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TABLE 

|       |                                                                                        | Page   |
|------------|---------------------------------------------------------------------------------------------|--------|
| PART I     | FINANCIAL INFORMATION                                                                       |   |
| Item 1.    | Consolidated Financial Statements                                                           |   |
|       | Statements of Condition                                                                     | 1      |
|       | Statements of Income (Loss)                                                            | 2      |
|       | Statements of Comprehensive Income (Loss)                                                   | 3      |
|       | Statements of Stockholders’ Equity                                                    | 4      |
|       | Statements of Cash Flows                                                                    | 5      |
|       | Notes to Consolidated Financial Statements                                                  | 7      |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27     |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                  | 51     |
| Item 4T.   | Controls and Procedures                                                                     | 53     |
|       |                                                                                        |   |
| PART II    | OTHER INFORMATION                                                                           |   |
| Item 1.    | Legal Proceedings                                                                           | 53     |
| Item 1A.   | Risk Factors                                                                                | 53     |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 54     |
| Item 3.    | Defaults Upon Senior Securities                                                             | 54     |
| Item 4.    | (Removed and Reserved)                                                                      | 54     |
| Item 5.    | Other Information                                                                           | 54     |
| Item 6.    | Exhibits                                                                                    | 54     |
|       |                                                                                        |   |
| SIGNATURES | 55                                                                                          |

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Table of Contents

PART 

| PAB BANKSHARES, INC. AND SUBSIDIARIES                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CONDITION                                                                               |   |
| AS OF JUNE 30, 2010 AND DECEMBER 31, 2009                                                                          |   |
|                                                                                                               |   |
|                                                                                                               |   | June 30, |   |   | December 31, |   |
|                                                                                                               |   | 2010 |   |   | 2009 |   |
|                                                                                                               |   | (UNAUDITED) |   |   |   |   |
| ASSETS                                                                                                             |   |   |   |   |   |   |
| Cash and due from banks                                                                                            |   | $ | 14,764,381 |   |   | $ | 16,641,978 |   |
| Interest-bearing deposits in other banks                                                                           |   |   | 157,347,733 |   |   |   | 169,732,493 |   |
| Federal funds sold                                                                                                 |   |   | 149,427 |   |   |   | 103,825 |   |
| Investment securities                                                                                              |   |   | 178,779,945 |   |   |   | 111,541,113 |   |
| Restricted equity securities                                                                                       |   |   | 9,008,700 |   |   |   | 9,459,600 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Loans                                                                                                              |   |   | 654,525,280 |   |   |   | 805,313,687 |   |
| Allowance for loan losses                                                                                          |   |   | (34,518,387 | ) |   |   | (29,314,145 | ) |
| Net loans                                                                                                          |   |   | 620,006,893 |   |   |   | 775,999,542 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Premises and equipment, net                                                                                        |   |   | 14,134,963 |   |   |   | 18,609,472 |   |
| Cash value of bank-owned life insurance policies                                                                   |   |   | 13,088,406 |   |   |   | 12,874,651 |   |
| Foreclosed assets                                                                                                  |   |   | 96,528,202 |   |   |   | 92,117,123 |   |
| Other assets                                                                                                       |   |   | 7,273,322 |   |   |   | 24,864,778 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Total assets                                                                                                       |   | $ | 1,111,081,972 |   |   | $ | 1,231,944,575 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                               |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                          |   |   |   |   |   |   |   |   |
| Noninterest-bearing demand                                                                                         |   | $ | 86,534,474 |   |   | $ | 100,458,230 |   |
| Interest-bearing demand and savings                                                                                |   |   | 181,530,030 |   |   |   | 250,232,355 |   |
| Time                                                                                                               |   |   | 685,349,595 |   |   |   | 694,524,617 |   |
| Total deposits                                                                                                     |   |   | 953,414,099 |   |   |   | 1,045,215,202 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Federal funds purchased and securities sold under agreements to repurchase                                         |   |   | 2,801,189 |   |   |   | 10,011,024 |   |
| Advances from the Federal Home Loan Bank of Atlanta                                                                |   |   | 89,810,666 |   |   |   | 90,139,501 |   |
| Guaranteed preferred beneficial interests in debentures (trust preferred securities)                               |   |   | 10,310,000 |   |   |   | 10,310,000 |   |
| Other borrowings                                                                                                   |   |   | 20,000,000 |   |   |   | 20,000,000 |   |
| Other liabilities                                                                                                  |   |   | 9,144,770 |   |   |   | 5,682,200 |   |
| Total liabilities                                                                                                  |   |   | 1,085,480,724 |   |   |   | 1,181,357,927 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Stockholders' equity:                                                                                              |   |   |   |   |   |   |   |   |
| Preferred stock, no par value; 10,000,000 and 1,500,000 shares authorized; no shares issued                        |   |   | - |   |   |   | - |   |
| Common stock, no par value; 300,000,000 and 98,500,000 shares authorized; 13,795,040 shares issued and outstanding |   |   | 1,217,065 |   |   |   | 1,217,065 |   |
| Additional paid-in capital                                                                                         |   |   | 37,576,146 |   |   |   | 37,348,508 |   |
| Retained earnings (deficit)                                                                                        |   |   | (15,128,780 | ) |   |   | 11,295,000 |   |
| Accumulated other comprehensive income                                                                             |   |   | 1,936,817 |   |   |   | 726,075 |   |
| Total stockholders' equity                                                                                         |   |   | 25,601,248 |   |   |   | 50,586,648 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                         |   | $ | 1,111,081,972 |   |   | $ | 1,231,944,575 |   |

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Table of Contents

PAB BANKSHARES, INC. AND SUBSIDIARIES

| CONSOLIDATED STATEMENTS OF INCOME (LOSS)                      |   |
|---------------------------------------------------------------|--------|
| THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009      |   |
| (UNAUDITED)                                                   |   |
|                                                          |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|                                                          |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and fees on loans                                    |   | $ | 9,239,109 |   |   | $ | 14,029,302 |   |   | $ | 18,786,644 |   |   | $ | 27,978,687 |   |
| Interest and dividends on investment securities:              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                       |   |   | 1,470,344 |   |   |   | 1,834,927 |   |   |   | 2,665,072 |   |   |   | 3,725,354 |   |
| Nontaxable                                                    |   |   | 91,689 |   |   |   | 153,645 |   |   |   | 191,518 |   |   |   | 383,802 |   |
| Other interest income                                         |   |   | 114,597 |   |   |   | 72,329 |   |   |   | 203,965 |   |   |   | 153,020 |   |
| Total interest income                                         |   |   | 10,915,739 |   |   |   | 16,090,203 |   |   |   | 21,847,199 |   |   |   | 32,240,863 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                          |   |   | 4,817,348 |   |   |   | 6,725,648 |   |   |   | 10,030,306 |   |   |   | 14,386,604 |   |
| Interest on Federal Home Loan Bank advances                   |   |   | 865,512 |   |   |   | 1,074,253 |   |   |   | 1,724,734 |   |   |   | 2,151,499 |   |
| Interest on other borrowings                                  |   |   | 256,126 |   |   |   | 304,098 |   |   |   | 512,584 |   |   |   | 524,348 |   |
| Total interest expense                                        |   |   | 5,938,986 |   |   |   | 8,103,999 |   |   |   | 12,267,624 |   |   |   | 17,062,451 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                           |   |   | 4,976,753 |   |   |   | 7,986,204 |   |   |   | 9,579,575 |   |   |   | 15,178,412 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                     |   |   | 15,114,000 |   |   |   | 2,000,000 |   |   |   | 17,114,000 |   |   |   | 3,750,000 |   |
| Net interest income (expense) after provision for loan losses |   |   | (10,137,247 | ) |   |   | 5,986,204 |   |   |   | (7,534,425 | ) |   |   | 11,428,412 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (loss)                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                           |   |   | 709,269 |   |   |   | 865,949 |   |   |   | 1,446,246 |   |   |   | 1,681,978 |   |
| Other fee income                                              |   |   | 586,125 |   |   |   | 591,199 |   |   |   | 1,065,623 |   |   |   | 1,028,731 |   |
| Securities transactions, net                                  |   |   | 685,596 |   |   |   | 755,910 |   |   |   | 830,330 |   |   |   | 772,500 |   |
| Loss on sale and write-down of other assets                   |   |   | (3,801,735 | ) |   |   | (394,216 | ) |   |   | (5,257,737 | ) |   |   | (521,570 | ) |
| Gain on derivative instruments                                |   |   | 99,228 |   |   |   | 386,825 |   |   |   | 162,649 |   |   |   | 1,168,911 |   |
| Other noninterest income                                      |   |   | 245,007 |   |   |   | 280,878 |   |   |   | 482,050 |   |   |   | 461,758 |   |
| Total other income (loss)                                     |   |   | (1,476,510 | ) |   |   | 2,486,545 |   |   |   | (1,270,839 | ) |   |   | 4,592,308 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expenses                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                |   |   | 3,529,899 |   |   |   | 4,035,349 |   |   |   | 6,195,466 |   |   |   | 8,675,123 |   |
| Occupancy expense of premises                                 |   |   | 494,287 |   |   |   | 579,146 |   |   |   | 1,017,826 |   |   |   | 1,187,280 |   |
| Furniture and equipment expense                               |   |   | 485,042 |   |   |   | 497,783 |   |   |   | 999,803 |   |   |   | 1,002,122 |   |
| Other noninterest expense                                     |   |   | 4,874,967 |   |   |   | 2,989,310 |   |   |   | 9,310,775 |   |   |   | 5,362,886 |   |
| Total other expenses                                          |   |   | 9,384,195 |   |   |   | 8,101,588 |   |   |   | 17,523,870 |   |   |   | 16,227,411 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income tax expense (benefit)             |   |   | (20,997,952 | ) |   |   | 371,161 |   |   |   | (26,329,134 | ) |   |   | (206,691 | ) |
| Income tax expense (benefit)                                  |   |   | 94,646 |   |   |   | 29,623 |   |   |   | 94,646 |   |   |   | (253,543 | ) |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                             |   | $ | (21,092,598 | ) |   | $ | 341,538 |   |   | $ | (26,423,780 | ) |   | $ | 46,852 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss)  per common share                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                         |   | $ | (1.53 | ) |   | $ | 0.04 |   |   | $ | (1.92 | ) |   | $ | 0.01 |   |
| Diluted                                                       |   | $ | (1.53 | ) |   | $ | 0.04 |   |   | $ | (1.92 | ) |   | $ | 0.01 |   |

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Table of Contents

PAB 

| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)                                                                                                                                                          |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009                                                                                                                                                        |   |
| (UNAUDITED)                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                            |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|                                                                                                                                                                                                            |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                                                                                                                               |   | $ | (21,092,598 | ) |   | $ | 341,538 |   |   | $ | (26,423,780 | ) |   | $ | 46,852 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss):                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized loss on cash flow hedge during the period, net of tax benefit of $21,164 and  $366,368 for the quarter and $54,883 and $569,642 for the year to date                                       |   |   | (41,085 | ) |   |   | (711,186 | ) |   |   | (106,544 | ) |   |   | (1,105,775 | ) |
| Reclassification adjustment for gains on  cash flow hedge included in net income (loss), net of tax of $33,738 and $131,521 for the quarter and $55,301and $397,430 for the year to date              |   |   | (65,490 | ) |   |   | (255,304 | ) |   |   | (107,348 | ) |   |   | (771,481 | ) |
| Unrealized holding gains (losses) on securities available for sale arising during the period, net of tax (benefit) of $578,219 and ($622,445) for the quarter and $1,016,214 and (514,113) for the year to date |   |   | 1,122,425 |   |   |   | (1,230,512 | ) |   |   | 1,972,652 |   |   |   | (997,988 | ) |
| Reclassification adjustment for gains on securities available for sale included in net income (loss), net of tax of $233,103 and $264,569 for the quarter and $282,312 and $262,650 for the year to date        |   |   | (452,494 | ) |   |   | (491,341 | ) |   |   | (548,018 | ) |   |   | (509,850 | ) |
|                                                                                                                                                                                                            |   |   | 563,356 |   |   |   | (2,688,343 | ) |   |   | 1,210,742 |   |   |   | (3,385,094 | ) |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss                                                                                                                                                                                              |   | $ | (20,529,242 | ) |   | $ | (2,346,805 | ) |   | $ | (25,213,038 | ) |   | $ | (3,338,242 | ) |

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PAB 

| CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY                       |   |
|-----------------------------------------------------------------------------|--------|
| SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2009 |   |
|                                                                        |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   | Additional |   |   | Retained |   |   | Other |   |   | Total |   |
|                                                                        |   | Common Stock |   |   | Paid-in |   |   | Earnings |   |   | Comprehensive |   |   | Stockholders’ |   |
|                                                                        |   | Shares |   |   | Par Value |   |   | Capital |   |   | (Deficit) |   |   | Income |   |   | Equity |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                                  |   |   | 9,324,407 |   |   | $ | 1,217,065 |   |   | $ | 24,225,407 |   |   | $ | 62,467,000 |   |   | $ | 3,691,270 |   |   | $ | 91,600,742 |   |
| Net loss                                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (51,172,000 | ) |   |   | - |   |   |   | (51,172,000 | ) |
| Other comprehensive loss                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,965,195 | ) |   |   | (2,965,195 | ) |
| Proceeds from private placement of capital                                  |   |   | 4,470,633 |   |   |   | - |   |   |   | 12,772,471 |   |   |   | - |   |   |   | - |   |   |   | 12,772,471 |   |
| Stock-based compensation                                                    |   |   | - |   |   |   | - |   |   |   | 350,630 |   |   |   | - |   |   |   | - |   |   |   | 350,630 |   |
| Balance, December 31, 2009                                                  |   |   | 13,795,040 |   |   |   | 1,217,065 |   |   |   | 37,348,508 |   |   |   | 11,295,000 |   |   |   | 726,075 |   |   |   | 50,586,648 |   |
| Net loss                                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (26,423,780 | ) |   |   | - |   |   |   | (26,423,780 | ) |
| Other comprehensive income                                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,210,742 |   |   |   | 1,210,742 |   |
| Stock-based compensation                                                    |   |   | - |   |   |   | - |   |   |   | 227,638 |   |   |   | - |   |   |   | - |   |   |   | 227,638 |   |
| Balance, June 30, 2010                                                      |   |   | 13,795,040 |   |   | $ | 1,217,065 |   |   | $ | 37,576,146 |   |   | $ | (15,128,780 | ) |   | $ | 1,936,817 |   |   | $ | 25,601,248 |   |

