBER 31,
                   ____________

                   <S>                 <C>        
                       1997             $1,078,000
                       1998              1,078,000
                       1999                 78,000
                       2000                206,000
                       2001                 10,000

   </TABLE>

   The advances are secured by first mortgage loans on residential (one-to-four
   units) real estate as provided in Note 4.


   Note 6 - 401(k) Plan
   --------------------
   During the year ended December 31, 1995, the Bank adopted a 401(k) plan for
   qualified employees.  The plan is qualified under the Internal Revenue Code. 
   Under the 401(k) plan, employees may make salary deferral contributions up to
   15% of qualified employee compensation.  The Company will also make
   contributions to the plan at a level determined by the Board of Directors. 
   Company contributions to the plan were $7,742 and $9,067 for the years ended
   December 31, 1996 and 1995, respectively.

   <PAGE> 54

   Note 7 - Income Taxes
   ---------------------
   The consolidated provision for income taxes for 1996 and 1995 consists of the
   following:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
     Current Federal tax expense (benefit)           $ (121,255)       85,811
     Deferred Federal tax expense (credit)             (469,677)         (522)
                                                     ----------    ----------
                                                     $ (590,932)       85,289
                                                     ==========    ==========
   </TABLE>

   The provision for Federal income taxes differs from that computed by applying

                                      PAGE 57











   Federal statutory rates to income before income taxes as indicated in the
   following analysis:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
     Expected tax provision (benefit) at a 34% rate  $ (590,670)      135,478
     Alternative minimum tax (credit)                       -0-       (33,257)
     Net operating loss carryover                           -0-       (13,326)
     Increase (Decrease) in deferred tax asset
       valuation allowance                                  -0-           -0-
     Other                                                 (262)       (3,606)
                                                     ----------    ----------
                                                     $ (590,932)       85,289
                                                     ==========    ==========
   </TABLE>

   Deferred tax liabilities have been provided for taxable temporary differences
   related to accumulated depreciation and unrealized gains on available-for-
   sale securities.  Deferred tax assets have been provided for deductible
   temporary differences related to unrealized losses on available-for-sale
   securities, the allowance for loan losses, net operating loss carryover, and
   amortization of start-up costs.  The net deferred tax assets in the
   accompanying balance sheets include the following components:
   <TABLE>
   <CAPTION>                                         YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Deferred tax assets:
     Allowance for loan losses                       $  411,997       111,144
     Alternative minimum tax credit carryover               477           -0-
     Net operating loss carryover                       187,004           -0-
     Unrealized losses on available-for-sale
       securities                                           -0-           447
     Start-up costs                                         -0-        10,105
                                                     ----------    ----------
                                                        599,478       121,696
                                                     ----------    ----------
   Deferred tax liabilities:
     Unrealized gains on available-for-sale
       securities                                           850           -0-
     Bank premises and equipment and
       depreciation                                      49,237        40,685
                                                     ----------    ----------
                                                         50,087        40,685
                                                     ----------    ----------
   Net deferred tax assets                           $  549,391        81,011
                                                     ==========    ==========
   </TABLE>

   No valuation allowance was established in view of the Company's tax

                                      PAGE 58











   strategies coupled with anticipated future taxable income as evidenced by the
   Company's earnings projections.

   The Company has a net operating loss carryforward of $540,458 that may be
   offset against future taxable income.  Substantially all of the carryforward
   expires in 2011.

   <PAGE> 55

   Note 8 - Related Party Transactions
   -----------------------------------
   The Bank had outstanding loans to its officers, directors and employees at
   December 31, 1996 and 1995 in the aggregate of $283,018 and $357,884,
   respectively.  These individuals maintain customary deposit accounts with the
   Bank.  Management believes that all of the above transactions were entered
   into in the normal course of business.  The Bank held deposits of $5,333,194
   and $728,418 for officers, directors, employees and their associates at
   December 31, 1996 and 1995, respectively.

   At December 31, 1996, the Company had outstanding notes payable to directors
   in the amount of $500,000, as described in Note 13 to these financial
   statements.

   Note 9 - Commitments, Contingencies and Financial Instruments with Off-
   Balance-Sheet Risk
   -----------------------------------------------------------------------
   The financial statements do not reflect various commitments and contingent
   liabilities which arise in the normal course of business and which involve
   elements of credit risk, interest rate risk and liquidity risk.  These
   commitments and contingent liabilities are commitments to extend credit and
   standby letters of credit.  A summary of the Bank's commitments and
   contingent liabilities is as follows:
   <TABLE>
   <CAPTION>                                             NOTIONAL AMOUNT
                                                          DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
     Commitments to extend credit                    $4,655,000     5,369,000
     Standby letters of credit                           16,300        28,255

   </TABLE>

   Commitments to extend credit and standby letters of credit all include
   exposure to some credit loss in the event of nonperformance by the customer. 
   The Bank's credit policies and procedures for credit commitments are the same
   as those for extensions of credit that are reported in the financial
   statements.  Because these instruments have fixed maturity dates and because
   many of them expire without being drawn upon, they do not generally present
   any significant liquidity risk to the Bank.  The Bank has not incurred any
   losses on its commitments in either 1996 or 1995.

