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, 2000

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         For the transition period from                    to

                  Commission file number:  33-37078

                    FNC BANCORP, INC. (A GEORGIA CORPORATION)
                I.R.S. EMPLOYER IDENTIFICATION NUMBER 58-1910615
                420 SOUTH MADISON AVENUE, DOUGLAS, GEORGIA 31533
                        TELEPHONE NUMBER: (229) 384-1100

           Securities registered pursuant to Section 12(b) of the Act

                                      None

           Securities registered pursuant to Section 12(g) of the Act

                      Common Stock, Par Value $1 Per Share

Check whether the registrant  (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
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 there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-B is not contained herein,  and will not 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]

The registrant's total revenues for the fiscal year ended December 31, 2000 were
$7,536,863.

As of March 1, 2001,  registrant had outstanding 414,886 shares of common stock,
$1 par value per share,  which is registrant's only class of common stock. There
is no established market for the common stock of the registrant.  Therefore, the
aggregate  market  value  of the  voting  stock  held  by  nonaffiliates  of the
registrant is not known.

                       DOCUMENTS INCORPORATED BY REFERENCE


                                      None

<PAGE>


                                     PART I.

ITEM 1.  DESCRIPTION OF BUSINESS

The Company

         FNC  Bancorp,  Inc.  (the  "Company")  was  incorporated  as a  Georgia
business  corporation on September 19, 1990, to serve as a bank holding  company
for First National Bank of Coffee County (the "Bank"). The Bank began operations
on September 23, 1991, and is the sole subsidiary of the Company.

         The Company's offices are located at 420 South Madison Avenue, Douglas,
Georgia and its telephone  number is (229) 384-1100.  The Company  maintains its
offices at the office of First National Bank of Coffee County at this address.

         The Company's principal business is the ownership and management of the
Bank.  The Company was 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 capital to the Bank. For example,  we may assist the
Bank  in  maintaining  its  required  capital  ratios  by  borrowing  money  and
contributing the proceeds of that debt to the Bank as primary capital.

The Bank

General

         On August 15, 1990, the Organizers of the Company and the Bank filed an
application  with the Office of the  Comptroller  of the Currency 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 Bank was  authorized  to commence  its banking  business
pursuant  to the  OCC's  approval  of a  national  bank  charter  for the  Bank.
Operations commenced on September 23, 1991.

         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.

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 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 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.


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<PAGE>





Market Area

         The Bank's primary service area 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 Coffee County was  approximately  29,592 in 1990 and was
estimated  at 34,958 in 1999,  an  increase  of almost  18% in nine  years.  The
population is projected to be 35,880 by 2001. The population is well distributed
by age and is slightly more than 51% female. The median age of the population is
32.2 years.

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  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.

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  noninterest-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  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 time and  savings  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.

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.




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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  include  Bankers  Bank  (Atlanta,   Georgia),   Regions  Bank
(Gainesville,  Georgia) SunTrust Bank (Atlanta,  Georgia),  Federal Reserve Bank
(Atlanta, Georgia), and Federal Home Loan Bank (Atlanta, Georgia).

The Bank sells loan  participation  to one or more  correspondent  or area 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  85% of  assets  and an  investment  portfolio  equal to
approximately  10% of the assets,  with the  remaining  5% 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
that 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  Asset/Liability  Committee on a quarterly  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  $1,011,000  (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 $674,000 (10% of the bank's unimpaired capital
and surplus),  provided such additional loans and extensions of credit are fully
secured by readily marketable collateral.

         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.






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<PAGE>




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 Coffee
County,  other than the Bank,  there are branches of six regional  banks.  These
include SunTrust Bank,  SouthTrust Bank, First Liberty Bank,  Citizens  Security
Bank,  Southeastern  Bank  and  Colony  Bank  Southeast.   The  Bank  encounters
competition from most of these financial institutions. 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 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  5.1% in commercial bank deposits in the
PSA over the last four 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, 2000,  the Bank  employed 36 full-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.

Supervision and Regulation

         Both the  Company  and the Bank are  subject  to  extensive  state  and
federal banking  regulations that impose restrictions on and provide for general
regulatory  oversight of our  operations.  These laws are generally  intended to
protect depositors and not shareholders.  The following discussion describes the
material elements of the regulatory framework that applies to us.

         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.

The Company

         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 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 the Bank.

         The Federal Reserve has  established a risk-based and leverage  measure
of capital  adequacy for bank holding  companies that is similar to that adopted
by the OCC for banks.





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<PAGE>




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

         The minimum  guideline for the ratio of total capital to  risk-weighted
assets is 8%. Total capital consists of two components,  Tier 1 Capital and Tier
2 Capital.  Tier 1 Capital generally  consists of common  shareholders'  equity,
minority  interests  in  the  equity  accounts  of  consolidated   subsidiaries,
qualifying  noncumulative  perpetual  preferred  stock,  and a limited amount of
qualifying  cumulative  perpetual  preferred  stock,  less  goodwill  and  other
specified  intangible  assets.  Tier  1  Capital  must  equal  at  least  4%  of
risk-weighted  assets.  Tier 2 Capital generally  consists of subordinated debt,
other  preferred  stock and  hybrid  capital  and a limited  amount of loan loss
reserves.  The  total  amount  of Tier 2 Capital  is  limited  to 100% of Tier 1
Capital.

         In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding  companies.  These guidelines  provide for a minimum
ratio of Tier 1 Capital to average  assets,  less  goodwill and other  specified
intangible  assets, of 3% for bank holding companies that meet certain specified
criteria,  including having the highest  regulatory  rating and implementing the
Federal  Reserve's  risk-based  capital  measure for market risk. All other bank
holding  companies  generally  are  required to maintain a leverage  ratio of at
least 4%. The guidelines also provide that bank holding  companies  experiencing
internal  growth or making  acquisitions  will be expected  to  maintain  strong
capital positions  substantially  above the minimum  supervisory  levels without
significant  reliance on intangible  assets.  The Federal Reserve  considers the
leverage ratio and other indicators of capital strength in evaluating  proposals
for expansion or new activities.

         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 an 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.





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<PAGE>




         The Federal Reserve has 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. ss. 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 retention by the
holding  company appears  consistent  with its capital needs,  asset quality and
overall financial condition.

           On November  12,  1999,  then-President  Clinton  signed into law the
Gramm-Leach-Bliley   Act  (the  "GLB  Act"),  which  significantly  changed  the
regulatory  structure  and  oversight  of the Company and the Bank.  The GLB Act
revises the Bank Holding Company Act and repeals the  affiliation  provisions of
the Glass-Steagall Act of 1933, permitting a qualifying holding company,  called
a  "financial  holding  company",  to  engage  in  a  full  range  of  financial
activities,  including banking,  insurance and securities activities, as well as
merchant  banking and  additional  activities  that are "financial in nature" or
"incidental" to such financial  activities.  The GLB Act thus provides  expanded
financial  affiliation  opportunities  for existing  bank  holding  companies by
allowing  bank holding  companies  to engage in  activities  such as  securities
underwriting and the underwriting and brokering of insurance  products.  The GLB
Act also expands passive  investments by financial holding companies in any type
of company,  financial or  nonfinancial,  through merchant banking and insurance
company  investments.  In order  for a bank  holding  company  to  qualify  as a
financial  holding  company,  its  subsidiary  depository  institutions  must be
"well-capitalized"  and "well-managed" and have at least a "satisfactory" rating
under the Community Reinvestment Act.




                                       6
<PAGE>




           The GLB Act also reforms the  regulatory  framework of the  financial
services industry. Under the GLB Act, financial holding companies are subject to
primary  supervision by the FRB, while current  federal and state  regulators of
financial   holding   company   regulated   subsidiaries   such   as   insurers,
broker-dealers,   investment   companies  and  banks   generally   retain  their
jurisdiction and authority.  In order to implement its underlying purposes,  the
GLB Act  preempts  state  laws that  restrict  the  establishment  of  financial
affiliations  authorized  or permitted  under the GLB Act,  subject to specified
exceptions for state insurance regulators.  The GLB Act also removes the current
blanket  exemption for banks from the  broker-dealer  registration  requirements
under the  Securities  Exchange Act of 1934, as amended,  amends the  Investment
Company Act of 1940,  as  amended,  with  respect to bank common  trust fund and
mutual fund  activities,  and amends the  Investment  Advisers  Act of 1940,  as
amended,  to require  registration  of banks that act as investment  advisers to
mutual funds.

           The provisions of the GLB Act relating to financial holding companies
became  effective  on March  15,  2000.  Financial  holding  companies  have the
authority to engage in  activities  that are  "financial in nature" that are not
permitted  for other bank holding  companies.  Some of the  activities  that the
G-L-B Act provides are financial in nature are:

           (a)    lending, exchanging, transferring, investing for others or
                  safeguarding money or securities;
           (b)    insuring,  guaranteeing,  or indemnifying  against loss, harm,
                  damage, illness, disability or death, or providing and issuing
                  annuities  and  acting  as  principal,  agent or  broker  with
                  respect thereto;
           (c) providing  financial,  investment or economic advisory  services,
           including  advising  an  investment  company;  (d) issuing or selling
           instruments representing interests in pools of assets permissible for
           a bank to hold directly; and (e) underwriting, dealing in or making a
           market in securities.

           A bank holding company that qualifies as a financial  holding company
may engage in activities  that are financial in nature or incident to activities
which are  financial in nature.  A bank holding  company may qualify to become a
financial holding company if:

           (a)    each of its depository institution subsidiaries is "well
                  capitalized";
           (b)    each of its depository institution subsidiaries is "well
                  managed";
           (c)    each of its depository  institution  subsidiaries has at least
                  a "satisfactory"  Community Reinvestment Act rating at
                  its most recent examination; and
           (d)    it has  filed a  certification  with  the FRB that it  elects
                  to become a financial holding company.

           As of  December  31,  2000,  FNC has not  registered  as a  financial
holding company with the FRB.

         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 the 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
levels 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 BHCA,  as  amended  by the  interstate  banking  provisions  of the
Riegle-Neal  Interstate  Banking  and  Branching  Efficiency  Act of  1994  (the
"Interstate  Banking  Act",   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.



                                       7
<PAGE>




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 Bank is subject to FDIC deposit insurance  assessments for the Bank
Insurance Fund (the "BIF"),  which as of December 31, 2000,  ranged from 0 to 27
basis  points  per $100 of  insured  deposits,  based  on the risk a  particular
institution  poses to its deposit  insurance  fund. The risk  classification  is
based on an institution's capital group and supervisory subgroup assignment.

         On  September  30,  1996,  then-President  Clinton  signed the  Deposit
Insurance Fund Act of 1996 ("DIFA") which was part of the omnibus  spending bill
enacted by Congress at the end of its 1996 session.  DIFA provides that the FDIC
may not set  semi-annual  assessments  with  respect to the BIF in excess of the
amount needed to maintain the 1.25% designated  reserve ratio or, if the reserve
ratio is less than the designated  reserve ratio,  to increase the reserve ratio
to the designated  reserve ratio.  In addition,  DIFA mandates the merger of BIF
and the Savings  Association  Insurance Fund (the "SAIF"),  effective January 1,
1999, only if no insured depository institution is a savings association on that
date. The combined deposit insurance fund would be called the "deposit insurance
fund" or "DIF".

         DIFA also  imposes  assessments  against  both SAIF and BIF deposits to
avoid  predicted  default  on the  bonds  issued  by the  Financing  Corporation
("FICO") as deposits in savings  institutions  continue to decline.  DIFA amends
the Federal Home Loan Bank Act to impose the FICO  assessment  against both SAIF
and BIF deposits  beginning  after December 31, 1996. The assessment  imposed on
insured depository  institutions with respect to any BIF-assessable deposit will
be assessed at a range equal to one-fifth of the rate  (approximately  1.3 basis
points)  of the  assessments  imposed on insured  depository  institutions  with
respect to any  SAIF-assessable  deposit  (approximately 6.7 basis points).  The
FICO  assessment for 1996 was paid entirely by  SAIF-insured  institutions,  but
BIF-insured banks will pay the same FICO assessment as SAIF-insured institutions
beginning as of the earlier of December  31,  2000,  or the date as of which the
last savings association ceases to exist.

         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 capital requirements applicable to the
Company,  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 8%.

         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.




                                       8
<PAGE>




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,  the  federal
banking regulators have established five capital  categories;  well capitalized,
adequately capitalized,  undercapitalized,  significantly undercapitalized,  and
critically  undercapitalized.  The federal banking  regulators have specified by
regulation the relevant capital level for each category.

         Under 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.

         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, 2000,  the Bank had the  requisite  capital  levels to
qualify as well capitalized.



                                       9
<PAGE>




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  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.
        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.

Community Reinvestment Act

        The  Community   Reinvestment  Act  requires  the  appropriate   federal
regulator,  in  connection  with their  examinations  of financial  institutions
within their jurisdiction,  to evaluate the record of each financial institution
in  meeting  the  credit  needs  of  its  local  community,  including  low  and
moderate-income  neighborhoods.  These factors are also considered in evaluating
mergers, acquisitions, and applications to open a branch or facility. Failure to
adequately  meet  these  criteria  could  impose  additional   requirements  and
limitations on the Bank. Under the Gramm-Leach-Bliley  Act, banks with aggregate
assets of not more than $250 million are subject to a Community Reinvestment Act
examination  only  once  every 60  months if the bank  receives  an  outstanding
rating,  once every 48 months if it receives a satisfactory rating and as needed
if  the   rating   is  less   than   satisfactory.   Additionally,   under   the
Gramm-Leach-Bliley  Act,  banks are  required to publicly  disclose the terms of
various Community Reinvestment Act-related agreements.

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.




                                       10
<PAGE>




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.

        Interest and other charges  collected or contracted  for by the Bank are
subject to state usury laws and federal  laws  concerning  interest  rates.  The
Bank's loan  operations  are also subject to federal laws  applicable  to credit
transactions, such as:

o        The federal Truth-In-Lending Act, governing disclosures of credit
         terms to consumer borrowers;

o        The Home  Mortgage  Disclosure  Act of 1975,  requiring  financial
         institutions  to  provide  information  to enable  the  public and
         public officials to determine  whether a financial  institution is
         fulfilling  its  obligation  to help meet the housing needs of the
         community it serves;

o        The Equal Credit  Opportunity Act,  prohibiting  discrimination on the
         basis of race, creed or other prohibited  factors in extending credit;

o        The Fair Credit Reporting Act of 1978, governing the use and provision
         of information to credit reporting agencies;

o        The Fair Debt Collection Act, governing the manner in which consumer
         debts may be collected by collection agencies; and

o        The rules and  regulations of the various  federal  agencies  charged
         with the responsibility of implementing these federal laws.

        The deposit operations of the Bank are subject to:

o             The  Right to  Financial  Privacy  Act,  which  imposes  a duty to
              maintain   confidentiality   of  consumer  financial  records  and
              prescribes procedures for complying with administrative  subpoenas
              of financial records; and

o             The  Electronic  Funds Transfer Act and Regulation E issued by the
              Federal  Reserve to implement  that act,  which governs  automatic
              deposits to and withdrawals  from deposit  accounts and customers'
              rights and  liabilities  arising from the use of automated  teller
              machines and other electronic banking services.

Taxation

General.  In  general,  the Company and the Bank are 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.



                                       11
<PAGE>




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.

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  on  private  activity  bonds  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 its AMTI
(determined  without regard to this item), with certain  adjustments,  including
the addition of tax-exempt income.

Future Requirements

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


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 Bank
building adds 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 totaled approximately $1.3 million.

        At December 31, 2000, the Company had no binding commitments for capital
expenditures.




                                       12
<PAGE>




ITEM 3.  LEGAL PROCEEDINGS

         Neither the Company nor its  subsidiary  bank is a party to, nor is any
of their property the subject of, any material pending legal proceedings,  other
than the ordinarily routine proceedings  incidental to the business of the Bank,
nor to the knowledge of the  management of the Company are any such  proceedings
contemplated or threatened against it or its subsidiary.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

         No  matters  were  submitted  to a vote of the  Company's  shareholders
during the fourth quarter of 2000.




                                       13
<PAGE>



                                     PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         SECURITY HOLDER MATTERS

        (a)      There currently is no public market for the Common Stock.

        (b)      As of March 1, 2001, there were approximately 360 holders of
                 record of the Common Stock.

        (c)      The Company  paid a cash  dividend of $.23 on its common  stock
                 during the fiscal year ended  December  31, 2000.  The payment
                 of dividends by national  banks is  restricted  by statute and
                 regulation.  See "Item 1. Description of Business - Supervision
                 and Regulation."



                                       14
<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

         The   Company's   2000   Annual   Report   on  Form   10-KSB   contains
forward-looking  statements in addition to historical  information.  The Company
cautions  that there are  various  important  factors  that could  cause  actual
results  to  differ  materially  from  those  indicated  in the  forward-looking
statements;  accordingly,  there can be no assurance that such indicated results
will be realized.  These factors include legislative and regulatory  initiatives
regarding deregulation and restructuring of the banking industry; the extent and
timing  of  the  entry  of  additional  competition  in the  Company's  markets;
potential business strategies,  including acquisitions or dispositions of assets
or internal restructuring, that may be pursued by the Company; state and Federal
banking  regulations;  changes in or application of environmental and other laws
and regulations to which the Company is subject;  political,  legal and economic
conditions  and  developments;  financial  market  conditions and the results of
financing  efforts;  changes in commodity  prices and interest  rates;  weather,
natural disasters and other catastrophic  events; and other factors discussed in
the Company's  filings with the  Securities and Exchange  Commission,  including
this Annual Report on Form 10-KSB. The words "believe", "expect",  "anticipate",
"project" and similar expressions signify  forward-looking  statements.  Readers
are cautioned not to place undue reliance on any forward-looking statements made
by or on behalf of the Company.  Any such  statement  speaks only as of the date
the statement was made. The Company undertakes no obligation to update or revise
any forward-looking  statements.  Additional information with respect to factors
that may cause  results to differ  materially  from those  contemplated  by such
forward-looking  statements is included in the Company's  current and subsequent
filings with the Securities and Exchange Commission.