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Table of Contents

PAB 

| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                               |   |
|-----------------------------------------------------------------------------------------------------|--------|
| SIX MONTHS ENDED JUNE 30, 2010 AND 2009                                                             |   |
| (UNAUDITED)                                                                                         |   |
|                                                                                                |   | Six Months Ended June 30, |   |
|                                                                                                |   | 2010 |   |   | 2009 |   |
|                                                                                                |   |   |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                |   |   |   |   |   |   |
| Net income (loss)                                                                                   |   | $ | (26,423,780 | ) |   | $ | 46,852 |   |
| Adjustments to reconcile net  income (loss) to net cash provided by operating activities: |   |   |   |   |   |   |   |   |
| Depreciation, amortization and accretion, net                                                       |   |   | 773,708 |   |   |   | 744,790 |   |
| Provision for loan losses                                                                           |   |   | 17,114,000 |   |   |   | 3,750,000 |   |
| Net realized gain on securities transactions                                                        |   |   | (830,330 | ) |   |   | (772,500 | ) |
| Loss on disposal of assets                                                                          |   |   | 5,950,978 |   |   |   | 521,570 |   |
| Gain on sale of branches                                                                            |   |   | (693,241 | ) |   |   | - |   |
| Gain on derivative instruments                                                                      |   |   | (162,649 | ) |   |   | (1,168,911 | ) |
| Stock-based compensation expense                                                                    |   |   | 227,638 |   |   |   | 150,834 |   |
| Increase in cash value of bank-owned life insurance                                                 |   |   | (213,755 | ) |   |   | (281,391 | ) |
| Increase in deferred compensation accrual                                                           |   |   | 108,331 |   |   |   | 36,566 |   |
| Net change in taxes receivable and taxes payable                                                    |   |   | 15,416,982 |   |   |   | 2,619,494 |   |
| Decrease in interest receivable                                                                     |   |   | 1,654,174 |   |   |   | 379,655 |   |
| Decrease in interest payable                                                                        |   |   | (96,170 | ) |   |   | (189,250 | ) |
| Net increase in prepaid expenses and other assets                                                   |   |   | (408,658 | ) |   |   | (1,763,912 | ) |
| Net increase (decrease) in accrued expenses and other liabilities                                   |   |   | 477,297 |   |   |   | (27,663 | ) |
| Net cash provided by operating activities                                                           |   |   | 12,894,525 |   |   |   | 4,046,134 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                |   |   |   |   |   |   |   |   |
| Decrease (increase) in interest-bearing deposits in other banks                                     |   |   | 12,384,760 |   |   |   | (363,751 | ) |
| (Increase) decrease in federal funds sold                                                           |   |   | (45,602 | ) |   |   | 1,051,068 |   |
| Purchase of debt securities                                                                         |   |   | (93,897,045 | ) |   |   | (44,313,619 | ) |
| Proceeds from sales of debt securities                                                              |   |   | 19,357,546 |   |   |   | 55,856,184 |   |
| Proceeds from calls of debt securities                                                              |   |   | 7,020,000 |   |   |   | 10,532,000 |   |
| Proceeds from maturities and paydowns of debt securities                                            |   |   | 12,038,236 |   |   |   | 13,778,104 |   |
| Purchase of restricted equity investments                                                           |   |   | - |   |   |   | (284,256 | ) |
| Redemption of restricted equity investments                                                         |   |   | 450,900 |   |   |   | 94,700 |   |
| Proceeds from sales of loans unrelated to branch sale                                               |   |   | 21,398,688 |   |   |   | - |   |
| Net decrease in loans                                                                               |   |   | 35,836,290 |   |   |   | 17,238,686 |   |
| Purchase of premises and equipment                                                                  |   |   | (49,146 | ) |   |   | (559,382 | ) |
| Proceeds from disposal of assets                                                                    |   |   | 13,782,111 |   |   |   | 4,154,394 |   |
| Net cash paid in branch sale                                                                        |   |   | (40,562,248 | ) |   |   | - |   |
| Net cash provided by (used in) investing activities                                                 |   |   | (12,285,510 | ) |   |   | 57,184,128 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                |   |   |   |   |   |   |   |   |
| Net increase (decrease) in deposits                                                                 |   |   | 5,052,058 |   |   |   | (87,321,129 | ) |
| Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements  |   |   | (7,209,835 | ) |   |   | 1,855,911 |   |
| Proceeds from the Federal Home Loan Bank advances                                                   |   |   | 5,000,000 |   |   |   | - |   |
| Payments on Federal Home Loan Bank advances                                                         |   |   | (5,328,835 | ) |   |   | (4,254,386 | ) |
| Proceeds from issuance of long-term debt                                                            |   |   | - |   |   |   | 20,000,000 |   |
| Proceeds from termination of cash flow hedge derivative                                             |   |   | - |   |   |   | 2,276,944 |   |
| Net cash used in financing activities                                                               |   |   | (2,486,612 | ) |   |   | (67,442,660 | ) |

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| CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)                        |   |
|--------------------------------------------------------------------------|--------|
| SIX MONTHS ENDED JUNE 30, 2010 AND 2009                                  |   |
| (UNAUDITED)                                                              |   |
|                                                                     |   | Six Months Ended June 30, |   |
|                                                                     |   | 2010 |   |   | 2009 |   |
|                                                                     |   |   |   |   |   |   |
| Net decrease in cash and due from banks                                  |   | $ | (1,877,597 | ) |   | $ | (6,212,398 | ) |
|                                                                     |   |   |   |   |   |   |   |   |
| Cash and due from banks at beginning of period                           |   |   | 16,641,978 |   |   |   | 18,104,521 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Cash and due from banks at end of period                                 |   | $ | 14,764,381 |   |   | $ | 11,892,123 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                        |   |   |   |   |   |   |   |   |
| Cash paid (received) during the period for:                              |   |   |   |   |   |   |   |   |
| Interest                                                                 |   | $ | 12,363,794 |   |   | $ | 17,251,701 |   |
| Taxes                                                                    |   | $ | (15,322,336 | ) |   | $ | (2,873,037 | ) |
|                                                                     |   |   |   |   |   |   |   |   |
| NONCASH INVESTING AND FINANCING TRANSACTIONS                             |   |   |   |   |   |   |   |   |
| Increase (decrease) in unrealized gains on securities available for sale |   | $ | 2,158,537 |   |   | $ | (2,284,602 | ) |
| Decrease in unrealized gain on cash flow hedges                          |   | $ | (329,799 | ) |   | $ | (2,844,328 | ) |
| Transfer of loans to foreclosed assets                                   |   | $ | 23,699,627 |   |   | $ | 16,345,885 |   |

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PAB 

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| Banking Locations          | Number of Banking Offices |
|----------------------------|---------------------------|
| South Georgia Market:      |                      |   |
| Valdosta, Lowndes County   |                      | 3 (including the main office) |
| Lake Park, Lowndes County  |                      | 1 |
| Bainbridge, Decatur County |                      | 3 |
| Cairo, Grady County        |                      | 1 |
| North Georgia Market:      |                      |   |
| McDonough, Henry County    |                      | 1 |
| Stockbridge, Henry County  |                      | 1 |
| Oakwood, Hall County       |                      | 1 |
| Athens, Oconee County      |                      | 1 |
| Florida Market:            |                      |   |
| Ocala, Marion County       |                      | 1 |

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| Securities Available for Sale                |   | Amortized Cost |        |   | Gross Unrealized Gains |   |      | Gross Unrealized Losses |   |   | Fair Value |   |
|----------------------------------------------|--------|----------------|-------------|--------|------------------------|--------|-----------|-------------------------|--------|--------|------------|--------|
| June 30, 2010:                               |   |           |        |   |                   |   |      |                    |   |   |       |   |
| Debt securities:                             |   |           |        |   |                   |   |      |                    |   |   |       |   |
| U.S. Government-sponsored enterprises (GSEs) |   | $              | 17,937,368  |   |                   | $      | 356,112   |                    |   | $      | -          |   |   | $ | 18,293,480 |   |
| State and municipal securities               |   |           | 8,947,276   |   |                   |   | 83,980    |                    |   |   | (273,206   | )      |   |   | 8,758,050 |   |
| Corporate                                    |   |           | 9,000,000   |   |                   |   | -         |                    |   |   | (84,370    | )      |   |   | 8,915,630 |   |
| Mortgage-backed                              |   |           |        |   |                   |   |      |                    |   |   |       |   |   |   |   |   |
| GSE residential                              |   |           | 139,432,553 |   |                   |   | 2,911,740 |                    |   |   | (143,501   | )      |   |   | 142,200,792 |   |
| Private-label residential                    |   |           | 520,000     |   |                   |   | -         |                    |   |   | (793       | )      |   |   | 519,207 |   |
| Private-label commercial                     |   |           | 89,324      |   |                   |   | 3,462     |                    |   |   | -          |   |   |   | 92,786 |   |
| Total securities available for sale          |   | $              | 175,926,521 |   |                   | $      | 3,355,294 |                    |   | $      | (501,870   | )      |   | $ | 178,779,945 |   |

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| Securities Available for Sale                |   | Amortized Cost |        |   | Gross Unrealized Gains |   |      | Gross Unrealized Losses |   |   | Fair Value |   |
|----------------------------------------------|--------|----------------|-------------|--------|------------------------|--------|-----------|-------------------------|--------|--------|------------|--------|
| December 31, 2009:                           |   |           |        |   |                   |   |      |                    |   |   |       |   |
| Debt securities:                             |   |           |        |   |                   |   |      |                    |   |   |       |   |
| U.S. Government-sponsored enterprises (GSEs) |   | $              | 30,452,647  |   |                   | $      | 262,292   |                    |   | $      | (247,182   | )      |   | $ | 30,467,757 |   |
| State and municipal securities               |   |           | 9,997,494   |   |                   |   | 117,577   |                    |   |   | (393,701   | )      |   |   | 9,721,370 |   |
| Corporate                                    |   |           | 4,027,832   |   |                   |   | -         |                    |   |   | (198,492   | )      |   |   | 3,829,340 |   |
| Mortgage-backed                              |   |           |        |   |                   |   |      |                    |   |   |       |   |   |   |   |   |
| GSE residential                              |   |           | 65,585,084  |   |                   |   | 1,379,928 |                    |   |   | (217,795   | )      |   |   | 66,747,217 |   |
| Private-label residential                    |   |           | 606,719     |   |                   |   | -         |                    |   |   | (5,271     | )      |   |   | 601,448 |   |
| Private-label commercial                     |   |           | 176,449     |   |                   |   | -         |                    |   |   | (2,468     | )      |   |   | 173,981 |   |
| Total securities available for sale          |   | $              | 110,846,225 |   |                   | $      | 1,759,797 |                    |   | $      | (1,064,909 | )      |   | $ | 111,541,113 |   |

|                       |   | AmortizedCost |        |   | FairValue |   |
|----------------------------|--------|---------------|-------------|--------|-----------|--------|
| Due in one year or less    |   | $             | -           |   |      | $      | - |   |
| Due from one to five years |   |          | 1,000,000   |   |      |   | 915,630 |   |
| Due from five to ten years |   |          | 10,768,815  |   |      |   | 10,898,937 |   |
| Due after ten years        |   |          | 24,115,829  |   |      |   | 24,152,593 |   |
| Mortgage-backed securities |   |          | 140,041,877 |   |      |   | 142,812,785 |   |
|                       |   | $             | 175,926,521 |   |      | $      | 178,779,945 |   |

|                                         |   | Three Months ended June 30, |    |   | Six Months ended June 30, |   |
|----------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
|                                         |   | 2010                        |    |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Gross gains on securities transactions       |   | $                           | 720,855 |   |                      | $      | 1,051,551 |   |   | $ | 865,589 |   |   | $ | 1,398,762 |   |
| Gross losses on securities transactions      |   |                        | (35,259 | )      |                      |   | (295,641 | ) |   |   | (35,259 | ) |   |   | (626,262 | ) |
| Net realized gain on securities transactions |   | $                           | 685,596 |   |                      | $      | 755,910 |   |   | $ | 830,330 |   |   | $ | 772,500 |   |

