SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB
(Mark One)

|X_|              QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1998
                                                 --------------
                                                        OR

|_|               TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934

                  For the transition period from __________ to __________.

                           Commission File No. 0-23763


                              Quitman Bancorp, Inc.
--------------------------------------------------------------------------------
        (Exact name of Small Business Issuer as Specified in Its Charter)


         Georgia                                                58-2365866
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation                (I.R.S. Employer
 or Organization)                                           Identification No.)


                 100 West Screven Street, Quitman, Georgia 31643
                 -----------------------------------------------
                    (Address of Principal Executive Offices)


                                 (912) 263-7538
--------------------------------------------------------------------------------
                 Issuer's Telephone Number, Including Area Code

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                                      YES      X               NO
                                          -----------             ----------
   Number of shares of Common Stock outstanding as of April 10, 1998: 661,250

Transitional Small Business Disclosure Format (check one)

                                      YES                      NO      X
                                          ----------              ----------

<PAGE>



                              QUITMAN BANCORP, INC.

                                    Contents
                                    --------
<TABLE>
<CAPTION>
                                                                                                               Page(s)
                                                                                                               -------
PART I - FINANCIAL INFORMATION
<S>  <C>      <C>                                                                                               <C>
     Item 1.  Financial Statements................................................................................3

     Item 2.  Management's Discussion and Analysis or Plan of Operation..........................................10


PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings..................................................................................12

     Item 2.  Changes in Securities and Use of Proceeds..........................................................12

     Item 3.  Defaults upon Senior Securities....................................................................12

     Item 4.  Submission of Matters to a Vote of Security Holders................................................12

     Item 5.  Other Information..................................................................................12

     Item 6.  Exhibits and Reports on Form 8-K...................................................................12

     Signatures..................................................................................................13
</TABLE>

                                      - 2 -

<PAGE>



                          PART I. FINANCIAL INFORMATION

         Quitman Bancorp, Inc. is a savings and loan holding company for Quitman
Federal  Savings  Bank  (the  "Bank"),   the  wholly  owned  subsidiary  of  the
registrant.  The information  required by Items 1 and 2 of Part I of Form 10-QSB
has been  omitted  because the  conversion  of the Bank from the mutual to stock
form of  ownership  and  simultaneous  issuance of shares of common stock of the
registrant (the "Conversion"),  as described in the registration statement filed
on Form SB-2 (File No.  333-43063)  with the Securities and Exchange  Commission
occurred  after March 31, 1998.  The  Conversion was completed on April 2, 1998.
Financial  statements for the Bank for the three months ended March 31, 1998 and
1997, the six months ended March 31, 1998 and 1997 and at September 30, 1997 and
March 31, 1998 are included with this form.

         This Form  10-QSB  includes  forward-looking  statements  that  involve
inherent risks and uncertainties.  Quitman Bancorp, Inc. cautions readers that a
number of important factors could cause actual results to differ materially from
those in the forward- looking statements.  Those factors include fluctuations in
interest rates, inflation,  government regulations,  and economic conditions and
competition in the geographic and business areas in which Quitman Bancorp, Inc.,
through the Bank, conducts its operations.



                                      - 3 -

<PAGE>



                          QUITMAN FEDERAL SAVINGS BANK

                        STATEMENTS OF FINANCIAL CONDITION
                        ---------------------------------

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                                 MARCH 31,    SEPTEMBER 30,
                                                                                   1998          1997
                                                                                -----------   -------------
                                                                                (Unaudited)    (Audited)
<S>                                                                            <C>            <C>       
Cash and Cash Equivalents:
   Cash and amounts due from depository
      institutions                                                             $   400,149       108,650
   Interest-bearing deposits in other banks                                      5,625,675       548,158
                                                                               -----------   -----------
         Total Cash and Cash Equivalents                                         6,025,824       656,808
Investment securities:
   Available-for-sale                                                            3,183,006     3,046,109
   Held-to-maturity                                                                700,411       804,706
Loans receivable - net of allowance for loan
   losses and deferred origination fees                                         33,027,088    33,325,719
Office properties and equipment, at cost, net of
   accumulated depreciation                                                        464,394       322,527
Real estate and other property acquired
   in settlement of loans                                                          185,692        63,915
Accrued interest receivable                                                        361,905       381,218
Investment required by law-stock in Federal
   Home Loan Bank, at cost                                                         239,800       227,700
Cash value of life insurance                                                       297,788       218,106
Other assets                                                                       332,971       145,356
                                                                               -----------   -----------