General

         The   Company's   principal   asset  is  its  ownership  of  the  Bank.
Accordingly,  the Company's  results of operations are primarily  dependent upon
the results of  operations of the Bank.  The Bank conducts a commercial  banking
business,  which  consists of attracting  deposits  from the general  public and
applying those funds to the origination of commercial,  consumer and real estate
loans (including  commercial loans  collateralized  by real estate).  The Bank's
profitability  depends primarily on net interest income, which is the difference
between interest income generated from interest-earning  assets (i.e., loans and
investments) less the interest expense incurred on interest-bearing  liabilities
(i.e., customer deposits and borrowed funds). Net interest income is affected by
the   relative   amounts  of   interest-earning   assets  and   interest-bearing
liabilities,  and the  interest  rate  paid and  earned on these  balances.  Net
interest income is dependent upon the Bank's interest rate spread,  which is the
difference between the average yield earned on its  interest-earning  assets and
the average rate paid on its interest-bearing liabilities. When interest-earning
assets  approximates  or  exceeds  interest-bearing  liabilities,  any  positive
interest rate spread will generate interest income.  The interest rate spread is
impacted by interest rates, deposit flows and loan demand. Additionally,  and to
a lesser  extent,  the Bank's  profitability  is affected by such factors as the
level of noninterest income and expenses,  the provision for loan losses and the
effective tax rate. Noninterest income consists primarily of loan and other fees
and income from the sale of investment securities.  Noninterest expenses consist
of compensation  and benefits,  occupancy-related  expenses,  deposit  insurance
premiums paid to the FDIC and other operating expenses.




                                       15
<PAGE>




Results of Operations For Years Ended December 31, 2000 and 1999

         The Company's  results of operations  are  determined by its ability to
effectively manage interest income and expense,  to minimize loan and investment
losses, to generate noninterest income and to control noninterest expense. Since
interest  rates are determined by market forces and economic  conditions  beyond
the  control of the  Company,  the ability to generate  net  interest  income is
dependent upon the Bank's ability to obtain an adequate  spread between the rate
earned  on  interest-earning  assets  and  the  rate  paid  on  interest-bearing
liabilities.  Thus, the key  performance  measure for net interest income is the
interest margin or net yield,  which is  taxable-equivalent  net interest income
divided by average earning assets.

         The primary component of consolidated  earnings is net interest income,
or the  difference  between  interest  income  on  interest-earning  assets  and
interest paid on  interest-bearing  liabilities.  The net interest margin is net
interest income  expressed as a percentage of average  interest-earning  assets.
Interest-earning  assets  consist of loans,  investment  securities  and Federal
funds  sold.   Interest-bearing   liabilities  consist  of  deposits  and  other
short-term  borrowings.  A portion of  interest  income is earned on  tax-exempt
investments,  such as state and  municipal  bonds.  In an  effort to state  this
tax-exempt  income and its  resultant  yield on a basis  comparable to all other
taxable  investments,  an  adjustment  is  made  to  present  this  income  on a
taxable-equivalent basis.

         The Company's net interest margin increased 12 basis points or 2.35% to
5.22%  in  2000,   as  compared   to  5.10%  in  1999.   The  yield  on  average
interest-earning  assets increased 85 basis points or 9.66% to 9.65% in 2000, as
compared to 8.80% in 1999.  The interest  rate paid on average  interest-bearing
liabilities increased 60 basis points or 12.58% to 5.37% in 2000, as compared to
4.77% in 1999. Net interest income on a taxable-equivalent  basis was $3,672,000
in 2000 as compared to $3,093,000 in 1999,  representing an increase of $579,000
or 18.72%.  The increase in the yield on  interest-earning  assets was partially
offset by an increase  in the rate paid on  interest-bearing  liabilities.  As a
result, only $167,000 of the increase in net interest income was attributable to
changes in interest rate. Due primarily to a significant increase of $10,665,000
or 21.67% in average loans in 2000 as compared to 1999, $412,000 of the increase
in net interest income was attributable to increase in volume.

         Average   interest-earning  assets  increased  $9,734,000  or16.06%  to
$70,349,000  in  2000  from   $60,615,000  in  1999.   Average  loans  increased
$10,665,000;  average  Federal  funds sold  decreased  $2,516,000;  and  average
investments  increased  $1,585,000.  The  increase  in average  interest-earning
assets  was  accompanied  by an  increase  of  $9,062,000  or 15.65% in  average
deposits to $66,951,000 in 2000 from $57,889,000 in 1999.  Approximately  16% of
the average  deposits were  noninterest-bearing  deposits in 2000 as compared to
approximately 20% in 1999.

         Average total assets increased  $11,480,000 or 17.95% to $75,434,000 in
2000 as compared to $63,954,000 in 1999. Loan demand was strong again in 2000 as
evidenced  by average  loan to deposit  ratio of 89.44 % in 2000 as  compared to
85.02% in 1999.

         The  allowance for loan losses is  established  through a provision for
loan losses charged to expense and represents a reserve for potential  losses in
the loan portfolio. 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. The  adequacy of the  allowance  for loan losses is evaluated  periodically
based on a review  of all  significant  loans,  with a  particular  emphasis  on
nonaccruing,   past  due  and  other  loans  that  management  believes  require
attention.

         The  provision  for loan  losses is a charge to earnings in the current
period to  replenish  the  allowance  for loan losses and maintain it at a level
management has determined to be adequate.  Based upon management's evaluation of
the loan  portfolio and the potential loan risk  associated  with specific loans
and selected  loan  categories,  management  determined  that no  provision  was
required to be charged to earnings in 2000 or in 1999.  The  allowance  for loan
losses as a percentage of total loans outstanding  amounted to 2.18% at December
31, 2000 as compared to 2.63% at December 31,  1999.  Management  considers  the
year-end allowances adequate to cover potential losses in the loan portfolio.



                                       16
<PAGE>




         Following is a  comparison  of  noninterest  income for the years ended
December 31, 2000 and 1999.
<TABLE>
<CAPTION>

                                                                                                           Increase
                                                                           2000             1999          (Decrease)
                                                                      ----------------  --------------  ----------------

            <S>                                                       <C>               <C>             <C>
            Service charges on deposit accounts ..................... $       609,000   $     524,000   $       85,000
            Other commissions and fees ..............................          36,000          37,000           (1,000)
            Origination fees on mortgage loans ......................          20,000          34,000          (14,000)
            Other ...................................................          87,000          75,000           12,000
                                                                      ----------------  --------------  ----------------

                                                                      $       752,000   $     670,000   $       82,000
                                                                      ================  ==============  ================
</TABLE>

         Total noninterest income increased $82,000 or 12.24%, in 2000. However,
as a percentage of average assets,  noninterest  income  decreased from 1.05% in
1999 to 1.00% in 2000,  a 4.76%  decrease.  The  increase in service  charges on
deposit  accounts of $85,000 or 16.22% is partly  attributable to an increase of
approximately  $1,303,000  or 5.17% in average  demand  deposits  and savings in
2000. Other commissions and fees decreased $1,000 or 2.70%.  Origination fees on
mortgage loans decreased  $14,000 or 41.18% in 2000 as compared to a decrease of
$12,000 or 26.09% in 1999 from 1998.  The Bank continues to fund and retain more
new  mortgage  loans as opposed to  originating  such loans for other  financial
institutions.  Other  income  increased  $12,000  in 2000  due  primarily  to an
increase of $15,000 in ATM fees.

         Following  is an  analysis of  noninterest  expense for the years ended
December 31, 2000 and 1999.
<TABLE>
<CAPTION>

                                                                                                            Increase
                                                                          2000              1999           (Decrease)
                                                                    -----------------  ---------------- ------------------

             <S>                                                    <C>                <C>              <C>
             Salaries and employee benefits ....................... $      1,457,000   $     1,251,000  $        206,000
             Equipment and occupancy ..............................          343,000           279,000            64,000
             Data processing ......................................          113,000            89,000            24,000
             Printing and office supplies .........................           71,000            72,000            (1,000)
             Legal and professional ...............................           98,000            80,000            18,000
             Advertising and business development .................           56,000            68,000           (12,000)
             Training and travel ..................................          132,000           148,000           (16,000)
             Other ................................................          393,000           334,000            59,000
                                                                    -----------------  ---------------- ------------------

                                                                    $      2,663,000   $     2,321,000  $        342,000
                                                                    =================  ================ ==================
</TABLE>

         Total  noninterest  expense  increased  $342,000  or  14.74%  in  2000.
However,  as a percentage of average assets,  noninterest expense decreased .10%
from 3.63% in 1999 to 3.53% in 2000.  Salaries and employee  benefits  increased
$206,000 or 16.47%. Salaries,  including bonuses increased $175,000 or 16.97% to
$1,211,000  in 2000 from  $1,036,000 in 1999 due to an increase in the number of
bank  officers  in 2000 and an overall  increase  in  salaries  for  non-officer
employees. Equipment and occupancy increased $64,000 or 22.94% in 2000, of which
$37,000  was  attributable  to  additional  depreciation  in  2000  and  $21,000
represented  an increase in repairs and  maintenance  expense.  The  increase of
$24,000 in data  processing  expense is attributable to the increase in the size
of the Bank and in the volume of transactions  handled.  The increase of $18,000
in legal and  professional  is  attributable  to  additional  fees  incurred  in
transactions  related to other real estate acquired and disposed of during 2000.
The net increase in all other  noninterest  expense amounted to $31,000 or 5.64%
over the comparable expenses in 1999.








                                       17
<PAGE>




 Liquidity and Capital Resources

         Liquidity   management   involves   the   matching  of  the  cash  flow
 requirements  of customers  who may be either  depositors  desiring to withdraw
 funds or borrowers needing assurance that sufficient funds will be available to
 meet their  credit  needs and the  ability of the  Company and the Bank to meet
 those  needs.  The  Company  and the Bank seek to meet  liquidity  requirements
 primarily through  management of short-term  investments  (principally  federal
 funds sold) and monthly  amortizing  loans.  Another source of liquidity is the
 repayment of maturing single payment loans. The Bank is a member of the Federal
 Home Loan  Bank of  Atlanta  and as such has the  ability  to  obtain  advances
 therefrom,  although the cost of such advances  exceed lower cost  alternatives
 such as deposits from the local  community.  The Bank had outstanding  advances
 from the Federal Home Loan Bank of Atlanta of  $1,045,000  at December 31, 2000
 at an  average  rate of 7.27%.  The Bank  also has the  ability  to borrow  and
 purchase federal funds from other financial institutions on a short-term basis,
 if needed.

         The  liquidity  and capital  resources  of the Company and the Bank are
 monitored on a periodic basis by state and federal regulatory  authorities.  As
 determined under guidelines  established by these regulatory  authorities,  the
 Bank's  liquidity  ratio at December 31, 2000 was considered  satisfactory.  At
 that  date,  the  Bank's  short-term  investments  were  adequate  to cover any
 reasonable  anticipated immediate need for funds. The Company and the Bank were
 aware of no  events or trends  likely to result in a  material  change in their
 liquidity. During 2000, the Company increased its capital by retaining earnings
 of $1,064,000.  The Company also reduced capital by purchasing  1,250 shares of
 common stock at a cost of $23,000 for the treasury. After recording an increase
 in capital of $34,000 for unrealized losses on securities,  net of taxes, total
 capital  increased  $1,075,000  to $5,927,000  from  $4,852,000 at December 31,
 1999.

         At December 31, 2000,  there were no  outstanding  commitments  for any
major capital expenditures in the year 2001.

         In  accordance  with risk  capital  guidelines  issued  by the  Federal
 Reserve Board,  the Company is required to maintain a minimum standard of total
 capital to weighted  risk  assets of 8%.  Additionally,  all member  banks must
 maintain  "core" or "Tier 1" capital of at least 4% of total assets  ("leverage
 ratio"). Member banks operating at or near the 4% capital level are expected to
 have  well-diversified  risks,  including no undue interest rate risk exposure,
 excellent control systems, good earnings,  high asset quality, and well managed
 on- and off-balance  sheet  activities;  and, in general,  be considered strong
 banking  organizations  with a composite 1 rating under the CAMEL rating system
 of banks. For all but the most highly rated banks meeting the above conditions,
 the  minimum  leverage  ratio is to be 4% plus an  additional  100 to 200 basis
 points.

         The following  table  summarizes the  regulatory  capital levels of the
Company at December 31, 2000.
<TABLE>
<CAPTION>

                                                    Actual                     Required                      Excess
                                           --------------------------  --------------------------   --------------------------
                                              Amount      Percent         Amount       Percent         Amount       Percent
                                           ------------ -------------  ------------  ------------   --------------------------
                                                                         (Dollars in Thousands)
                                           -----------------------------------------------------------------------------------

              <S>                          <C>               <C>       <C>               <C>        <C>                <C>
              Leverage capital ........... $     5,942       7.88 %    $     3,017       4.00 %     $     2,925        3.88 %
              Risk-based capital:
               Core capital ..............       5,942       9.55            2,490       4.00             3,452        5.55
               Total capital .............       6,729      10.81            4,980       8.00             1,749        2.81
</TABLE>

         The Bank also met its individual  regulatory  capital  requirements  at
December 31, 2000.



                                       18
<PAGE>




 Average Balances and Net Income Analysis

         The  following  table sets forth the amount of the  Company's  interest
income or interest  expense for each  category  of  interest-earning  assets and
interest-bearing   liabilities   and  the  average   interest   rate  for  total
interest-earning  assets and total  interest-bearing  liabilities,  net interest
spread and net yield on average  interest-earning  assets.  Federally tax-exempt
income is presented  on a  taxable-equivalent  basis  assuming a 34% Federal tax
rate.
<TABLE>
<CAPTION>

                                                                Year Ended December 31,
                          ----------------------------------------------------------------------------------------------------
                                        2000                              1999                              1998
                          ---------------------------------  --------------------------------  -------------------------------
                                                                (Dollars in Thousands)
                          ----------------------------------------------------------------------------------------------------
                                      Interest    Average               Interest    Average               Interest   Average
                           Average     Income/     Yield/     Average    Income/     Yield/    Average    Income/     Yield/
                           Balance     Expense    Rate        Balance    Expense    Rate       Balance    Expense    Rate
                                                    Paid                              Paid                             Paid
                          ----------- ----------  ---------  ---------- ----------  ---------  ---------  ---------  ---------

<S>                       <C>         <C>         <C>        <C>        <C>         <C>        <C>        <C>        <C>
ASSETS
   Interest-earning
   assets:
   Loans, net of
   unearned
      interest .......... $  59,881   $   6,155    10.28 %   $  49,216  $   4,709     9.57 %   $ 35,670   $  3,615    10.13 %
   Investment securities:
      Taxable ...........     8,057         483     5.99         6,682        389     5.82        4,806        291     6.05
      Nontaxable ........       295          20     6.78            85          5     5.88            -          -        -
   Federal funds sold ...     2,116         134     6.33         4,632        231     4.99        3,942        206     5.23
                          ----------- ----------             ---------- ----------             ---------  ---------
        Total interest-
           earning assets    70,349       6,792     9.65        60,615      5,334     8.80       44,418      4,112     9.26
                          ----------- ----------             ---------- ----------             ---------  ---------

   Noninterest-earning
   assets
      Cash ..............     3,280                              3,485                            3,009
      Allowance for loan
      losses ............    (1,509)                           (1,377)                          (1,244)
      Unrealized gain
      (loss)
        on available
        for sale
        securities ......       (82)                              (32)                               19
   Other assets .........     3,396                              1,263                            2,525
                          -----------                        ----------                        ---------
        Total
        noninterest-
           earning assets     5,085                              3,339                            4,309
                          -----------                        ----------                        ---------

           Total assets   $  75,434                          $  63,954                         $ 48,727
                          ===========                        ==========                        =========


</TABLE>


                                       19
<PAGE>

<TABLE>
<CAPTION>



                                                                Year Ended December 31,
                           ---------------------------------------------------------------------------------------------------
                                         2000                             1999                             1998
                           --------------------------------- -------------------------------- --------------------------------
                                                                 (Dollars in Thousands)
                           ---------------------------------------------------------------------------------------------------
                                       Interest    Average              Interest   Average                Interest   Average
                            Average     Income/    Yield/     Average   Income/     Yield/     Average    Income/     Yield/
                            Balance     Expense   Rate Paid   Balance   Expense   Rate Paid    Balance    Expense    Rate
                                                                                                                       Paid
                           ----------- ---------- ---------- ---------- --------- ----------- ---------- ----------- ---------

<S>                        <C>         <C>        <C>        <C>       <C>        <C>         <C>        <C>         <C>
LIABILITIES AND
   STOCKHOLDERS'
   EQUITY
   Interest-bearing
   liabilities:
   Savings and
   interest-bearing
      demand deposits .... $   15,962  $     498     3.12%   $   13,736 $    369     2.69%    $   9,732  $      236    2.42%
   Time deposits .........     40,445      2,497     6.17        32,686    1,831      5.6        24,948       1,478    5.92
   Other borrowings ......      1,680        125     7.44           569       41     7.21           881          59    6.70
                           ----------- ----------            ---------- ---------             ---------- -----------
      Total
      interest-bearing
        liabilities ......     58,087      3,120     5.37        46,991    2,241     4.77        35,561       1,773    4.99
                           ----------- ----------            --------------------             ---------- -----------
   Noninterest-bearing
   liabilities and
   stockholders' equity:
      Demand deposits ....     10,544                            11,467                           8,898
      Other liabilities ..      1,405                             1,122                             615
      Stockholders' equity      5,398                             4,374                           3,653
                           -----------                       -----------                      ----------
      Total
      noninterest-bearing
      liabilities and
      stockholders'equity      17,347                            16,963                          13,166
                           -----------                       -----------                      ----------
Total liabilities and
stockholders'
   equity ...............  $   75,434                        $   63,954                       $  48,727
                           ===========                       ===========                      ==========

Interest rate spread                                 4.28%                           4.03%                             4.27%
                                                  ==========                      ===========                        =========

Net interest income                    $   3,672                        $  3,093                         $    2,339
                                       ==========                       =========                        ===========

Net interest margin                                  5.22%                           5.10%                             5.27%
                                                  ==========                      ===========                        =========

</TABLE>


                                       20
<PAGE>



Rate and Volume Analysis

         The  following  table  reflects  the  changes  in net  interest  income
resulting  from changes in interest  rates and from asset and liability  volume.
Federally  tax-exempt  interest  is  presented  on  a  taxable-equivalent  basis
assuming a 34% Federal tax rate. The change in interest attributable to rate has
been determined by applying the change in rate between years to average balances
outstanding  in the later year.  The change in  interest  due to volume has been
determined  by applying  the rate from the earlier year to the change in average
balances  outstanding  between years.  Thus,  changes that are not solely due to
volume have been consistently attributed to rate.
<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                           ----------------------------------------------------------------------------------
                                                        2000 vs. 1999                             1999 vs. 1998
                                           ----------------------------------------  ----------------------------------------
                                                                        (Dollars in Thousands)
                                           ----------------------------------------------------------------------------------
                                             Increase         Changes Due To          Increase          Changes Due To
                                                         --------------------------                --------------------------
                                            (Decrease)        Rate        Volume     (Decrease)        Rate         Volume
                                           ------------- ------------- ------------  ------------  ------------  ------------

<S>                                         <C>           <C>           <C>           <C>           <C>           <C>
Increase (decrease) in:
   Income from earning assets:
      Interest and fees on loans .......... $     1,446   $        426  $    1,020    $    1,094    $     (279)   $     1,373
   Interest on securities: ................          94             14          80
      Taxable .............................                                                   98           (16)           114
      Nontaxable ..........................          15              3          12             5             -              5
   Interest on Federal funds ..............         (97)            28        (125)           25           (11)            36
                                            ------------- ------------- ------------  ------------  ------------  -------------
        Total interest income .............       1,458            471         987         1,222          (306)         1,528
                                            ------------- ------------- ------------  ------------  ------------  -------------

Expense from interest-bearing liabilities:
   Interest on savings and interest-
      bearing demand deposits .............         129             69          60           133            36             97
   Interest on time deposits ..............         666            231         435           353          (105)           458
   Interest on other borrowings ...........          84              4          80           (18)            3            (21)
                                            ------------- ------------- ------------  ------------  ------------  -------------
        Total interest expense ............         879            304         575           468           (66)           534
                                            ------------- ------------- ------------  ------------  ------------  -------------

             Net interest income .......... $       579   $        167  $      412    $      754    $     (240)   $       994
                                            ============= ============= ============  ============  ============  =============

</TABLE>


                                       21
<PAGE>




Asset/Liability Management

         A  principal  objective  of the  Company's  asset/liability  management
strategy is to minimize  its  exposure to changes in interest  rates by matching
the   maturity   and   repricing   horizons  of   interest-earning   assets  and
interest-bearing  liabilities.  At FNC this strategy is overseen in part through
the  direction  of the  Investment  Committee  which  establishes  policies  and
monitors results to control interest rate sensitivity. At the Bank, the strategy
is overseen by the Board of Directors  with the  direction  and  strategy  being
directed principally by the President of the Bank.