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|                                         |   | Less Than Twelve Months |    |   | Over Twelve Months |   |       |                    |   |
|----------------------------------------------|--------|-------------------------|---------|--------|--------------------|--------|------------|-------------------------|--------|
|                                         |   | Gross Unrealized Losses |    |   | Fair Value         |   |       | Gross Unrealized Losses |   |   | Fair Value |   |   | Total Unrealized Losses |   |
|                                         |   |                    |    |   |               |   |
| Available for Sale Securities                |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |
| June 30, 2010:                               |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |
| Debt securities:                             |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |
| U.S. Government-sponsored enterprises (GSEs) |   | $                       | -       |   |               | $      | -          |                    |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| State and municipal securities               |   |                    | -       |   |               |   | -          |                    |   |   | 273,206 |   |   |   | 5,030,895 |   |   |   | 273,206 |   |
| Corporate                                    |   |                    | 84,370  |   |               |   | 915,630    |                    |   |   | - |   |   |   | - |   |   |   | 84,370 |   |
| Mortgage-backed                              |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |   |   |   | - |   |
| GSE residential                              |   |                    | 143,501 |   |               |   | 17,750,854 |                    |   |   | - |   |   |   | - |   |   |   | 143,501 |   |
| Private-label residential                    |   |                    | -       |   |               |   | -          |                    |   |   | 793 |   |   |   | 519,207 |   |   |   | 793 |   |
| Private-label commercial                     |   |                    | -       |   |               |   | -          |                    |   |   | - |   |   |   | - |   |   |   | - |   |
| Total securities available for sale          |   | $                       | 227,871 |   |               | $      | 18,666,484 |                    |   | $ | 273,999 |   |   | $ | 5,550,102 |   |   | $ | 501,870 |   |
|                                         |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for Sale Securities                |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                           |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt securities:                             |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government-sponsored enterprises (GSEs) |   | $                       | 247,182 |   |               | $      | 16,526,513 |                    |   | $ | - |   |   | $ | - |   |   | $ | 247,182 |   |
| State and municipal securities               |   |                    | 8,504   |   |               |   | 584,492    |                    |   |   | 385,197 |   |   |   | 4,917,796 |   |   |   | 393,701 |   |
| Corporate                                    |   |                    | 143,160 |   |               |   | 856,840    |                    |   |   | 55,332 |   |   |   | 972,500 |   |   |   | 198,492 |   |
| Mortgage-backed                              |   |                    |    |   |               |   |       |                    |   |   |   |   |   |   |   |   |   |   |   |   |
| GSE residential                              |   |                    | 217,795 |   |               |   | 15,005,641 |                    |   |   | - |   |   |   | - |   |   |   | 217,795 |   |
| Private-label residential                    |   |                    | -       |   |               |   | -          |                    |   |   | 5,271 |   |   |   | 601,448 |   |   |   | 5,271 |   |
| Private-label commercial                     |   |                    | -       |   |               |   | -          |                    |   |   | 2,468 |   |   |   | 173,981 |   |   |   | 2,468 |   |
| Total securities available for sale          |   | $                       | 616,641 |   |               | $      | 32,973,486 |                    |   | $ | 448,268 |   |   | $ | 6,665,725 |   |   | $ | 1,064,909 |   |

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|                                               |   | Three Months Ended June 30, |        |   | Six Months Ended June 30, |   |
|----------------------------------------------------|--------|-----------------------------|-------------|--------|---------------------------|--------|
|                                               |   | 2010                        |        |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Basic earnings (losses) per share:                 |   |                        |        |   |                      |   |   |   |   |   |   |   |
| Net income (loss)                                  |   | $                           | (21,092,598 | )      |                      | $      | 341,538 |   |   | $ | (26,423,780 | ) |   | $ | 46,852 |   |
|                                               |   |                        |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding         |   |                        | 13,795,040  |   |                      |   | 9,324,407 |   |   |   | 13,795,040 |   |   |   | 9,324,407 |   |
|                                               |   |                        |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (losses) per common share                 |   | $                           | (1.53       | )      |                      | $      | 0.04 |   |   | $ | (1.92 | ) |   | $ | 0.01 |   |
|                                               |   |                        |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings (losses) per share:               |   |                        |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                  |   | $                           | (21,092,598 | )      |                      | $      | 341,538 |   |   | $ | (26,423,780 | ) |   | $ | 46,852 |   |
|                                               |   |                        |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding         |   |                        | 13,795,040  |   |                      |   | 9,324,407 |   |   |   | 13,795,040 |   |   |   | 9,324,407 |   |
| Effect of dilutive stock options and warrants      |   |                        | -           |   |                      |   | - |   |   |   | - |   |   |   | - |   |
| Weighted average diluted common shares outstanding |   |                        | 13,795,040  |   |                      |   | 9,324,407 |   |   |   | 13,795,040 |   |   |   | 9,324,407 |   |
|                                               |   |                        |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (losses) per common share                 |   | $                           | (1.53       | )      |                      | $      | 0.04 |   |   | $ | (1.92 | ) |   | $ | 0.01 |   |

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|                                                                             | Asset Derivatives      |   | Liability Derivatives   |   |
|----------------------------------------------------------------------------------|------------------------|--------|-------------------------|--------|
|                                                                             | As of June 30, 2010    |   | As of December 31, 2009 |   | As of June 30, 2010 |   | As of December 31, 2009 |   |
|                                                                             | Balance Sheet Location |   | Fair Value              |   | Balance Sheet Location |   | Fair Value |   | Balance Sheet Location |   | Fair Value |   | Balance Sheet Location |   | FairValue |   |
| Interest Rate Products                                                           | Other Assets           |   | $                       | -      |   | Other Assets |   | $ | - |   | Other Liabilities |   | $ | - |   | Other Liabilities |   | $ | - |   |
|                                                                             |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total derivatives designated as hedging instruments under FASB ASC 815      |                   | $      | -                       |   |   |   | $ | - |   |   |   | $ | - |   |   |   | $ | - |   |
|                                                                             |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives not designated as hedging instruments under FASB ASC 815:            |                   |
|                                                                             |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Products                                                           | Other Assets           |   | $                       | 75     |   | Other Assets |   | $ | 13,757 |   | Other Liabilities |   | $ | - |   | Other Liabilities |   | $ | - |   |
|                                                                             |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total derivatives not designated as hedging instruments under FASB ASC 815  |                   | $      | 75                      |   |   |   | $ | 13,757 |   |   |   | $ | - |   |   |   | $ | - |   |

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| Derivatives in FASB ASC 815 Cash |   | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |   | Location of Gain or (Loss) Reclassified from Accumulated OCI into |   | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |     | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded |               | Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|----------------------------------|--------|------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| FlowHedging                      |   | Three Months EndedJune 30,                                                   |   | Income(Effective                                                  |   | Three Months EndedJune 30,                                                                 |     | fromEffectiveness                                                                                      |               | Three Months EndedJune 30,                                                                                                       |   |
| Relationships                    |   | 2010                                                                         |   |                                                              | 2009   |                                                                                       | Portion) |                                                                                                   | 2010               |                                                                                                                             |   | 2009 |   | Testing) |   | 2010 |   |   | 2009 |   |
|                             |   |                                                                         |   |                                                              |   |                                                                                       |     |                                                                                                   |               |                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Products           |   | $                                                                            | -      |                                                              |   | $                                                                                          | (109,626 | )                                                                                                      | Interest Income    |                                                                                                                             | $      | 61,814 |   |   | $ | 718,333 |   | Other Income |   | $ | - |   |   | $ | (21,970 | ) |
|                             |   |                                                                         |   |                                                              |   |                                                                                       |     |                                                                                                   |  Other Income |                                                                                                                             |   | 99,665 |   |   |   | 603,123 |   |   |   |   |   |   |   |   |   |   |
| Total                            |   | $                                                                            | -      |                                                              |   | $                                                                                          | (109,626 | )                                                                                                      |               |                                                                                                                             | $      | 161,479 |   |   | $ | 1,321,456 |   |   |   | $ | - |   |   | $ | (21,970 | ) |

| Derivatives in FASB ASC 815 Cash |   | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |   | Location of Gain or (Loss) Reclassified from Accumulated OCI into |   | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |     | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded |              | Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|----------------------------------|--------|------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------|-------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| FlowHedging                      |   | Six Months EndedJune 30,                                                     |   | Income(Effective                                                  |   | Six Months EndedJune 30,                                                                   |     | fromEffectiveness                                                                                      |              | Six Months EndedJune 30,                                                                                                         |   |
| Relationships                    |   | 2010                                                                         |   |                                                              | 2009   |                                                                                       | Portion) |                                                                                                   | 2010              |                                                                                                                             |   | 2009 |   | Testing) |   | 2010 |   |   | 2009 |   |
|                             |   |                                                                         |   |                                                              |   |                                                                                       |     |                                                                                                   |              |                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Products           |   | $                                                                            | -      |                                                              |   | $                                                                                          | (60,029  | )                                                                                                      | Interest Income   |                                                                                                                             | $      | 147,747 |   |   | $ | 1,478,092 |   | Other Income |   | $ | - |   |   | $ | (21,354 | ) |
|                             |   |                                                                         |   |                                                              |   |                                                                                       |     |                                                                                                   | Other Income |                                                                                                                             |   | 182,052 |   |   |   | 1,295,393 |   |   |   |   |   |   |   |   |   |   |
| Total                            |   | $                                                                            | -      |                                                              |   | $                                                                                          | (60,029  | )                                                                                                      |              |                                                                                                                             | $      | 329,799 |   |   | $ | 2,773,485 |   |   |   | $ | - |   |   | $ | (21,354 | ) |

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| Derivatives Not Designated as Hedging Instruments Under FASB | Location of Gain or (Loss) Recognized in Income on |   | Amount of Gain or (Loss) Recognized in Income on DerivativeThree Months Ended June 30, |   |
|--------------------------------------------------------------|----------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|
| ASC 815                                                      | Derivative                                         |   | 2010                                                                                   |   |   | 2009 |   |
|                                                         |                                               |   |                                                                                   |   |   |   |   |
| Interest Rate Products                                       | Other Income / Expense                             |   | $                                                                                      | (437   | ) |   | $ | (270,274 | ) |
|                                                         |                                               |   |                                                                                   |   |   |   |   |   |   |
| Total                                                        |                                               |   | $                                                                                      | (437   | ) |   | $ | (270,274 | ) |

| Derivatives Not Designated as Hedging Instruments Under FASB |  Location of Gain or (Loss) Recognized in Income on |   | Amount of Gain or (Loss) Recognized in Income on DerivativeSix Months Ended June 30, |    |
|--------------------------------------------------------------|----------------------------------------------------------|--------|--------------------------------------------------------------------------------------|---------|
| ASC 815                                                      |  Derivative                                         |   | 2010                                                                                 |    |   | 2009 |   |
|                                                         |                                                     |   |                                                                                 |    |   |   |   |
| Interest Rate Products                                       | Other Income / Expense                                   |   | $                                                                                    | (13,682 | ) |   | $ | (137,150 | ) |
|                                                         |                                                     |   |                                                                                 |    |   |   |   |   |   |
| Total                                                        |                                                     |   | $                                                                                    | (13,682 | ) |   | $ | (137,150 | ) |

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| As of June 30, 2010:                     |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |        | Significant Unobservable Inputs(Level 3) |   |   | Total  |   |
|------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------------|--------|-------------|------------------------------------------|--------|--------|--------|--------|
| Assets                                   |   |                                                          |   |   |                                         |   |        |                                     |   |   |   |   |
| Investment securities available-for-sale |   | $                                                             | -      |   |                                         | $      | 178,779,945 |                                     |   | $      | -      |   |   | $ | 178,779,945 |   |
| Derivative financial instruments         |   |                                                          | -      |   |                                         |   | 75          |                                     |   |   | -      |   |   |   | 75 |   |
| Total assets at fair value               |   | $                                                             | -      |   |                                         | $      | 178,780,020 |                                     |   | $      | -      |   |   | $ | 178,780,020 |   |

| As of December 31, 2009:                        |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |        | Significant Unobservable Inputs(Level 3) |   |   | Total  |   |
|-------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------------|--------|-------------|------------------------------------------|--------|--------|--------|--------|
| Assets                                          |   |                                                          |   |   |                                         |   |        |                                     |   |   |   |   |
| Investment securities available-for-sale        |   | $                                                             | -      |   |                                         | $      | 111,541,113 |                                     |   | $      | -      |   |   | $ | 111,541,113 |   |
| Derivative financial instruments                |   |                                                          | -      |   |                                         |   | 13,757      |                                     |   |   | -      |   |   |   | 13,757 |   |
| Total fair value of assets on a recurring basis |   | $                                                             | -      |   |                                         | $      | 111,554,870 |                                     |   | $      | -      |   |   | $ | 111,554,870 |   |

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|                                               |   | Carrying value at June 30, 2010                               |   |   |                                         |   |      |                                     |   |
|----------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------------|--------|-----------|------------------------------------------|--------|
|                                               |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |      | Significant Unobservable Inputs(Level 3) |   |   | Total |   |   | Total losses for the three months endedJune 30, 2010 |   |   | Total losses for the six months endedJune 30, 2010 |   |
|                                               |   |                                                          |   |   |                                         |   |      |                                     |   |   |   |   |   |   |   |   |   |   |
| Nonperforming loans                                |   | $                                                             | -      |   |                                         | $      | -         |                                     |   | $ | 123,958,285 |   |   | $ | 123,958,285 |   |   | $ | - |   |   | $ | - |   |
| Foreclosed assets                                  |   |                                                          | -      |   |                                         |   | 3,247,863 |                                     |   |   | 4,809,247 |   |   |   | 8,057,110 |   |   |   | (4,500,579 | ) |   |   | (5,977,805 | ) |
| Total fair value of assets on a nonrecurring basis |   | $                                                             | -      |   |                                         | $      | 3,247,863 |                                     |   | $ | 128,767,532 |   |   | $ | 132,015,395 |   |   | $ | (4,500,579 | ) |   | $ | (5,977,805 | ) |

|                                               |   | Carrying value at December 31, 2009                           |   |   |                                         |   |       |                                     |   |
|----------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------------|--------|------------|------------------------------------------|--------|
|                                               |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |       | Significant Unobservable Inputs(Level 3) |   |   | Total |   |   | Total losses for the three months endedJune 30, 2009 |   |   | Total losses for the six months endedJune 30, 2009 |   |
|                                               |   |                                                          |   |   |                                         |   |       |                                     |   |   |   |   |   |   |   |   |   |   |
| Nonperforming loans                                |   | $                                                             | -      |   |                                         | $      | -          |                                     |   | $ | 80,723,630 |   |   | $ | 80,723,630 |   |   | $ | - |   |   | $ | - |   |
| Foreclosed assets                                  |   |                                                          | -      |   |                                         |   | 20,313,388 |                                     |   |   | 71,803,735 |   |   |   | 92,117,123 |   |   |   | (394,216 | ) |   |   | (517,579 | ) |
| Total fair value of assets on a nonrecurring basis |   | $                                                             | -      |   |                                         | $      | 20,313,388 |                                     |   | $ | 152,527,365 |   |   | $ | 172,840,753 |   |   | $ | (394,216 | ) |   | $ | (517,579 | ) |