   The nature of the business of the Bank is such that it is ordinarily
   subjected to a certain amount of litigation.  In the opinion of management

                                      PAGE 59











   and counsel for the Bank, there is no litigation in which the outcome will
   have a material effect on the financial statements.


   Note 10 - Regulatory Matters
   ----------------------------
   The primary source of funds available for the payment of cash dividends are
   dividends received from the subsidiary Bank.  The Bank is limited by banking
   regulations as to the amount of dividends that may be paid without prior
   approval of the Bank's regulatory agency.  No earnings were available for the
   payment of dividends at December 31, 1996.

   The Bank is required to maintain average cash balances as a reserve
   requirement.  The average amount of those reserve balances was $152,000 and
   $225,000 for the years ended December 31, 1996 and 1995, respectively.

   <PAGE> 56

   The Bank is subject to various regulatory capital requirements administered
   by the federal banking agencies.  Failure to 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 judgements 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 (as defined in the regulations) to
   risk-weighted assets (as defined), and of Tier I capital (as defined) to
   average assets (as defined).  Management believes, as of December 31, 1996,
   that the Bank meets all capital adequacy requirements to which it is subject.

   As of December 31, 1995, the most recent notification from the Comptroller of
   the Currency, the Bank was categorized as well-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 table.  There have
   been no conditions or events since that notification that management believes
   have changed the institution's category.

   The Bank's actual capital amounts and ratios are also presented in the table.
   <TABLE>
   <CAPTION>

                                                                 TO BE WELL
                                                                 CAPITALIZED
                                                                    UNDER
                                                                   PROMPT
                                                                 CORRECTIVE
                                               FOR CAPITAL         ACTION

                                      PAGE 60











                                ACTUAL      ADEQUACY PURPOSES    PROVISIONS
                           ----------------  ---------------- ----------------
                             AMOUNT   RATIO   AMOUNT RATIO   AMOUNT    RATIO
                           ---------- ----- ----------
                                                     -----
                                                         ----------    -----
   <S>                     <C>        <C>   <C>        <C>    <C>        <C>
   As of December 31, 1995
     Total Capital
        (to Risk Weighted
        Assets)            $3,877,311  11.5% 2,694,097   8.0%  3,367,621  10.0%
     Tier I Capital
        (to Risk Weighted
        Assets)             3,491,951  10.4% 1,347,048   4.0%  2,020,573   6.0%
     Tier I Capital
        (to Average Assets) 3,491,951   7.4% 1,898,320   4.0%  2,372,900   5.0%

   As of December 31, 1996
     Total Capital
        (to Risk Weighted
        Assets)             3,310,365  11.3% 2,342,089   8.0%  2,927,611  10.0%
     Tier 1 Capital
        (to Risk Weighted
        Assets)             2,944,414  10.1% 1,171,044   4.0%  1,756,566   6.0%
     Tier 1 Capital
        (to Average Assets) 2,944,414   6.2% 1,914,080   4.0%  2,392,600   5.0%

   </TABLE>

   Note 11 - Concentrations of Credit Risk
   ---------------------------------------
   In addition to the concentrations of credit risk disclosures in notes one and
   four, the Bank maintains its cash in bank deposit accounts which, at times,
   may exceed federally insured limits.  The Bank has not experienced any losses
   in such accounts.  The Bank believes it is not exposed to any significant
   credit risk on cash and cash equivalents.

   <PAGE> 57

   Note 12 - Fair Values of Financial Instruments
   ----------------------------------------------
   The estimated fair values of the Company's financial instruments are as
   follows:
   <TABLE>
   <CAPTION>
                                  DECEMBER 31, 1996       DECEMBER 31, 1995
                               ----------------------  ----------------------
                                 CARRYIG      FAIR       CARRYIG      FAIR   
                                 AMOUNT       VALUE        AMOU       VALUE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   Financial assets:
     Cash and cash
       equivalents            $12,166,622  12,166,622  11,254,011  11,254,011
     Investment securities      7,829,126   7,829,126   5,191,927   5,196,885
     Loans, net of allowance
       for loan losses         25,825,258  25,398,258  31,532,756  32,692,756

                                      PAGE 61











     Accrued interest
       receivable                 757,467     757,467     686,724     686,724

   Financial liabilities:
     Deposits                  42,544,601  42,384,601  45,185,544  46,330,544
     Notes payable to
       directors                  500,000     500,000         -0-         -0-
     Advances from Federal
       Home Loan Bank           2,485,000   2,485,000     595,000     595,000
     Accrued interest
       payable                    546,773     546,773     577,420     577,420

   </TABLE>

   The carrying amounts in the preceding table are included in the balance sheet
   under the applicable captions.
   <TABLE>
   <CAPTION>
                                  DECEMBER 31, 1996       DECEMBER 31, 1995
                               ----------------------  ----------------------
                                NOTIONAL      FAIR      NOTIONAL      FAIR   
                                 AMOUNT       VALUE      AMOUNT       VALUE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   Other:
     Loan commitments         $ 4,655,000   4,655,000   5,369,000   5,369,000
     Letters of credit             16,300      16,300      28,255      28,255

   </TABLE>

   Note 13 - Notes Payable to Directors
   ------------------------------------
   Notes payable to directors in the amount of $500,000 consist of notes which
   were executed on December 27, 1996.  Each of the notes accrues interest at
   the Bank's prime rate less 1%.  There are no scheduled principal or interest
   payments during the first two years of the notes.  Principal and interest
   payments in years three through five are subject to certain restrictions
   relative to the Bank's earnings and regulatory capital position.  Each of the
   notes matures on December 27, 2001.