         As part  of the  Banks'  interest  rate  risk  management  policy,  the
Investment  Committee  or Board  examines  the  extent to which its  assets  and
liabilities   are   "interest   rate-sensitive"   and   monitors   its  interest
rate-sensitivity  "gap".  An asset or  liability  is  considered  to be interest
rate-sensitive  if it will  reprice or mature  within the time period  analyzed,
usually one year or less.  The interest  rate-sensitivity  gap is the difference
between the interest-earning  assets and interest-bearing  liabilities scheduled
to mature or reprice within such time period. A gap is considered  positive when
the amount of  interest  rate-sensitive  assets  exceeds  the amount of interest
rate-sensitive  liabilities.  A gap is  considered  negative  when the amount of
interest rate-sensitive  liabilities exceeds the interest rate-sensitive assets.
During a period of rising interest rates, a negative gap would tend to adversely
affect net  interest  income,  while a  positive  gap would tend to result in an
increase in net interest income. Conversely, during a period of falling interest
rates,  a  negative  gap would  tend to result in an  increase  in net  interest
income, while a positive gap would tend to adversely affect net interest income.
If the  Company's  assets  and  liabilities  were  equally  flexible  and  moved
concurrently,  the impact of any  increase or decrease in interest  rates on net
interest income would be minimal.

         A simple  interest rate "gap" analysis by itself may not be an accurate
indicator  of how net  interest  income  will be affected by changes in interest
rates.  Accordingly,  the  Investment  Committee or Board also evaluates how the
repayment  of  particular  assets  and  liabilities  is  impacted  by changes in
interest  rates.  Income  associated  with  interest-earning  assets  and  costs
associated with  interest-bearing  liabilities may not be affected  uniformly by
changes in interest rates. In addition, the magnitude and duration of changes in
interest  rates  may have a  significant  impact  on net  interest  income.  For
example,  although certain assets and liabilities may have similar maturities or
periods of repricing,  they may react in different  degrees to changes in market
interest  rates.  Interest  rates on  certain  types of assets  and  liabilities
fluctuate in advance of changes in general market interest rates, while interest
rates on other  types  may lag  behind  changes  in  general  market  rates.  In
addition,  certain assets, such as adjustable rate mortgage loans, have features
(generally  referred to as "interest rate caps") which limit changes in interest
rates on a  short-term  basis and over the life of the asset.  In the event of a
change in interest  rates,  prepayment  and early  withdrawal  levels also could
deviate  significantly  from those assumed in calculating the interest rate gap.
The ability of many  borrowers  to service  their debts also may decrease in the
event of an interest rate increase.

         As of December 31, 2000,  the Company's  cumulative  one-year  interest
rate  sensitivity  gap  ratio  was  0.79%.  This  indicates  that the  Company's
interest-bearing  liabilities  will reprice  during this period at a rate faster
than the Company's  interest-earning  assets. However,  management believes that
the type and amount of the  Company's  interest  rate-sensitive  liabilities  (a
significant  portion of which are  composed  of money  market,  NOW and  savings
accounts  whose yields,  to a certain  extent,  are subject to the discretion of
management) may reduce the potential  impact that a rise in interest rates might
have on the  Company's  net  interest  income.  In  addition,  the  Company  has
borrowing  agreements with three  correspondent  banks and the Federal Home Loan
Bank to provide temporary liquidity as necessary.


                                       22
<PAGE>




         The following table sets forth the distribution of the repricing of the
Company's  earning  assets and  interest-bearing  liabilities as of December 31,
2000, the interest rate  sensitivity gap (i.e.,  interest rate sensitive  assets
less  interest  rate  sensitive  liabilities),   the  cumulative  interest  rate
sensitivity gap ratio (i.e.,  interest rate sensitive assets divided by interest
rate  sensitivity  liabilities)  and the cumulative  sensitivity gap ratio.  The
table also sets forth the time periods in which earning  assets and  liabilities
will mature or may reprice in accordance with their contractual terms.  However,
the table does not  necessarily  indicate  the impact of general  interest  rate
movements on the net interest  margin since the repricing of various  categories
of assets and  liabilities is subject to competitive  pressures and the needs of
the Banks' customers.  In addition,  various assets and liabilities indicated as
repricing  within the same period may in fact reprice at different  times within
such period and at different rates.
<TABLE>
<CAPTION>

                                                                                At December 31, 2000
                                                        ---------------------------------------------------------------------
                                                                            Maturing or Repricing Within
                                                        ---------------------------------------------------------------------
                                                          Zero to        Three         One to         Over
                                                           Three       Months to       Three         Three
                                                           Months       One Year       Years         Years         Total
                                                        ------------- ------------- ------------- ------------- -------------
                                                                               (Dollars in Thousands)
                                                        ---------------------------------------------------------------------

      <S>                                               <C>           <C>           <C>           <C>           <C>
      Earning assets:
         Interest-bearing deposits in banks ........... $         22  $         -   $         -   $         -   $         22
         Federal funds sold ...........................           -             -             -             -             -
         Investment securities ........................          314        1,499         5,954            550         8,317
         Loans ........................................       27,680        6,809        14,813         18,330        67,632
                                                        ------------- ------------- ------------- ------------- -------------
                                                              28,016        8,308        20,767         18,880        75,971
                                                        ------------- ------------- ------------- ------------- -------------
      Interest-bearing liabilities:
         Interest-bearing demand deposits (1) .........           -         6,546         9,038             -         15,584
         Savings (1) ..................................           -             -         1,752             -          1,752
         Certificates less than $100,000 ..............        9,119       15,318         4,482            141        29,060
         Certificates, $100,000 and over ..............        4,608        7,948         2,929            200        15,685
         Federal funds purchased ......................          940            -             -             -            940
         Notes payable ................................          500            -             -             -            500
         FHLB borrowings ..............................           -         1,010            35             -          1,045
                                                        ------------- ------------- ------------- ------------- -------------
                                                              15,167       30,822        18,236            341        64,566
                                                        ------------- ------------- ------------- ------------- -------------

      Interest rate sensitivity gap ................... $     12,849  $   (22,514)  $     2,531   $     18,539  $     11,405
                                                        ============= ============= ============= ============= =============

      Cumulative interest rate sensitivity gap ........ $     12,849  $    (9,665)  $    (7,134)  $     11,405
                                                        ============= ============= ============= =============

      Interest rate sensitivity gap ratio .............         1.85         0.27          1.14          55.37
                                                        ============= ============= ============= =============

      Cumulative interest rate sensitivity gap ratio ..         1.85         0.79          0.89           1.18
                                                        ============= ============= ============= =============
</TABLE>

(1)      The Company has found that NOW checking  accounts and savings  deposits
         are  generally  not  sensitive  to  changes  in  interest   rates  and,
         therefore,  it has placed such  liabilities  in the "One to Five Years"
         category.  It has also found that the  money-market  checking  deposits
         reprice between three months to one year, on the average.




                                       23
<PAGE>



Investment Portfolio

         The Company  manages the mix of asset and  liability  maturities  in an
effort to control the effects of changes in the general level of interest  rates
on net interest  income.  See " -  Asset/Liability  Management."  Except for its
effect  on the  general  level  of  interest  rates,  inflation  does not have a
material  impact  on the  Company  due to the rate  variability  and  short-term
maturities of its earning assets.  In particular,  approximately 51% of the loan
portfolio is comprised of loans which mature or reprice within one year or less.
Mortgage loans, primarily with five- to fifteen-year  maturities,  are also made
on a variable rate basis with rates being adjusted  every one to five years.  In
contrast, 78% of the investment portfolio matures or reprices after one year.

Types of Investments

         The  amortized  cost and fair value of  securities  are  summarized  as
follows:
<TABLE>
<CAPTION>

                                                                                 Gross            Gross
                                                             Amortized        Unrealized       Unrealized           Fair
                                                                Cost             Gains           Losses            Value
                                                           ---------------   --------------   --------------   ---------------
                                                                                 (Dollars in Thousands)
                                                           -------------------------------------------------------------------
                <S>                                        <C>               <C>              <C>              <C>
                Securities Available for Sale
                   December 31, 2000:
                   U. S. Treasury and government
                      agencies ........................... $        3,243    $          -     $        (23)    $        3,220
                   Restricted equity securities ..........            314               -                -                314
                                                           ---------------   --------------   --------------   ---------------
                                                           $        3,557    $          -     $        (23)    $        3,534
                                                           ===============   ==============   ==============   ===============

                   December 31, 1999:
                   U. S. Treasury and government
                      agencies ........................... $        3,239    $          -     $        (74)    $        3,165
                   Restricted equity securities ..........            314               -                -                314
                                                           ---------------   --------------   --------------   ---------------
                                                           $        3,553    $          -     $        (74)    $        3,479
                                                           ===============   ==============   ==============   ===============

                Securities Held to Maturity
                   December 31, 2000:
                   U. S. Treasury and government
                      agencies ........................... $        4,488    $           2    $         (9)    $        4,481
                   State, county and municipal
                      securities .........................            295               -               (1)               294
                                                           ---------------   --------------   --------------   ---------------
                                                           $        4,783    $           2    $        (10)    $        4,775
                                                           ===============   ==============   ==============   ===============

                   December 31, 1999:
                   U. S. Treasury and government
                      agencies ........................... $        4,483    $          -     $        (46)    $        4,437
                   State, county and municipal
                      securities .........................            295               -               (3)               292
                                                           ---------------   --------------   --------------   ---------------
                                                           $        4,778    $          -     $        (49)    $        4,729
                                                           ===============   ==============   ==============   ===============


</TABLE>


                                       24
<PAGE>




Maturities

         The amounts of  investment  securities  in each category as of December
31, 2000 are shown in the  following  table  according to  contractual  maturity
classifications (1) one year or less, (2) after one year through five years, (3)
after five years through ten years, and (4) after ten years.
<TABLE>
<CAPTION>

                                                                    U.S. Treasury and                State, County and
                                                                   Government Agencies             Municipal Securities
                                                                                   Yield                           Yield
                                                                 Amount             (1)           Amount          (1) (2)
                                                               ------------     ------------    ------------    ------------
                                                                                  (Dollars in Thousands)
                                                               -------------------------------------------------------------
<S>                                                            <C>              <C>             <C>              <C>
Maturity:
   One year or less .......................................... $     1,813         6.32 %       $        -            -  %
   After one year through five years .........................       6,209         5.90                 245         6.68
   After five years through ten years ........................          -            -                   50         6.14
   After ten years ...........................................          -            -                   -            -
                                                               ------------     ------------    ------------    ------------
                                                               $     8,022         6.00 %       $       295         6.59 %
                                                               ============     ============    ============    ============
</TABLE>

(1)      Yields were computed using coupon interest,  adding discount  accretion
         or subtracting premium amortization, as appropriate, on a ratable basis
         over the life of each  security.  The weighted  average  yield for each
         maturity  range  was  computed  using  the  acquisition  price  of each
         security in that range.

(2)      Yields on state, county and municipal securities are stated on a
         taxable equivalent basis using a tax rate of 34%.



                                       25
<PAGE>



Loan Portfolio

         The amount of loans  outstanding at the indicated dates is shown in the
following table according to type of loans.
<TABLE>
<CAPTION>

                                                                                                   December 31,
                                                                                         ----------------------------------
                                                                                               2000               1999
                                                                                         ---------------    ---------------
                                                                                              (Dollars in Thousands)
                                                                                         ----------------------------------

       <S>                                                                               <C>                <C>
       Commercial and financial ........................................................ $      10,754      $       8,015
       Agricultural ....................................................................         1,579              1,431
       Real estate - construction ......................................................         3,552              2,545
       Real estate - mortgage, farmland ................................................         9,498              8,419
       Real estate - mortgage, other ...................................................        36,970             27,848
       Consumer installment ............................................................         5,279              5,911
                                                                                         ---------------    ---------------
                                                                                                67,632             54,169
       Allowance for loan losses .......................................................        (1,476)            (1,423)
                                                                                         ---------------    ---------------
       Loans, net ...................................................................... $      66,156      $      52,746
                                                                                         ===============    ===============
</TABLE>

Maturities and Sensitivity of Loans to Changes in Interest Rates

         The  Company's  loan  portfolio,  as of  December  31, 2000 was made up
primarily of  short-term  fixed rate loans or variable  rate loans.  The average
contractual  life on  installment  loans is  approximately  three  years,  while
mortgages are generally variable over one-to five-year  periods.  Following is a
summary of loans which presents separately the amount of loans outstanding as of
December  31,  2000  in  each  category   according  to   contractual   maturity
classifications:  (i) one year or less,  (ii) after one year through five years,
and (iii) after five years.
<TABLE>
<CAPTION>

                                                                      Due in       After One       After
                                                                       One          Through         Five
                                                                       Year       Five Years       Years         Total
                                                                   ------------- -------------- ------------- ------------
                                                                                   (Dollars in Thousands)
                                                                   -------------------------------------------------------

          <S>                                                      <C>           <C>            <C>           <C>
          Commercial and financial ............................... $      4,886  $       4,596  $      1,272  $    10,754
          Agricultural ...........................................          530            923           126        1,579
          Real estate - construction .............................        2,481          1,071            -         3,552
          Real estate - mortgage, farmland .......................        2,454          3,661         3,384        9,499
          Real estate - mortgage, other ..........................       10,592         21,126         5,252       36,970
          Consumer installment ...................................        1,432          2,852           994        5,278
                                                                   ------------- -------------- ------------- ------------
                  Total .......................................... $     22,375  $      34,229  $     11,028  $    67,632
                                                                   ============= ============== ============= ============

</TABLE>


                                       26
<PAGE>




         The following table  summarizes loans at December 31, 2000 with the due
dates after one year which (i) have  predetermined  interest rates and (ii) have
floating or adjustable interest rates.

                                                                December 31,
                                                                    2000
                                                                (Dollars in
                                                                 Thousands)
                                                             ----------------

   Predetermined interest rates ............................ $        30,303
   Floating or adjustable interest rates ...................          14,954
                                                             ----------------
                                                             $        45,257
                                                             ================


Nonperforming Loans

        The following table presents,  at the dates indicated,  the aggregate of
nonperforming loans for the categories indicated.
<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                           ----------------------------------
                                                                                                 2000              1999
                                                                                           ---------------   ----------------
                                                                                                (Dollars in Thousands)
                                                                                           ----------------------------------

<S>                                                                                        <C>               <C>
       Loans accounted for on a nonaccrual basis ......................................... $          716    $           380

       Instalment loans and term loans contractually past due ninety
          days or more as to interest or principal payments and still accruing ...........             -                   3

       Loans, the term of which have been renegotiated to provide a
          reduction or deferral of interest or principal because of
          deterioration in the financial position of the borrower ........................             -                   -

       Loans now current about which there are serious doubts as to
          the ability of the borrower to comply with present loan
          repayment terms ................................................................             -                   -
</TABLE>

         In the  opinion  of  management,  any loans  classified  by  regulatory
authorities as substandard or special mention that have not been disclosed above
do not (i)  represent or result from trends or  uncertainties  which  management
reasonably expects will materially impact future operating results, liquidity or
capital resources, nor (ii) represent material credits about which management is
aware of any  information  which causes  management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms. Any loans
classified by regulatory authorities as loss have been charged off.


                                       27
<PAGE>




Summary of Loan Loss Experience

         The provision for possible loan losses is created by direct  charges to
operations.  Losses on loans are charged  against the allowance in the period in
which such loans,  in management's  opinion,  become  uncollectible.  Recoveries
during the period are credited to this  allowance.  The factors  that  influence
management's judgment in determining the amount charged to operating expense are
past loan experience,  composition of the loan portfolio, evaluation of possible
future losses,  current  economic  conditions and other  relevant  factors.  The
Company's allowance for loan losses was approximately $1,476,000 at December 31,
2000,  representing  2.18% of year-end  total loans  outstanding  compared  with
approximately  $1,423,000 at December 31, 1999, which represented 2.63% year end
total loans outstanding.

         The  allowance  for  loan  losses  is  reviewed   quarterly   based  on
management's  evaluation of current risk  characteristics of the loan portfolio,
as well as the impact of prevailing and expected economic  business  conditions.
Management  considers the allowance for loan losses  adequate to cover  possible
loan losses on each  outstanding  loan with  particular  emphasis on any problem
loans. No assurance can be given, however,  that adverse economic  circumstances
will not result in increased  losses in the Bank's loan  portfolio,  and require
greater provisions for loan losses in the future.