         Total Assets                                                          $44,818,879    39,192,164
                                                                               ===========   ===========

                        LIABILITIES AND RETAINED EARNINGS
                        ---------------------------------

Liabilities:
   Deposits                                                                    $41,329,949    34,470,803
   Advances from Federal Home Loan Bank                                                -0-     1,300,000
   Accrued interest payable                                                        280,811       272,346
   Income taxes payable                                                             98,777       114,766
   Other liabilities                                                                36,284        75,696
                                                                               -----------   -----------

      Total Liabilities                                                         41,745,821    36,233,611
                                                                               -----------   -----------

Equity:
   Retained Earnings                                                             3,056,212     2,952,560
   Unrealized gains (losses) on available-
      for-sale securities, net of deferred
         income taxes                                                               16,846         5,993
                                                                               -----------   -----------

      Total Equity                                                               3,073,058     2,958,553
                                                                               -----------   -----------
         Total Liabilities and Retained Earnings                               $44,818,879    39,192,164
                                                                               ===========   ===========
</TABLE>

                                      - 4 -

<PAGE>



                          QUITMAN FEDERAL SAVINGS BANK

                              STATEMENTS OF INCOME
                              --------------------
<TABLE>
<CAPTION>
                                                        (UNAUDITED)                (UNAUDITED)
                                                    THREE MONTHS ENDED          SIX MONTHS ENDED
                                                          MARCH 31,                 MARCH 31,
                                                -------------------------   -----------------------
                                                   1998          1997          1998          1997
                                                -----------   -----------   -----------   ---------
<S>                                              <C>             <C>         <C>          <C>      
Interest Income:
   Loans receivable:
      First mortgage loans                       $  741,700      712,620     1,499,330    1,398,929
      Consumer and other loans                       28,492       27,391        57,720       51,527
   Interest on FHLMC Pool                                68           92           142           92
   Investment securities                             62,830       58,134       125,558      114,508
   Interest-bearing deposits                         20,503        6,530        26,253       12,071
   Federal funds sold                                   -0-          -0-            68          -0-
                                                 ----------   ----------    ----------   ----------
         Total Interest Income                      853,593      804,767     1,709,071    1,577,127
                                                 ----------   ----------    ----------   ----------

Interest Expense:
   Deposits                                         529,440      470,429     1,041,331      932,166
   Interest on Federal Home Loan
      Bank advances                                  15,401       12,900        36,622       29,314
                                                 ----------   ----------    ----------   ----------
         Total Interest Expense                     544,841      483,329     1,077,953      961,480
                                                 ----------   ----------    ----------   ----------

Net Interest Income                                 308,752      321,438       631,118      615,647

Provision for loan losses                             9,000        9,000        18,000       18,000
                                                 ----------   ----------    ----------   ----------

Net Interest Income After Provision for Losses      299,752      312,438       613,118      597,647
                                                 ----------   ----------    ----------   ----------


Non-Interest Income:
   Gain (loss) on sale of securities                    -0-           (2)           18           (2)
   Other income                                       9,440       11,933        25,819       23,449
                                                 ----------   ----------    ----------   ----------
         Total Non-Interest Income                    9,440       11,931        25,837       23,447
                                                 ----------   ----------    ----------   ----------

Non-Interest Expense:
   Compensation                                      77,901       64,221       150,646      123,653
   Other personnel expenses                          38,250       37,874        81,278       75,280
   Occupancy expenses of premises                     4,936        5,060        10,430       10,186
   Furniture and equipment expenses                  31,055       18,755        47,259       37,558
   Federal deposit insurance                          5,402        2,616        10,705       20,327
   Other operating expenses                          68,295       52,840       172,603      126,613
                                                 ----------   ----------    ----------   ----------
         Total Non-Interest Expense                 225,839      181,366       472,921      393,617
                                                 ----------   ----------    ----------   ----------