   <PAGE> 58

   Note 14- Stock Option Plan
   --------------------------
   In recognition of the efforts and risks undertaken by the Company's
   organizers, the Company issued warrants to purchase one share of common stock
   for each share purchased by them in the Company's common stock offering. 
   Upon exercise, each warrant will entitle the holder to purchase one share of
   common stock at a price equal to $10 per share (the same price at which the
   shares initially were sold to the public) unless the Bank is required to
   raise capital to meet its regulatory guidelines in which case the exercise
   price will be the greater of $10 per share or the book value per share of the
   common stock as reflected in the Company's quarterly financial report for the
   quarter ended immediately prior to the exercise of the warrant.  Subject to

                                      PAGE 62











   certain limitations, the warrants are exercisable for a period of ten years
   from the date of the Company's stock offering.

   A summary of the status of the Company's stock option plan as of December 31,
   1996, and the changes during the year ended December 31, 1996 is presented
   below:

   <TABLE>
   <CAPTION>

                                      DIRECTORS               EMPLOYEES
                               ----------------------  ----------------------
                                             WEIGHED-                WEIGHED-
                                             AVERAGE                 AVERAGE 
                                            EXERCISE                EXERCISE 
                                 SHARES       PRICE      SHARES       PRICE  
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   January 1, 1996                142,500     $ 10.00      10,926     $ 10.00 
   Granted                            -0-         .00         -0-         .00
   Reallocated                     10,926       10.00     (10,926)      10.00
   Exercised                          -0-         .00         -0-         .00
   Forfeited                       (5,000)      10.00         -0-         .00
                               ----------  ----------  ----------  ----------
   December 31, 1996              148,426     $ 10.00         -0-     $   .00
                               ==========  ==========  ==========  ==========

   </TABLE>

   The following table summarizes information about fixed stock options
   outstanding at December 31, 1996:
   <TABLE>
   <CAPTION>
                            OUTSTANDING OPTIONS          EXERCISABLE OPTIONS
                    ----------------------------------  ----------------------
                                  WEIGHTED-
                                   AVERAGE    WEIGHTED                 WEIGHTED-
   RANGE OF            NUMBER     REMAINING   AVERAGE       NUMBER      AVERAGE
   EXERCISE          OUTSTANDING CONTRACTUAL  EXERCISE    EXERCISABLE  EXERCISE
    PRICES           AT 12/31/96    LIFE       PRICE      AT 12/31/96    PRICE 
   --------          ----------- ----------------------   -----------  ---------
   <S>               <C>         <C>         <C>          <C>          <C>      

   $ 10.00             148,426   4.85 years   $ 10.00       148,426     $ 10.00

   </TABLE>

   If the Company had used the fair value based method of accounting for its
   stock option plan, as prescribed by Statement of Financial Accounting
   Standards No. 123, compensation cost in net income for the year ended
   December 31, 1996 would not have changed.



   <PAGE> 59

                                      PAGE 63











   Note 15 - Financial Information of FNC Bancorp, Inc. (Parent Only)
   ------------------------------------------------------------------
   Condensed balance sheets of FNC Bancorp, Inc. as of December 31, 1996 and
   1995 and related statements of income and cash flows for the years then ended
   are as follows:
   <TABLE>
   <CAPTION>
                                  BALANCE SHEETS
                                  --------------
                                                           DECEMBER 31,     
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
                     ASSETS
                     ------
   Cash on deposit with subsidiary Bank              $   66,591       578,088
   Investment in First National Bank
     of Coffee County                                 3,356,055     3,491,084
   Other assets                                          10,926         8,215
                                                     ----------    ----------
     Total Assets                                    $3,433,572     4,077,387
                                                     ==========    ==========

      LIABILITIES AND STOCKHOLDERS' EQUITY
      ------------------------------------
   Notes payable to directors                        $  500,000           -0-
                                                     ----------    ----------
   Stockholders' Equity:
     Common stock                                       405,710       405,710
     Additional paid in capital                       3,610,541     3,610,541
     Retained earnings (deficit)                     (1,084,329)       62,003
     Unrealized gains (losses) on available-
       for-sale securities, net of applicable
       deferred income taxes                              1,650          (867)
                                                     ----------    ----------
                                                      2,933,572     4,077,387
                                                     ----------    ----------
       Total Liabilities and Stockholders' Equity    $3,433,572     4,077,387
                                                     ==========    ==========
   </TABLE>
   <TABLE>
   <CAPTION>
                               STATEMENTS OF INCOME
                               ---------------------

                                                     YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        
   Income:
     Equity in earnings (loss) of First National
       Bank of Coffee County                        $(1,137,546)      309,440
     Interest income                                     11,795        19,042

                                      PAGE 64











                                                    -----------   -----------
                                                     (1,125,751)      328,482
   Expenses                                              28,423        13,382
                                                    -----------   -----------
   Income (loss) before taxes                        (1,154,174)      315,100