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|                                                                                                |   | June 30, 2010   |        |   | December 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------|--------|-----------------|-------------|--------|-------------------|--------|
|                                                                                                |   | Carrying Amount |        |   | Fair Value        |   |   | Carrying Amount |   |   | Fair Value |   |
| Cash and balances due from banks, interest-bearing deposits with other banks and federal funds sold |   | $               | 172,262,000 |   |              | $      | 172,262,000 |   |   | $ | 186,478,000 |   |   | $ | 186,478,000 |   |
| Investment securities                                                                               |   |            | 178,780,000 |   |              |   | 178,780,000 |   |   |   | 111,541,000 |   |   |   | 111,541,000 |   |
| Restricted equity securities                                                                        |   |            | 9,009,000   |   |              |   | 9,009,000 |   |   |   | 9,460,000 |   |   |   | 9,460,000 |   |
| Loans, net                                                                                          |   |            | 620,007,000 |   |              |   | 623,014,000 |   |   |   | 776,000,000 |   |   |   | 777,400,000 |   |
| Cash flow hedge derivative instrument                                                               |   |            | -           |   |              |   | - |   |   |   | 14,000 |   |   |   | 14,000 |   |
| Deposits                                                                                            |   |            | 953,414,000 |   |              |   | 965,171,000 |   |   |   | 1,045,215,000 |   |   |   | 1,057,778,000 |   |
| Federal funds purchased and securities sold under agreements to repurchase                          |   |            | 2,801,000   |   |              |   | 2,801,000 |   |   |   | 10,011,000 |   |   |   | 10,011,000 |   |
| Advances from the FHLB                                                                              |   |            | 89,811,000  |   |              |   | 87,395,000 |   |   |   | 90,140,000 |   |   |   | 88,829,000 |   |
| Other borrowings                                                                                    |   |            | 20,000,000  |   |              |   | 22,217,000 |   |   |   | 20,000,000 |   |   |   | 22,489,000 |   |
| Beneficial interest in debentures                                                                   |   |            | 10,310,000  |   |              |   | 10,310,000 |   |   |   | 10,310,000 |   |   |   | 10,310,000 |   |

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|                               |   | South Georgia  |    |   | North Georgia |   |    | Florida |   |   | Treasury |   |   | Total  |    |
|------------------------------------|--------|----------------|---------|--------|---------------|--------|---------|---------|--------|--------|----------|--------|--------|--------|---------|
|                               |   | (In thousands) |    |
| Three Months ended June 30, 2010 1 |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |
| Net interest income                |   | $              | 3,348   |   |          | $      | 1,418   |    |   | $      | 27       |   |   | $      | 184     |   |   | $ | 4,977 |   |
| Provision for loan losses          |   |           | 1,953   |   |          |   | 6,116   |    |   |   | (33      | )      |   |   | 7,078   |   |   |   | 15,114 |   |
| Noninterest income                 |   |           | 460     |   |          |   | (3,302  | )       |   |   | (810     | )      |   |   | 2,175   |   |   |   | (1,477 | ) |
| Noninterest expense                |   |           | 2,053   |   |          |   | 2,332   |    |   |   | 700      |   |   |   | 4,299   |   |   |   | 9,384 |   |
| Income tax expense (benefit)       |   |           | -       |   |          |   | -       |    |   |   | -        |   |   |   | 95      |   |   |   | 95 |   |
| Net income (loss)                  |   |           | (198    | )      |          |   | (10,332 | )       |   |   | (1,450   | )      |   |   | (9,113  | ) |   |   | (21,093 | ) |
| Total assets                       |   |           | 287,263 |   |          |   | 348,381 |    |   |   | 78,041   |   |   |   | 397,397 |   |   |   | 1,111,082 |   |
|                               |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Three Months ended June 30, 2009   |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Net interest income                |   |           | 3,909   |   |          |   | 2,994   |    |   |   | 474      |   |   |   | 609     |   |   |   | 7,986 |   |
| Provision for loan losses          |   |           | 284     |   |          |   | 1,914   |    |   |   | (87      | )      |   |   | (111    | ) |   |   | 2,000 |   |
| Noninterest income                 |   |           | 1,076   |   |          |   | (193    | )       |   |   | 24       |   |   |   | 1,580   |   |   |   | 2,487 |   |
| Noninterest expense                |   |           | 2,539   |   |          |   | 1,846   |    |   |   | 438      |   |   |   | 3,279   |   |   |   | 8,102 |   |
| Income tax expense (benefit)       |   |           | 735     |   |          |   | (326    | )       |   |   | 50       |   |   |   | (429    | ) |   |   | 30 |   |
| Net income (loss)                  |   |           | 1,427   |   |          |   | (633    | )       |   |   | 97       |   |   |   | (550    | ) |   |   | 341 |   |
| Total assets                       |   |           | 388,704 |   |          |   | 452,081 |    |   |   | 102,409  |   |   |   | 333,822 |   |   |   | 1,277,016 |   |
|                               |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Six Months ended June 30, 2010 1   |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Net interest income                |   |           | 6,933   |   |          |   | 3,000   |    |   |   | 296      |   |   |   | (649    | ) |   |   | 9,580 |   |
| Provision for loan losses          |   |           | 5,473   |   |          |   | 5,672   |    |   |   | 2,420    |   |   |   | 3,549   |   |   |   | 17,114 |   |
| Noninterest income                 |   |           | 1,217   |   |          |   | (4,634  | )       |   |   | (788     | )      |   |   | 2,934   |   |   |   | (1,271 | ) |
| Noninterest expense                |   |           | 4,081   |   |          |   | 4,404   |    |   |   | 1,667    |   |   |   | 7,372   |   |   |   | 17,524 |   |
| Income tax expense (benefit)       |   |           | -       |   |          |   | -       |    |   |   | -        |   |   |   | 95      |   |   |   | 95 |   |
| Net income (loss)                  |   |           | (1,404  | )      |          |   | (11,710 | )       |   |   | (4,579   | )      |   |   | (8,731  | ) |   |   | (26,424 | ) |
|                               |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Six Months ended June 30, 2009     |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Net interest income                |   |           | 7,682   |   |          |   | 5,512   |    |   |   | 1,240    |   |   |   | 744     |   |   |   | 15,178 |   |
| Provision for loan losses          |   |           | 1,783   |   |          |   | 5,084   |    |   |   | 835      |   |   |   | (3,952  | ) |   |   | 3,750 |   |
| Noninterest income                 |   |           | 2,030   |   |          |   | (200    | )       |   |   | 59       |   |   |   | 2,703   |   |   |   | 4,592 |   |
| Noninterest expense                |   |           | 4,739   |   |          |   | 3,506   |    |   |   | 905      |   |   |   | 7,077   |   |   |   | 16,227 |   |
| Income tax expense (benefit)       |   |           | 1,085   |   |          |   | (1,115  | )       |   |   | (150     | )      |   |   | (74     | ) |   |   | (254 | ) |
| Net income (loss)                  |   |           | 2,105   |   |          |   | (2,163  | )       |   |   | (291     | )      |   |   | 396     |   |   |   | 47 |   |

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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

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| Market/County |   | Number of Offices |   |   | Total Loans1 |   |    | Total Deposits1 |   |   | Market Share (%) 2 |   |   | Market Share Rank 2 |   |
|---------------|--------|------------------------|--------|--------|--------------|--------|---------|-----------------|--------|--------|------------------------------|--------|--------|--------------------------|--------|
|          |   |                   |   |   |         |   |    |            |   |   |                         |   |   |                     |   |
| South Georgia |   |                   |   |   |         |   |    |            |   |   |                         |   |   |                     |   |
| Lowndes       |   |                   | 4      |   |         | $      | 226,322 |            |   | $      | 317,137                      |   |   |                     | 20.3   |   |   |   | 2 |   |
| Decatur       |   |                   | 3      |   |         |   | 40,596  |            |   |   | 102,514                      |   |   |                     | 29.6   |   |   |   | 1 |   |
| Grady         |   |                   | 1      |   |         |   | 11,382  |            |   |   | 21,031                       |   |   |                     | 8.5    |   |   |   | 5 |   |
|          |   |                   | 8      |   |         | $      | 278,300 |            |   | $      | 440,682                      |   |   |                     |   |   |   |   |   |   |
| North Georgia |   |                   |   |   |         |   |    |            |   |   |                         |   |   |                     |   |   |   |   |   |   |
| Henry         |   |                   | 2      |   |         | $      | 142,182 |            |   | $      | 64,010                       |   |   |                     | 3.5    |   |   |   | 9 |   |
| Hall          |   |                   | 1      |   |         |   | 92,118  |            |   |   | 35,654                       |   |   |                     | 1.6    |   |   |   | 13 |   |
| Oconee        |   |                   | 1      |   |         |   | 45,305  |            |   |   | 20,369                       |   |   |                     | 2.0    |   |   |   | 9 |   |
|          |   |                   | 4      |   |         | $      | 279,605 |            |   | $      | 120,033                      |   |   |                     |   |   |   |   |   |   |
|          |   |                   |   |   |         |   |    |            |   |   |                         |   |   |                     |   |   |   |   |   |   |
| Florida       |   |                   |   |   |         |   |    |            |   |   |                         |   |   |                     |   |   |   |   |   |   |
| Marion        |   |                   | 1      |   |         | $      | 64,102  |            |   | $      | 172,915                      |   |   |                     | 3.4    |   |   |   | 6 |   |
|          |   |                   | 1      |   |         | $      | 64,102  |            |   | $      | 172,915                      |   |   |                     |   |   |   |   |   |   |

| 1 | Dollar amounts are presented in thousands as of June 30, 2010.  Amounts exclude $32.5 million in loans and $219.8 million in deposits assigned to the “Treasury” that are not allocated to any particular market (i.e. participation loans, employee and director accounts, brokered deposits, official checks, etc.). |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Based on the FDIC/OTS Summary of Deposits report as of June 30, 2009. |
|---|-----------------------------------------------------------------------|

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|                       |   |        |        |   |        |   |   |        |   |   |         |   |   | Median 2009 |   |
|----------------------------|--------|-------------|-------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|-------------|--------|
| Market/                    |   | Total       |        |   | Population  |   |   | Employment  |   |   | Unemployment |   |   | Household   |   |
| County                     |   | Population1 |        |   | Growth (%)2 |   |   | Growth (%)3 |   |   | Rate (%)4    |   |   | Income ($)5 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |
| Selected Georgia Counties: |   |        |        |   |        |   |   |        |   |   |         |   |   |
| South Georgia:             |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |
| Decatur                    |   |        | 28,838      |   |        |   | 2.1    |        |   |   | (6.2         | )      |   |        | 14.0   |   |   |   | 35,129 |   |
| Grady                      |   |        | 25,187      |   |        |   | 6.5    |        |   |   | (6.5         | )      |   |        | 10.3   |   |   |   | 35,015 |   |
| Lowndes                    |   |        | 106,814     |   |        |   | 15.9   |        |   |   | (4.5         | )      |   |        | 9.1    |   |   |   | 41,277 |   |
| North Georgia:             |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| Hall                       |   |        | 187,743     |   |        |   | 34.8   |        |   |   | (3.5         | )      |   |        | 9.8    |   |   |   | 57,198 |   |
| Henry                      |   |        | 195,370     |   |        |   | 63.7   |        |   |   | (4.5         | )      |   |        | 10.8   |   |   |   | 72,929 |   |
| Oconee                     |   |        | 33,320      |   |        |   | 27.1   |        |   |   | (2.0         | )      |   |        | 7.0    |   |   |   | 66,899 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| State of Georgia           |   |        | 9,829,211   |   |        |   | 20.1   |        |   |   | (4.0         | )      |   |        | 10.7   |   |   |   | 56,761 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| Selected Florida Counties: |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |
| Marion                     |   |        | 328,547     |   |        |   | 26.9   |        |   |   | (4.9         | )      |   |        | 15.3   |   |   |   | 40,201 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| State of Florida           |   |        | 18,537,969  |   |        |   | 16.0   |        |   |   | (2.5         | )      |   |        | 12.2   |   |   |   | 50,413 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| National Total             |   |        | 307,006,550 |   |        |   | 9.1    |        |   |   | (2.0         | )      |   |        | 10.4   |   |   |   | 54,719 |   |

| 1 | Estimated July 1, 2009 population provided by the U.S. Census Bureau. |
|---|-----------------------------------------------------------------------|

| 2 | Estimated percentage population change from 2000 to 2009 provided by the U.S. Census Bureau. |
|---|----------------------------------------------------------------------------------------------|

| 3 | Total employment growth (not seasonally adjusted) for the First Quarter 2010 year-to-date percentage change from the prior year’s year-to-date data provided by the Bureau of Labor Statistics Household Survey. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Unemployment rate (not seasonally adjusted) for the First Quarter 2010 provided by the Bureau of Labor Statistics. |
|---|--------------------------------------------------------------------------------------------------------------------|

| 5 | Based on actual 2009 market demographics provided by SNL Financial. |
|---|---------------------------------------------------------------------|