Income Before Income Taxes                           83,353      143,003       166,034      227,477
Provision for Income Taxes                           27,221       47,484        62,382       78,244
                                                 ----------   ----------    ----------   ----------
Net Income                                       $   56,132       95,519       103,652      149,234
                                                 ==========   ==========    ==========   ==========
</TABLE>

                                      - 5 -

<PAGE>



                          QUITMAN FEDERAL SAVINGS BANK

                              STATEMENTS OF EQUITY
                              --------------------
<TABLE>
<CAPTION>
                                                                               UNREALIZED
                                                                                  GAINS
                                                                                (LOSS) ON
                                                                                AVAILABLE-
                                                                                 FOR-SALE
                                                                                SECURITIES
                                                                                  NET OF
                                                                                APPLICABLE
                                                                  RETAINED       DEFERRED
                                                                  EARNINGS     INCOME TAXES    TOTAL
                                                                  --------     ------------    -----
<S>                                                              <C>          <C>           <C>
Balance, September 30, 1996                                      $2,689,761      (22,921)    2,666,840

Net Income                                                          149,234          -0-       149,234

Change In Unrealized Gains
   (Losses) On Available-For-
   Sale Securities Net Of
   Applicable Deferred
   Income Taxes                                                         -0-      (10,142)      (10,142)
                                                                 ----------   ----------    ----------

Balance, March 31, 1997
   (Unaudited)                                                   $2,838,995      (33,063)    2,805,932
                                                                 ==========   ==========    ==========

Balance, September 30, 1997                                      $2,952,560        5,993     2,958,553

Net Income                                                          103,652          -0-       103,652

Change In Unrealized Gains
   (Losses) On Available-For-
   Sale Securities Net Of
   Applicable Deferred
   Income Taxes                                                         -0-       10,853        10,853
                                                                 ----------   ----------    ----------

Balances, March 31, 1998
   (Unaudited)                                                   $3,056,212       16,846     3,073,058
                                                                 ==========   ==========    ==========
</TABLE>


                                      - 6 -

<PAGE>



                          QUITMAN FEDERAL SAVINGS BANK

                            STATEMENTS OF CASH FLOWS
                            ------------------------
<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED MARCH 31,
                                                                 --------------------------
                                                                     1998             1997
                                                                     ----             ----
                                                                  (Unaudited)     (Unaudited)
<S>                                                             <C>              <C>      
Cash Flows From Operating Activities:
   Net income                                                    $   103,652        149,234
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                                    35,059         25,840
      Provision for loan losses                                       18,000         18,000
      Amortization (Accretion) of securities and loans                 8,438          5,028
      Gain on sale of foreclosed assets                               (3,012)           -0-

   Change in Assets and Liabilities:
      (Increase) Decrease in accrued interest receivable              19,313         20,126
      Increase (Decrease) in accrued interest payable                  8,465          3,041
      Increase (Decrease) in other liabilities                       (39,412)      (229,721)
      Increase (Decrease) in income taxes payable                    (24,667)        26,544
      (Increase) Decrease in other assets                           (187,615)        55,574
                                                                 -----------    -----------
         Net cash provided by operating activities                   (61,779)        73,666
                                                                 -----------    -----------

Cash Flows From Investing Activities:
   Capital expenditures                                             (176,926)           -0-
   Purchase of available-for-sale securities                        (230,102)      (945,230)
   Proceeds from sale of foreclosed property                          66,927            -0-
   Proceeds from maturity of held-to-maturity securities             100,000        300,000
   Proceeds from maturity of available-for-sale securities           100,000        100,000
   Proceeds from sale of available-for-sale securities                   -0-        399,844
   Purchase of stock in Federal Home Loan Bank                       (12,100)        (8,600)
   Net (increase) decrease in loans                                   94,939     (1,353,747)
   Principal collected on mortgage-backed securities                   8,593            -0-
   Increase in cash value of life insurance                          (79,682)       (72,457)
                                                                 -----------    -----------
         Net cash provided (used) by investing activities           (128,351)    (1,580,190)
                                                                 -----------    -----------