   Income taxes (benefit)                                (7,842)        1,924
                                                    -----------   -----------
   Net Income (Loss)                                $(1,146,332)      313,176
                                                    ===========   ===========
   <PAGE> 60

   </TABLE>
   <TABLE>
   <CAPTION>
                             STATEMENTS OF CASH FLOWS
                             -------------------------

                                                     YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                        1996          1995   
                                                    -----------   -----------
   <S>                                              <C>           <C>        

   Cash Flows From Operating Activities:
     Net income (loss)                              $(1,146,332)      313,176
     Adjustments to reconcile net income to
       net cash provided (used) by operating
       activities:
       Equity in earnings (loss) of Bank              1,137,546      (309,440)
       Deferred income taxes (benefit)                   (7,842)        4,111
       Amortization                                       2,944         3,925
       (Increase) decrease in income taxes
         receivable                                       2,187         9,402
                                                     ----------    ----------
     Net cash provided (used) by operating
       activities                                       (11,497)       21,174
                                                     ----------    ----------
   Cash Flows From Investing Activities:
     Additional investment in subsidiary             (1,000,000)          -0-
                                                     ----------    ----------
     Net cash provided (used) by investing
       activities                                    (1,000,000)          -0-
                                                     ----------    ----------
   Cash Flows From Financing Activities:
     Proceeds from notes payable                        500,000           -0-
                                                     ----------    ----------
     Net cash provided (used) by financing
       activities                                       500,000           -0-
                                                     ----------    ----------
   Net Increase (Decrease) in Cash                     (511,497)       21,174

   Cash at Beginning of Period                          578,088       556,914
                                                     ----------    ----------
   Cash at End of Period                             $   66,591       578,088

                                      PAGE 65











                                                     ==========    ==========
   </TABLE>


   <PAGE> 61
                                     PART III

   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
   ----------------------------------------------------------------------

   DIRECTORS
   ---------
     The members of the Board of Directors of the Company are elected by the
   shareholders.  The directorships of the Company are divided into three
   classes, with the members of each class serving three-year terms and the
   shareholders of the Company elect one class annually.

     The following table and accompanying notes sets forth the name, age,
   business experience during the past five years, the year he first became a
   director and the year in which his current term will expire of each of the
   Directors of the Company as of December 31, 1996.
   <TABLE>
   <CAPTION>                                                         DIRECTOR'S
                                                           DIRECTOR     TERM
          NAME                 AGE        POSITION          SINCE     EXPIRES

       BOARD NOMINEES   
   ---------------------
   <S>                         <C>   <C>                   <C>       <C>
   Milton G. Clements          48    Director                1990       1997
   Robert L. Cation            52    Chairman of the Board   1990       1997
                                       of Directors

   DIRECTORS CONTINUING
         IN OFFICE      
   ---------------------
   A. Curtis Farrar, Jr.       52    Director                1990       1999
   Norman E. Fletcher          59    Director                1990       1999
   William C. Ellis, Jr.       52    Director                1990       1998
   Ralph G. Evans              40    Director                1990       1998
   </TABLE>

   Executive Officers
   ------------------
     The following table and accompanying notes sets forth the name, age and
   business experience during the past five years of individuals who are the
   executive officers of the Company and the Bank and all persons chosen to
   become executive officers.
   <TABLE>
   <CAPTION>

                Name            Age Position With the Company and the Bank

   <S>                           <C>   <C>

                                      PAGE 66






   Robert L. Cation              52    Interim President and CEO of FNC
                                          Bancorp, Inc.
                                       Interim President and CEO of First
                                          National Bank of Coffee County

   Al D. Ross                    33    Executive Vice President of First
                                          National Bank of Coffee County

   Ralph G. Evans                40    Secretary of FNC Bancorp, Inc.

   Pat Williams                  28    Vice President of First National
                                          Bank of Coffee County

   Rose C. Pope                  46    Vice President/Cashier of First
                                          National Bank of Coffee County

   Lisa H. Bennett               34    Assistant Vice President/ Mortgage
                                          Lending of First National Bank
                                          of Coffee County

   Charlene Hall                 44    Banking Officer of First National
                                          Bank of Coffee County

   <PAGE> 62

   Business Experience
   -------------------
     Al D. Ross is Executive Vice President of First National Bank of Coffee
   County.  His responsibilities include supervision of the Bank's lending area
   as well as the Bank's loan processing and operation area.  He came to First
   National Bank with over 11 years of banking experience primarily in
   commercial, agricultural and mortgage lending.  He is actively involved in
   community and civic affairs through his memberships in the Douglas-Coffee
   County Chamber of Commerce and Douglas Rotary Club.

     Robert L. Cation is an Organizer of the Company and the Bank.  Mr. Cation
   also is the Chairman of the Board of Directors of the Company and serves as
   Chairman of the Board of Directors of the Bank.  Since 1970, Mr. Cation has
   owned and operated Cation Food Stores, Inc., a retail grocery operation in
   south Georgia, where he serves as President and is responsible for the
   overall management of the corporation.  Mr. Cation served as a director for
   Bank South, Douglas (and as a director for The Exchange Bank of Douglas, the
   predecessor of Bank South, Douglas) from 1983 until June 1990.

