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 December 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 February 5, 1999: 569,950

Transitional Small Business Disclosure Format (check one)

                               YES        NO   X     
                                   ---        ---


<PAGE>



                              QUITMAN BANCORP, INC.

                                    Contents
                                    --------

                                                                         Page(s)
                                                                         -------
PART I - FINANCIAL INFORMATION

     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...............................................13

     Item 2.  Changes in Securities and Use of Proceeds.......................13

     Item 3.  Defaults upon Senior Securities.................................13

     Item 4.  Submission of Matters to a Vote of Security Holders.............13

     Item 5.  Other Information...............................................13

     Item 6.  Exhibits and Reports on Form 8-K................................13

     Signatures...............................................................14

                                      - 2 -

<PAGE>
                          PART I. FINANCIAL INFORMATION
                      QUITMAN BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------
<TABLE>
<CAPTION>

                                          ASSETS
                                          ------
                                                                                    DECEMBER 31,    SEPTEMBER 30,
                                                                                        1998            1998    
                                                                                   ------------    ------------
                                                                                     (Unaudited)
<S>                                                                               <C>             <C>    
Cash and Cash Equivalents:
   Cash and amounts due from depository
      institutions                                                                 $    498,662         168,404
   Interest-bearing deposits in other banks                                           1,490,044         203,462
                                                                                   ------------    ------------
         Total Cash and Cash Equivalents                                              1,988,706         371,866
Investment securities:
   Available-for-sale                                                                 5,848,771       5,640,709
   Held-to-maturity                                                                         -0-         200,000
Loans receivable - net of allowance for loan
   losses and deferred origination fees                                              36,744,862      36,397,067
Office properties and equipment, at cost, net of
   accumulated depreciation                                                           1,028,552         681,453
Real estate and other property acquired
   in settlement of loans                                                                14,897             -0-
Accrued interest receivable                                                             425,366         447,854
Investment required by law-stock in Federal
   Home Loan Bank, at cost                                                              239,800         239,800
Cash value of life insurance                                                            397,072         337,813
Other assets                                                                            155,776          45,182
                                                                                   ------------    ------------
         Total Assets                                                              $ 46,843,802      44,361,744
                                                                                   ============    ============

                           LIABILITIES AND STOCKHOLDERS' EQUITY
                           ------------------------------------
Liabilities:
   Deposits                                                                        $ 36,488,425      34,954,584
   Advances from Federal Home Loan Bank                                               1,000,000             -0-
   Accrued interest payable                                                             328,344         275,028
   Income taxes payable                                                                 100,705          24,660
   Other liabilities                                                                     22,830         143,719
                                                                                   ------------    ------------
      Total Liabilities                                                              37,940,304      35,397,991
                                                                                   ------------    ------------

Stockholders' Equity:
   Common stock,  $.10 par value,  4,000,000 
      shares  authorized,  661,250 shares
      issued and 646,250 shares outstanding 
      December 31, 1998 (661,250 September 30,
      1998)                                                                              66,125          66,125
   Preferred stock, no par value, 1,000,000
      shares authorized, no shares issued
      or outstanding                                                                        -0-             -0-
   Additional paid in capital                                                         6,135,412       6,135,412
   Retained Earnings                                                                  3,345,579       3,256,097
   Accumulated other comprehensive income                                                23,932          35,119
                                                                                      9,571,048       9,492,753
   Receivable from employee stock ownership plan                                       (502,550)       (529,000)
   Treasury stock, 15,000 shares at cost                                               (165,000)            -0-
      Total Stockholders' Equity                                                      8,903,498       8,963,753
                                                                                   ------------    ------------
         Total Liabilities and Stockholders' Equity                                $ 46,843,802      44,361,744
                                                                                   ============    ============
</TABLE>

                                      - 3 -

<PAGE>
                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------

                                                    QUARTER ENDED
                                                    DECEMBER 31,      
                                                 -------------------  
                                                    1998       1997   
                                                 --------   --------
                                               (Unaudited) (Unaudited)
Interest Income:
   Loans receivable:
      First mortgage loans                       $788,680    757,630
      Consumer and other loans                     54,318     29,228
   Interest on FHLMC Pool                              50         74
   Investment securities                           88,880     62,728
   Interest-bearing deposits                        6,062      5,750
   Federal funds sold                                 356         68
                                                 --------   --------
         Total Interest Income                    938,346    855,478
                                                 --------   --------