Cash Flows From Financing Activities:
   Net increase (decrease) in deposits                             6,859,146      1,422,383
   Proceeds from Federal Home Loan Bank advances                     300,000            -0-
   Payments on Federal Home Loan advances                         (1,600,000)      (300,000)
                                                                 -----------    -----------
         Net cash provided (used) by financing activities          5,559,146      1,122,383
                                                                 -----------    -----------

Net Increase (Decrease) in cash and cash equivalents               5,369,016       (384,141)
Cash and Cash Equivalents at Beginning of Period                     656,808        765,250
                                                                 -----------    -----------
Cash and Cash Equivalents at End of Period                       $ 6,025,824        381,109
                                                                 ===========    ===========

Supplemental Disclosures of Cash Flows Information:
   Cash Paid During The Period:
      Interest                                                   $ 1,069,488        958,439
      Income taxes                                                    90,109          1,000
   Non-Cash Investing Activities:
      Increase in unrealized gains on available-
         for-sale securities                                          19,531         10,142
</TABLE>

                                      - 7 -

<PAGE>



                          QUITMAN FEDERAL SAVINGS BANK

                          Notes to Financial Statements
                                   (Unaudited)

1.       Basis of Preparation
         --------------------

         The financial  statements  included  herein  are  for  Quitman  Federal
         Savings Bank (the "Bank").

         The  accompanying  unaudited  financial  statements  were  prepared  in
         accordance  with  instructions  for Form  10-QSB and  therefore  do not
         include all  disclosure  necessary for a complete  presentation  of the
         statements of financial condition,  statements of income and statements
         of  cash  flow  in  conformity  with  generally   accepted   accounting
         principles.  However,  all  adjustments  which are,  in the  opinion of
         management,   necessary  for  the  fair  presentation  of  the  interim
         financial statements have been included.  All such adjustments are of a
         normal  recurring  nature.  The  statement  of income for the six month
         period  ended  March  31,  1998 is not  necessarily  indicative  of the
         results which may be expected for the entire year.

         It is suggested that these  unaudited  financial  statements be read in
         conjunction with the audited financial statements and notes thereto for
         the Bank for the year ended September 30, 1997.

2.       Plan of Conversion
         ------------------

         On October 14,  1997,  the Bank's  Board of  Directors  approved a plan
         ("Plan") to convert from a federally-chartered mutual savings bank to a
         federally-chartered  stock  savings  bank  subject to  approval  by the
         Bank's  members.  The Plan,  which  included  formation  of the holding
         company,  Quitman Bancorp,  Inc., was subject to approval by the Office
         of Thrift  Supervision  (OTS) and included the filing of a registration
         statement with the SEC. The  conversion  was not completed  until after
         March 31, 1998.  Actual  conversion  costs will be  accounted  for as a
         reduction in gross proceeds.

         The Plan called for the common stock of the Bank to be purchased by the
         holding  company and for the common stock of the holding  company to be
         offered to  various  parties  in an  offering  at a price of $10.00 per
         share.

         The  stockholders  of the  holding  company  will be asked to approve a
         proposed  stock option plan and a proposed  restricted  stock plan at a
         meeting of the  stockholders  after the  conversion.  Shares  issued to
         directors and employees  under these plans may be from  authorized  but
         unissued  shares of common  stock or they may be  purchased in the open
         market.  In the event that  options or shares  are issued  under  these
         plans,  such  issuances  will be  included  in the  earnings  per share
         calculation;  thus,  the  interests of existing  stockholders  would be
         diluted.

         The Bank may not declare or pay a cash  dividend if the effect  thereof
         would  cause its net  worth to be  reduced  below  either  the  amounts
         required for the liquidation  account discussed below or the regulatory
         capital requirements imposed by federal regulations.

         At the time of conversion,  the Bank established a liquidation  account
         (which is a  memorandum  account  that does not  appear on the  balance
         sheet) in an amount  equal to its  retained  income as reflected in the
         latest  balance  sheet  used in the final  conversion  prospectus.  The
         liquidation  account  will be  maintained  for the  benefit of eligible
         account holders who continue to maintain their deposit

                                      - 8 -

<PAGE>



         accounts in the Bank after the  conversion.  In the event of a complete
         liquidation  of  the  Bank  (and  only  in  such  an  event),  eligible
         depositors  who  continue  to  maintain  accounts  shall be entitled to
         receive  a  distribution  from  the  liquidation   account  before  any
         liquidation may be made with respect to common stock.