     Milton G. Clements is an Organizer of the Company and the Bank.  Mr.
   Clements also is a Director of the Company and the Bank.  He is President and
   managing principal of Clements, Purvis & Stewart, P.C., a Certified Public
   Accounting firm in Douglas, Georgia.  He has served as the 2nd Vice President
   and a director of the Douglas-Coffee County Chamber of Commerce as well as a
   director of the Douglas Downtown Development Authority.  Mr. Clements is a
   member of the Douglas Lions Club where he has held all the primary officer
   positions, as well as a member of the Georgia Society and the American
   Institute of CPA's.

     William C. Ellis, Jr. is an Organizer of the Company and the Bank.  Mr.
   Ellis also is a Director of the Company and the Bank.  Mr. Ellis has served
   as President of ESCO Industries, Inc., a manufacturing corporation with
   branch locations in Asheboro, North Carolina and Lakeland, Florida.  In
   addition, Mr. Ellis serves as Secretary-Treasurer of Diversified Polymer
   Industries, Inc., Dalton, Georgia.  Mr. Ellis' professional involvement
   includes membership in the Georgia Manufactured Housing Association, the

                                      PAGE 67










   Coffee County Manufacturers Council and the Douglas-Coffee County Chamber of
   Commerce.  From 1984 until June 1990, he served as a director and a member of
   the Audit Committee for Trust Company Bank of Coffee County.

     Ralph G. Evans is an Organizer of the Company and the Bank.  Mr. Evans also
   is a Director and the Secretary of the Company and Director of the Bank.  Mr.
   Evans serves as President of both R. W. Griffin Feed, Seed & Fertilizer,
   Inc., a farming and farm supply retail store, and Douglas Peanut and Grain
   Co. Mr. Evans also serves as a director of Chem Nut, Inc., an Albany, Georgia
   based publicly-held ag-chemical distribution company with annual sales of
   $120 million.  Mr. Evans previously served as a director of the Downtown
   Douglas Development Authority.

     A. Curtis Farrar, Jr. is an Organizer of the Company and the Bank.  Mr.
   Farrar also is a Director of the Company and the Bank.  He is presently
   Senior Partner with the law firm of Farrar and Hennesy .  Since 1973, Mr.
   Farrar has served as a Juvenile Court Judge in Douglas and is presently
   serving as chairman of the Georgia Board of Natural Resources.  From 1987 to
   1989, Mr. Farrar served on the Georgia Governor's Task Force on Drug
   Awareness and Prevention.

   <PAGE> 63

     Norman E. Fletcher is an Organizer of the Company and the Bank.  Mr.
   Fletcher also is a Director of the Company and the Bank.  He is President of
   Fletcher Oil Company and Floco, Inc. all of which are wholesale oil
   companies.  He also serves as President of Quick Change, Inc., convenience
   store chain in south Georgia.  Mr. Fletcher is an active member, deacon and
   gideon of the First Baptist Church in Douglas, and since January 1990, he has
   served as Chairman of the Job Training Program in the area.

     Pat Williams is Vice President/Commercial and Consumer Lending.  Pat
   graduated from the University of Mississippi with a B.S. degree in Banking
   and Finance.  He brings seven years of banking experience to the position.

     Rose C. Pope is Vice President/Cashier and has been with the Bank since its
   inception.  Formerly, Ms. Pope was with BankSouth, Douglas.  She is Past
   President of the Pilot Club of Douglas and an active member of Carver Baptist
   Church.

     Lisa H. Bennett is Assistant Vice President/Mortgage Lending and has been
   with the Bank since August, 1992.  Ms. Bennett brings 14 years of banking
   experience to the position.  She is an active member of the First United
   Methodist Church of Douglas.

     Charlene Hall is Banking Officer with primary responsibilities in the areas
   of Personnel and Customer Service.  She joined the staff of First National in
   January 1995 and contributes 26 years of banking experience to the management
   team.

     Unless stated otherwise, each of the above-named persons has been engaged
   in his or her present occupation for more than the past five years.

     There are no family relationships among directors, executive officers, or
   persons nominated or chosen by the Company to become directors or executive

                                      PAGE 68











   officers.


   <PAGE> 64

   ITEM 10.  EXECUTIVE COMPENSATION
   --------------------------------

   Executive Compensation
   ----------------------
     The Company does not separately compensate any of its executive officers. 
   The following table sets forth certain information concerning the
   compensation of the Bank's chief executive officer during fiscal years 1996,
   1995 and 1994.
   
</TABLE>
<TABLE>
   <CAPTION>
                                              ANNUAL COMPENSATION
                                ------------------------------------------------
   NAME AND                                                            OHER  
   PRINCIPAL                                 SALARY        BOUS        COMP  
   POSITION (2)                   YEAR          $           $           $    
                               ----------  ----------  ----------  ----------
   <S>                         <C>         <C>         <C>         <C>       
   Robert L. Cation                  1996 $       -0-         -0-          (1)
   Interim President
     and CEO of FNC
     Bancorp, Inc. and
     First National Bank
     Of Coffee County

   Timothy J. Palmer                 1996 $    71,186         -0-          (1)
     President and                   1995      90,000      13,950          (1)
     CEO of FNC                      1994      79,194      19,000          (1)
     Bancorp, Inc. and
     First National Bank
     Of Coffee County
   </TABLE>