Allocation of the Allowance for Loan Losses

         The following  table sets forth the breakdown of the allowance for loan
losses by loan  category  for the periods  indicated.  Management  believes  the
allowance can be allocated only on an approximate  basis.  The allocation of the
allowance to each  category is not  necessarily  indicative of future losses and
does not  restrict  the use of the  allowance  to  absorb  losses  in any  other
category.
<TABLE>
<CAPTION>

                                                                                     At December 31,
                                                              ---------------------------------------------------------------
                                                                           2000                            1999
                                                              ------------------------------- -------------------------------
                                                                                Percent of                       Percent of
                                                                                 Loans in                         Loans in
                                                                                Category to                     Category to
                                                                   Amount       Total Loans        Amount       Total Loans
                                                              ---------------  -------------- ----------------  -------------
                                                                                  (Dollars in Thousands)
                                                              ---------------------------------------------------------------

<S>                                                           <C>                    <C>      <C>                     <C>
   Commercial, financial, industrial and agricultural ....... $          441         18 %     $           375         17 %
   Real estate ..............................................            418         74                   333         72
   Consumer .................................................            396          8                   503         11
   Unallocated ..............................................            221         -                    212          -
                                                              ---------------  -------------- ----------------  -------------
                                                              $        1,476        100 %     $         1,423        100 %
                                                              ===============  ============== ================  =============

</TABLE>


                                       28
<PAGE>




Allocation of the Allowance for Loan Losses (Continued)

         The following  table  presents an analysis of the  Company's  loan loss
experience for the periods indicated:
<TABLE>
<CAPTION>

                                                                                               Year Ended December 31,
                                                                                           ---------------------------------
                                                                                                2000               1999
                                                                                           ---------------   ---------------
                                                                                                (Dollars in Thousands)
                                                                                           ---------------------------------

<S>                                                                                        <C>               <C>
       Average amount of loans outstanding ............................................... $      59,881     $       49,216
                                                                                           ===============   ===============

       Balance of reserve for possible loan losses at beginning of period ................         1,423              1,274
                                                                                           ---------------   ---------------

       Charge-offs:
          Commercial, financial and agricultural .........................................           (16)               (2)
          Real estate ....................................................................           (81)                 -
          Consumer .......................................................................          (107)              (61)
       Recoveries:
          Commercial, financial and agricultural .........................................            55                 25
          Real estate ....................................................................           113                 53
          Consumer .......................................................................            89                134
                                                                                           ---------------   ---------------
               Net (charge-offs) recoveries ..............................................            53                149
                                                                                           ---------------   ---------------

       Additions to reserve charged to operating expenses ................................             -                  -
                                                                                           ---------------   ---------------

       Balance of reserve for possible loan losses ....................................... $       1,476     $        1,423
                                                                                           ===============   ===============

       Ratio of net loan (charge-offs) recoveries to average loans .......................          0.09%              .30%
                                                                                           ===============   ===============

</TABLE>


                                       29
<PAGE>



Deposits

         Average amount of deposits and average rate paid thereon, classified as
to  noninterest-bearing  demand  deposits,  interest-bearing  demand and savings
deposits and time deposits for the periods indicated are presented below.
<TABLE>
<CAPTION>

                                                                                    Year Ended December 31,
                                                                  ------------------------------------------------------------
                                                                              2000                           1999
                                                                  -----------------------------  -----------------------------
                                                                       Amount         Rate            Amount         Rate
                                                                  ---------------  ------------  ---------------  ------------
                                                                                    (Dollars in Thousands)
                                                                  ------------------------------------------------------------

<S>                                                               <C>                            <C>
   Noninterest-bearing demand deposits .......................... $       10,544         -  %    $       11,467          - %
   Interest-bearing demand and savings deposits .................         15,962       3.12              13,736       2.69
   Time deposits ................................................         40,445       6.17              32,686       5.60
                                                                  ---------------                ---------------
              Total deposits .................................... $       66,951                 $       57,889
                                                                  ===============                ===============
</TABLE>

        The Company has a large, stable base of time deposits, with little or no
dependence  on volatile  deposits of $100,000  or more.  The time  deposits  are
principally  certificates of deposit and individual retirement accounts obtained
from individual customers.

         The  amounts  of time  certificates  of  deposit  issued in  amounts of
$100,000 or more as of December 31, 2000, are shown below by category,  which is
based on time remaining  until  maturity of (i) three months or less,  (ii) over
three through twelve months and (iii) over twelve months.

                                                            December 31,
                                                               2000
                                                         ----------------
                                                           (Dollars in
                                                            Thousands)
                                                         ----------------

           Three months or less                          $          4,608
           Over three through twelve months                         7,948
           Over twelve months                                       3,129
                                                        -----------------
                         Total                           $         15,685
                                                        =================



                                       30
<PAGE>



Return on Assets and Stockholders' Equity

         The  following  table shows  return on assets  (net  income  divided by
average  total  assets),  return  on  equity  (net  income  divided  by  average
stockholders'  equity),  dividend  payout  ratio  (dividends  declared per share
divided  by net  income  per  share)  and  stockholders'  equity to asset  ratio
(average  stockholders'  equity divided by average total assets) for the periods
indicated.
<TABLE>
<CAPTION>

                                                                                                 Year Ended December 31,
                                                                                           ------------------------------------
                                                                                                2000                1999
                                                                                           ----------------    ----------------

<S>                                                                                                <C>                 <C>
Return on assets .........................................................................         1.54 %              1.45 %

Return on equity .........................................................................        21.49               21.16

Dividends payout .........................................................................         8.25                  -

Equity to assets ratio ...................................................................         7.16                6.84
</TABLE>


Commitments and Lines of Credits

         In the ordinary course of business, the Bank has granted commitments to
extend credit to approved  customers.  Generally,  these  commitments  to extend
credit  have been  granted  on a  temporary  basis  for  seasonal  or  inventory
requirements and have been approved by the Bank's Board of Directors.  The Banks
have also  granted  commitments  to approved  customers  for standby  letters of
credit.  These  commitments are recorded in the financial  statements when funds
are disbursed or the financial  instruments  become  payable.  The Bank uses the
same credit  policies for these  off-balance  sheet  commitments  as they do for
financial   instruments  that  are  recorded  in  the   consolidated   financial
statements.   Commitments   generally  have  fixed  expiration  dates  or  other
termination  clauses  and may  require  payment  of a fee.  Because  many of the
commitment amounts expire without being drawn upon, the total commitment amounts
do not necessary represent future cash requirements.

         Following is a summary of the  commitments  outstanding at December 31,
2000 and 1999.
<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                           ----------------------------------
                                                                                                 2000               1999
                                                                                           ---------------    ---------------
                                                                                                (Dollars in Thousands)
                                                                                           ----------------------------------

<S>                                                                                        <C>                <C>
           Commitments to extend credit .................................................. $        9,217     $        7,164
           Standby letters of credit .....................................................          3,467                102
                                                                                           ---------------    ---------------
                                                                                           $       12,684     $        7,266
                                                                                           ===============    ===============
</TABLE>



                                       31
<PAGE>



Impact of Inflation

         The  consolidated   financial   statements  and  related   consolidated
financial data presented  herein have been prepared in accordance with generally
accepted  accounting  principles and practices within the banking industry which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering the changes in the relative  purchasing
power of money over time due to  inflation.  Unlike most  industrial  companies,
virtually all the assets and liabilities of a financial institution are monetary
in  nature.  As a result,  interest  rates have a more  significant  impact on a
financial  institution's  performance  than the  effects  of  general  levels of
inflation.


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following  consolidated financial statements of the Company and its
subsidiaries  are  included on pages F-1 through  F-25 of this Annual  Report on
Form 10-KSB:

         Consolidated Balance Sheets - December 31, 2000 and 1999

         Consolidated Statements of Income - Years Ended December 31, 2000 and
         1999

         Consolidated Statements of Comprehensive Income  - Years Ended December
         31, 2000 and 1999

         Consolidated Statements of Stockholders' Equity - Years Ended December
         31, 2000 and 1999

         Consolidated Statements of Cash Flows - Years Ended December 31, 2000
         and 1999

         Notes to Consolidated Financial Statements.


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

         During 2000, the Company did not change its  accountants  and there was
no  disagreement  on any  matter  of  accounting  principles  or  practices  for
financial statement  disclosure that would have required the filing of a current
report on Form 8-K.




                                       32
<PAGE>



                                    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, 2000.
<TABLE>
<CAPTION>

                                                                                                                  Director's
                                                                                                    Director         Term
                      Name                     Age                     Position                       Since         Expires
       -----------------------------------  ---------- ------------------------------------------ -------------- --------------
 <S>                                         <C>        <C>                                        <C>            <C>
       Board Nominees:
          William C. Ellis, Jr.                56      Director                                       1990           2001
          Ralph G. Evans                       44      Director                                       1990           2001

       Directors Continuing in Office:
          Robert L. Cation                     56      Chairman of the Board of Director              1990           2003
          Milton G. Clements                   52      Director                                       1990           2003
          Jeffrey W. Johnson                   51      Director                                       1997           2003
          Norman E. Fletcher                   63      Director                                       1990           2002
          A. Curtis Farrar, Jr.                56      Director                                       1990           2002
</TABLE>

Executive Officers

         The following table and accompanying  notes set 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>
Robert L. Cation                56      Chairman of the Board of FNC Bancorp, Inc.
                                        Chairman of the Board of First National Bank of Coffee County

Jeffery W. Johnson              51      President and CEO of FNC Bancorp, Inc.
                                        President and CEO of First National Bank of Coffee County

Leonard W. Thomas               40      Senior Vice President and CFO of First National Bank of Coffee County
                                        Assistant Secretary of FNC Bancorp, Inc.

Ralph G. Evans                  44      Secretary of FNC Bancorp, Inc.

</TABLE>


                                       33
<PAGE>




Business Experience

     Effective  April 2, 1997,  Jeffery W. Johnson was employed as President and
CEO of the  Company  and the Bank as well as elected as a director  of the Bank.
Mr. Johnson has twenty-five years experience in banking. He most recently served
as President of First State Bank in Cordele, Georgia, a position he held for ten
years.  Prior to his tenure with First State Bank,  Mr. Johnson served as CEO of
Commercial State Bank,  Donalsonville,  Georgia, as a Vice President of the Bank
of Perry,  Perry,  Georgia  and as a Banking  Officer at C & S National  Bank in
Athens, Georgia. Mr. Johnson is a native of Soperton, Georgia, a graduate of the
University of Georgia and the School of Banking at Louisiana  State  University.
He has  served as a director  of the Small  Business  Administration's  Advisory
Board, is a past President of the Cordele Chamber of Commerce and was a delegate
to the 1998 Congressional Conference on Small Business.

     Leonard W. Thomas is Senior Vice  President and CFO of First  National Bank
of  Coffee  County.  His  responsibilities  include  supervision  of the  Bank's
investment,  bookkeeping and accounting operations. He has over 15 years of bank
audit and management experience, is a CPA and has completed the AICPA's National
Banking School in Charlottesville, Virginia.

     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 Chairman  and
President of Clements,  Purvis & Stewart,  P.C., a Certified  Public  Accounting
firm  in  Douglas,  Georgia.  He  is  a  past  President  and  director  of  the
Douglas-Coffee  County  Chamber of  Commerce  as well as a past  director of the
Douglas Downtown Development  Authority.  Mr. Clements is a former member of the
Douglas Lions Club where he has held all the primary officer  positions and is a
current 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 Douglas  Georgia  based  manufacturing
corporation  with  branch  locations  in  Asheboro,  North  Carolina,  Lakeland,
Florida,  Waco, Texas and Hartselle,  Alabama. In addition,  Mr. Ellis serves as
President of Ellis & Ellis, Inc., Douglas,  Georgia and  Secretary-Treasurer  of
Diversified Polymer Industries,  Inc., Dalton,  Georgia. Mr. Ellis' professional
involvement includes membership in the Georgia Manufactured Housing Association,
the Coffee County Manufacturers Council and the Douglas-Coffee County Chamber of
Commerce.  From 1984 until June 1990,  he served as a director of 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. 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.  From 1987 to 1989,  Mr.  Farrar
served on the Georgia Governor's Task Force on Drug Awareness and Prevention.

     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 and deacon of the First Baptist
Church in Douglas,  and since  January  1990,  has served as Chairman of the Job
Training Program in the area.

     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 chose by the  Company to become  directors  or  executive
officers.


                                       34
<PAGE>




ITEM 10. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

Executive Compensation

         The  Company  does  not  separately  compensate  any of  its  executive
officers.  The following table sets forth the annual and long-term  compensation
paid to the Company's and the Bank's Chief Executive Officer for the most recent
and previous two fiscal  years.  There were no other  executive  officers of the
Company and the Bank whose cash compensation exceeded $100,000 during 2000.
<TABLE>
<CAPTION>

                                                                                         Long-Term Compensation
                                                                           ----------------------------------------------------
                                       Annual Compensation                          Awards             Payouts
                         ------------------------------------------------- --------------------------  ---------
                                                               Other       Restricted    Securities
         Name                                                  Annual         Stock      Underlying      LTP       All Other
       Principal                     Salary       Bonus     Compensation    Award(S)      Options      Payouts   Compensation
       Position           Year        ($)          ($)        ($) (1)          ($)        SARS (#)       ($)          ($)
------------------------ -------  ---------------------------------------- ------------ -------------  --------- --------------

<S>                       <C>     <C>          <C>         <C>             <C>          <C>            <C>       <C>
Jeffery W. Johnson (2)    2000    $    120,000 $    64,500 $           -   $        -             -    $     -   $          -
   President  and CEO     1999    $    120,000 $    49,250 $           -   $        -            101   $     -   $          -
   of FNC Bancorp, Inc.   1998    $     96,000 $    24,000 $           -   $        -         10,259   $     -   $          -
   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)      Jeffery W. Johnson  began  employment  April 2, 1997 and was elected
         President and CEO of the Bank and the Company on May 15, 1997.





                                       35
<PAGE>





         The Board of  Directors,  after  consulting  with others in the banking
industry and legal counsel  negotiated an employment  agreement  with Jeffery W.
Johnson  which  commenced  on April 1, 1997 and will  continue for a term ending
April 30, 2000.  Thereafter such employment agreement will continue from year to
year unless and until  terminated by either party. The Board of Directors relied
upon  information  pertaining to comparable CEO  compensation in the industry as
well as its determination of the value of Mr. Johnson's  previous  experience in
determining a fair and  reasonable  compensation  package for Mr. Johnson as set
forth  in the  new  employment  agreement.  The  terms  and  conditions  of such
employment agreement are summarized described below.

Employment Agreement

         The employment agreement (the "Agreement")  provides Mr. Johnson with a
base salary of $90,000 annually during the initial term of the Agreement.  After
the initial  fiscal year,  the base salary may be increased at the discretion of
the Board. The Agreement also provides for incentive compensation in the form of
bonuses to be paid to Mr. Johnson should certain  performance  levels related to
profitability  be achieved.  Mr.  Johnson may receive a bonus equal to fifty per
cent (50%) of the amount by which the  Company's  net income  exceeds  return on
equity benchmarks determined as set forth in the Agreement. The return on equity
benchmark for the 1997 fiscal year was 9.5%. For subsequent years, the benchmark
will be  determined  by the  Board  of  Directors  or a  compensation  committee
thereof.  These bonuses are capped at $35,000 for the first fiscal year, $45,000
for the second fiscal year and $50,000 for the third fiscal year. Mr. Johnson is
afforded  the right under the  Agreement  to elect to receive the amount of such
incentive  bonus in the form of  non-qualified  stock options  provided that the
total number of stock options issued under this election shall not exceed 25,000
shares. As an additional inducement to Mr. Johnson to accept employment with the
Bank,  the Company  issued stock options for 25,000 shares  vesting 8,333 shares
per year the first two years of employment and 8,334 in the third year. All such
stock  options will provide for a strike price of $10 per share and shall have a
term of seven to ten years after the date of issuance or vesting, as applicable.

         The  Agreement  also  provides for  hospitalization  and major  medical
insurance coverage for Mr. Johnson;  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.

         The Agreement  will provide that, if the Bank  terminates the Agreement
without cause during the first three years of its term, Mr. Johnson will receive
severance  pay equal to twelve  months base salary.  In the event of a change in
control of the Bank, Mr.  Johnson will receive  severance pay equal to two years
base salary unless he is offered equivalent  employment with the acquiring party
and remains employed in such capacity for at least six months.

         In addition,  the  employment  agreement  will  provide that  following
termination of his employment  with the Bank, Mr. Johnson will not engage in any
banking  activities in which he was engaged at the time of his employment within
a fifty  mile  radius of  Douglas,  Georgia  for a period of one year  following
termination.





                                       36
<PAGE>





Other Executive Compensation

         With respect to compensation paid to executive  officers other than the
CEO, the Board of Directors  has offered  competitive  salaries in comparison to
market practices when hiring.  Subsequent  raises are based upon a comparison of
current  market  conditions  and  management's   subjective   valuation  of  job
performance.  The Bank paid bonuses to certain executive officers. These bonuses
were  based  upon an  evaluation  of the  job  performance  of  each  individual
executive  officer as well as a  comparison  of current  market  conditions.  In
addition,  the Board has awarded stock options to certain executive  officers as
an incentive to job performance.

Director Compensation

         Currently, directors are reimbursed for expenses in connection with the
performance  of their duties but receive no directors'  fees.  However,  for the
year ending  December  31, 2001,  the Company has budgeted to pay the  directors
$36,000 in  directors'  fees for  participation  in Board  meetings  and various
sub-committees of the Bank and Company.

         There were no grants of options to purchase the Company's  common stock
made during the 2000 fiscal year to the person named in the Summary Compensation
Table.

         There were no exercise of stock  options in the 2000 fiscal year by the
person named in the Summary Compensation Table.




                                       37
<PAGE>




ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

Principal Shareholders

         The  following  table  presents  as  of  December  31,  2000,   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.
<TABLE>
<CAPTION>

                                                                                  Amount and
                                                                                  Nature of
                                           Name and Address of                    Beneficial                Percent of
          Title of Class                    Beneficial Owner                      Ownership                   Class
        --------------------        ----------------------------------        -------------------        -----------------
<S>     <C>                         <C>                                       <C>                        <C>
              Common                Carl C. Atkinson                                   25,000  1                 6.03%
                                    Rt. 2, Box 777
                                    Broxton, Georgia 31519

              Common                Robert L. Cation                                   26,917                    6.49
                                    1008 Golf Club Road
                                    Douglas, Georgia  31533

              Common                William C. Ellis, Jr.                              27,167                    6.55
                                    Post Office Box 270
                                    Douglas, Georgia  31534

              Common                Ralph G. Evans                                     31,717 2                  7.64
                                    Post Office Box 1264
                                    Douglas, Georgia  31534

              Common                A. Curtis Farrar, Jr.                              26,917                    6.49
                                    Post Office Box 770
                                    Douglas, Georgia  31534

              Common                Norman E. Fletcher                                 26,566 3                  6.40
                                    401 Shirley Avenue
                                    Douglas, Georgia  31533
</TABLE>

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

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 Marvelyne G. Fletcher (wife of
    Normal E. Fletcher).