                                      - 9 -

<PAGE>



       ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


Comparison of Financial Condition at March 31, 1998 and September 30, 1997

Total assets  increased by $5.6 million or 14.36% due  primarily to the increase
in  cash  and  cash  equivalents   resulting  from  funds  held  in  escrow  for
subscriptions  to the capital stock to be issued by Quitman  Bancorp,  Inc., the
Bank's newly formed holding company.

Deposits increased by $6.9 million due primarily to increases in certificates of
deposit and escrow accounts for  subscriptions to the capital stock to be issued
by Quitman Bancorp, Inc., the Bank's newly formed holding company. Advances from
the Federal Home Loan Bank in the amount of $1.6 million were repaid.

Total  equity  increased  by $114,505 as result of net income for the six months
ended  March  31,  1998  and  changes  in  the   unrealized   gain  or  loss  on
available-for-sale securities.

Non-Performing Assets and Delinquencies

Loans  accounted  for on a non-accrual  basis  decreased to $15,000 at March 31,
1998 from  $124,000 at September  30, 1997.  The decrease was the result of four
loans  being  reclassified  to  performing  loans  and one loan  being  added to
non-accrual.  At March 31, 1998, the Bank had real estate owned in the amount of
$185,692. The allowance for loan losses was $364,000 at March 31, 1998.

Comparison  of the Results of  Operations  for the Three  Months Ended March 31,
1998 and 1997

Net Income.  Net income  decreased  by $39,000 or 41% from net income of $95,000
for the three months ended March 31, 1997 to net income of $56,000 for the three
months ended March 31, 1998.  This decrease is primarily the result of increased
interest  expense and  non-interest  expense that more than offset  increases in
interest income and non-interest  income. The return on average assets decreased
from  1.03% to .53%  for the  three  months  ended  March  31,  1997  and  1998,
respectively.

Net Interest Income.  Net interest income decreased $13,000 or 4%, from $313,000
for the three months ended March 31, 1997 to $300,000 for the three months ended
March 31,  1998.  The  decrease  was  primarily  due to an  increase  in savings
deposits.

Interest Income.  Interest income  increased  $49,000 for the three months ended
March 31, 1998  compared to the same three  months  ended  March 31,  1997.  The
increase  in  interest  income was  primarily  due to an increase in the average
balance of  interest-earning  assets.  The average  balance of  interest-earning
assets increased by 5.1%. This increase in average interest-earning assets added
an additional $49,000 of interest income. The average yield on  interest-earning
assets  increased  moderately to 9.1% from 8.7% for the three months ended March
31, 1998 and 1997, respectively.

Interest Expense. Interest expense increased $62,000 from $483,000 for the three
months  ended March 31, 1997 to $545,000  for the three  months  ended March 31,
1998.   The   increase   in   interest   expense  was  due  to  an  increase  in
interest-bearing  liabilities of $7.3 million and a slight  increase in the cost
of funds of 20 basis points (100 basis points  equals 1%). The average  balances
of deposits  and  advances  from the Federal  Home Loan Bank  increased  by $2.4
million and decreased by $.3 million, respectively,  from the three months ended
March 31, 1997 to the three months ended March 31, 1998.

                                     - 10 -

<PAGE>



Non-Interest  Income.  Non-interest income decreased by $2,500 primarily from an
decrease in late charges and service  charges on deposit  accounts of $1,800 and
$700, respectively.

Non-Interest Expense. Non-interest expense increased by $44,000 primarily due to
increased  compensation  and other  personnel  expense,  furniture and equipment
expense and other  operating  expenses . Our  compensation  and other  personnel
expense  increased an  aggregate  of $14,000  between the periods as a result of
year-end  pay raises  and our  hiring of  additional  part time  employees.  Our
furniture and equipment  expense  increased by $12,300  between the periods as a
result of acquisition of new equipment which increased our depreciation  cost by
$11,000  and our  repairs  and  maintenance  cost  increased  by a  $1,000.  The
increases in other operating expenses were primarily  attributable to other real
estate expenses in the amount of $8,000,  increase in federal insurance premiums
of  $1,500,  increase  in other  taxes of $1,700,  increase  in  accounting  and
professional  expense of $5,700,  increase in communications  expense of $1,000,
all of which were offset somewhat by a decrease in advertising of $3,900.