Interest Expense:
   Deposits                                       519,152    511,891
   Interest on Federal Home Loan
      Bank advances                                10,161     21,221
                                                 --------   --------
         Total Interest Expense                   529,313    533,112
                                                 --------   --------

Net Interest Income                               409,033    322,366

Provision for loan losses                          10,000      9,000
                                                 --------   --------

Net Interest Income After Provision for Losses    399,033    313,366
                                                 --------   --------

Non-Interest Income:
   Gain (loss) on sale of securities                1,094         18
   Other income                                    13,856     16,379
                                                 --------   --------
         Total Non-Interest Income                 14,950     16,397
                                                 --------   --------

Non-Interest Expense:
   Compensation                                    87,307     72,745
   Other personnel expenses                        34,246     43,028
   Occupancy expenses of premises                   6,095      5,494
   Furniture and equipment expenses                37,788     16,204
   Federal deposit insurance                        5,251      5,303
   Other operating expenses                       102,643    104,308
                                                 --------   --------
         Total Non-Interest Expense               273,330    247,082
                                                 --------   --------

Income Before Income Taxes                        140,653     82,681
Provision for Income Taxes                         51,171     35,161
                                                 --------   --------
Net Income                                       $ 89,482     47,520
                                                 ========   ========

Earnings Per Share (Basic and Diluted)           $    .15        N/A
                                                 ========   ========

                                      - 4 -

<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
<TABLE>
<CAPTION>


                                                                             ACCUMULATED
                                                                               OTHER
                                                   ADDITIONAL              COMPREHENSIVE  RECEIVABLE
                                         COMMON      PAID IN    RETAINED      INCOME         FROM         TREASURY
                                          STOCK      CAPITAL    EARNINGS      (LOSS)         ESOP           STOCK        TOTAL   
                                          -----      -------    --------      ------         ----           -----        -----   
<S>                                  <C>          <C>         <C>            <C>          <C>           <C>            <C>      
Balances, September 30, 1997          $     -0-           -0-  2,952,560       5,993             -0-            -0-     2,958,553

Net income                                  -0-           -0-     47,520          -0-            -0-            -0-        47,520

Other comprehensive income                  -0-           -0-         -0-      4,253             -0-            -0-         4,253
                                      --------    ----------   --------      -------        -------        -------     ---------

Balances, December 31, 1997,
 (Unaudited)                           $    -0-           -0-  3,000,080      10,246             -0-           -0-      3,010,326
                                      ========    ==========   =========      ======        =======        =======      =========

Balances, September 30, 1998           $66,125     6,135,412   3,256,097      35,119       (529,000)           -0-      8,963,753

Net income                                  -0-           -0-     89,482          -0-            -0-           -0-         89,482

Other comprehensive income (loss)           -0-           -0-         -0-    (11,187)            -0-           -0-        (11,187)

Change in receivable from employee
 stock ownership plan                       -0-           -0-         -0-         -0-        26,450            -0-         26,450

Treasury stock acquired, 15,000
 shares                                     -0-           -0-         -0-         -0-            -0-     (165,000)       (165,000)
                                      --------     ---------   ---------      ------        -------       -------       ---------

Balances, December 31, 1998,
 (Unaudited)                          $  66,125    6,135,412   3,345,579      23,932       (502,550)     (165,000)      8,903,498
                                      =========    =========   =========      ======       ========       =======       =========
</TABLE>


                                      - 5 -

<PAGE>

                                         QUITMAN BANCORP, INC. AND SUBSIDIARY

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

                                                              QUARTER ENDED DECEMBER 31, 
                                                              -------------------------- 
                                                                   1998          1997    
                                                              -----------      ---------    
                                                               (Unaudited)    (Unaudited)
<S>                                                           <C>              <C>   
Cash Flows From Operating Activities:
-------------------------------------
   Net income                                                 $    89,482         47,520
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                                 20,941         14,185
      Provision for loan losses                                    10,000          9,000
      Amortization (Accretion) of securities                        1,949          2,755
      Gain on sale of foreclosed assets                               -0-         (3,012)
      Gain on sale of securities                                   (1,094)           -0-
      Deferred income taxes                                        (3,832)           -0-
   Change in Assets and Liabilities:
      (Increase) Decrease in accrued interest receivable           22,488        (44,137)
      Increase (Decrease) in accrued interest payable              53,316         24,007
      Increase (Decrease) in other liabilities                   (135,923)       (43,605)
      Increase (Decrease) in income taxes payable                   8,581        (11,500)
      (Increase) Decrease in other assets                         (18,500)       (73,644)
                                                              -----------    -----------
         Net cash provided (used) by operating activities          47,408        (78,431)
                                                              -----------    -----------