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|                                               |   | South                  |    |   | North   |   |    |    |   |   |     |   |   |   |    |
|----------------------------------------------------|--------|------------------------|---------|--------|---------|--------|---------|---------|--------|--------|----------|--------|--------|--------|---------|
| As of June  30, 2010                     |   | Georgia                |    |   | Georgia |   |    | Florida |   |   | Treasury |   |   | Total  |    |
|                                               |   | (Dollars in Thousands) |    |
| Loans                                              |   |                   |    |   |    |   |    |    |   |   |     |   |   |   |    |
| Commercial and financial                           |   | $                      | 25,152  |   |    | $      | 34,766  |    |   | $      | 1,713    |   |   | $      | 16,243  |   |   | $ | 77,874 |   |
| Agricultural (including loans secured by farmland) |   |                   | 31,305  |   |    |   | 1,847   |    |   |   | 5,286    |   |   |   | -       |   |   |   | 38,438 |   |
| Real estate - construction                         |   |                   | 57,767  |   |    |   | 71,346  |    |   |   | 24,632   |   |   |   | 270     |   |   |   | 154,015 |   |
| Real estate - commercial                           |   |                   | 74,851  |   |    |   | 134,912 |    |   |   | 21,241   |   |   |   | 6,002   |   |   |   | 237,006 |   |
| Real estate - residential                          |   |                   | 82,459  |   |    |   | 36,382  |    |   |   | 11,094   |   |   |   | 6,161   |   |   |   | 136,096 |   |
| Installment loans to individuals and other loans   |   |                   | 6,679   |   |    |   | 447     |    |   |   | 250      |   |   |   | 3,858   |   |   |   | 11,234 |   |
|                                               |   |                   | 278,213 |   |    |   | 279,700 |    |   |   | 64,216   |   |   |   | 32,534  |   |   |   | 654,663 |   |
| Deferred loan fees and unearned interest, net      |   |                   | 87      |   |    |   | (95     | )       |   |   | (114     | )      |   |   | (16     | ) |   |   | (138 | ) |
|                                               |   |                   | 278,300 |   |    |   | 279,605 |    |   |   | 64,102   |   |   |   | 32,518  |   |   |   | 654,525 |   |
| Allowance for loan losses                          |   |                   | (9,135  | )      |    |   | (13,837 | )       |   |   | (2,636   | )      |   |   | (8,910  | ) |   |   | (34,518 | ) |
| Net loans                                          |   | $                      | 269,165 |   |    | $      | 265,768 |    |   | $      | 61,466   |   |   | $      | 23,608  |   |   | $ | 620,007 |   |
| Percentage of total                                |   |                   | 43.4    | %      |    |   | 42.9    | %       |   |   | 9.9      | %      |   |   | 3.8     | % |   |   | 100.0 | % |
|                                               |   |                   |    |   |    |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Deposits                                           |   |                   |    |   |    |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Noninterest-bearing demand                         |   | $                      | 62,543  |   |    | $      | 16,827  |    |   | $      | 2,822    |   |   | $      | 4,342   |   |   | $ | 86,534 |   |
| Interest-bearing demand and savings                |   |                   | 127,463 |   |    |   | 25,355  |    |   |   | 28,244   |   |   |   | 468     |   |   |   | 181,530 |   |
| Retail time less than $100,000                     |   |                   | 142,793 |   |    |   | 43,776  |    |   |   | 93,985   |   |   |   | 510     |   |   |   | 281,064 |   |
| Retail time greater than or equal to $100,000      |   |                   | 101,676 |   |    |   | 33,433  |    |   |   | 47,864   |   |   |   | -       |   |   |   | 182,973 |   |
| Retail time placed in CDARs program                |   |                   | 6,207   |   |    |   | 642     |    |   |   | -        |   |   |   | -       |   |   |   | 6,849 |   |
| Brokered time1                                     |   |                   | -       |   |    |   | -       |    |   |   | -        |   |   |   | 97,120  |   |   |   | 97,120 |   |
| Internet time1                                     |   |                   | -       |   |    |   | -       |    |   |   | -        |   |   |   | 117,344 |   |   |   | 117,344 |   |
| Total deposits                                     |   | $                      | 440,682 |   |    | $      | 120,033 |    |   | $      | 172,915  |   |   | $      | 219,784 |   |   | $ | 953,414 |   |
| Percentage of total                                |   |                   | 46.2    | %      |    |   | 12.6    | %       |   |   | 18.1     | %      |   |   | 23.1    | % |   |   | 100.0 | % |

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| As of Quarter End                                  |   | Jun-10                 |    |   | Mar-10 |   |    | Dec-09 |   |   | Sep-09  |   |   | Jun-09 |    |
|----------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
|                                               |   | (Dollars in Thousands) |    |
| Commercial and financial                           |   | $                      | 77,874  |   |   | $      | 78,395  |   |   | $      | 84,771  |   |   | $      | 88,863  |   |   | $ | 84,599 |   |
| Agricultural (including loans secured by farmland) |   |                   | 38,438  |   |   |   | 42,396  |   |   |   | 40,215  |   |   |   | 44,470  |   |   |   | 45,774 |   |
| Real estate - construction                         |   |                   | 154,015 |   |   |   | 181,318 |   |   |   | 204,663 |   |   |   | 269,804 |   |   |   | 290,949 |   |
| Real estate - commercial                           |   |                   | 237,006 |   |   |   | 264,341 |   |   |   | 275,927 |   |   |   | 283,404 |   |   |   | 285,731 |   |
| Real estate - residential                          |   |                   | 136,096 |   |   |   | 171,843 |   |   |   | 174,879 |   |   |   | 181,048 |   |   |   | 183,074 |   |
| Installment loans to individuals and other loans   |   |                   | 11,234  |   |   |   | 19,542  |   |   |   | 24,949  |   |   |   | 24,561  |   |   |   | 29,790 |   |
|                                               |   |                   | 654,663 |   |   |   | 757,835 |   |   |   | 805,404 |   |   |   | 892,150 |   |   |   | 919,917 |   |
|                                               |   |                   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Deferred loan fees and unearned interest, net      |   |                   | (138    | )      |   |   | (103    | )      |   |   | (90     | )      |   |   | (169    | ) |   |   | (219 | ) |
| Total loans                                        |   |                   | 654,525 |   |   |   | 757,732 |   |   |   | 805,314 |   |   |   | 891,981 |   |   |   | 919,698 |   |
| Allowance for loan losses                          |   |                   | (34,518 | )      |   |   | (30,529 | )      |   |   | (29,314 | )      |   |   | (40,000 | ) |   |   | (19,719 | ) |
| Net loans                                          |   | $                      | 620,007 |   |   | $      | 727,203 |   |   | $      | 776,000 |   |   | $      | 851,981 |   |   | $ | 899,979 |   |

| As of Quarter End                                  |   | Jun-10 |   |   | Mar-10 |   |   | Dec-09 |   |   | Sep-09 |   |   | Jun-09 |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Commercial and financial                           |   |   | 11.90  | %      |   |   | 10.35  | %      |   |   | 10.53  | %      |   |   | 9.96   | % |   |   | 9.20 | % |
| Agricultural (including loans secured by farmland) |   |   | 5.87   | %      |   |   | 5.59   | %      |   |   | 4.99   | %      |   |   | 4.99   | % |   |   | 4.98 | % |
| Real estate - construction                         |   |   | 23.53  | %      |   |   | 23.93  | %      |   |   | 25.41  | %      |   |   | 30.25  | % |   |   | 31.63 | % |
| Real estate - commercial                           |   |   | 36.21  | %      |   |   | 34.88  | %      |   |   | 34.26  | %      |   |   | 31.77  | % |   |   | 31.07 | % |
| Real estate - residential                          |   |   | 20.79  | %      |   |   | 22.68  | %      |   |   | 21.72  | %      |   |   | 20.30  | % |   |   | 19.90 | % |
| Installment loans to individuals and other loans   |   |   | 1.72   | %      |   |   | 2.58   | %      |   |   | 3.10   | %      |   |   | 2.75   | % |   |   | 3.24 | % |
|                                               |   |   | 100.02 | %      |   |   | 100.01 | %      |   |   | 100.01 | %      |   |   | 100.02 | % |   |   | 100.02 | % |
| Deferred loan fees and unearned interest, net      |   |   | -0.02  | %      |   |   | -0.01  | %      |   |   | -0.01  | %      |   |   | -0.02  | % |   |   | -0.02 | % |
| Total loans                                        |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | 100.00 | % |
| Allowance for loan losses                          |   |   | -5.27  | %      |   |   | -4.03  | %      |   |   | -3.64  | %      |   |   | -4.48  | % |   |   | -2.14 | % |
| Net loans                                          |   |   | 94.73  | %      |   |   | 95.97  | %      |   |   | 96.36  | %      |   |   | 95.52  | % |   |   | 97.86 | % |

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Table of Contents

|                                     |   | June 30, 2010          |    |   | December 31, 2009 |   |   | June 30, 2009 |   |
|------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|--------|---------------|--------|
|                                     |   | $ Amount               |    |   | % to Total        |   |   | $ Amount      |   |   | % to Total |   |   | $ Amount |   |   | % to Total |   |
|                                     |   | (Dollars in Thousands) |    |
| Construction and development:            |   |                   |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Acquisition and development:             |   |                   |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| 1-4 family residential                   |   | $                      | 66,932  |   |              |   | 43.4   | %             |   | $ | 83,868 |   |   |   | 41.0 | % |   | $ | 119,476 |   |   |   | 41.1 | % |
| Commercial and multi-family              |   |                   | 43,201  |   |              |   | 28.0   | %             |   |   | 58,477 |   |   |   | 28.6 | % |   |   | 95,245 |   |   |   | 32.7 | % |
| Construction:                            |   |                   |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family residential spec              |   |                   | 3,641   |   |              |   | 2.4    | %             |   |   | 10,364 |   |   |   | 5.1 | % |   |   | 12,547 |   |   |   | 4.3 | % |
| 1-4 family residential pre-sold          |   |                   | 581     |   |              |   | 0.4    | %             |   |   | 304 |   |   |   | 0.1 | % |   |   | 162 |   |   |   | 0.1 | % |
| 1-4 family residential other             |   |                   | 8,931   |   |              |   | 5.8    | %             |   |   | 14,501 |   |   |   | 7.1 | % |   |   | 20,701 |   |   |   | 7.1 | % |
| Commercial owner-occupied                |   |                   | 1,046   |   |              |   | 0.7    | %             |   |   | 704 |   |   |   | 0.3 | % |   |   | 2,007 |   |   |   | 0.7 | % |
| Commercial not owner-occupied            |   |                   | 27,656  |   |              |   | 18.0   | %             |   |   | 27,994 |   |   |   | 13.7 | % |   |   | 28,938 |   |   |   | 9.9 | % |
| Hotel/motel                              |   |                   | 221     |   |              |   | 0.1    | %             |   |   | 2,427 |   |   |   | 1.2 | % |   |   | 4,080 |   |   |   | 1.4 | % |
| Multi-family properties                  |   |                   | 1,178   |   |              |   | 0.8    | %             |   |   | 4512 |   |   |   | 2.2 | % |   |   | 5,066 |   |   |   | 1.7 | % |
| Special purpose property                 |   |                   | 628     |   |              |   | 0.4    | %             |   |   | 1,512 |   |   |   | 0.7 | % |   |   | 2,288 |   |   |   | 0.8 | % |
| Other                                    |   |                   | 0       |   |              |   | 0.0    | %             |   |   | 0 |   |   |   | 0.0 | % |   |   | 439 |   |   |   | 0.2 | % |
| Total construction and development loans |   | $                      | 154,015 |   |              |   | 100.0  | %             |   | $ | 204,663 |   |   |   | 100.0 | % |   | $ | 290,949 |   |   |   | 100.0 | % |
| Percentage of total loans                |   |                   | 23.5    | %      |              |   |   |          |   |   | 25.4 | % |   |   |   |   |   |   | 31.6 | % |   |   |   |   |

|                               |   | June 30, 2010 |    |   | December 31, 2009 |   |   | June 30, 2009 |   |
|------------------------------------|--------|---------------|---------|--------|-------------------|--------|--------|---------------|--------|
|                               |   | $ Amount      |    |   | % to Total        |   |   | $ Amount      |   |   | % to Total |   |   | $ Amount |   |   | % to Total |   |
| Commercial real estate:            |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Owner-occupied:                    |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Office                             |   | $             | 25,475  |   |              |   | 10.7   | %             |   | $ | 40,718 |   |   |   | 14.8 | % |   | $ | 41,945 |   |   |   | 14.7 | % |
| Retail                             |   |          | 17,529  |   |              |   | 7.4    | %             |   |   | 18,576 |   |   |   | 6.7 | % |   |   | 19,993 |   |   |   | 7.0 | % |
| Other                              |   |          | 25,770  |   |              |   | 10.9   | %             |   |   | 39,783 |   |   |   | 14.4 | % |   |   | 41,260 |   |   |   | 14.4 | % |
| Not owner-occupied:                |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Office                             |   |          | 26,459  |   |              |   | 11.2   | %             |   |   | 27,342 |   |   |   | 9.9 | % |   |   | 20,892 |   |   |   | 7.3 | % |
| Retail                             |   |          | 37,054  |   |              |   | 15.6   | %             |   |   | 36,524 |   |   |   | 13.2 | % |   |   | 44,896 |   |   |   | 15.7 | % |
| Other                              |   |          | 15,001  |   |              |   | 6.3    | %             |   |   | 24,035 |   |   |   | 8.7 | % |   |   | 24,937 |   |   |   | 8.7 | % |
| Other:                             |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel/motel                        |   |          | 27,791  |   |              |   | 11.7   | %             |   |   | 25,756 |   |   |   | 9.3 | % |   |   | 21,887 |   |   |   | 7.7 | % |
| Industrial                         |   |          | 4,808   |   |              |   | 2.1    | %             |   |   | 4,300 |   |   |   | 1.6 | % |   |   | 4,502 |   |   |   | 1.6 | % |
| Multi-family properties            |   |          | 17,474  |   |              |   | 7.4    | %             |   |   | 19,462 |   |   |   | 7.1 | % |   |   | 23,043 |   |   |   | 8.1 | % |
| Special purpose property           |   |          | 39,645  |   |              |   | 16.7   | %             |   |   | 38,748 |   |   |   | 14.0 | % |   |   | 41,430 |   |   |   | 14.5 | % |
| Other                              |   |          | 0       |   |              |   | 0.0    | %             |   |   | 683 |   |   |   | 0.3 | % |   |   | 946 |   |   |   | 0.3 | % |
| Total commercial real estate loans |   | $             | 237,006 |   |              |   | 100.0  | %             |   | $ | 275,927 |   |   |   | 100.0 | % |   | $ | 285,731 |   |   |   | 100.0 | % |
| Percentage of total loans          |   |          | 36.2    | %      |              |   |   |          |   |   | 34.3 | % |   |   |   |   |   |   | 31.1 | % |   |   |   |   |