Income Taxes.  Income tax expense amounted to $47,000 for the three months ended
March 31, 1997 compared to $27,000 for the three months ended March 31, 1998.

Comparison of the Results of Operations  for the Six Months Ended March 31, 1998
and 1997

Net Income.  Net income  decreased by $45,000 or 30% from net income of $149,000
for the six months  ended March 31, 1997 to net income of $103,000  for the same
six months of fiscal 1998.  This  decrease is primarily  the result of increased
non-interest  expense that more than offset increases in net interest income and
non-interest  income.  The return on average assets  decreased from .81% to .49%
for the six months ended March 31, 1997 and 1998, respectively.

Net  Interest  Income.  Net  interest  income  increased  $15,000 or 2.5%,  from
$598,000  for the six months ended March 31, 1997 to $613,000 for the six months
ended  March  31,  1998.  The  increase  was  primarily  due to an  increase  in
residential mortgages and consumer loans.

Interest  Income.  Interest income  increased  $132,000 for the six months ended
March 31,  1998  compared  to the same six  months  ended  March 31,  1997.  The
increase in interest  income was  primarily  attributable  to an increase in the
average   balance  of   interest-earning   assets.   The   average   balance  of
interest-earning   assets   increased   by  5.9%.   This   increase  in  average
interest-earning  assets added an additional  $132,000 of interest  income.  The
average yield on interest-earning  assets increased moderately to 9.6% from 9.0%
for the six months ended March 31, 1998 and 1997, respectively.

Interest Expense.  Interest expense increased $116,000 from $961,000 for the six
months  ended March 31, 1997 to  $1,078,000  for the six months  ended March 31,
1998.  The  increase in  interest  expense  was  attributable  to an increase in
interest-bearing  liabilities of $8.1 million and a slight  increase in the cost
of funds of 20 basis points (100 basis points  equals 1%). The average  balances
of deposits  and  advances  from the Federal  Home Loan Bank  increased  by $2.6
million and  decreased by $.4 million,  respectively,  from the six months ended
March 31, 1997 to the six months ended March 31, 1998.

Non-Interest  Income.  Non-interest income increased by $2,400 primarily from an
increase in service charges on deposit  accounts of $400 and gain on the sale of
other real estate of $3,000, and partially offset by a decrease in late charges.

                                     - 11 -

<PAGE>



Non-Interest Expense. Non-interest expense increased by $79,000 primarily due to
increased   compensation   and  other   personnel   expense,   advertising   and
contributions to local charitable and volunteer organizations.  Our compensation
and other  personnel  expense  increased  an  aggregate  of $33,000  between the
periods as a result of  year-end  pay raises and our hiring of  additional  part
time employees.  Our  advertising  increased  between the two periods  primarily
because the cost for our annual gift to  customers (a form of  advertising)  was
unusually  low during the 1997 period.  During the 1997 period,  we were able to
secure a bulk  quantity of gifts at a large  discount.  We did not obtain such a
favorable  price  during  the 1998  period and we do not expect in the future to
have as low an  advertising  expense  as we did  during  the  1997  period.  Our
contributions  during  the six  months  ended  March 31,  1997 were  smaller  by
comparison due to the one-time  deposit premium to recapitalize the SAIF that we
expensed during the 1996 fiscal year and paid during November 1997.

Income  Taxes.  Income tax expense  amounted to $78,000 for the six months ended
March 31, 1997 compared to $62,000 for the six months ended March 31, 1998.

Liquidity and Capital Resources

Management  monitors our risk-based capital and leverage capital ratios in order
to assess compliance with regulatory guidelines. At March 31, 1998, the Bank had
tangible capital,  leverage,  and total risk-based  capital of 6.59%,  6.59% and
12.94%,  respectively,  which exceeded the OTS's minimum  requirements of 1.50%,
3.00% and 8.00%, respectively.