   <TABLE>
   <CAPTION>
                                       LONG-TERM COMPENSATION
                     ----------------------------------------------------------
   NAME AND                      RESRICED   SECURIIES                  ALL   
   PRINCIPAL                      STOCK      UDERLYIG      LTIP        OHER  
   POSITION (2)        YEAR      AWARD $       OPIOS       PAYOU       COMP  
                    ---------- ----------  ----------  ----------  ----------
   <S>              <C>        <C>         <C>         <C>       
   Robert L. Cation       1996$       -0-         -0-         -0-         -0-
     Interim President
     and CEO of FNC
     Bancorp, Inc. and
     First National Bank
     Of Coffee County

   Timothy J. Palmer      1996        -0-         -0-         -0-         -0-

                                      PAGE 69











     President and        1995        -0-     3,642(4)        -0-         -0-
     CEO of FNC           1994        -0-     3,642(4)        -0-         -0-
     Bancorp, Inc. and
     First National Bank
     Of Coffee County
   </TABLE>

   ----------------------------------------
   (1)   Compensation does not include any perquisites and other personal
   benefits which may be derived from business-related expenditures that in the
   aggregate do not exceed the lesser of $50,000 or 10% of the total annual
   salary and bonuses reported for such person.

   (2)   None of the four other highest paid executive officers earned more than
   $100,000 per year.

   (3)   Mr. Palmer left the Company on May 19, 1996.  His successor will begin
   employment April 1, 1997.

   (4)   Transferred to other Directors as of December 31, 1996.

     Mr. Timothy J. Palmer, who was a Director, President and Chief Executive
   Officer of the Company and served as Director, President and Chief Executive
   Officer of the Bank, executed an employment agreement with the Bank effective
   December 31, 1994.  The employment agreement provided that Mr. Palmer would
   serve as President, Chief Executive Officer and Director of the Bank.

     In addition, the employment agreement provided for a base salary of $90,000
   which may be increased annually at the sole discretion of the Board of
   Directors.  The agreement also provided for bonuses to be paid to Mr. Palmer
   based upon the achievement by the Bank of specified levels of total assets or
   profits earned by the Bank.  Mr. Palmer would receive a bonus in accordance
   with the following:

           (1)  (Growth Incentive) for each $1 million increase in assets over
                the preceding fiscal year, Mr. Palmer shall receive a bonus
                equal to 1.3% of his base salary for the year subject to a
                maximum of 6.5% of such base salary.  For purposes of
                calculating the growth incentive for 1996, the 1995 asset base
                shall be deemed to be $40 million.  For any increase in assets
                or portion thereof which is less than $1 million, Mr. Palmer
                shall receive a bonus pro-rated based upon the bonus per $1
                million.

   <PAGE> 65

           (2)  (Profit Incentive) Mr. Palmer shall receive a bonus equal to the
                sum of the following as a profit incentive:

                 If the net income for the current year exceeds the net income
                 for the prior fiscal year, then a bonus equal to 2% of Mr.
                 Palmer's base salary, plus for each $6,000 increase in net
                 income over the preceding year's net income, a bonus equal to
                 .7% of his base salary subject to a maximum of 7% of such base
                 salary.  For any increase in net income or portion thereof

                                      PAGE 70











                 that is less than $6,000, Mr. Palmer shall receive a bonus
                 prorated based upon the bonus for $6,000.  In calculating the
                 profit incentive bonus, the reserve for loan losses to gross
                 loans shall equal at least the pro-forma reserves of $1.2% for
                 1995 and 1.29% for 1996.  Thereafter, the actual reserve for
                 loan losses shall be used.  In addition and for all years in
                 calculating net income, the gain on the sale of securities
                 (after tax) shall not exceed 20%.  Net profit is determined
                 after accrual for all employee and officer bonuses except
                 those payable to Mr. Palmer hereunder and all other accruals
                 including state and federal income taxes.

    Under a previous employment agreement, it was provided that the Company's
   Board will grant to Mr. Palmer at the end of the first fiscal year an option
   to purchase up to 1% of the Company's Common Stock outstanding as of the
   first day the Bank opens for business at the original issue price if, at the
   end of the first full fiscal year, the Bank's total assets are not less than
   125% of the amount estimated in the pro forma statements ($9,003,276.00).  At
   the end of the second and third years, the Board will grant to Mr. Palmer an
   option to purchase an additional 1% of the Company's stock if the Bank's net
   profit before tax is not less than 125% of the amount estimated in the pro
   forma statements.  At no time may the aggregate stock options granted to Mr.
   Palmer under the employment agreement exceed 3% of the Company's Common Stock
   outstanding as of the first day the Bank opens for business.  If Mr. Palmer
   is not granted the above options by reason of failure to meet the performance
   requirements, at the end of the Bank's fifth full fiscal year he will be
   granted any of the above specified options not already granted provided he is
   still employed by the Bank and the Bank's return on average assets is not
   less than 1.2% for the fifth fiscal year.  As of December 31, 1994, the
   maximum number of options had been issued representing shares of 10,926.  All
   stock options granted to Mr. Palmer must be exercised within five years after
   their issuance.  As of the date Mr. Palmer terminated his employment, all
   options outstanding were transferred to the other Directors.