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| As of Quarter End                             |   | Jun-10                 |    |   | Mar-10 |   |      | Dec-09 |   |   | Sep-09    |   |   | Jun-09 |      |
|-----------------------------------------------|--------|------------------------|---------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
|                                          |   | (Dollars In Thousands) |    |
| Noninterest-bearing demand                    |   | $                      | 86,534  |   |   | $      | 95,228    |   |   | $      | 100,458   |   |   | $      | 106,573   |   |   | $ | 108,973 |   |
| Interest-bearing demand and savings           |   |                   | 181,530 |   |   |   | 252,662   |   |   |   | 250,232   |   |   |   | 241,073   |   |   |   | 245,459 |   |
| Retail time less than $100,000                |   |                   | 281,064 |   |   |   | 302,125   |   |   |   | 305,381   |   |   |   | 317,403   |   |   |   | 320,834 |   |
| Retail time greater than or equal to $100,000 |   |                   | 182,973 |   |   |   | 191,579   |   |   |   | 179,325   |   |   |   | 184,339   |   |   |   | 191,852 |   |
| Retail time placed in CDARs programs          |   |                   | 6,849   |   |   |   | 12,819    |   |   |   | 29,532    |   |   |   | 41,799    |   |   |   | 35,190 |   |
| Brokered time1                                |   |                   | 97,120  |   |   |   | 113,701   |   |   |   | 133,012   |   |   |   | 119,237   |   |   |   | 134,074 |   |
| Internet time1                                |   |                   | 117,344 |   |   |   | 99,093    |   |   |   | 47,275    |   |   |   | 19,214    |   |   |   | - |   |
| Total deposits                                |   | $                      | 953,414 |   |   | $      | 1,067,207 |   |   | $      | 1,045,215 |   |   | $      | 1,029,638 |   |   | $ | 1,036,382 |   |

| As of Quarter End                             |   | Jun-10 |   |   | Mar-10 |   |   | Dec-09 |   |   | Sep-09 |   |   | Jun-09 |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Noninterest-bearing demand                    |   |   | 9.07   | %      |   |   | 8.92   | %      |   |   | 9.61   | %      |   |   | 10.35  | % |   |   | 10.51 | % |
| Interest-bearing demand and savings           |   |   | 19.04  | %      |   |   | 23.68  | %      |   |   | 23.94  | %      |   |   | 23.41  | % |   |   | 23.68 | % |
| Retail time less than $100,000                |   |   | 29.48  | %      |   |   | 28.31  | %      |   |   | 29.22  | %      |   |   | 30.83  | % |   |   | 30.96 | % |
| Retail time greater than or equal to $100,000 |   |   | 19.19  | %      |   |   | 17.95  | %      |   |   | 17.15  | %      |   |   | 17.90  | % |   |   | 18.51 | % |
| Retail time placed in CDARs program           |   |   | 0.72   | %      |   |   | 1.20   | %      |   |   | 2.83   | %      |   |   | 4.06   | % |   |   | 3.40 | % |
| Brokered time1                                |   |   | 10.19  | %      |   |   | 10.65  | %      |   |   | 12.73  | %      |   |   | 11.58  | % |   |   | 12.94 | % |
| Internet time1                                |   |   | 12.31  | %      |   |   | 9.29   | %      |   |   | 4.52   | %      |   |   | 1.87   | % |   |   | - |   |
| Total deposits                                |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | 100.00 | % |

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Table of Contents

| For the Three Months Ended June 30, |   | 2010                   |      |   |     |   |   |    |   |   | 2009    |   |   |     |      |
|-------------------------------------|--------|------------------------|-----------|--------|----------|--------|--------|---------|--------|--------|---------|--------|--------|----------|-----------|
|                                |   |                   |      |   | Interest |   |   | Average |   |   |    |   |   | Interest |      |   | Average |   |
|                                |   | Average                |      |   | Income/  |   |   | Yield/  |   |   | Average |   |   | Income/  |      |   | Yield/ |   |
|                                |   | Balance                |      |   | Expense  |   |   | Rate    |   |   | Balance |   |   | Expense  |      |   | Rate |   |
|                                |   | (Dollars In Thousands) |      |
| Interest-earning assets:            |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |   |   |
| Loans                               |   | $                      | 720,845   |   |     | $      | 9,239  |    |   |   | 5.14    | %      |   | $        | 930,131   |   |   | $ | 14,029 |   |   |   | 6.05 | % |
| Investment securities:              |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |   |   |   |   |   |   |   |   |
| Taxable                             |   |                   | 156,055   |   |     |   | 1,470  |    |   |   | 3.78    | %      |   |     | 156,453   |   |   |   | 1,835 |   |   |   | 4.70 | % |
| Nontaxable                          |   |                   | 9,044     |   |     |   | 139    |    |   |   | 6.16    | %      |   |     | 15,245    |   |   |   | 236 |   |   |   | 6.22 | % |
| Other short-term investments        |   |                   | 182,528   |   |     |   | 115    |    |   |   | 2.50    | %      |   |     | 119,556   |   |   |   | 73 |   |   |   | 0.24 | % |
| Total interest-earning assets       |   | $                      | 1,068,472 |   |     | $      | 10,963 |    |   |   | 4.12    | %      |   | $        | 1,221,385 |   |   | $ | 16,173 |   |   |   | 5.31 | % |
| Interest-bearing liabilities:       |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |   |   |   |   |   |   |   |   |
| Demand deposits                     |   | $                      | 189,442   |   |     | $      | 308    |    |   |   | 0.65    | %      |   | $        | 215,201   |   |   | $ | 294 |   |   |   | 0.55 | % |
| Savings deposits                    |   |                   | 34,245    |   |     |   | 21     |    |   |   | 0.25    | %      |   |     | 36,467    |   |   |   | 23 |   |   |   | 0.25 | % |
| Time deposits                       |   |                   | 701,053   |   |     |   | 4,488  |    |   |   | 2.57    | %      |   |     | 706,348   |   |   |   | 6,409 |   |   |   | 3.64 | % |
| FHLB advances                       |   |                   | 89,897    |   |     |   | 866    |    |   |   | 3.86    | %      |   |     | 105,532   |   |   |   | 1,074 |   |   |   | 4.08 | % |
| Notes payable                       |   |                   | 30,310    |   |     |   | 247    |    |   |   | 3.27    | %      |   |     | 30,310    |   |   |   | 270 |   |   |   | 3.58 | % |
| Other short-term borrowings         |   |                   | 5,041     |   |     |   | 9      |    |   |   | 0.74    | %      |   |     | 8,889     |   |   |   | 34 |   |   |   | 1.53 | % |
| Total interest-bearing liabilities  |   | $                      | 1,049,988 |   |     | $      | 5,939  |    |   |   | 2.27    | %      |   | $        | 1,102,747 |   |   | $ | 8,104 |   |   |   | 2.95 | % |
|                                |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |   |   |   |   |   |   |   |   |
| Interest rate spread                |   |                   |      |   |     |   |   |    |   |   | 1.85    | %      |   |     |      |   |   |   |   |   |   |   | 2.36 | % |
| Net interest income                 |   |                   |      |   |     | $      | 5,024  |    |   |   |    |   |   |     |      |   |   | $ | 8,069 |   |   |   |   |   |
| Net interest margin                 |   |                   |      |   |     |   |   |    |   |   | 1.89    | %      |   |     |      |   |   |   |   |   |   |   | 2.65 | % |

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Table of Contents

| For the Six Months Ended June 30,  |   |                   |      |   | 2010     |   |   |    |   |   |    |   |   | 2009     |      |   |    |   |
|------------------------------------|--------|------------------------|-----------|--------|----------|--------|--------|---------|--------|--------|---------|--------|--------|----------|-----------|--------|---------|--------|
|                               |   |                   |      |   | Interest |   |   | Average |   |   |    |   |   | Interest |      |   | Average |   |
|                               |   | Average                |      |   | Income/  |   |   | Yield/  |   |   | Average |   |   | Income/  |      |   | Yield/  |   |
|                               |   | Balance                |      |   | Expense  |   |   | Rate    |   |   | Balance |   |   | Expense  |      |   | Rate    |   |
|                               |   | (Dollars In Thousands) |      |
| Interest-earning assets:           |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |
| Loans                              |   | $                      | 752,011   |   |     | $      | 18,787 |    |   |   | 5.04    | %      |   | $        | 938,534   |   |    | $      | 27,979 |   |   |   | 6.01 | % |
| Investment securities:             |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Taxable                            |   |                   | 138,668   |   |     |   | 2,665  |    |   |   | 3.88    | %      |   |     | 153,156   |   |    |   | 3,726 |   |   |   | 4.91 | % |
| Nontaxable                         |   |                   | 9,414     |   |     |   | 290    |    |   |   | 6.22    | %      |   |     | 19,279    |   |    |   | 590 |   |   |   | 6.18 | % |
| Other short-term investments       |   |                   | 184,686   |   |     |   | 204    |    |   |   | 0.22    | %      |   |     | 132,754   |   |    |   | 153 |   |   |   | 0.23 | % |
| Total interest-earning assets      |   | $                      | 1,084,779 |   |     | $      | 21,946 |    |   |   | 4.08    | %      |   | $        | 1,243,723 |   |    | $      | 32,448 |   |   |   | 5.26 | % |
| Interest-bearing liabilities:      |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Demand deposits                    |   | $                      | 203,913   |   |     | $      | 628    |    |   |   | 0.62    | %      |   | $        | 214,837   |   |    | $      | 585 |   |   |   | 0.55 | % |
| Savings deposits                   |   |                   | 35,843    |   |     |   | 44     |    |   |   | 0.25    | %      |   |     | 35,340    |   |    |   | 44 |   |   |   | 0.25 | % |
| Time deposits                      |   |                   | 701,598   |   |     |   | 9,358  |    |   |   | 2.69    | %      |   |     | 737,995   |   |    |   | 13,758 |   |   |   | 3.76 | % |
| FHLB advances                      |   |                   | 89,811    |   |     |   | 1,725  |    |   |   | 3.87    | %      |   |     | 107,110   |   |    |   | 2,152 |   |   |   | 4.05 | % |
| Notes payable                      |   |                   | 30,310    |   |     |   | 489    |    |   |   | 3.25    | %      |   |     | 25,780    |   |    |   | 453 |   |   |   | 3.55 | % |
| Other short-term borrowings        |   |                   | 6,446     |   |     |   | 24     |    |   |   | 0.75    | %      |   |     | 8,910     |   |    |   | 71 |   |   |   | 1.61 | % |
| Total interest-bearing liabilities |   | $                      | 1,067,921 |   |     | $      | 12,268 |    |   |   | 2.32    | %      |   | $        | 1,129,972 |   |    | $      | 17,063 |   |   |   | 3.05 | % |
|                               |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Interest rate spread               |   |                   |      |   |     |   |   |    |   |   | 1.76    | %      |   |     |      |   |    |   |   |   |   |   | 2.21 | % |
| Net interest income                |   |                   |      |   |     | $      | 9,678  |    |   |   |    |   |   |     |      |   |    | $      | 15,385 |   |   |   |   |   |
| Net interest margin                |   |                   |      |   |     |   |   |    |   |   | 1.80    | %      |   |     |      |   |    |   |   |   |   |   | 2.49 | % |

| Reconciliation of Non-GAAP Measure                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The reconciliation of net interest margin to net interest margin, as adjusted for the impact of nonperforming loans and excess liquidity follows: |   |
|                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                              |   | Jun-10 |   |   | Mar-10 |   |   | Dec-09 |   |   | Sep-09 |   |   | Jun-09 |   |
| Net interest margin:                                                                                                                              |   |   | 1.89   | %      |   |   | 1.71   | %      |   |   | 2.05   | %      |   |   | 2.45   | % |   |   | 2.65 | % |
| Impact of nonperforming loans                                                                                                                     |   |   | 0.83   | %      |   |   | 1.03   | %      |   |   | 0.88   | %      |   |   | 0.47   | % |   |   | 0.34 | % |
| Impact of excess liquidity                                                                                                                        |   |   | 0.24   | %      |   |   | 0.22   | %      |   |   | 0.15   | %      |   |   | 0.14   | % |   |   | 0.14 | % |
| Net interest margin, as adjusted for impact of nonperforming loans and excess liquidity                                                           |   |   | 2.96   | %      |   |   | 2.96   | %      |   |   | 3.08   | %      |   |   | 3.06   | % |   |   | 3.13 | % |

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|   | · | lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes in international, national, regional and local economic and business conditions that affect the collectability of the portfolio; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes in the nature and volume of the loan portfolio; |
|--------|--------|---------------------------------------------------------|

|   | · | experience, ability, and depth of lending management and other relevant staff; |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | levels of and trends in delinquencies and impaired loans; |
|--------|--------|-----------------------------------------------------------|

|   | · | changes in the quality of our loan review system; |
|--------|--------|---------------------------------------------------|

|   | · | value of underlying collateral for collateral-dependent loans; |
|--------|--------|----------------------------------------------------------------|

|   | · | existence and effect of any concentrations of credit, and changes in the level of such concentrations; and |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | other external factors such as competition and legal and regulatory requirements. |
|--------|--------|-----------------------------------------------------------------------------------|