Cash Flows From Investing Activities:
-------------------------------------
   Capital expenditures                                          (368,040)      (149,434)
   Purchase of available-for-sale securities                   (1,766,388)      (230,102)
   Proceeds from sale of foreclosed property                          -0-         66,927
   Proceeds from maturity of held-to-maturity securities          200,000        100,000
   Proceeds from maturity of available-for-sale securities        100,000            -0-
   Proceeds from sale of available-for-sale securities          1,400,000            -0-
   Net (increase) decrease in loans                              (372,692)      (478,032)
   Principal collected on mortgage-backed securities               40,520            572
   Increase in cash value of life insurance                       (59,259)       (58,082)
                                                              -----------    -----------
         Net cash provided (used) by investing activities        (825,859)      (748,151)
                                                              -----------    -----------

Cash Flows From Financing Activities:
-------------------------------------
   Net increase (decrease) in deposits                          1,533,841        521,305
   Proceeds from Federal Home Loan Bank advances                1,000,000        300,000
   Principal collected on receivable from ESOP                     26,450            -0-
   Purchase of treasury stock                                    (165,000)           -0-
                                                              -----------    -----------
   Net cash provided (used) by financing activities             2,395,291        821,305
                                                              -----------    -----------

Net Increase (Decrease) in cash and cash equivalents            1,616,840         (5,277)
Cash and Cash Equivalents at Beginning of Period                  371,866        656,808
                                                              -----------    -----------
Cash and Cash Equivalents at End of Period                    $ 1,988,706        651,531
                                                              ===========    ===========

Supplemental Disclosures of Cash Flows Information:
---------------------------------------------------
   Cash Paid During The Period:
      Interest                                                $   475,997        509,105
      Income taxes                                                 56,848         48,700
   Non-Cash Investing Activities:
      Increase (Decrease) in unrealized gains on available-
         for-sale securities                                      (16,950)         6,444

</TABLE>

                                      - 6 -

<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 -----------------------------------------------


                                              QUARTER ENDED DECEMBER 31,
                                              --------------------------
                                                 1998         1997    
                                              ----------    --------    
                                              (Unaudited)  (Unaudited)

Net Income                                      $ 89,482      47,520
                                                --------    --------

Other Comprehensive Income, Net of Tax:
   Unrealized gains (losses) on securities:
      Unrealized holding gains (losses)
        arising during the period                (12,281)      4,271
      Reclassification adjustment for (gains)
        losses included in net income             (1,094)        (18)
                                                --------    --------

   Other Comprehensive Income                    (11,187)      4,253
                                                --------    --------

Comprehensive Income                            $ 78,295      51,773
                                                ========    ========

                                      - 7 -

<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                          Notes to Financial Statements
                                   (Unaudited)

Note 1 - Basis of Preparation
-----------------------------

         The financial statements included herein for the periods ended December
         31, 1998 are for Quitman  Bancorp,  Inc. and Subsidiary.  The financial
         statements  included herein for the periods ended December 31, 1997 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  disclosures  necessary for a complete  presentation of the
         statements of financial condition,  statements of income, statements of
         comprehensive  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 three  month  period  ended  December  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  consolidated  financial  statements  and
         notes thereto for Quitman  Bancorp,  Inc. and  Subsidiary  for the year
         ended September 30, 1998.

Note 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 completed on April 2, 1998.
         Actual  conversion  costs were  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 

                                      - 8 -

<PAGE>



         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
         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.


Note 3 - Stock Repurchase
-------------------------

         The Company has adopted a stock repurchase  program that allows for the
         repurchase,  from time to time,  of up to 99,187 (15%) shares of common
         stock.  Any  shares  repurchased  may be used  for  general  and  other
         corporate purposes,  including the issuance of shares upon the exercise
         of stock options.