                                       38
<PAGE>




Stock Ownership by Management

         The  following  table  presents  as  of  December  31,  2000,   certain
information  regarding  the  Company's  common  stock  owned  (i) by each of the
Company's  directors and (ii) by all  directors  and  executive  officers of the
Company as a group.
<TABLE>
<CAPTION>

                                                                                         Amount and
                                                                                          Nature of
                                               Name and Address of                       Beneficial             Percent of
          Title of Class                        Beneficial Owner                          Ownership               Class
        --------------------        ------------------------------------------       --------------------    -----------------

<S>           <C>                   <C>                                              <C>                     <C>
              Common                Robert L. Cation                                          26,917                  6.49%
                                    1008 Golf Club Road
                                    Douglas, Georgia  31533

              Common                Milton G. Clements                                        13,600 4                3.28
                                    1512 Golf Club Ext.
                                    Douglas, Georgia  31533

              Common                William C. Ellis, Jr.                                     27,167                  6.55
                                    Post Office Box 270
                                    Douglas, Georgia  31534

              Common                Ralph G. Evans                                            31,717 5                7.64
                                    Post Office Box 1264
                                    Douglas, Georgia  31534

              Common                A. Curtis Farrar, Jr.                                     26,917                  6.49
                                    Post Office Box 770
                                    Douglas, Georgia  31534

              Common                Norman E. Fletcher                                        26,566 6                6.40
                                    401 Shirley Avenue
                                    Douglas, Georgia  31533

              Common                Jeffery W. Johnson                                        16,925                  4.08

              Common                Leonard W. Thomas                                            467                  0.11
                                                                                     ----------------        -----------------
        All directors and executive officers as a group (8 persons)                          170,276                 41.04%
                                                                                     ================        =================
</TABLE>

4   Includes  1,000  shares held in the name of Laura B.  Clements,  wife of
    Milton G.  Clements  and 2,000  shares held in the name of Steven Griffin
    Clements, son of Milton G. Clements.

5   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.

6   Includes 200 shares held in the name of Marvalyne G. Fletcher (wife of
    Norman E. Fletcher) IRA.


                                       39
<PAGE>




         The  following  contains  information  with respect to the common stock
owned as of the record  date (i) by  directors  and  executive  officers  of the
Company and (ii) by all  directors  and  executive  officers of the Company as a
group,  who are deemed to be the beneficial  owners of additional  shares of the
common stock of the Company  through  their right to exercise  warrants or stock
options. The percent owned is calculated for each individual upon the assumption
that they have  exercised all of their  warrants or stock options while no other
holder of warrants  or options  has done so. The  percent  owned of the group is
calculated upon the assumption  that all such  individuals  have  simultaneously
exercised all of their warrants and options.
<TABLE>
<CAPTION>

                                                                                                  Number of         % Owned
                                                   Number of                                      Shares and      (Including
                       Name of                      Shares        Number of      Number of         Options/        Options/
                   Beneficial Owner                Issued 7      Warrants 8       Options         Warrants 9     Warrants) 10
       ----------------------------------------- -------------- -------------- --------------- ----------------- --------------
<S>                                              <C>            <C>            <C>             <C>               <C>
       Robert L. Cation                                 26,917         25,000              -             51,917       11.80%
       Milton G. Clements                               13,600         12,500              -             26,100        6.11
       William C. Ellis, Jr.                            27,167         25,000              -             52,167       11.86
       Ralph G. Evans                                   31,717         25,000              -             56,717       12.89
       A. Curtis Farrar, Jr.                            26,917         25,000              -             51,917       11.80
       Norman E. Fletcher                               26,566         25,000              -             51,566       11.72
       Jeffery W. Johnson                               16,925             -           50,000            66,925       14.40
       Leonard W. Thomas                                   467             -            2,047             2,514        0.60
                                                 -------------- -------------- --------------- ----------------- --------------
          All directors and executive officers
             as a group (8 persons)                    170,276        137,500          52,047           359,823       60.01%
                                                 ============== ============== =============== ================= ==============
</TABLE>

         Under  Mr.  Jeffery  W.  Johnson's   employment   agreement  and  under
agreements  with the Bank's  directors  individually,  he acquired the rights to
acquire certain stock options and stock of the Company.  If Mr. Johnson acquired
all of the shares of stock available to him by stock option under his employment
agreement or from the Bank's  directors,  then he would own 66,925 shares of the
Company's stock which would represent 14.36% of the issued and outstanding stock
of the Company  assuming  that no other holder of options or warrants  exercised
their rights to acquire additional stock.

7   Taken from the previous table except as noted.

8   In  recognition  of  the  efforts  and  financial  risks  undertaken  by the
    directors and executive officers in organizing the Company and the Bank, the
    directors  and  executive  officers  named  above were  granted  warrants to
    purchase one share of common stock for each share  purchased in the original
    offering,  however,  such persons elected to acquire a total of only 137,500
    such  warrants.  Upon  exercise,  each  warrant  will  entitle the holder to
    purchase  one share of the common  stock of the  company at a price equal to
    $10 per share (the same price at which the shares were initially sold to the
    public) unless the Bank is, at that time,  required to raise capital to meet
    its  regulatory  guidelines in which case the exercise price will be greater
    of $10 per  share or the book  value per  share of the  common  stock of the
    Company as reflected in the  Company's  quarterly  financial  report for the
    quarter and  immediately  prior to the exercise of the  warrant.  Subject to
    certain  limitations,  the warrants are exercisable for a period of ten (10)
    years from the date of the Company's stock offering.

9   Includes  shares  deemed  to be  beneficially  owned  through  the  right to
    exercise warrants or stock options exercisable within sixty (60) days of the
    record date.

10  Based upon 416,136 shares  outstanding as of the record date and as adjusted
    for  warrants or stock  options  exercisable  within  sixty (60) days of the
    record date.



                                       40
<PAGE>




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Bank Loans to Affiliates

         The  Directors,  officers and employees of the Company and the Bank, as
well as individuals, firms and companies with which they are associated, have or
are  anticipated  to  have  banking  transactions  with  the  Bank.  Subject  to
applicable  laws,  the Bank  has a  policy  of  offering  loans to its  eligible
employees (i.e., employees other than Directors,  executive officers and holders
of more than ten percent of the Company's  outstanding  Common Stock, as well as
affiliates of such persons) at favorable  interest rates which generally will be
equal to or in excess of the Bank's prime  lending rate at the time of the loan.
Loans to  directors,  executive  officers,  controlling  shareholders  and their
affiliates  are made at the  prevailing  interest rate for  comparable  loans to
unaffiliated  borrowers. In all respects other than the rate of interest charged
on loans to  eligible  employees,  loans  by the  Bank to  directors,  officers,
employees  and  controlling  shareholders,  as  well  as to  affiliates  of such
persons,   are  extended  only  in  the  ordinary  course  of  business  and  on
substantially the same terms,  including collateral,  as those prevailing at the
time for comparable  transactions with unrelated persons and do not involve more
than the normal risk of collectability  or present other  unfavorable  features.
Bank policy also  requires that any loans by the Bank to any of its directors or
executive  officers  aggregating  in excess of $25,000  must be  approved by the
affirmative  vote of a majority of the Board of  Directors at a meeting in which
any interested  director has abstained from  participating,  either  directly or
indirectly.






                                       41
<PAGE>



                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits required by Item 601 of Regulation S-B.
<TABLE>
<CAPTION>
Exhibit
   No.               Description

<S>                  <C>
  3.1                Articles of  Incorporation  of the  Registrant,  (filed as Exhibit 3.1 to the  Registrant's  Form S-18 (File
                     Number 33-37078), as amended.)

  3.2                Bylaws of the Registrant  (filed as Exhibit 3.2 to the  Registrant's  Form S-18 (File Number  33-37078),  as
                     amended.)

  10.1               Form of  subscription  Agreement  (filed as Exhibit 10.1 to the  Registrant's  Annual  Report on Form 10-KSB
                    (File Number  33-37078),  filed with the Commission  for the year ended  December 31, 1990 and  incorporated
                     herein by reference.)

  10.2               Form of Organizer's  Warrant (filed as Exhibit 10.2 to the  Registrant's  Form S-18 (File Number  33-37078),
                     as amended.)

  10.31997           Incentive  Stock Option Plan (filed as Exhibit 10.3 to the  Registrant's  Annual Report on Form 10-KSB (File
                     Number 33-37078),  filed with the Commission for the year ended December 31, 1997 and incorporated herein by
                     reference).

  10.4               Executive  Employment  Agreement with Jeffery W. Johnson (filed as Exhibit 10.4 to the  Registrant's  Annual
                     Report on Form 10-KSB (File Number  33-37078),  filed with the  Commission  for the year ended  December 31,
                     1997 and incorporated herein by reference).

  21.1               Subsidiaries  of the  Registrant.  (filed as Exhibit 21.1 to the  Registrant's  Annual Report on Form 10-KSB
                    (File Number  33-37078),  (filed with the Commission  for the year ended December 31, 1996 and  incorporated
                     herein by reference).

  24                 Power of Attorney  relating to this Annual Report on Form 10-KSB is set forth on the signature pages to this
                     Annual Report.

  27                 Financial Data Schedule
</TABLE>

 (b) The  Registrant  did not file any reports on
     Form  8-K  during  the last  quarter  of the
     period covered by this Report.

                                       42
<PAGE>



                                   SIGNATURES

         Pursuant to the  requirement  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934 (the "Exchange  Act"),  the Registrant has duly caused this
Form  10-KSB to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                                      FNC BANCORP, INC.

Date:     March 29, 2001                By: /s/Jeffrey W. Johnson
          -------------------------     --------------------------------------
                                        Jeffery W. Johnson, President,
                                        Chief Executive Officer and Director


                                POWER OF ATTORNEY

         KNOWN ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears   below   constitutes   and   appoints   Jeffery   W.   Johnson  as  his
attorney-in-fact,  acting with full power of  substitution  for him in his name,
place and stead, in any and all capacities,  to sign any amendments to this Form
10-KSB and to file the same, with exhibits  thereto,  and any other documents in
connection  therewith,  with the Securities  and Exchange  Commission and hereby
ratifies and  confirms  all that said  attorney-in-fact,  or his  substitute  or
substitutes, may do or cause to be done by virtue thereof.

         Pursuant to the  requirements of the Exchange Act, this Form 10-KSB has
been  signed  by the  following  persons  in  the  capacities  and on the  dates
indicated.

Date:     March 29, 2001                /s/ Jeffrey W. Johnson
          -------------------------     --------------------------------------
                                        Jeffery W. Johnson, President
                                        Chief Executive Officer and Director

Date:     March 29, 2001                /s/ Robert L. Cation
          -------------------------     --------------------------------------
                                        Robert L. Cation, Director

Date:     March 29, 2001                /s/ Milton G. Clements
          -------------------------     --------------------------------------
                                        Milton G. Clements, Director

Date:     March 29, 2001                /s/ William C. Ellis, Jr.
          -------------------------     --------------------------------------
                                        William C. Ellis, Jr., Director

Date:     March 29, 2001                /s/ Ralph G. Evans
          -------------------------     --------------------------------------
                                        Ralph G. Evans, Director

Date:     March 29, 2001                /s/ A. Curtis Farrar, Jr.
          -------------------------     --------------------------------------
                                        A. Curtis Farrar, Jr., Director

Date:     March 29, 2001                /s/ Norman E. Fletcher
          -------------------------     --------------------------------------
                                        Norman E. Fletcher, Director



                                       43
<PAGE>



                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits required by Item 601 of Regulation S-B.
<TABLE>
<CAPTION>

Exhibit
   No.              Description

<S>                 <C>
  3.1               Articles of  Incorporation  of the  Registrant,  (filed as Exhibit 3.1 to the  Registrant's  Form S-18 (File
                    Number 33-37078), as amended.)

  3.2               Bylaws of the Registrant  (filed as Exhibit 3.2 to the  Registrant's  Form S-18 (File Number  33-37078),  as
                    amended.)

  10.1              Form of  subscription  Agreement  (filed as Exhibit 10.1 to the  Registrant's  Annual  Report on Form 10-KSB
                    (File Number  33-37078),  filed with the Commission  for the year ended  December 31, 1990 and  incorporated
                    herein by reference.)

  10.2              Form of Organizer's  Warrant (filed as Exhibit 10.2 to the  Registrant's  Form S-18 (File Number  33-37078),
                    as amended.)

  10.31997          Incentive  Stock Option Plan (filed as Exhibit 10.3 to the  Registrant's  Annual Report on Form 10-KSB (File
                    Number 33-37078),  filed with the Commission for the year ended December 31, 1997 and incorporated herein by
                    reference).

  10.4              Executive  Employment  Agreement with Jeffery W. Johnson (filed as Exhibit 10.4 to the  Registrant's  Annual
                    Report on Form 10-KSB (File Number  33-37078),  filed with the  Commission  for the year ended  December 31,
                    1997 and incorporated herein by reference).

  21.1              Subsidiaries  of the  Registrant.  (filed as Exhibit 21.1 to the  Registrant's  Annual Report on Form 10-KSB
                    (File Number  33-37078),  (filed with the Commission  for the year ended December 31, 1996 and  incorporated
                    herein by reference).

  24                Power of Attorney  relating to this Annual Report on Form 10-KSB is set forth on the signature pages to this
                    Annual Report.

  27                Financial Data Schedule
</TABLE>

 (b)   The  Registrant  did not file any  reports on Form 8-K during the last
       quarter of the period covered by this Report.



                                       44
<PAGE>




                               FNC BANCCORP, INC.

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
Consolidated financial statements:
    Independent Auditor's Report .......................................................... F-2
    Consolidated  Balance  Sheets -  December  31,  2000  and 1999 ........................ F-3
    Consolidated Statements of Income - Years ended  December 31, 2000 and 1999 ........... F-4
    Consolidated Statements of Comprehensive  Income - Years ended December 31,
     2000 and 1999 ........................................................................ F-5
    Consolidated  Statements of Stockholders'  Equity - Years ended December 31,
     2000 and 1999 ........................................................................ F-6
    Consolidated  Statements of Cash Flows - Years ended December 31, 2000 and
     1999 ................................................................................. F-7
    Notes to Consolidated Financial Statements ............................................ F-9
</TABLE>

All schedules are omitted as the required  information  is  inapplicable  or the
information is presented in the financial statements or related notes.










                                      F- 1
<PAGE>











                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
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, 2000 and 1999 and the
related consolidated statements of income,  comprehensive income,  stockholders'
equity and cash flows for the years then ended.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

                  In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of FNC
Bancorp,  Inc. and  Subsidiary as of December 31, 2000 and 1999, and the results
of their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.






Albany, Georgia
January 11, 2001                               /s/ MAULDIN & JENKINS, LLC




                                      F- 2
<PAGE>




                                FNC BANCORP, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                      Assets                                              2000                  1999
                                      ------
                                                                                   -----------------     -----------------

<S>                                                                                <C>                   <C>
Cash and due from banks .......................................................... $       4,516,549     $       3,394,212
Federal funds sold ...............................................................                 -             1,528,000
Securities available for sale, at fair value .....................................         3,533,481             3,479,190
Securities held to maturity, at cost
     (fair value $4,775,877 and $4,728,603) ......................................         4,783,313             4,777,413

Loans ............................................................................        67,632,127            54,168,453
Less allowance for loan losses ...................................................         1,475,525             1,422,689
                                                                                   -----------------    ------------------
          Loans, net .............................................................        66,156,602            52,745,764
                                                                                   -----------------    ------------------

Premises and equipment, net ......................................................         2,141,221             1,849,122
Other assets .....................................................................         1,358,004             1,079,603
                                                                                   -----------------    ------------------

                                                                                   $      82,489,170    $       68,853,304
                                                                                   =================    ==================

                       Liabilities and Stockholders' Equity

Deposits
    Noninterest-bearing .......................................................... $      10,466,444    $       11,090,409
    Interest-bearing .............................................................        62,081,297            49,784,012
                                                                                   -----------------    ------------------
              Total deposits .....................................................        72,547,741            60,874,421

    Federal funds purchased ......................................................           940,000             1,250,000
    Notes payable, directors .....................................................           500,000               500,000
    Federal Home Loan Bank borrowings ............................................         1,045,000                55,000
    Other liabilities ............................................................         1,529,005             1,322,291
                                                                                   -----------------    ------------------
          Total liabilities ......................................................        76,561,746            64,001,712
                                                                                   -----------------    ------------------


Stockholders' equity
    Preferred stock, par value $1; 10,000,000 shares
        authorized; no shares issued
    Common stock, par value $1; 10,000,000 shares
        authorized; issued 416,636 shares ........................................           416,636               416,636
    Additional paid-in capital ...................................................         3,708,875             3,708,875
    Retained earnings ............................................................         1,848,413               784,081
    Accumulated other comprehensive loss .........................................           (15,000)              (49,000)
    Treasury stock ...............................................................           (31,500)               (9,000)
                                                                                   -----------------    ------------------
                                                                                           5,927,424             4,851,592
                                                                                   -----------------    ------------------

                                                                                   $      82,489,170    $       68,853,304
                                                                                   =================    ==================
</TABLE>

See Notes to Consolidated Financial Statements.




                                      F- 3
<PAGE>




                                FNC BANCORP, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                              2000                1999
                                                                                        ----------------    ----------------
<S>                                                                                     <C>                 <C>
Interest income
    Interest and fees on loans ........................................................ $      6,155,275    $      4,708,709
    Interest and dividends on taxable securities ......................................          483,203             389,393
    Interest on nontaxable securities .................................................           12,773               3,586
    Interest on federal funds sold ....................................................          133,994             230,641
                                                                                        ----------------    ----------------
                                                                                               6,785,245           5,332,329
                                                                                        ----------------    ----------------

Interest expense
    Interest on deposits ..............................................................        2,995,425           2,200,033
    Interest on other borrowings ......................................................          124,883              40,984
                                                                                        ----------------    ----------------
                                                                                               3,120,308           2,241,017
                                                                                        ----------------    ----------------

          Net interest income .........................................................        3,664,937           3,091,312
Provision for loan losses .............................................................                -                   -
                                                                                        ----------------    ----------------
          Net interest income after provision for loan losses .........................        3,664,937           3,091,312
                                                                                        ----------------    ----------------

Other income
    Service charges on deposit accounts ...............................................          609,393             524,040
    Other commissions and fees ........................................................           35,645              36,507
    Origination fees on mortgage loans ................................................           19,544              34,308
    Other .............................................................................           87,036              75,364
                                                                                        ----------------    ----------------
                                                                                                 751,618             670,219
                                                                                        ----------------    ----------------

Other expenses
    Salaries and employee benefits ....................................................        1,456,698           1,250,855
    Equipment and occupancy ...........................................................          342,815             279,188
    Data processing ...................................................................          112,818              89,226
    Printing and office supplies ......................................................           71,297              71,512
    Legal and professional ............................................................           98,343              80,454
    Advertising and business development ..............................................           55,676              67,501
    Training and travel ...............................................................          131,508             148,226
    Other operating expenses ..........................................................          392,869             334,177
                                                                                        ----------------    ----------------
                                                                                               2,662,024           2,321,139
                                                                                        ----------------    ----------------

          Income before income taxes ..................................................        1,754,531           1,440,392

Income tax expense ....................................................................          594,488             514,970
                                                                                        ----------------    ----------------

          Net income .................................................................. $      1,160,043    $        925,422
                                                                                        ================    ================

Basic earnings per common share ....................................................... $           2.79    $           2.23
                                                                                        ================    ================

Diluted earnings per common share ..................................................... $           2.41    $           2.07
                                                                                        ================    ================
</TABLE>

See Notes to Consolidated Financial Statements.