We have received a letter from our computer  service vendor assuring us that the
computer  services of our vendor will properly  function on January 1, 2000, the
date that  computer  problems  are  expected  to develop  worldwide  on computer
systems that incorrectly identify the year 2000 as the year 1900 and incorrectly
compute  interest,  payment  or  delinquency.  However,  our  vendor,  and other
vendors,  have not yet eliminated the year 2000 computer problem.  Accurate data
processing is essential to our operations  and a lack of accurate  processing by
our vendor or by us could have a  significant  adverse  impact on our  financial
condition  and results of  operation.  We have also  examined  our  computers to
determine  whether  they will  properly  function  on January 1, 2000 and do not
believe that we will experience  material costs to upgrade our computers to meet
our requirements.

We have ordered an upgrade to our computer  system that is intended to solve our
internal  year 2000 computer  problem.  We expect  installation  of this upgrade
during the second  calendar  quarter of 1998 with year 2000  testing to occur by
the end of the third calendar quarter of 1998. We are also awaiting updates from
our  computer  service  vendor  concerning  their  progress  with the year  2000
computer  program.  In the event our computer  service vendor indicates that the
year 2000  computer  problem  cannot be solved in time,  we will try to locate a
computer  service  vendor who has solved the year 2000 computer  problem,  or if
that is not  possible,  to  identify  what  steps  we can take to  minimize  the
negative impact the year 2000 computer problem could have on us.


                                     - 12 -

<PAGE>



                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

          Not applicable.

Item 2.  Changes in Securities and Use of Proceeds
         -----------------------------------------
          As  described  in  the  beginning  of  Part  I  of  this  report,  the
          Conversion, including the initial public offering of the shares of the
          registrant,  was not completed until April 2, 1998. 

          The  Conversion  resulted in the issuance of 661,250  shares of common
          stock,  $0.10  par  value per  share,  at  $10.00  per share for gross
          proceeds of $6,612,500.  The referenced  shares  constitute all of the
          shares  registered by means of a Form SB-2 (file no.  333-43063)  that
          was  declared   effective  on  February  11,  1998.  The  offering  of
          securities commenced on February 20, 1998 and ended on March 17, 1998.
          The registrant was assisted  by Trident  Securities, Inc.  on  a  best
          efforts basis.  Fees and  expenses  paid  to  Trident Securities, Inc.
          totaled $150,054.

          Total expenses are estimated at $368,249, resulting in net proceeds of
          $6,244,251.  These  amounts and the following  amounts are  reasonable
          estimates. One half of the net proceeds, $3,122,125, was paid directly
          by the registrant to its subsidiary  bank in return for 100,000 shares
          (100% of the  issued  and  outstanding  securities  of the  subsidiary
          bank). Of this amount,  $10,000  constitutes capital stock of the bank
          and $3,112,125  constitutes paid in capital of the bank. The remaining
          one  half  of  the  net  proceeds,  $3,122,126,  was  retained  by the
          registrant.  Of this amount, $529,000 was a direct payment in the form
          of a loan  by the  registrant  to its  subsidiary  bank  to  fund  the
          purchase by the employee  stock  ownership  plan of the bank of 52,900
          shares  of  common  stock of the  registrant.  The  remaining  amount,
          $2,593,126,  was  deposited by the  registrant  into an account at the
          subsidiary bank.

Item 3.  Defaults Upon Senior Securities
         -------------------------------

          Not applicable.

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

          Not applicable.

Item 5.  Other Information
         -----------------

          Not applicable.

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

         (a)      None.

         (b)      No  reports on Form 8-K were filed  during the  quarter  ended
                  March 31, 1998.

                                     - 13 -

<PAGE>


                                   SIGNATURES


         In accordance with the  requirements of the Securities  Exchange Act of
1934,  as  amended,  the  registrant  has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                 QUITMAN BANCORP, INC.



Date: May 14,  1998              By:      /s/Melvin E. Plair
                                          --------------------------------------
                                          Melvin E. Plair
                                          President and Chief Executive Officer
                                          (Principal Executive and Financial
                                            Officer)
                                          (Duly Authorized Officer)



Date: May 14, 1998               By:      /s/Peggy L. Forgione
                                          --------------------------------------
                                          Peggy L. Forgione
                                          Vice President and Controller
                                          (Chief Accounting Officer)


                                     - 14 -