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| As of                                              |   | June 30, 2010 |   |   | December 31, 2009                              |   |   | December 31, 2008 |   |   | December 31, 2007                              |   |
|----------------------------------------------------|--------|---------------|--------|--------|------------------------------------------------|--------|--------|-------------------|--------|--------|------------------------------------------------|--------|
|                                               |   | Amount        |   |   | Percentage of Loans in Category to Total Loans |   |   | Amount            |   |   | Percentage of Loans in Category to Total Loans |   |   | Amount |   |   | Percentage of Loans in Category to Total Loans |   |   | Amount |   |   | Percentage of Loans in Category to Total Loans |   |
| Commercial and financial                           |   | $             | 2,935  |   |                                           |   | 11.9   | %                 |   | $      | 1,415                                          |   |   |   | 10.5 | % |   | $ | 1,382 |   |   |   | 9.1 | % |   | $ | 229 |   |   |   | 8.6 | % |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agricultural (including loans secured by farmland) |   |          | 2,598  |   |                                           |   | 5.9    | %                 |   |   | 196                                            |   |   |   | 5.0 | % |   |   | 112 |   |   |   | 5.1 | % |   |   | 1,029 |   |   |   | 4.5 | % |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – construction                   |   |          | 15,670 |   |                                           |   | 23.5   | %                 |   |   | 16,828                                         |   |   |   | 25.4 | % |   |   | 11,950 |   |   |   | 33.0 | % |   |   | 8,383 |   |   |   | 38.2 | % |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – commercial                     |   |          | 4,831  |   |                                           |   | 36.2   | %                 |   |   | 5,121                                          |   |   |   | 34.3 | % |   |   | 2,552 |   |   |   | 28.9 | % |   |   | 2,008 |   |   |   | 27.0 | % |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – residential                    |   |          | 4,003  |   |                                           |   | 20.8   | %                 |   |   | 3,179                                          |   |   |   | 21.7 | % |   |   | 2,417 |   |   |   | 20.5 | % |   |   | 815 |   |   |   | 18.9 | % |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer and other loans                           |   |          | 197    |   |                                           |   | 1.7    | %                 |   |   | 415                                            |   |   |   | 3.1 | % |   |   | 176 |   |   |   | 3.4 | % |   |   | 215 |   |   |   | 2.8 | % |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unallocated                                        |   |          | 4,284  |   |                                           |   | N/A    |              |   |   | 2,160                                          |   |   |   | N/A |   |   |   | 785 |   |   |   | N/A |   |   |   | 227 |   |   |   | N/A |   |
|                                               |   |          |   |   |                                           |   |   |              |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $             | 34,518 |   |                                           |   | 100.0  | %                 |   | $      | 29,314                                         |   |   |   | 100.0 | % |   | $ | 19,374 |   |   |   | 100.0 | % |   | $ | 12,906 |   |   |   | 100.0 | % |

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|                                                                                               |   | Six months endedJune 30,2010 |    |   | Year endedDecember 31,2009 |   |    | Year endedDecember 31,2008 |   |   | Year endedDecember 31,2007 |   |
|----------------------------------------------------------------------------------------------------|--------|------------------------------|---------|--------|---------------------------------|--------|---------|---------------------------------|--------|--------|---------------------------------|--------|
|                                                                                               |   |                         |    |   |                            |   |    |                            |   |   |                            |   |
| Balance at beginning of year                                                                       |   | $                            | 29,314  |   |                            | $      | 19,374  |                            |   | $      | 12,906                          |   |   | $ | 11,006 |   |
| Charge-offs:                                                                                       |   |                         |    |   |                            |   |    |                            |   |   |                            |   |   |   |   |   |
| Commercial and financial                                                                           |   |                         | 978     |   |                            |   | 5,965   |                            |   |   | 709                             |   |   |   | 66 |   |
| Agricultural (including loans secured by farmland)                                                 |   |                         | 412     |   |                            |   | 1,108   |                            |   |   | -                               |   |   |   | 10 |   |
| Real estate – construction and development                                                   |   |                         | 9,437   |   |                            |   | 21,212  |                            |   |   | 8,023                           |   |   |   | 324 |   |
| Real estate – commercial                                                                     |   |                         | 746     |   |                            |   | 4,906   |                            |   |   | 25                              |   |   |   | 257 |   |
| Real estate – residential                                                                    |   |                         | 665     |   |                            |   | 3,063   |                            |   |   | 3,188                           |   |   |   | 65 |   |
| Installment loans to individuals and other loans                                                   |   |                         | 260     |   |                            |   | 5,494   |                            |   |   | 183                             |   |   |   | 146 |   |
|                                                                                               |   |                         | 12,498  |   |                            |   | 41,748  |                            |   |   | 12,128                          |   |   |   | 868 |   |
| Recoveries:                                                                                        |   |                         |    |   |                            |   |    |                            |   |   |                            |   |   |   |   |   |
| Commercial and financial                                                                           |   |                         | 66      |   |                            |   | 138     |                            |   |   | 38                              |   |   |   | 55 |   |
| Agricultural (including loans secured by farmland)                                                 |   |                         | 35      |   |                            |   | 38      |                            |   |   | 38                              |   |   |   | 56 |   |
| Real estate – construction and development                                                   |   |                         | 29      |   |                            |   | 8       |                            |   |   | 2                               |   |   |   | - |   |
| Real estate – commercial                                                                     |   |                         | 371     |   |                            |   | 19      |                            |   |   | 340                             |   |   |   | 28 |   |
| Real estate – residential                                                                    |   |                         | 13      |   |                            |   | 38      |                            |   |   | 33                              |   |   |   | 108 |   |
| Installment loans to individuals and other loans                                                   |   |                         | 74      |   |                            |   | 259     |                            |   |   | 94                              |   |   |   | 121 |   |
|                                                                                               |   |                         | 588     |   |                            |   | 500     |                            |   |   | 545                             |   |   |   | 368 |   |
| Net charge-offs                                                                                    |   |                         | 11,910  |   |                            |   | 41,248  |                            |   |   | 11,583                          |   |   |   | 500 |   |
| Additions provided to the allowance charged to operations                                          |   |                         | 17,114  |   |                            |   | 51,188  |                            |   |   | 18,050                          |   |   |   | 2,400 |   |
| Balance at end of year                                                                             |   | $                            | 34,518  |   |                            | $      | 29,314  |                            |   | $      | 19,373                          |   |   | $ | 12,906 |   |
|                                                                                               |   |                         |    |   |                            |   |    |                            |   |   |                            |   |   |   |   |   |
| Average balance of loans outstanding                                                               |   | $                            | 752,012 |   |                            | $      | 915,674 |                            |   | $      | 955,253                         |   |   | $ | 883,334 |   |
|                                                                                               |   |                         |    |   |                            |   |    |                            |   |   |                            |   |   |   |   |   |
| Ratio of net charge-offs during the year to average loans outstanding during the year (annualized) |   |                         | 3.19    | %      |                            |   | 4.50    | %                               |   |   | 1.21                            | %      |   |   | 0.06 | % |

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| Category                     | Net Carrying Value * | Collateral Description                              | Average CarryingValue/ Unit                                           |
|------------------------------|----------------------|-----------------------------------------------------|-----------------------------------------------------------------------|
|                         |                 |                                                |                                                                  |
| Construction and Development | $50.7 million        | 31 parcels of undeveloped land totaling 4,832 acres | $8,500 per residential acre  and$12,400 per commercial acre |
|                         |                 |                                                |                                                                  |
| Construction and Development | $6.6 million         | 230 residential lots                                | $28,700 per lot                                                       |
|                         |                 |                                                |                                                                  |
| 1-4 Family Residential       | $14.4 million        | 103 houses                                          | $139,800 per house                                                    |
|                         |                 |                                                |                                                                  |
| Commercial Real Estate       | $41.5 million        | 39 commercial properties                            | $1.1 million per property                                             |
|                         |                 |                                                |                                                                  |
| Agriculture                  | $6.8 million         | 6 parcels of farm land totaling 1,272 acres         | $5,300 per acre                                                       |
|                         |                 |                                                |                                                                  |
| Commercial and Industrial    | $2.1 million         | Non-real estate collateral                          | $66,100 per loan                                                      |
|                         |                 |                                                |                                                                  |
| Multi-Family Residential     | $1.7 million         | 7 condominium units                                 | $243,000 per unit                                                     |
|                         |                 |                                                |                                                                  |
| Consumer                     | $136,000             | Non-real estate collateral                          | $6,800 per loan                                                       |

| As of Quarter End                                                                                    |   | Jun-10                 |    |   | Mar-10 |   |    | Dec-09 |   |   | Sep-09 |   |   | Jun-09 |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                 |   | (Dollars In Thousands) |    |
| Loans accounted for on a nonaccrual basis                                                            |   | $                      | 136,239 |   |   | $      | 138,290 |   |   | $      | 92,272 |   |   | $      | 64,808 |   |   | $ | 70,232 |   |
| Accruing loans which are contractually past due 90 days or more as to principal or interest payments |   |                   | 206     |   |   |   | -       |   |   |   | 15     |   |   |   | 4      |   |   |   | 190 |   |
| Troubled debt restructurings not included above                                                      |   |                   | -       |   |   |   | 880     |   |   |   | 881    |   |   |   | -      |   |   |   | 84 |   |
| Total nonperforming loans                                                                            |   | $                      | 136,445 |   |   | $      | 139,170 |   |   | $      | 93,168 |   |   | $      | 64,812 |   |   | $ | 70,506 |   |
|                                                                                                 |   |                   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of  nonperforming loans to total loans                                               |   |                   | 20.85   | %      |   |   | 18.37   | %      |   |   | 11.57  | %      |   |   | 7.27   | % |   |   | 7.67 | % |
|                                                                                                 |   |                   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserves allocated to nonperforming loans:                                                           |   |                   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Specific Reserves (FAS 114)                                                                          |   | $                      | 11,371  |   |   | $      | 14,234  |   |   | $      | 12,056 |   |   | $      | 8,765  |   |   | $ | 5,965 |   |
| General Reserves (FAS 5)                                                                             |   |                   | 1,115   |   |   |   | 624     |   |   |   | 388    |   |   |   | 300    |   |   |   | 697 |   |
| Total reserves allocated to nonperforming loans                                                      |   | $                      | 12,486  |   |   | $      | 14,858  |   |   | $      | 12,444 |   |   | $      | 9,065  |   |   | $ | 6,662 |   |
|                                                                                                 |   |                   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total reserves allocated as a percentage of nonperforming loans                                      |   |                   | 9.15    | %      |   |   | 10.68   | %      |   |   | 13.36  | %      |   |   | 13.99  | % |   |   | 9.45 | % |

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|                                                                                                 |   | South Georgia          |   |   | North Georgia |   |    | Florida |   |   | Treasury |   |   | Total  |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------|--------|---------|---------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                 |   | (Dollars In Thousands) |   |
| Loans accounted for on a nonaccrual basis                                                            |   | $                      | 30,810 |   |          | $      | 67,221  |    |   | $      | 38,208   |   |   | $      | -      |   |   | $ | 136,239 |   |
| Accruing loans which are contractually past due 90 days or more as to principal or interest payments |   |                   | -      |   |          |   | 200     |    |   |   | -        |   |   |   | 6      |   |   |   | 206 |   |
| Troubled debt restructurings not included above                                                      |   |                   | -      |   |          |   | -       |    |   |   | -        |   |   |   | -      |   |   |   | - |   |
| Total nonperforming loans                                                                            |   | $                      | 30,810 |   |          | $      | 67,421  |    |   | $      | 38,208   |   |   | $      | 6      |   |   | $ | 136,445 |   |
| Foreclosed assets                                                                                    |   |                   | 5,733  |   |          |   | 74,697  |    |   |   | 16,098   |   |   |   | -      |   |   |   | 96,528 |   |
| Total nonperforming assets                                                                           |   | $                      | 36,543 |   |          | $      | 142,118 |    |   | $      | 54,306   |   |   | $      | 6      |   |   | $ | 232,973 |   |
| Ratio of nonperforming loans to total loans in market                                                |   |                   | 11.07  | %      |          |   | 24.11   | %       |   |   | 59.61    | %      |   |   | 0.02   | % |   |   | 20.85 | % |
| Ratio of nonperforming assets to total assets in market                                              |   |                   | 12.72  | %      |          |   | 40.79   | %       |   |   | 69.59    | %      |   |   | 0.00   | % |   |   | 20.97 | % |

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| Category                     | Book Value    | Description                                         | Average Value/ Unit                                     |
|------------------------------|---------------|-----------------------------------------------------|---------------------------------------------------------|
|                         |          |                                                |                                                    |
| Construction and Development | $57.1 million | 54 parcels of undeveloped land totaling 1,795 acres | $14,200 per residential acre$85,000 per commercial acre |
|                         |          |                                                |                                                    |
| Construction and Development | $17.5 million | 862 residential lots                                | $20,300 per lot                                         |
|                         |          |                                                |                                                    |
| 1-4 Family Residential       | $8.6 million  | 59 houses                                           | $145,500 per house                                      |
|                         |          |                                                |                                                    |
| Commercial Real Estate       | $7.2 million  | 19 commercial properties                            | $378,000 per property                                   |
|                         |          |                                                |                                                    |
| Multi-Family Residential     | $5.2 million  | 13 condominium units                                | $402,000 per property                                   |