                                      F- 4
<PAGE>




                                FNC BANCORP, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                               2000               1999
                                                                                        ----------------    ---------------

<S>                                                                                     <C>                 <C>
Net income ............................................................................ $      1,160,043    $       925,422

Other comprehensive income (loss):
    Net unrealized holding gains (losses) arising during
        period, net of tax (benefit) of $17,000 and ($32,000) .........................           34,000            (63,000)
                                                                                        ----------------     --------------

Comprehensive income .................................................................. $      1,194,043     $      862,422
                                                                                        ================     ==============

</TABLE>

See Notes to Consolidated Financial Statements.



                                      F- 5
<PAGE>






                                FNC BANCORP, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>







                                                                                     Accumulated
                                          Common Stock      Additional    Retained      Other        Treasury Stock       Total
                                      ---------------------  Paid-in      Earnings   Comprehensive ------------------ Stockholders'
                                       Shares   Par Value    Capital     (Deficit)   Income(Loss)  Shares   Par Value    Equity
                                      -------  -----------  ----------  -----------  ------------  -------  ---------  ----------

<S>                                   <C>      <C>          <C>         <C>          <C>           <C>      <C>        <C>
 Balance, December 31, 1998 ......... 411,173  $   411,173  $3,659,708  $ (141,341)  $     14,000        -  $       -  $3,943,540
     Exercise of options by officer .   5,463        5,463      49,167           -              -        -          -      54,630
     Net income .....................       -            -           -     925,422              -        -          -     925,422
     Purchase of treasury stock .....       -            -           -           -              -      500     (9,000)     (9,000)
     Other comprehensive loss .......       -            -           -           -        (63,000)       -          -     (63,000)
                                      -------  -----------  ----------  ----------  -------------  -------  ---------  ----------
 Balance, December 31, 1999 ......... 416,636      416,636   3,708,875     784,081        (49,000)     500     (9,000)  4,851,592
     Net income .....................       -            -           -   1,160,043              -        -          -   1,160,043
     Dividends declared, $.23 per
      share .........................       -            -           -     (95,711)             -        -          -     (95,711)
     Purchase of treasury stock .....       -            -           -           -              -    1,250    (22,500)    (22,500)
     Other comprehensive income .....       -            -           -           -         34,000        -          -      34,000
                                      -------  -----------  ----------  ----------  -------------  -------  ---------  ----------
 Balance, December 31, 2000 ......... 416,636  $   416,636  $3,708,875  $1,848,413  $     (15,000)   1,750  $ (31,500) $5,927,424
                                      =======  ===========  ==========  ==========  =============  =======  =========  ==========
</TABLE>

 See Notes to Consolidated Financial Statements.




                                      F- 6
<PAGE>





                                FNC BANCORP, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                        2000                   1999
                                                                                --------------------    --------------------
<S>                                                                             <C>                     <C>
 OPERATING ACTIVITIES
     Net income ............................................................... $          1,160,043    $            925,422
                                                                                --------------------    --------------------
     Adjustments to reconcile net income to net cash
         provided by operating activities:
         Depreciation .........................................................              178,347                 141,167
         Net accretion of securities ..........................................               (9,191)                      -
         Provision for deferred income taxes ..................................              (15,188)                 10,691
         Loss on disposal of property and equipment ...........................                1,524                  14,790
         Increase in interest receivable ......................................             (212,130)               (150,434)
         Increase in interest payable .........................................              352,015                 149,382
         Increase (decrease) in taxes payable .................................             (304,856)                315,629
         Other prepaids, deferrals and accruals, net ..........................               91,472                  92,302
                                                                                --------------------    --------------------
               Total adjustments ..............................................               81,993                 573,527
                                                                                --------------------    --------------------

               Net cash provided by operating activities ......................            1,242,036               1,498,949
                                                                                --------------------    --------------------

 INVESTING ACTIVITIES
     Decrease in federal funds sold ...........................................            1,528,000               4,438,000
     Purchases of securities available for sale ...............................                    -              (2,979,928)
     Proceeds from sales of securities available for sale .....................                    -               1,000,000
     Proceeds from maturities of securities available for sale ................                    -               3,000,000
     Purchases of securities held to maturity .................................                    -              (4,777,413)
     Proceeds from redemption of
         Federal Home Loan Bank stock .........................................                    -                 159,700
     Increase in loans, net ...................................................          (13,410,838)            (12,030,099)
     Purchase of premises and equipment .......................................             (471,970)               (392,054)
                                                                                --------------------    --------------------

               Net cash used in investing activities ..........................          (12,354,808)            (11,581,794)
                                                                                --------------------    --------------------

 FINANCING ACTIVITIES
     Increase in deposits .....................................................           11,673,320               6,574,068
     Increase (decrease) in federal funds purchased ...........................             (310,000)              1,250,000
     Proceeds from Federal Home Loan Bank borrowings ..........................            2,000,000                       -
     Repayments of Federal Home Loan Bank borrowings ..........................           (1,010,000)                (10,000)
     Proceeds from issuance of common stock ...................................                    -                  54,630
     Dividends paid ...........................................................              (95,711)                      -
     Purchase of treasury stock ...............................................              (22,500)                 (9,000)
                                                                                --------------------    --------------------

               Net cash provided by financing activities ......................           12,235,109               7,859,698
                                                                                --------------------    --------------------

 Net increase (decrease) in cash and due from banks ...........................            1,122,337              (2,223,147)

 Cash and due from banks at beginning of year .................................            3,394,212               5,617,359
                                                                                --------------------    --------------------

 Cash and due from banks at end of year ....................................... $          4,516,549    $          3,394,212
                                                                                ====================    ====================

</TABLE>





                                      F- 7
<PAGE>





                                FNC BANCORP, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                        2000                    1999
                                                                                --------------------    --------------------


<S>                                                                             <C>                     <C>
 SUPPLEMENTAL DISCLOSURES Cash paid during the year for:
         Interest ............................................................. $          2,768,293    $          2,091,635

         Income taxes ......................................................... $            914,532    $            188,650


 See Notes to Consolidated Financial Statements.

</TABLE>



                                      F- 8
<PAGE>




                                FNC BANCORP, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  Nature of Business

                     FNC Bancorp,  Inc. (the Company) is a bank holding  company
                     whose business is conducted by its wholly-owned subsidiary,
                     First  National Bank of Coffee County (the Bank).  The Bank
                     is a  commercial  bank located in Douglas,  Coffee  County,
                     Georgia. The Bank provides a full range of banking services
                     in its  primary  market  area  of  Coffee  County  and  the
                     surrounding counties.

                  Basis of Presentation

                      The preparation of financial statements in conformity with
                      generally   accepted   accounting    principles   requires
                      management to make estimates and  assumptions  that affect
                      the reported  amounts of assets and  liabilities as of the
                      balance  sheet date and  reported  amounts of revenues and
                      expenses during the reporting period. Actual results could
                      differ from those estimates.  Material  estimates that are
                      particularly susceptible to significant change in the near
                      term relate to the determination of the allowance for loan
                      losses,  the  valuation of  foreclosed  real  estate,  and
                      deferred taxes.

                      The Company's  consolidated  financial  statements include
                      the accounts of the Company and the Bank. All  significant
                      intercompany   transactions   and   accounts   have   been
                      eliminated in consolidation.

                  Cash, Due From Banks and Cash Flows

                    For  purposes of  reporting  cash  flows,  cash and due from
                    banks  includes  cash on  hand,  cash  items in  process  of
                    collection  and  amounts  due from  banks.  Cash  flows from
                    loans, federal funds sold and deposits are reported net.

                    The  Company  maintains  amounts  due from banks  which,  at
                    times, may exceed federally insured limits.  The Company has
                    not experienced any losses in such accounts.

                  Securities

                     Debt securities that management has the positive intent and
                     ability   to   hold   to   maturity   are   classified   as
                     held-to-maturity and recorded at amortized cost. Securities
                     not  classified  as   held-to-maturity,   including  equity
                     securities  with  readily  determinable  fair  values,  are
                     classified as available-for-sale and recorded at fair value
                     with unrealized gains and losses excluded from earnings and
                     reported in other comprehensive  income. Equity securities,
                     including  restricted stock, without a readily determinable
                     fair  value  are  classified  as   available-for-sale   and
                     recorded at cost.

                     Interest and dividends,  including amortization of premiums
                     and  accretion of  discounts,  are  recognized  in interest
                     income.  Gains  and  losses on the sale of  securities  are
                     determined  using  the  specific   identification   method.
                     Declines  in  the  fair  value  of   held-to-maturity   and
                     available-for-sale  securities  below  their  cost that are
                     deemed to be other than temporary are reflected in earnings
                     as realized losses.


                                      F- 9
<PAGE>




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  Loans

                     Loans are reported at their  outstanding  unpaid  principal
                     balances  less unearned  income,  deferred fees or costs on
                     originated  loans,  and  the  allowance  for  loan  losses.
                     Interest income is accrued on the unpaid balance.

                     Loan  origination  fees, net of certain direct  origination
                     costs of consumer and  instalment  loans are  recognized at
                     the time the loan is placed  on the  books.  Because  these
                     loan fees are not  significant  and the  majority  of loans
                     have  maturities  of one  year  or  less,  the  results  of
                     operations  are not  materially  different than the results
                     which  would be obtained  by  accounting  for loan fees and
                     costs in  accordance  with  generally  accepted  accounting
                     principles.  Loan  origination  fees net of certain  direct
                     loan origination costs for all other loans are deferred and
                     recognized  as an  adjustment of the yield over the life of
                     the loan.

                     The accrual of interest on loans is  discontinued  when, in
                     management's  opinion,  the  borrower may be unable to meet
                     payments   as  they   become   due,   unless  the  loan  is
                     well-secured.  All interest  accrued but not  collected for
                     loans  that are  placed on  nonaccrual  or  charged  off is
                     reversed  against  interest  income.   Interest  income  on
                     nonaccrual  loans is  subsequently  recognized  only to the
                     extent  cash  payments  are  received  until  the loans are
                     returned to accrual status.

                     The  allowance  for loan  losses is  established  through a
                     provision  for loan losses  charged to  expense.  Loans are
                     charged against the allowance when management  believes the
                     collectibility  of the  principal is  unlikely.  Subsequent
                     recoveries are credited to the allowance.

                     The allowance is an amount that management believes will be
                     adequate to absorb  estimated losses in the loan portfolio.
                     The  allowance  for loan losses is  evaluated  on a regular
                     basis by management and is based upon management's periodic
                     review  of the  collectibility  of the  loans  in  light of
                     historical  experience,  the  nature and volume of the loan
                     portfolio,   adverse   situations   that  may   affect  the
                     borrower's  ability  to  repay,   estimated  value  of  any
                     underlying  collateral and prevailing economic  conditions.
                     This  evaluation  is  inherently  subjective as it requires
                     estimates that are  susceptible to significant  revision as
                     more information becomes available. In addition, regulatory
                     agencies, as an integral part of their examination process,
                     periodically  review the Bank's  allowance for loan losses,
                     and may require the Bank to make additions to the allowance
                     based on their judgment about information available to them
                     at the time of their examinations.

                     A loan is considered  impaired when it is probable the Bank
                     will be  unable  to  collect  all  principal  and  interest
                     payments due in accordance  with the  contractual  terms of
                     the loan  agreement.  Impaired  loans are measured based on
                     the present value of expected future cash flows  discounted
                     at  the  loan's   effective   interest   rate,  the  loan's
                     observable   market  price,   or  the  fair  value  of  the
                     collateral if the loan is collateral dependent.  The amount
                     of  impairment,  if any,  and any  subsequent  changes  are
                     included in the allowance for loan losses.

                  Premises and Equipment

                     Land is carried at cost. Premises and equipment are carried
                     at cost less accumulated  depreciation computed principally
                     on the straight-line method over the estimated useful lives
                     of the assets.



                                     F- 10
<PAGE>





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  Other Real Estate Owned

                     Other real  estate  owned  represents  properties  acquired
                     through  foreclosure.  Other real estate  owned is held for
                     sale and is carried at the lower of cost or fair value less
                     estimated  costs of disposal.  Any write-down to fair value
                     at the time of  transfer  to  other  real  estate  owned is
                     charged  to the  allowance  for loan  losses.  Revenue  and
                     expenses  from  operations  and  changes  in the  valuation
                     allowance  are  included in net  expenses  from  foreclosed
                     assets.  The carrying  amount of other real estate owned at
                     December 31, 2000 was $81,520.

                  Transfers of Financial Assets

                     Transfers of financial  assets are  accounted for as sales,
                     when control over the assets has been surrendered.  Control
                     over  transferred  assets is deemed to be surrendered  when
                     (1) the assets have been  isolated  from the Bank,  (2) the
                     transferee  obtains  the  right  (free of  conditions  that
                     constrain it from taking advantage of that right) to pledge
                     or exchange the transferred  assets,  and (3) the Bank does
                     not maintain  effective control over the transferred assets
                     through  an  agreement  to  repurchase  them  before  their
                     maturity.
                                     Income Taxes

                     Deferred  income tax assets and  liabilities are determined
                     using the balance sheet method.  Under this method, the net
                     deferred tax asset or liability is determined  based on the
                     tax effects of the temporary  differences  between the book
                     and tax  bases of the  various  balance  sheet  assets  and
                     liabilities and gives current recognition to changes in tax
                     rates and laws.

                  Stock Compensation Plans

                     Statement of Financial  Accounting  Standards  ("SFAS") No.
                     123,  Accounting for Stock-Based  Compensation,  encourages
                     all  entities  to  adopt  a  fair  value  based  method  of
                     accounting for employee stock compensation  plans,  whereby
                     compensation  cost is  measured  at the grant date based on
                     the value of the award and is  recognized  over the service
                     period,  which is usually the vesting period.  However,  it
                     also allows an entity to  continue to measure  compensation
                     cost for those plans using the intrinsic value based method
                     of accounting  prescribed by  Accounting  Principles  Board
                     Opinion No. 25,  Accounting  for Stock Issued to Employees,
                     whereby  compensation  cost is the  excess,  if any, of the
                     quoted  market  price of the  stock at the  grant  date (or
                     other  measurement  date) over the amount an employee  must
                     pay to acquire the stock.  Stock  options  issued under the
                     Bank's  stock  option plan have no  intrinsic  value at the
                     grant date, and under Opinion No. 25 no  compensation  cost
                     is  recognized  for them.  The Bank has elected to continue
                     with the accounting methodology in Opinion No. 25 and, as a
                     result,  has provided pro forma  disclosures  of net income
                     and  earnings  per share and other  disclosures,  as if the
                     fair value based method of accounting had been applied.

                  Earnings Per Common Share

                     Basic  earnings  per common  share are computed by dividing
                     net  income  by the  weighted  average  number of shares of
                     common stock outstanding. Diluted earnings per common share
                     are computed by dividing net income after  adjustments  for
                     the  after-tax  income  effect of the issuance of potential
                     common   shares  that  are  dilutive  by  the  sum  of  the
                     weighted-average   number  of   shares   of  common   stock
                     outstanding    and    potential    common    shares.    The
                     weighted-average number of shares outstanding for the years
                     ended  December  31, 2000 and 1999 was 416,074 and 415,104,
                     respectively.



                                     F- 11
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  Comprehensive Income

                     Accounting  principles  generally  require that  recognized
                     revenue,  expenses,  gains and  losses be  included  in net
                     income. Although certain changes in assets and liabilities,
                     such as unrealized  gains and losses on  available-for-sale
                     securities,  are  reported as a separate  component  of the
                     equity section of the balance sheet, such items, along with
                     net income, are components of comprehensive income.

                  Recent  Developments

                     In June 1998, the FASB issued SFAS No. 133,  Accounting for
                     Derivative  Instruments and Hedging  Activities,  effective
                     for  fiscal  years  beginning  after  June 15,  2000.  This
                     Statement  establishes  accounting and reporting  standards
                     for   derivative   instruments   and  hedging   activities,
                     including certain derivative  instruments embedded in other
                     contracts,  and  requires  that  an  entity  recognize  all
                     derivatives  as assets or  liabilities in the balance sheet
                     and measure them at fair value.  If certain  conditions are
                     met,  an entity  may elect to  designate  a  derivative  as
                     follows: (a) a hedge of the exposure to changes in the fair
                     value of a recognized asset or liability or an unrecognized
                     firm  commitment,  (b) a hedge of the  exposure to variable
                     cash flows of a forecasted  transaction,  or (c) a hedge of
                     the  foreign  currency  exposure  of an  unrecognized  firm
                     commitment,  an  available-for-sale   security,  a  foreign
                     currency  denominated  forecasted  transaction,  or  a  net
                     investment   in  a  foreign   corporation.   The  Statement
                     generally   provides   for   matching  the  timing  of  the
                     recognition of the gain or loss on  derivatives  designated
                     as hedging  instruments with the recognition of the changes
                     in the fair value of the item being  hedged.  Depending  on
                     the type of hedge,  such  recognition will be in either net
                     income or other comprehensive  income. For a derivative not
                     designated as a hedging  instrument,  changes in fair value
                     will be  recognized  in net income in the period of change.
                     Management is currently  evaluating  the impact of adopting
                     this  Statement on the financial  statements,  but does not
                     anticipate that it will have a material impact.