    The employment agreement also provided for hospitalization and major
   medical insurance coverage for Mr. Palmer and his immediate family; term life
   insurance; disability insurance; an automobile; membership in a social club
   suitable for conducting banking business; and reimbursement for expenses
   incurred on behalf of the Bank.

    In addition, the employment agreement provided that following the
   termination of his employment with the Bank, Mr. Palmer will not engage in
   any banking activities in which he was engaged at the time of his employment
   within Coffee County for a period of one year following termination.

   <PAGE> 66

    The following table sets forth certain information concerning each grant of
   options to purchase the Company's common stock made during the 1996 fiscal
   year to the persons named in the Summary Compensation Table.
   <TABLE>
   <CAPTION>

                                        INDIVIDUAL GRANTS                   
                    --------------------------------------------------------

                                      PAGE 71











                           NUMBER OF    % OF TOTAL
                             SHARES       OPTIONS
                           UNDERLYING   GRANTED TO   EXERCISE OR
                            OPTIONS    EMPLOYEES IN  BASE PRICE   EXPIRATION
               NAME       GRANTED (#)   FISCAL YEAR     ($/SH)       DATE   
                           ----------   ----------   ----------   ----------
   <S>                   <C>            <C>                 <C>         <C>
   Robert L. Cation              -0-          -0-           N/A         N/A
   Timothy J. Palmer             -0-          -0-           N/A         N/A
   </TABLE>

   The following table sets forth certain information regarding the exercise of
   stock options in the 1996 fiscal year by the person named in the Summary
   Compensation Table and the value of options held by such person at the end of
   such fiscal year.
   <TABLE>
   <CAPTION>
                                             NUMBER OF           VALUE OF
                                             SECURITIES       UNEXERCISED
                                             UNDERLYING      IN-THE-MONEY
                      SHARES                UNEXERCISED           OPTIONS
                      SHARES                 OPTIONS AT                AT
                     ACQUIRED     VALUE     YEAR END (#)      YEAR END ($)(2)
                          O      REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/
          NAME       EXERCISE      (1)   UNEXERCISABLE (U)
                                                         UNEXERCISABLE (U)

   <S>                 <C>       <C>        <C>                <C>   
   Timothy J. Palmer      -0-       -0-           -0-             -0-
   Robert L. Cation       -0-       -0-       26,561(E)           -0-

   </TABLE>
   ----------------------------------------
   (1)  Values are calculated by subtracting the exercise or base price from
   the fair market value of the stock as of the exercise date or fiscal year
   end, as appropriate, which is assumed to be the same price at which the stock
   was initially sold in 1991, due to the lack of an established trading market.

   (2)  Assumes, for all unexercised in-the-money options, the difference
   between fair market value and the exercise price to be -0- for the reason
   stated in (1) above.

   Director Compensation
   ---------------------
     Initially, Directors are reimbursed for expenses in connection with the
   performance of their duties but receive no directors' fees at the current
   time.


   <PAGE> 67

   ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   ------------------------------------------------------------------------
     The following table presents as of December 31, 1996, certain information
   regarding the Company's common stock owned by each person who beneficially
   owns more than 5% of the shares of the Company's common stock.

                                      PAGE 72











   <TABLE>
   <CAPTION>

                            NAME AND           AMOUNT AND
                           ADDRESS OF          NATURE OF 
                           BENEFICIAL          BENEFICIAL         PERCENT 
   TITLE OF CLASS             OWNER            OWNERSHIP          OF CLASS
   -----------------      -------------       -----------        ---------
   <S>                   <C>                    <C>                 <C>
   Common                Carl C. Atkinson       25,715 (1)          6.34%
                         Rt. 2, Box 777
                         Broxton, GA  31519
   Common                Robert L. Cation       26,465              6.52
                         1206 Hampton Road
                         Douglas, GA  31533
   Common                William C. Ellis, Jr.  26,714              6.58
                         P. O. Box 270
                         Douglas, GA  31533
   Common                Ralph G. Evans         28,264 (2)          6.97
                         P. O. Box 1264
                         Douglas, GA  31533
   Common                A. Curtis Farrar, Jr.  26,464              6.52
                         308 Dogwood Avenue
                         Douglas, GA  31533
   Common                Norman E. Fletcher     26,014 (3)          6.41
                         401 Shirley Avenue
                         Douglas, GA  31533

   </TABLE>

     The following table presents as of December 31, 1996, certain information
   regarding the Company's common stock owned, (1) by each of the Company's
   directors (2) each of the named executive officers and (3) by all directors
   and executive officers of the Company as a group.

   <TABLE>
   <CAPTION>

                            NAME AND           AMOUNT AND
                           ADDRESS OF          NATURE OF 
                           BENEFICIAL          BENEFICIAL         PERCENT 
   TITLE OF CLASS             OWNER            OWNERSHIP          OF CLASS
   -----------------      -------------       -----------        ---------
   <S>                   <C>                    <C>                 <C>
   Common                Robert L. Cation        26,465              6.52%
   Common                Milton G. Clements      18,314 (4)          4.51
   Common                William C. Ellis, Jr.   26,714              6.58
   Common                Ralph G. Evans          28,264 (2)          6.97
   Common                A. Curtis Farrar, Jr.   26,464              6.52
   Common                Norman E. Fletcher      26,014 (3)          6.41

   All directors and executive officers
   as a group (10 persons).                     152,490             37.59%



                                      PAGE 73











   (1)  Includes 12,500 shares held in the name of Malklean B. Atkinson, wife
        of Carl C. Atkinson.