Note 4 - Earnings Per Share
---------------------------

         The following table sets forth the reconciliation of the numerators and
         denominators  of  the  basic  and  diluted  earnings  per  share  (EPS)
         computations:

<TABLE>
<CAPTION>

                                                                              THREE MONTHS ENDED DECEMBER 31, 
                                                                              ------------------------------- 
                                                                                 1998              1997    
                                                                                 ----              ----    

<S>                                                                           <C>                <C>        
(a)   Net income available to shareholders                                    $   89,482            N/A  
                                                                              ----------          -------
         Denominator:
           Weighted-average shares outstanding                                   655,598            N/A
           Less:  ESOP weighted-average shares outstanding                        52,900            N/A  

(b)   Basic EPS weighted-average shares outstanding                              602,698            N/A

         Effect of dilutive securities                                                -0-           N/A  

(c)   Diluted EPS weighted-average shares outstanding                            602,698            N/A  
                                                                              ==========          =======

         Basic earnings per share (a/b)                                       $      .15            N/A  
                                                                              ==========          =======

         Diluted earnings per share (a/c)                                     $      .15            N/A  
                                                                              ==========          =======

</TABLE>

                                      - 9 -

<PAGE>



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

Comparison of Financial Condition at December 31, 1998 and September 30, 1998

Quitman Bancorp, Inc. (the "Company") may from time to time make written or oral
"forward-looking  statements"  including  statements  contained in the Company's
filings with the Securities and Exchange  Commission  (including  this report on
Form 10-QSB), in its reports to stockholders and in other  communications by the
Company,  which  are made in good  faith by the  Company  pursuant  to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These  forward-looking  statements  involve  risks  and  uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,   objectives,   expectations,   estimates  and  intentions  expressed  in
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effect of, and changes in, trade,  monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,  inflation,  interest  rate and  market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and  saving  habits;  and the  success  of the  Company  at  managing  the risks
described above involved in the foregoing.

The Company cautions that these important factors are not exclusive. The Company
does not undertake to update any forward-looking  statement,  whether written or
oral, that may be made from time to time by or on behalf to the Company.

Total assets  increased by $2.5 million or 5.6% due primarily to the increase in
cash and cash equivalents, office properties and equipment, loans resulting from
funds  received from capital stock issued by Quitman  Bancorp,  Inc., the Bank's
newly formed  holding  company,  and advances from the Federal Home Loan Bank in
the amount of $1 million.

Total  equity  decreased by $60,255 as result of net income for the three months
ended  December  31,  1998,   changes  in  the   unrealized   gain  or  loss  on
available-for-sale  securities,  reduction of a guaranty of a loan to the Bank's
employee stock  ownership  plan, and purchase of 15,000 shares of treasury stock
at a cost of $165,000.

Non-Performing Assets and Delinquencies

Loans accounted for on a non-accrual  basis  increased to $332,000  December 31,
1998 from  $103,213 at September  30,  1998.  The increase was the result of two
loans  being  reclassified  to  performing  loans and nine loans  being added to
non-accrual. The allowance for loan losses was $380,000 at December 31, 1998.

                                     - 10 -

<PAGE>



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

Net Income.  Net income increased by $42,000 or 88.4% from net income of $47,000
for the three  months  ended  December 31, 1997 to net income of $89,000 for the
three months ended  December 31, 1998.  This increase is primarily the result of
increased  interest  income  that was  reduced by an  increase  in  non-interest
expense.  The return on average assets increased from .48% to .78% for the three
months ended December 31, 1997 and 1998, respectively.

Net  Interest  Income.  Net  interest  income  increased  $87,000  or 26.9% from
$322,000 for the three months ended  December 31, 1997 to $409,000 for the three
months ended December 31, 1998. The increase was primarily due to an increase in
loans resulting from the approximately  $6.2 million in net proceeds received in
April, 1998 from our initial public offering.

Interest Income.  Interest income  increased  $83,000 for the three months ended
December 31, 1998 compared to the same three months ended December 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 13.85%.  This increase in average  interest-earning  assets
added  an  additional   $83,000  of  interest  income.   The  average  yield  on
interest-earning  assets  decreased  moderately  to 8.6% from 8.9% for the three
months ended December 31, 1998 and 1997, respectively.