NOTE 2.  INVESTMENT SECURITIES

                  The amortized cost and  approximate  fair values of securities
are summarized as follows:
<TABLE>
<CAPTION>

                                                                                    Gross           Gross
                                                                   Amortized      Unrealized      Unrealized         Fair
                                                                      Cost          Gains           Losses          Value
                                                                 --------------- -------------  --------------- ---------------

                   <S>                                           <C>             <C>            <C>             <C>
                   Securities Available for Sale
                      December 31, 2000:
                      U. S. Treasury and government agencies ... $    3,242,581  $         -    $    (23,000)   $    3,219,581
                      Restricted equity securities .............        313,900            -              -            313,900
                                                                 --------------- -------------  --------------- ---------------

                                                                 $    3,556,481  $         -    $    (23,000)   $    3,533,481
                                                                 =============== =============  =============== ===============

                      December 31, 1999:
                      U. S. Treasury and government agencies ... $    3,239,290  $         -    $    (74,000)   $    3,165,290
                      Restricted equity securities .............        313,900            -               -           313,900
                                                                 --------------- -------------  --------------  ---------------

                                                                 $    3,553,190  $         -    $    (74,000)   $    3,479,190
                                                                 =============== =============  ==============  ===============

                  Securities Held to Maturity
                     December 31, 2000:
                     U. S. Treasury and government agencies .... $    4,488,469  $      1,863   $     (8,613)   $    4,481,719
                     State, county and municipal securities ....        294,844            -            (686)          294,158
                                                                 --------------- -------------  --------------  ---------------

                                                                 $    4,783,313  $      1,863   $     (9,299)   $    4,775,877
                                                                 =============== =============  ==============  ===============


</TABLE>


                                     F- 12
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.  INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>

                                                                                    Gross           Gross
                                                                   Amortized      Unrealized     Unrealized          Fair
                                                                      Cost          Gains          Losses           Value
                                                                 --------------- -------------  --------------  ---------------
<S>                                                              <C>             <C>            <C>             <C>
                     U. S. Treasury and government agencies .... $    4,482,594  $         -    $    (46,188)   $    4,436,406
                     State, county and municipal securities ....        294,819            -          (2,622)          292,197
                                                                 --------------- -------------  --------------  ---------------
                                                                 $    4,777,413  $         -    $    (48,810)   $    4,728,603
                                                                 =============== =============  ==============  ===============
</TABLE>

                  Securities  with a carrying value of $6,020,731 and $4,722,586
                  at December 31, 2000 and 1999,  respectively,  were pledged to
                  secure  public  deposits  and for other  purposes  required or
                  permitted by law.

                  The  amortized  cost and fair value of debt  securities  as of
December 31, 2000 by contractual maturity are shown below.
<TABLE>
<CAPTION>

                                                            Securities Available for Sale       Securities Held to Maturity
                                                          ---------------------------------- ----------------------------------
                                                            Amortized            Fair           Amortized           Fair
                                                               Cost             Value             Cost              Value
                                                          ---------------  ----------------- ----------------  ----------------
<S>                                                       <C>              <C>               <C>               <C>
                      Due less than one year ............ $           -    $             -   $     1,499,395   $     1,496,250
                      Due from one to three years .......      3,242,581          3,219,581        2,734,070         2,735,784
                      Due from three to five years ......             -                  -           500,000           494,531
                      Due from five to ten years ........             -                  -            49,848            49,312
                                                          ---------------  ----------------- ----------------  ----------------
                                                          $    3,242,581   $      3,219,581  $     4,783,313   $     4,775,877
                                                          ===============  ================= ================  ================
</TABLE>

NOTE 3.  LOANS AND ALLOWANCE FOR LOAN LOSSES

                  The composition of loans is summarized as follows:
<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                        ---------------------------------------
                                                                                               2000                 1999
                                                                                        ------------------   ------------------
<S>                                                                                     <C>                  <C>
                     Commercial and financial ......................................... $     10,753,635     $      8,015,067
                     Agricultural .....................................................        1,578,653            1,431,012
                     Real estate - construction .......................................        3,552,219            2,545,021
                     Real estate - mortgage, farmland .................................        9,497,911            8,419,070
                     Real estate - mortgage, other ....................................       36,969,870           27,847,233
                     Consumer installment .............................................        5,279,839            5,911,050
                                                                                        ------------------   ------------------
                                                                                              67,632,127           54,168,453
                     Allowance for loan losses ........................................       (1,475,525)          (1,422,689)
                                                                                        ------------------   ------------------
                                       Loans, net ..................................... $     66,156,602     $     52,745,764
                                                                                        ==================   ==================

                  Changes in the allowance for loan losses are as follows:

                                                                                              Years Ended December 31,
                                                                                     -------------------------------------------
                                                                                              2000                   1999
                                                                                     -------------------     -------------------
                      Balance, beginning of year ................................... $       1,422,689       $       1,274,285
                         Loans charged off .........................................          (204,609)                (63,359)
                         Recoveries of loans previously charged off ................           257,445                 211,763
                                                                                     -------------------     -------------------
                      Balance, end of year ......................................... $       1,475,525       $       1,422,689
                                                                                     ===================     ===================
</TABLE>
                                     F- 13
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.  LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

                  The Bank had no loans which it considered to be impaired other
                  than the  loans on which  the  accrual  of  interest  had been
                  discontinued.  The total recorded investment in impaired loans
                  was  $689,000  and  $380,425  at  December  31, 2000 and 1999,
                  respectively.  These  loans  had  related  allowance  for loan
                  losses of  approximately  $79,000 and $67,000 at December  31,
                  2000 and 1999,  respectively.  The average recorded investment
                  in impaired loans for 2000 and 1999 was approximately $734,000
                  and $403,000, respectively. There was no significant amount of
                  interest income recognized on impaired loans in 2000 or 1999.

                  The  Bank  has  granted  loans  to  certain  related  parties,
                  including directors,  executive officers and their affiliates.
                  The interest rates on these loans were  substantially the same
                  as  rates  prevailing  at  the  time  of the  transaction  and
                  repayment terms are customary for the type of loan. Changes in
                  related  party loans for the year ended  December 31, 2000 are
                  as follows:
<TABLE>

<S>                                                                                                           <C>
                         Balance, beginning of year ......................................................... $      595,879
                            Advances ........................................................................        953,771
                            Repayments ......................................................................       (606,050)
                                                                                                              ----------------
                         Balance, end of year ............................................................... $      943,600
                                                                                                             ================
</TABLE>


NOTE 4.  PREMISES AND EQUIPMENT, NET

                  Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>

                                                                                                   December 31,
                                                                                       --------------------------------------
                                                                                              2000                 1999
                                                                                       -----------------    -----------------
<S>                                                                                    <C>                  <C>
                      Land ........................................................... $       372,676      $       372,676
                      Buildings and improvements .....................................       1,561,741            1,064,078
                      Equipment ......................................................       1,078,889            1,006,375
                      Construction in process ........................................               -              240,386
                                                                                       -----------------    -----------------
                                                                                             3,013,306            2,683,515
                      Accumulated depreciation .......................................        (872,085)            (834,393)
                                                                                       -----------------    -----------------
                                                                                       $     2,141,221      $     1,849,122
                                                                                       =================    =================
</TABLE>

 Note 5.          DEPOSITS

                  The  aggregate  amount of time  deposits in  denominations  of
                  $100,000 or more at December 31, 2000 and 1999 was $15,685,112
                  and  $10,724,505,  respectively.  The scheduled  maturities of
                  time deposits at December 31, 2000 are as follows:
<TABLE>
<S>                                                                                                        <C>
                      For the year ending December 31,
                         2001 ............................................................................ $     37,000,375
                         2002 ............................................................................        5,402,500
                         2003 ............................................................................        2,001,224
                         2004 ............................................................................          232,876
                         2005 ............................................................................          108,237
                                                                                                           -----------------
                                                                                                           $     44,745,212
                                                                                                           =================
</TABLE>

                                     F- 14
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6.  NOTES PAYABLE TO DIRECTORS

                  Notes payable to certain  directors  totaling $500,000 consist
                  of notes  which  were  executed  on  December  27,  1996,  and
                  subsequently  modified  on July 10,  1999.  Each of the  notes
                  accrues  interest  at the Bank's  prime rate less 1%. With the
                  exception of one note in the amount of $36,750 to one director
                  where  interest  payments are due  quarterly,  all payments of
                  principal  and  accrued  interest  have  been  deferred  until
                  maturity on December  29, 2001.  At maturity,  the Company has
                  the  option  to pay  all or a part  of  unpaid  principal  and
                  interest  by  issuing  to the  director  any stock  subject to
                  unexercised  warrants or options  held by the  directors.  The
                  directors  have the option at any time to pay for any  warrant
                  or option then exercisable through forgiveness of interest and
                  principal accrued and outstanding.

NOTE 7.  FEDERAL HOME LOAN BANK BORROWINGS

                  The Bank can obtain additional  funding as needed for mortgage
                  loans from the Federal Home Loan Bank of Atlanta ("FHLB").  At
                  December 31, 2000, the Bank had two advances  outstanding that
                  totaled  $1,045,000.  These advances are  collateralized  by a
                  blanket  floating lien on qualifying  first mortgage loans and
                  pledging  of the  Bank's  stock in the FHLB.  A summary of the
                  Bank's  borrowings  from the FHLB as of December  31, 2000 and
                  1999 follows:
<TABLE>
<CAPTION>

                                                                                                 2000                1999
                                                                                          -----------------   -----------------
<S>                                                                                       <C>                 <C>
                      Advances from Federal Home Loan Bank with interest ................ $        45,000     $        55,000
                         at fixed rate of 6.99% due in annual semi-annual
                         instalments of $5,000 through May 16, 2005.
                      Advances from Federal Home Loan Bank with interest
                         at a fixed rate of 7.28% due at October 28, 2001 ...............       1,000,000                   -
                                                                                          -----------------   -----------------
                                                                                          $     1,045,000     $        55,000
                                                                                          =================   =================

                      Balance, beginning of year ........................................ $        55,000     $        65,000
                         Advances .......................................................       2,000,000                   -
                         Repayments .....................................................      (1,010,000)            (10,000)
                                                                                          -----------------   -----------------
                      Balance, end of year .............................................. $     1,045,000     $        55,000
                                                                                          =================   =================

                  At December 31, 2000,  scheduled maturities of FHLB borrowings
are as follows:

                      For the year ending December 31,
                         2001 .............................................................................  $     1,010,000
                         2002 .............................................................................           10,000
                         2003 .............................................................................           10,000
                         2004 .............................................................................           10,000
                         2005 .............................................................................            5,000
                                                                                                             ----------------
                                                                                                             $     1,045,000
                                                                                                             ================

</TABLE>

                                     F- 15
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8.  EMPLOYEE BENEFIT PLAN

                  The  Bank has a  401(k)  salary  deferral  plan  which  allows
                  employees  to defer up to 15% of their  salary with  partially
                  matching Bank  contributions.  Bank contributions to this plan
                  charged to expense amounted to $25,124and  $16,154 in 2000 and
                  1999, respectively.


NOTE 9.  INCOME TAXES

                  Income tax expense consists of the following:
<TABLE>
<CAPTION>

                                                                                             Years Ended December 31,
                                                                                       --------------------------------------

                                                                                              2000                 1999
                                                                                       -----------------    -----------------
<S>                                                                                    <C>                  <C>
                      Current .......................................................  $       609,676      $        504,279
                      Deferred ......................................................          (15,188)               10,691
                                                                                       -----------------    -----------------
                                                                                       $       594,488      $        514,970
                                                                                       =================    =================
</TABLE>

                  The  Company's  income tax  expense  differs  from the amounts
                  computed by applying the federal income tax statutory rates to
                  income   before  income  taxes.   A   reconciliation   of  the
                  differences is as follows:
<TABLE>
<CAPTION>

                                                                                      Years Ended December 31,
                                                                       -------------------------------------------------------
                                                                                 2000                         1999
                                                                       -------------------------    --------------------------
                                                                         Amount        Percent         Amount        Percent
                                                                       ------------   ----------    -------------   ----------
<S>                                                                    <C>                <C>       <C>                 <C>
                       Tax provision at statutory rate ..............  $  596,541         34 %      $    489,733        34 %
                       Increase (decrease) resulting from:
                          Other items, net ..........................      (2,053)        -               25,237         2
                                                                       ------------   ----------    -------------   ----------
                       Income tax expense ...........................  $  594,488         34 %      $    514,970        36 %
                                                                       ============   ==========    =============   ==========
</TABLE>

                  The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>

                                                                                                   December 31,
                                                                                      ---------------------------------------
                                                                                            2000                  1999
                                                                                      -----------------     -----------------
                     <S>                                                              <C>                   <C>
                     Deferred tax assets:
                        Allowance for loan losses ................................... $        254,232      $        256,143
                        Non accrual loan interest receivable ........................           39,503                27,752
                        Securities available for sale ...............................            8,000                25,000
                                                                                      -----------------     -----------------
                                                                                               301,735               308,895
                                                                                      -----------------     -----------------

                     Deferred tax liabilities:
                        Premises and equipment ......................................           60,808                73,172
                        Other .......................................................           28,398                21,382
                                                                                      -----------------     -----------------
                                                                                                89,206                94,554
                                                                                      -----------------     -----------------

                     Net deferred tax assets ........................................ $        212,529      $        214,341
                                                                                      =================     =================


</TABLE>


                                     F- 16
<PAGE>





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10. EARNINGS PER COMMON SHARE

                  The following is a reconciliation of net income (the numerator
                  and the weighted average shares  outstanding (the denominator)
                  used in determining basic and diluted earnings per share.
<TABLE>
<CAPTION>

                                                                                  Year Ended December 31, 2000
                                                                  -----------------------------------------------------------
                                                                       Income               Shares          Per Share Amount
                                                                    (Numerator)          (Denominator)
                                                                  -----------------    ------------------   -----------------
                        <S>                                       <C>                  <C>                  <C>
                        Basic earnings per share
                           Net income ........................... $      1,160,043               416,074    $           2.79
                                                                                                            =================

                        Effect of Dilutive Securities
                           Stock options and warrants ...........               -                 66,199
                                                                  -----------------    ------------------

                        Dilutive earnings per share
                           Net income ........................... $     1,160,043                482,273    $           2.41
                                                                  =================    ==================   =================

                                                                                  Year Ended December 31, 1999
                                                                  -----------------------------------------------------------
                                                                       Income               Shares          Per Share Amount
                                                                    (Numerator)          (Denominator)
                                                                  -----------------    ------------------   -----------------

                        Basic earnings per share
                           Net income ........................... $        925,422               415,104    $           2.23
                                                                                                            =================

                        Effect of Dilutive Securities
                           Stock options and warrants ...........               -                 32,620
                                                                  -----------------    ------------------

                        Dilutive earnings per share
                           Net income ........................... $        925,422               447,724    $           2.07
                                                                  =================    ==================   =================
</TABLE>

NOTE 11. STOCK WARRANTS AND STOCK OPTION PLAN

                  Stock Warrants

                     In   recognition   of  the  efforts  and  financial   risks
                     undertaken by the Company's organizers, the Company granted
                     each  organizer  an  opportunity  to purchase  one share of
                     common  stock  for  each  share  purchased  by  them in the
                     Company's  common  stock  offering.   The  warrants  became
                     exercisable  on the date the Bank opened for  business  and
                     are  exercisable in whole or in part at any time during the
                     ten year period  following  that date, at an exercise price
                     equal to $10 per share unless the Bank is required to raise
                     capital to meet  regulatory  guidelines.  In the event this
                     occurs,  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.  The warrants are  nontransferable,  other than by
                     will or the laws of descent  and  distribution,  but shares
                     issued  pursuant  to  the  exercise  of  warrants  will  be
                     transferable,   subject  to  compliance   with   applicable
                     securities  laws. At December 31, 2000 and 1999, there were
                     137,500 warrants outstanding.



                                     F- 17
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11. STOCK WARRANTS AND STOCK OPTION PLAN (Continued)

                  Stock Option Plan

                     The   Company   has   options    outstanding    under   the
                     stockholder-approved  1997  Stock  Option  Plan (the  "1997
                     Plan").  Options granted under the 1997 Plan are one of two
                     types:  (i) those which  qualify for treatment as incentive
                     stock  options  under  Section 422 of the Internal  Revenue
                     Code of 1986,  as amended  ("Incentive  Stock  Options") or
                     (ii)  those  which do not so qualify  ("Nonqualified  Stock
                     Options").  The 1997  Plan  provides  that  not  more  than
                     125,000  shares in the  aggregate  be issued for  Incentive
                     Stock Options and Nonqualified Stock Options.  The exercise
                     price of an  Incentive  Stock Option shall not be less than
                     the fair value at the date of grant.  The exercise price of
                     a  Nonqualified  Stock  Option shall be  determined  by the
                     Board on the date granted.

                     In addition to the options  available  under the 1997 Plan,
                     in April 1997 the Board  granted  options for 10,926 shares
                     of common stock with a $10 exercise  price to the President
                     and CEO of the Bank provided that he exercises  one-half of
                     the options  within twelve months and the remainder  within
                     twenty-four  months.  The officer  exercised  5,463 options
                     during  each year  ended  December  31,  2000 and 1999.  At
                     December  31,  2000,  there  were  no  options  outstanding
                     outside of the 1997 Plan.