   <PAGE> 68

   (2)  Includes 600 shares held in the name of Cady Suzanne Evans, daughter of
        Ralph G. Evans, 600 shares held in the name of Christy Elizabeth Evans,
        daughter of Ralph G. Evans and 600 shares held in the name of Ralph G.
        Evans, Jr., son of Ralph G. Evans.

   (3)  Includes 200 shares held in the name of CEDE & Company F/B/O Norman E.
        Fletcher IRA and 200 shares held in the name of CEDE & Company F/B/O
        Marvelyne G. Fletcher (wife of Norman E. Fletcher) IRA.

   (4)  Includes 1,000 shares held in the name of Laura B. Clements, wife of
        Milton G. Clements, 1,000 shares held in the name of Milton Bryan
        Clements, son of Milton G. Clements, 1,000 shares held in the name of
        Steven Griffin Clements, son of Milton G. Clements and 1,000 shares
        held in the name of William Donovan Clements, son of Milton G. Clements
        and 1,000 shares held in the name of CEDE & Company F/B/O Milton G.
        Clements IRA.

   ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
   --------------------------------------------------------
   Certain of the executive officers, directors and principal shareholders of
   the Company and the Bank, and affiliates of such persons, may from time-to-
   time be engaged in banking transactions with the Bank.  Any loans or other
   extensions of credit made by the Bank to such individuals are made in the
   ordinary course of business on substantially the same terms, including
   interest rates and collateral, as those prevailing at the time for comparable
   transactions with unaffiliated third parties and do not involve more than the
   normal risk of collectibility or present other unfavorable features.  At
   December 31, 1996, loans to executive officers, directors and principal
   shareholders and their associates amounted to $159,252.


   <PAGE> 69

   ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
   ------------------------------------------
   (a)  Documents filed as part of this report:

     1. The following financial statements of the Company are included in Item
        7 of this report:

          Independent Auditor's Report
          Consolidated Balance Sheets
          Consolidated Statements of Income
          Consolidated Statements of Stockholders' Equity
          Consolidated Statements of Cash Flows
          Notes to Consolidated Financial Statements

     2. Financial Statement Schedules

        All schedules have been omitted as the required information is not

                                      PAGE 74











        applicable.

     3. Exhibits

        The following exhibits are filed as part of or incorporated by
        reference in this Report.

          Exhibit No.  Documents
          ___________  _________

             3.1  Articles of Incorporation of the Company (Attached
                  as Exhibit 3.1 to the Company's Form S-18, as
                  amended, No. 33-37078)
             3.2  Bylaws of the Company (Attached as Exhibit 3.2 to
                  the Company's Form S-18, as amended, No. 33-37078)
            10.1  Form of Subscription Agreement (Attached as Exhibit
                  10.1 to the Company's Form 10-K filed for the year
                  ended December 31, 1990)
            10.2  Form of Organizer's Warrant (Attached as Exhibit
                  10.2 to the Company's Form S-18, as amended, No. 33-37078)
            21.1  Subsidiaries of the Registrant (Filed Herewith)
            27.1  Financial Data Schedule (Filed Herewith)

   (b)  Reports on Form 8-K

   None.


   <PAGE> 70
                                    SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
   has caused this report to be signed on its behalf by the undersigned,
   thereunto duly authorized.

                                                         FNC BANCORP, INC.
                                                           (Registrant)



   Date:  March 31, 1997                     By:  /s/ Robert L. Cation           
          __________________                      _______________________________

                                                  Robert L. Cation
                                                  Chairman

               In accordance with the Exchange Act, this report has been signed
   below by the following persons on behalf of the Registrant and in the
   capacities and on the dates indicated.

            Signature                      Title                    Date
            _________                      _____                    ____

   /s/ Robert L. Cation              Director               March 31, 1997
   --------------------
       Robert L. Cation

   /s/ Milton G. Clements            Director               March 31, 1997

                                      PAGE 75











   -------------------------
       Milton G. Clements

   /s/ William C. Ellis, Jr.         Director               March 31, 1997
   -------------------------
       William C. Ellis, Jr.

   /s/ Ralph G. Evans                Director               March 31, 1997
   -------------------------
       Ralph G. Evans

   /s/ A. Curtis Farrar, Jr.         Director               March 31, 1997
   -------------------------
       A. Curtis Farrar, Jr.

   /s/ Norman E. Fletcher            Director               March 31, 1997
   -------------------------
       Norman E. Fletcher






































                                      PAGE 76











                                   EXHIBIT 21.1

                          SUBSIDIARIES OF THE REGISTRANT
                                 FNC BANCORP, INC.

            NAME OF SUBSIDIARY                       STATE OF INCORPORATION
   -------------------------------------             ----------------------
   First National Bank of Coffee County                     Georgia




























































                                     EXHIBIT 27.1

                               FINANCIAL DATA SCHEDULE
                                  FNC BANCORP, INC.
          
</TABLE>