Interest Expense.  Interest expense decreased $4,000 from $533,000 for the three
months ended  December 31, 1997 to $529,000 for the three months ended  December
31,  1998.  The  decrease  in  interest   expense  was  due  to  a  decrease  in
interest-bearing liabilities of $.7 million and a slight increase in the cost of
funds of 6 basis  points (100 basis points  equals 1%). The average  balances of
deposits and advances from the Federal Home Loan bank  decreased by $.5 million,
from the three months ended December 31, 1997 to the three months ended December
31, 1998.

Non-Interest  Income.  Non-interest  income decreased by $1,400 primarily from a
decrease of $1,500 in miscellaneous income.

Non-Interest Expense. Non-interest expense increased by $26,000 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 $5,800  between the periods as a result of
year-end pay raises, and hiring of additional part-time employees. Our furniture
and equipment  expense  increased by $21,600  between the periods as a result of
acquisition of new equipment which increased our depreciation cost by $7,000 and
our repairs and maintenance cost increased by $13,000.

Once our new bank  building  is opened,  we expect our  non-interest  expense to
increase.  Also,  we expect to submit  benefit  plans for  consideration  of the
stockholders. If these benefit plans are adopted, this will further increase our
non-interest expense.

Income Taxes.  Income tax expense amounted to $35,000 for the three months ended
December 31, 1997  compared to $51,000 for the three  months ended  December 31,
1998.

Liquidity and Capital Resources

Management  monitors our risk-based capital and leverage capital ratios in order
to asses compliance with regulatory  guidelines.  At December 31, 1998, the Bank
had tangible capital,  leverage,  and total risk-based capital of 12.96%, 12.96%
and 20.50%,  respectively,  which  exceeded the OTS's  minimum  requirements  of
1.50%, 3.00% and 8.00%, respectively.

                                     - 11 -

<PAGE>




We are taking  necessary steps to be certain our data  processing  equipment and
software  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 and incorrectly compute interest, payment or delinquency.
Accurate data processing is essential to our operations.

We have 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.  We have ordered and installed an upgrade to our computer
system that is  intended  to solve the Year 2000  Computer  software  issue.  We
installed  this upgrade during the first  calendar  quarter of 1998.  Testing of
this software through December 31, 2000 has been completed.

There was no malfunction of the software during testing. If a malfunction of the
software is  discovered,  we plan to  implement  "manual  processing"  until our
software  becomes Y2K compliant.  We have ordered packages of all forms required
to  handle  loans,  deposits  and  operations.  Detailed  plans  for the  manual
operation of Quitman Federal Savings bank are in progress.

Non-information  technology such as: heating,  air  conditioning  and door locks
have been tested. These areas will not be impacted.

We have made  contact  with our  Commercial  Borrowers  regarding  the Year 2000
issue,  advising  them of the  potential  problem.  As the  majority of our loan
portfolio is 1 to 4 family  dwellings,  we do not feel our commercial  borrowers
will be an issue.

A new bank building is currently under  construction,  the estimated cost of the
new facility and land is $960,000. We are exploring whether to purchase land and
construct a branch.  Although no definite  plans have been made, if a new branch
is built, the land and construction costs could total approximately $600,000. We
have sufficient liquid assets to pay for these costs. These costs will partially
offset  by the sale of our  existing  office.  We also have  sufficient  capital
resources to install an ATM  machine,  if we decide to offer that service in the
future.

                                     - 12 -

<PAGE>



                           PART II. OTHER INFORMATION

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

                  Not applicable.

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

                  Not applicable.

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)      A Form 8-K (Item 7) dated  October 30,  1998 was filed  during
                  the quarter ended December 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: February 12, 1999                By: /s/Melvin E. Plair
                                           -------------------------------------
                                           Melvin E. Plair
                                           President and Chief Executive Officer
                                           (Principal Executive and Financial
                                            Officer)
                                           (Duly Authorized Officer)



Date: February 12, 1999                By: /s/Peggy L. Forgione
                                           -------------------------------------
                                           Peggy L. Forgione
                                           Vice President and Controller
                                           (Chief Accounting Officer)


                                     - 14 -