                    A summary  of the  status of the 1997 Plan at  December  31,
                    2000 and 1999,  and changes  during the years ended on those
                    dates is as follows:
<TABLE>
<CAPTION>

                                                                             2000                              1999
                                                               --------------------------------   -------------------------------
                                                                                 Weighted-                         Weighted-
                                                                                  Average                           Average
                                                                                 Exercise                          Exercise
                                                                  Number           Price            Number           Price
                                                               --------------  --------------    -------------   --------------
<S>                                                                  <C>       <C>                     <C>       <C>
                      Under option, beginning of year .........      63,018    $       10.33           58,117    $       10.00
                         Granted ..............................          -                -             4,901            11.96
                         Forfeited ............................          -                -                -                -
                                                               -------------                     -------------
                      Under option, end of year ...............      63,018            10.33           63,018            10.33
                                                               =============                     =============


                      Exercisable at end of year ..............      55,007                            44,070
                                                               =============                     =============


                      Available for grant at end of year ......      61,982                            61,982
                                                               =============                     =============


                      Weighted-average fair value per option
                         of options granted during the year ... $         -                      $       5.55
                                                               =============                     =============
</TABLE>

                  Additional  information about options  outstanding at December
31, 2000 is as follows:
<TABLE>
<CAPTION>

                                                                                                                  Options
                                                                                 Options Outstanding            Exercisable
                                                                           ---------------------------------   ---------------
                                                                                                Weighted-
                                                                                                 Average
                                                            Exercise           Number          Contractual         Number
                                                              Price          Outstanding      Life in Years     Outstanding
                                                          --------------   ----------------   --------------   ---------------
<S>                                                       <C>                       <C>                 <C>           <C>
                                                          $       10.00             58,218              5.7           54,047
                                                                  12.00              4,800              9.0              960
                                                                           ----------------                    ---------------
                                                                                    63,018              5.9           55,007
                                                                           ================                    ===============

</TABLE>


                                     F- 18
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11. STOCK WARRANTS AND STOCK OPTION PLAN (Continued)

                  As  permitted  by generally  accepted  accounting  principles,
                  grants  under  the  1997  Plan are  accounted  for  under  the
                  provisions   of  APB   Opinion   No.   25  and   its   related
                  interpretations.  Accordingly,  no compensation  cost has been
                  recognized for grants made to date. Had compensation cost been
                  determined  based on the fair value method  prescribed in FASB
                  Statement No. 123,  reported net income and earnings per share
                  would have been reduced to the pro forma amounts shown below:
<TABLE>
<CAPTION>

                                                                                             Year Ended December 31,
                                                                                         ---------------------------------
                                                                                              2000             1999
                                                                                         ---------------- ----------------
                        <S>                                                             <C>               <C>
                        Net income:
                           As reported ................................................ $      1,160,043  $       925,422
                           Pro forma .................................................. $      1,127,953  $       895,594

                        Primary earnings per share:
                           As reported ................................................ $           2.79  $          2.23
                           Pro forma .................................................. $           2.71  $          2.16

                        Fully diluted earnings per share:
                           As reported ................................................ $           2.41  $          2.07
                           Pro forma .................................................. $           2.34  $          2.00

</TABLE>
NOTE 12. COMMITMENTS AND CONTINGENCIES

                  The   Bank   is   party   to   financial    instruments   with
                  off-balance-sheet  risk in the normal  course of  business  to
                  meet the financing  needs of its  customers.  These  financial
                  instruments  include  commitments to extend credit and standby
                  letters of credit. They involve, to varying degrees,  elements
                  of credit risk and interest  rate risk in excess of the amount
                  recognized in the balance sheets.

                  The  Bank's   exposure   to  credit   loss  in  the  event  of
                  nonperformance by the other party to the financial  instrument
                  for commitments to extend credit and standby letters of credit
                  is represented by the contractual amount of those instruments.
                  The Bank uses the same credit  policies in making  commitments
                  and  conditional  obligations as it does for  on-balance-sheet
                  instruments.  A  summary  of  the  Bank's  commitments  is  as
                  follows:
<TABLE>
<CAPTION>

                                                                                                  December 31,
                                                                                      --------------------------------------
                                                                                             2000                 1999
                                                                                      -----------------    -----------------
<S>                                                                                   <C>                  <C>
                      Commitments to extend credit .................................. $      9,217,480     $      7,164,000
                      Standby letters of credit .....................................        3,466,400              102,500
                                                                                      -----------------    -----------------
                                                                                      $     12,683,880     $      7,266,500
                                                                                      =================    =================
</TABLE>

                  Commitments  to  extend  credit  are  agreements  to lend to a
                  customer  as long as there is no  violation  of any  condition
                  established in the contract. Since many of the commitments are
                  expected  to  expire  without  being  drawn  upon,  the  total
                  commitment  amounts do not necessarily  represent  future cash
                  requirements.    The   Bank    evaluates    each    customer's
                  creditworthiness  on  a  case-by-case  basis.  The  amount  of
                  collateral  obtained,  if  deemed  necessary  by the Bank upon
                  extension  of  credit,   is  based  on   management's   credit
                  evaluation of the customer.

                  Standby letters of credit are conditional  commitments  issued
                  by the Bank to guarantee  the  performance  of a customer to a
                  third party.  Those guarantees are primarily issued to support
                  public and  private  borrowing  arrangements.  The credit risk
                  involved in issuing  letters of credit is essentially the same
                  as that involved in extending  loan to  customers.  Collateral
                  held varies as  specified  above and is required in  instances
                  which the Bank deems necessary.



                                     F- 19
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12. COMMITMENTS AND CONTINGENCIES (Continued)
                  In the normal  course of business,  the Company is involved in
                  various legal proceedings.  In the opinion of management,  any
                  liability  resulting  from such  proceedings  would not have a
                  material effect on the Company's financial statements.


NOTE 13. CONCENTRATIONS OF CREDIT

                  The Bank originates  primarily  commercial,  residential,  and
                  consumer   loans  to  customers  in  the  Coffee   County  and
                  surrounding  counties.  The  ability  of the  majority  of the
                  Bank's  customers to honor their  contractual loan obligations
                  is   dependent   on  the  economy  in  Douglas,   Georgia  and
                  surrounding areas.

                  Although the Bank's loan portfolio is diversified,  there is a
                  relationship in this region between the  agricultural  economy
                  and the economic  performance of loans made to nonagricultural
                  customers.  The Bank's lending  policies for  agricultural and
                  nonagricultural     customers     require    loans    to    be
                  well-collateralized  and  supported by cash flows.  Collateral
                  for agricultural loans include equipment, crops, livestock and
                  land.  Credit  losses from loans  related to the  agricultural
                  economy  is  taken  into   considerations   by  management  in
                  determining the allowance for loan losses.

                  Approximately  seventy-two percent (72%) of the Company's loan
                  portfolio is  concentrated in real estate loans. A substantial
                  portion  of these  loans  are  secured  by real  estate in the
                  Bank's   primary  market  area.   Accordingly,   the  ultimate
                  collectibility of the loan portfolio is susceptible to changes
                  in market  conditions in the Bank's  primary  market area. The
                  other significant concentrations of credit by type of loan are
                  set forth in Note 3.

                  The Bank is subject to certain  statutory  requirements  which
                  generally  provide that the Bank may not extend  credit to any
                  single borrower or group of related borrowers in excess of 15%
                  of the Bank's  unimpaired  capital  and surplus (as defined by
                  the   Bank's   regulatory   authorities),   or   approximately
                  $1,196,000.

                  The  Bank has a  concentration  of  funds  on  deposit  at its
                  primary correspondent bank at December 31, 2000 as follows:

                  Correspondent commercial checking account       $3,574,715
                                                                  ==========

NOTE 14. REGULATORY MATTERS

                  The Bank is subject to certain  restrictions  on the amount of
                  dividends  that  may  be  declared  without  prior  regulatory
                  approval.  At December 31, 2000,  approximately  $2,003,600 of
                  retained  earnings  were  available  for dividend  declaration
                  without regulatory approval.

                  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 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 assets, liabilities,  and certain
                  off-balance-sheet   items  as  calculated   under   regulatory
                  accounting  practices.  The capital amounts and classification
                  are also subject to  qualitative  judgments by the  regulators
                  about components,  risk weightings,  and other factors. Prompt
                  corrective  action  provisions  are  not  applicable  to  bank
                  holding companies.

                  Quantitative  measures  established  by  regulation  to ensure
                  capital  adequacy require the Bank to maintain minimum amounts
                  and ratios of total and Tier I capital to risk-weighted assets
                  and of Tier I capital to average assets.  Management believes,
                  as of December  31,  2000,  the Bank met all capital  adequacy
                  requirements to which it is subject.



                                     F- 20
<PAGE>





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14. REGULATORY MATTERS (Continued)

                  As of December 31, 2000, the most recent notification from The
                  Office of the Comptroller of the Currency categorized the Bank
                  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
                  following table.  There are no conditions or events since that
                  notification that management  believes have changed the Bank's
                  category.

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

                                                                                                            To Be Well
                                                                                 For Capital             Capitalized Under
                                                                                  Adequacy               Prompt Corrective
                                                                                                     --------------------------
                                                       Actual                     Purposes               Action Provisions
                                             ---------------------------   ------------------------  --------------------------
      As of December 31, 2000                    Amount         Ratio          Amount       Ratio        Amount        Ratio
                                             ----------------  ---------   ---------------  -------  ---------------  ---------
        <S>                                  <C>               <C>         <C>              <C>      <C>              <C>
        Total Capital to Risk Weighted Assets
             Consolidated                    $     6,729,200      10.8%    $    4,980,300     8.0%         - - - N/A - - -
             Bank                            $     7,290,400      11.7%    $    4,980,300     8.0%   $    6,225,400      10.0%
        Tier I Capital to Risk Weighted Assets
             Consolidated                    $     5,942,400       9.6%    $    2,490,100     4.0%         - - - N/A - - -
             Bank                            $     6,503,600      10.4%    $    2,490,100     4.0%   $    3,735,200       6.0%
        Tier I Capital to Average Assets
             Consolidated                    $     5,942,400       7.9%    $    3,017,300     4.0%         - - - N/A - - -
             Bank                            $     6,503,600       8.6%    $    3,017,300     4.0%   $    3,771,600       5.0%

                                                                                                             To Be Well
                                                                                 For Capital             Capitalized Under
                                                                                   Adequacy              Prompt Corrective
                                                                                                     ---------------------------
                                                       Actual                      Purposes              Action Provisions
                                             ----------------------------  ------------------------- ---------------------------
      As of December 31, 1999                    Amount          Ratio         Amount        Ratio       Amount         Ratio
                                             ----------------  ----------  ---------------  -------- ----------------  ---------
        Total Capital to Risk Weighted Assets
             Consolidated                    $     5,524,300       11.3%   $    3,928,000      8.0%        - - - N/A - - -
             Bank                            $     5,941,100       12.1%   $    3,928,000      8.0%  $     4,909,900      10.0%
        Tier I Capital to Risk Weighted Assets
             Consolidated                    $     4,900,600       10.0%   $    1,964,000      4.0%        - - - N/A - - -
             Bank                            $     5,317,400       10.8%   $    1,964,000      4.0%  $     2,946,000       6.0%
        Tier I Capital to Average Assets
             Consolidated                    $     4,900,600        7.7%   $    2,558,200      4.0%        - - - N/A - - -
             Bank                            $     5,317,400        8.3%   $    2,558,200      4.0%  $     3,197,700       5.0%

</TABLE>

NOTE 15. FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The fair value of a financial instrument is the current amount
                  that would be exchanged between willing parties, other than in
                  a forced liquidation. Fair value is best determined based upon
                  quoted market prices. However, in many instances, there are no
                  quoted  market  prices  for  the  Bank's   various   financial
                  instruments.  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. Accordingly,
                  the fair value  estimates  may not be realized in an immediate
                  settlement  of  the  instrument.  SFAS  107  excludes  certain
                  financial  instruments and all  nonfinancial  instruments from
                  its disclosure requirements.  Accordingly,  the aggregate fair
                  value  amounts  presented  may not  necessarily  represent the
                  underlying fair value of the Bank.





                                     F- 21
<PAGE>





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

                  Cash and Due From Banks and Federal Funds Sold

                     The carrying amounts of cash and due from banks and federal
                     funds sold approximate fair values.

                  Securities

                     Fair values for securities classified as available for sale
                     and held to maturity are based on available  quoted  market
                     prices.  The carrying values of other  investments  with no
                     readily determinable fair value approximate fair values.

                  Loans

                     For variable-rate loans that reprice frequently and have no
                     significant change in credit risk, fair values are based on
                     carrying  values.  For other  loans,  the fair  values  are
                     estimated  using  discounted  cash  flow  analyses,   using
                     interest  rates  currently  being  offered  for loans  with
                     similar  terms to borrowers  with similar  credit  quality.
                     Fair  values  for  impaired   loans  are  estimated   using
                     discounted  cash flow  analyses  or  underlying  collateral
                     values.

                  Deposits

                     The carrying amounts of demand deposits,  savings deposits,
                     and variable-rate certificates of deposit approximate their
                     fair values.  Fair values for  fixed-rate  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
                     expected monthly maturities on time deposits.

                  Federal Funds Purchased

                     The carrying amounts of federal funds purchased approximate
                     their fair values.

                  Notes Payable

                     For  variable-rate  notes payable that reprice  frequently,
                     the carrying amounts approximate fair values.

                  Federal Home Loan Bank Borrowings

                     The fair values of the Company's  borrowings  from the FHLB
                     are  estimated  using  discounted  cash flow models,  using
                     current  market  interest rates offered on similar types of
                     borrowing arrangements.




                                     F- 22
<PAGE>





                    NOTE TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

                  Off-Balance Sheet Instruments

                     Fair values of the Company's  off-balance  sheet  financial
                     instruments are based on fees charged to enter into similar
                     agreements.  However,  commitments  to  extend  credit  and
                     standby  letters of credit do not  represent a  significant
                     value to the Company until such commitments are funded. The
                     Company has determined that these instruments do not have a
                     distinguishable  fair  value  and no fair  value  has  been
                     assigned.

                  The estimated fair values and related  carrying  values of the
Company's financial instruments were as follows:
<TABLE>
<CAPTION>

                                                              December 31, 2000                    December 31, 1999
                                                       ---------------------------------   ----------------------------------
                                                          Carrying            Fair              Carrying            Fair
                                                           Amount            Value               Amount            Value
                                                       ----------------  ---------------   -----------------  ---------------
                  <S>                                  <C>               <C>               <C>                <C>
                  Financial assets:
                     Cash and due from banks and
                        Federal funds sold ........... $     4,516,549   $    4,516,549    $      4,922,212   $    4,922,212
                                                       ================  ===============   =================  ===============

                     Investments in securities ....... $     8,316,794   $    8,309,358    $      8,256,603   $    8,207,793
                                                       ================  ===============   =================  ===============


                     Loans ........................... $    67,632,127   $   67,261,000    $     54,168,453   $   54,219,600
                     Allowance for loan losses .......       1,475,525               -            1,422,689               -
                                                       ----------------  ---------------   -----------------  ---------------

                                Loans, net ........... $    66,156,602   $   67,261,000    $     52,745,764   $   54,219,600
                                                       ================  ===============   =================  ===============


                  Financial liabilities:
                     Noninterest-bearing demand ...... $    10,466,444   $   10,466,444    $     11,090,409   $   11,090,409
                     Interest-bearing demand .........      15,668,613       15,668,613          13,136,785       13,136,785
                     Savings .........................       1,751,922        1,751,922           1,999,607        1,999,607
                     Time deposits ...................      44,745,212       47,133,000          34,647,620       34,810,000
                                                       ----------------  ---------------   -----------------  ---------------

                                Total deposits ....... $    72,632,191   $   75,019,979    $     60,874,421   $   61,036,801
                                                       ================  ===============   =================  ===============


                  Federal funds purchased ............ $       940,000   $      940,000    $      1,250,000   $    1,250,000
                                                       ================  ===============   =================  ===============

                  Notes payable, director ............ $       500,000   $      500,000    $        500,000   $      500,000
                                                       ================  ===============   =================  ===============

                  Other borrowings ................... $     1,045,000   $    1,045,000    $         55,000   $       53,700
                                                       ================  ===============   =================  ===============

</TABLE>



                                     F- 23
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16. PARENT COMPANY FINANCIAL INFORMATION

                  The  following  information  presents  the  condensed  balance
                  sheets of FNC Bancorp,  Inc. and statements of income and cash
                  flows as of and for the  years  ended  December  31,  2000 and
                  1999.
<TABLE>
<CAPTION>

                            CONDENSED BALANCE SHEETS
                                                                                             2000                  1999
                                                                                      -----------------     -----------------
                   <S>                                                                 <C>                   <C>
                   Assets
                      Cash ........................................................... $          84,450     $        169,709
                      Investment in subsidiary .......................................         6,488,650            5,268,408
                      Other assets, due from subsidiary ..............................                -               336,909
                                                                                       ------------------    -----------------

                              Total assets ........................................... $       6,573,100     $      5,775,026
                                                                                       ==================    =================


                   Liabilities
                      Notes payable, directors ....................................... $         500,000     $        500,000
                      Other liabilities ..............................................           145,676              423,434
                                                                                       ------------------    -----------------


                              Total liabilities ......................................           645,676              923,434
                                                                                       ------------------    -----------------


                   Stockholders' equity ..............................................         5,927,424            4,851,592
                                                                                       ------------------    -----------------

                              Total liabilities and stockholders' equity ............. $       6,573,100     $      5,775,026
                                                                                       ==================    =================

                         CONDENSED STATEMENTS OF INCOME

                                                                                             2000                 1999
                                                                                      -----------------     ----------------
                   Income, interest ................................................. $         7,625       $        6,481
                                                                                      -----------------     ----------------


                   Expense
                      Interest ......................................................          41,736               35,455
                      Other expense .................................................           5,600                6,495
                                                                                      -----------------     ----------------

                                                                                               47,336               41,950
                                                                                      -----------------     ----------------


                              Loss before income tax benefits and
                                  equity in undistributed earnings
                                  of subsidiary .....................................         (39,711)             (35,469)

                   Income tax benefits ..............................................         (13,512)             (12,000)
                                                                                      -----------------     ----------------


                              Loss before equity in undistributed
                                   earnings of subsidiary ...........................         (26,199)             (23,469)

                   Equity in undistributed earnings  of subsidiary ..................       1,186,242              948,891
                                                                                      -----------------     ----------------

                              Net income ............................................ $     1,160,043       $      925,422
                                                                                      =================     ================


</TABLE>


                                     F- 24
<PAGE>





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16. PARENT COMPANY FINANCIAL INFORMATION (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                             2000                  1999
                                                                                     -------------------   -------------------
                    <S>                                                              <C>                   <C>
                    OPERATING ACTIVITIES
                       Net income                                                    $       1,160,043     $         925,422
                                                                                     -------------------   -------------------

                       Adjustments to reconcile net income to net
                          cash provided by (used in) operating activities:
                          Undistributed earnings of subsidiary .....................        (1,186,242)             (948,891)
                          (Increase) decrease in due from subsidiary ...............           336,909              (336,909)
                          Increase  in interest payable ............................            38,774                27,999
                          Increase (decrease) in taxes payable .....................          (316,532)              320,019
                                                                                     -------------------   -------------------

                            Total adjustments ......................................        (1,127,091)             (937,782)
                                                                                     -------------------   -------------------


                            Net cash provided by (used in) operating activities ....            32,952               (12,360)
                                                                                     -------------------   -------------------


                    FINANCING ACTIVITIES
                       Purchase of treasury stock ..................................           (22,500)               (9,000)
                       Dividends paid ..............................................           (95,711)                  -
                       Proceeds from issuance of common stock ......................               -                  54,630
                                                                                     -------------------   -------------------


                            Net cash provided by (used in) financing activities ....          (118,211)               45,630
                                                                                     -------------------   -------------------


                    Net increase (decrease) in cash ................................           (85,259)               33,270

                    Cash at beginning of year ......................................           169,709               136,439
                                                                                     -------------------   -------------------

                    Cash at end of year ............................................ $          84,450     $         169,709
                                                                                     ===================   ===================


</TABLE>

                                     F- 25
<PAGE>