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|                                                              |   | Three Months EndedJune 30, |   |   |   |   |   | Six Months EndedJune 30, |   |   |    |   |
|-------------------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|--------|--------------------------|--------|--------|---------|--------|
|                                                              |   | 2010                       |   |   | 2009   |   |   | Pct. Chg.                |   |   | 2010    |   |   | 2009 |   |   | Pct. Chg. |   |
|                                                              |   | (Dollars in Thousands)     |   |
| Noninterest income:                                               |   |                       |   |   |   |   |   |                     |   |   |    |   |   |   |   |   |   |   |
| Service charges on deposit accounts                               |   | $                          | 709    |   |   | $      | 866    |                     |   |   | -18.1   | %      |   | $ | 1,446 |   |   | $ | 1,682 |   |   |   | -14.0 | % |
| Mortgage origination fees                                         |   |                       | 318    |   |   |   | 268    |                     |   |   | 18.7    | %      |   |   | 528 |   |   |   | 465 |   |   |   | 13.5 | % |
| ATM/debit card fee income                                         |   |                       | 218    |   |   |   | 218    |                     |   |   | 0.0     | %      |   |   | 433 |   |   |   | 408 |   |   |   | 6.1 | % |
| Securities transactions, net                                      |   |                       | 685    |   |   |   | 756    |                     |   |   | -9.4    | %      |   |   | 830 |   |   |   | 772 |   |   |   | 7.5 | % |
| Earnings on bank-owned life insurance                             |   |                       | 119    |   |   |   | 177    |                     |   |   | -32.8   | %      |   |   | 214 |   |   |   | 281 |   |   |   | -23.8 | % |
| Loss on disposal of assets                                        |   |                       | (4,496 | )      |   |   | (394   | )                        |   |   | -1041.1 | %      |   |   | (5,951 | ) |   |   | (522 | ) |   |   | -1040.0 | % |
| Gain on derivative instrument                                     |   |                       | 100    |   |   |   | 387    |                     |   |   | -74.2   | %      |   |   | 163 |   |   |   | 1,169 |   |   |   | -86.1 | % |
| Other noninterest income                                          |   |                       | 870    |   |   |   | 209    |                     |   |   | 316.3   | %      |   |   | 1,066 |   |   |   | 337 |   |   |   | 216.3 | % |
| Total noninterest income                                          |   | $                          | (1,477 | )      |   | $      | 2,487  |                     |   |   | -159.4  | %      |   | $ | (1,271 | ) |   | $ | 4,592 |   |   |   | -127.7 | % |
| Noninterest income (annualized) as a percentage of average assets |   |                       | -0.50  | %      |   |   | 0.76   | %                        |   |   |    |   |   |   | -0.21 | % |   |   | 0.69 | % |   |   |   |   |

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|                                                               |   | Three Months Ended June 30, |   |   |   |   |   | Six Months EndedJune 30, |   |   |   |   |
|--------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------|--------|--------|--------------------------|--------|--------|--------|--------|
|                                                               |   | 2010                             |   |   | 2009   |   |   | Pct. Chg.                |   |   | 2010   |   |   | 2009 |   |   | Pct. Chg. |   |
|                                                               |   | (Dollars in Thousands)           |   |
| Noninterest expenses:                                              |   |                             |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Salaries and wages                                                 |   | $                                | 2,991  |   |   | $      | 3,347  |                     |   |   | -10.6  | %      |   | $ | 5,994 |   |   | $ | 7,478 |   |   |   | -19.8 | % |
| Deferred loan cost                                                 |   |                             | (210   | )      |   |   | (399   | )                        |   |   | 47.4   | %      |   |   | (408 | ) |   |   | (770 | ) |   |   | 47.0 | % |
| Employee benefits                                                  |   |                             | 749    |   |   |   | 1,087  |                     |   |   | -31.1  | %      |   |   | 609 |   |   |   | 1,967 |   |   |   | -69.0 | % |
| Net occupancy expense of premises                                  |   |                             | 494    |   |   |   | 579    |                     |   |   | -14.7  | %      |   |   | 1,018 |   |   |   | 1,187 |   |   |   | -14.2 | % |
| Furniture and equipment expense                                    |   |                             | 485    |   |   |   | 498    |                     |   |   | -2.6   | %      |   |   | 1,000 |   |   |   | 1,002 |   |   |   | -0.2 | % |
| Advertising and business development                               |   |                             | 74     |   |   |   | 109    |                     |   |   | -32.1  | %      |   |   | 171 |   |   |   | 205 |   |   |   | -16.6 | % |
| Supplies and printing                                              |   |                             | 57     |   |   |   | 85     |                     |   |   | -32.9  | %      |   |   | 143 |   |   |   | 182 |   |   |   | -21.4 | % |
| Telephone and internet charges                                     |   |                             | 155    |   |   |   | 167    |                     |   |   | -7.2   | %      |   |   | 317 |   |   |   | 339 |   |   |   | -6.5 | % |
| Postage and courier                                                |   |                             | 117    |   |   |   | 133    |                     |   |   | -12.0  | %      |   |   | 230 |   |   |   | 268 |   |   |   | -14.2 | % |
| Legal and accounting fees                                          |   |                             | 241    |   |   |   | 226    |                     |   |   | 6.6    | %      |   |   | 360 |   |   |   | 353 |   |   |   | 2.0 | % |
| Deposit insurance                                                  |   |                             | 868    |   |   |   | 903    |                     |   |   | -3.9   | %      |   |   | 1,750 |   |   |   | 1,120 |   |   |   | 56.3 | % |
| Director fees and expenses                                         |   |                             | 108    |   |   |   | 131    |                     |   |   | -17.6  | %      |   |   | 223 |   |   |   | 308 |   |   |   | -27.6 | % |
| Service charges and fees                                           |   |                             | 66     |   |   |   | 124    |                     |   |   | -46.8  | %      |   |   | 112 |   |   |   | 271 |   |   |   | -58.7 | % |
| Foreclosure and repossession expenses                              |   |                             | 2,043  |   |   |   | 506    |                     |   |   | 303.8  | %      |   |   | 3,963 |   |   |   | 1,210 |   |   |   | 227.5 | % |
| Loan servicing costs                                               |   |                             | 674    |   |   |   | 262    |                     |   |   | 157.3  | %      |   |   | 1,207 |   |   |   | 450 |   |   |   | 168.2 | % |
| Other noninterest expense                                          |   |                             | 472    |   |   |   | 344    |                     |   |   | 37.2   | %      |   |   | 835 |   |   |   | 657 |   |   |   | 27.1 | % |
| Total noninterest expense                                          |   | $                                | 9,384  |   |   | $      | 8,102  |                     |   |   | 15.8   | %      |   | $ | 17,524 |   |   | $ | 16,227 |   |   |   | 8.0 | % |
| Noninterest expense as a percentage of average assets (annualized) |   |                             | 3.15   | %      |   |   | 2.48   | %                        |   |   |   |   |   |   | 2.90 | % |   |   | 2.45 | % |   |   |   |   |

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|                                                    |   |                   |    |   | Less than |   |   | 1 to 3 |   |   | 3 to 5 |   |   | More than |   |
|---------------------------------------------------------|--------|------------------------|---------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| Contractual Obligations                                 |   | Total                  |    |   | 1 year    |   |   | years  |   |   | years  |   |   | 5 years   |   |
|                                                    |   | (Dollars In Thousands) |    |
| Federal Home Loan Bank of Atlanta                       |   |                   |    |   |      |   |   |   |   |   |   |   |   |      |   |
| Advances                                                |   | $                      | 89,811  |   |      | $      | 5,663  |   |   | $      | 46,534 |   |   | $         | 36,892 |   |   | $ | 722 |   |
| Senior Unsecured Debt                                   |   |                   | 20,000  |   |      |   | -      |   |   |   | 20,000 |   |   |      | -      |   |   |   | - |   |
| Operating Lease Obligations                             |   |                   | 975     |   |      |   | 360    |   |   |   | 476    |   |   |      | 139    |   |   |   | - |   |
| Guaranteed Preferred Beneficial Interests in Debentures |   |                   | 10,310  |   |      |   | -      |   |   |   | -      |   |   |      | -      |   |   |   | 10,310 |   |
|                                                    |   | $                      | 121,096 |   |      | $      | 6,023  |   |   | $      | 67,010 |   |   | $         | 37,031 |   |   | $ | 11,032 |   |

|                         |   | Jun-10 |       |   | Dec-09 |   |
|------------------------------|--------|--------|------------|--------|--------|--------|
| Commitments to extend credit |   | $      | 63,305,000 |   |   | $      | 89,064,000 |   |
| Standby letters of credit    |   | $      | 1,920,000  |   |   | $      | 3,682,000 |   |

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|   | · | “Well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 4.0% or greater, a leverage ratio of 4.0% or greater, and is not categorized as well capitalized. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio of less than 4.0%, or a leverage ratio of less than 4.0%. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

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|                                              |   |         |   |   |   |   |   | Minimum     |   |
|---------------------------------------------------|--------|--------------|--------|--------|--------|--------|--------|-------------|--------|
|                                              |   | Company      |   |   |   |   |   | Regulatory  |   |
|                                              |   | Consolidated |   |   | Bank   |   |   | Requirement |   |
| Total Capital to Risk Weighted Assets             |   |         | 5.91   | %      |   |   | 6.18   | %           |   |   | 8.00 | % |
| Tier 1 Capital to Risk Weighted Assets            |   |         | 4.62   | %      |   |   | 4.89   | %           |   |   | 4.00 | % |
| Tier 1 Capital to Average Assets (Leverage Ratio) |   |         | 2.82   | %      |   |   | 2.98   | %           |   |   | 4.00 | % |

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| Contractual Maturity Gap    |   | 3-Month                |    |   | 6-Month |   |    | 1-Year |   |
|----------------------------------|--------|------------------------|---------|--------|---------|--------|---------|--------|--------|
|                             |   | (Dollars In Thousands) |    |
| Regulatory Defined               |   |                   |    |   |    |   |    |   |   |
| Rate Sensitive Assets (RSA)      |   | $                      | 336,273 |   |    | $      | 410,266 |   |   | $ | 511,802 |   |
| Rate Sensitive Liabilities (RSL) |   |                   | 135,664 |   |    |   | 233,495 |   |   |   | 444,804 |   |
| RSA minus RSL (Gap)              |   | $                      | 200,609 |   |    | $      | 176,771 |   |   | $ | 66,998 |   |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Maturity Gap Ratio (RSA/RSL)     |   |                   | 2.48    |   |    |   | 1.76    |   |   |   | 1.15 |   |

| Repricing Gap                    |   | 3-Month                |    |   | 6-Month |   |    | 1-Year |   |
|----------------------------------|--------|------------------------|---------|--------|---------|--------|---------|--------|--------|
|                             |   | (Dollars In Thousands) |    |
| Regulatory Defined               |   |                   |    |   |    |   |    |   |   |
| Rate Sensitive Assets (RSA)      |   | $                      | 536,636 |   |    | $      | 581,768 |   |   | $ | 634,640 |   |
| Rate Sensitive Liabilities (RSL) |   |                   | 402,394 |   |    |   | 498,424 |   |   |   | 702,380 |   |
| RSA minus RSL (Gap)              |   | $                      | 134,242 |   |    | $      | 83,344  |   |   | $ | (67,740 | ) |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Repricing Gap Ratio (RSA/RSL)    |   |                   | 1.33    |   |    |   | 1.17    |   |   |   | 0.90 |   |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Management-Adjusted              |   |                   |    |   |    |   |    |   |   |   |   |   |
| Rate Sensitive Assets (RSA)      |   | $                      | 538,665 |   |    | $      | 585,427 |   |   | $ | 640,623 |   |
| Rate Sensitive Liabilities (RSL) |   |                   | 409,550 |   |    |   | 512,117 |   |   |   | 727,500 |   |
| RSA minus RSL (Gap)              |   | $                      | 129,115 |   |    | $      | 73,310  |   |   | $ | (86,877 | ) |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Repricing Gap Ratio (RSA/RSL)    |   |                   | 1.32    |   |    |   | 1.14    |   |   |   | 0.88 |   |

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| Market      | Effect on Net Interest Income |
|-------------|-------------------------------|
| Rate Change | Gradual                       | Immediate |
| +300 bps    | 20.38%                        | 38.37% |
| +200 bps    | 17.96%                        | 26.24% |
| +100 bps    | 11.18%                        | 13.44% |
| -25 bps     | -2.84%                        | -2.84% |

ITEM 

PART II.  OTHER INFORMATION

ITEM 

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ITEM 

ITEM 

ITEM 

ITEM 

ITEM 

|   | 31.1 | Rule 13a-14(a) Certification of CEO |
|--------|------|-------------------------------------|

|   | 31.2 | Rule 13a-14(a) Certification of CFO |
|--------|------|-------------------------------------|

|   | 32.1 | Section 1350 Certification of CEO |
|--------|------|-----------------------------------|

|   | 32.2 | Section 1350 Certification of CFO |
|--------|------|-----------------------------------|

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SIGNATURES

| PAB BANKSHARES, INC.                   |   |      |                                                 |   |
|----------------------------------------|--------|-----------|------------------------------------------------------|--------|
| Registrant                             |   |      |                                                 |   |
|                                   |   |      |                                                 |   |
| Date: August 16, 2010             |   | By:  | /s/ Donald J. Torbert, Jr.                           |   |
|                                   |   |      | Donald J. Torbert, Jr.                               |
|                                   |   |      | President and Chief Executive Officer                |
|                                   |   |      | (principal executive officer of the registrant)      |
|                                   |   |      |                                                 |   |
|                                   |   |      |                                                 |   |
| Date:   August 16, 2010 |   | By:  | /s/ Nicole S. Stokes                                 |   |
|                                   |   |      | Nicole S. Stokes                                     |
|                                   |   |      | Executive Vice President and Chief Financial Officer |
|                                   |   |      | (principal financial officer of the registrant)      |

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