**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20429

**FORM 10-QSB**

**[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

For the Quarterly Period EndedJune 30,2002

**OR**

**[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

For the TransitionPeriod from ________to ________
Commission File number000-25267

**Oconee FinancialCorporation**(Exact name ofregistrant as specified in its charter)
 

Georgia 
 58-2442250 
(Stateof Incorporation)

 (I.R.S. Employer Identification No.)
  
35 North Main Street

 

Watkinsville, Georgia
 30677
(Address of principal

 (Zip Code)

executive offices)

 

706-769-6611(Telephone Number)
Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and(2) has been subjected to such filing requirements for the past 90 days.

YES       XX      NO         

Common stock, par value $2 per share: 899,885 sharesoutstanding as of August 14, 2002
   
**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

**INDEX**

 

Page No.

 

PART I

FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

 

Consolidated Balance Sheet (unaudited) atJune 30, 2002

3

 

 

Consolidated Statements of Earnings (unaudited) for the ThreeMonths and

 

     Six Months EndedJune 30, 2002 and 2001

4

 

 

Consolidated Statements of Comprehensive Income (unaudited)

 

     for the Three Monthsand the Six Months Ended June 30, 2002 and 2001

5

 

 

Consolidated Statements of Cash Flows (unaudited) for the Three

 

     Months and theSix Months Ended June 30, 2002 and 2001

6-7

 

 

Notes to Financial Statements (unaudited)

8

 

 

Item 2.

Management's Discussion and Analysis of Financial

 

     Condition and Results of Operations

9-12

 

 

PART II

OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

13

 

 

Item 2.

Changes in Securities

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

14

2   **PART I.  FINANCIAL INFORMATION**
Item 1.  Financial Statements

**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated Balance Sheet

June 30, 2002(Unaudited)
Assets   
Cash and due from banks, including reserves requirements of $2,310,000

$
9,082,504 

Federal funds sold
 
2,993,000 
  
Investment securities available for sale
 
33,106,965 
  
Mortgage loans held for sale
 
3,954,631 
   
Loans
 
170,739,224 

Less:  Allowance for loan losses
 
   (2,005,726)
  
     Loans, net
 
  168,733,498 
     
Premises and equipment, net
 
3,529,788 

Accrued interest receivable and other assets
 
     3,210,043 
   
Total Assets
$
224,610,429 
     
** Liabilities and Stockholders’ Equity**
Liabilities:
  
Deposits
  
     Noninterest-bearing

$
23,870,579 

  Interest-bearing
 
167,102,644 
     
Total Deposits
 
190,973,223 
   
Securities sold under repurchase agreements
 
909,538 

Federal Home Loan Bank advances
 
13,300,000 

Accrued interest payable and other liabilities
 
    1,076,977 
     
Total Liabilities

206,259,738 
     
Stockholders’ equity:
  
Common stock, $2 par value;
  
authorized 1,500,000 shares;
  
issued and outstanding 899,885 shares
 
1,799,770 

Additional paid-in capital
 
4,246,832 

Retained earnings
 
11,906,518 

Accumulated other comprehensive income
 
      397,571 
     
Total stockholders’ equity
 
18,350,691 
     
Total liabilities and stockholders’ equity

$
224,610,429 

See accompanying notes to financial statements.

3
   
**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated Statements of Earnings

For Each of the Three Months and the Six Months Ended June 30, 2002 and 2001(Unaudited)

**Three Months**

**Six Months**

**Ended**

**Ended**
 
**2002**

**2001**

**2002**

**2001**

Interest Income:
    
     Loans

$  3,218,075

$  3,365,848

 $ 6,324,817

 $  6,715,084

     Investment securities:
    
          Tax exempt

182,131

173,487

359,398

342,501

          Taxable

289,783

310,622

599,752

575,937

     Federal funds sold and other

23,969

151,347

62,718

377,970
 
            Total interest income

3,713,958

4,001,304

7,346,685

8,011,492
     
Interest Expense:
    
     Deposits

1,309,918

1,822,795

2,696,386

3,579,872

     Other

218,561

 224,475

434,436

444,647
 
            Total interest expense

1,528,479

2,047,270

3,130,822

4,024,519
     
            Net interest income

2,185,479

1,954,034

4,215,863

3,986,973
    
Provision for loan losses

105,000

75,000

210,000

150,000
      
     Net interest income after provision for loan losses

2,080,479

1,879,034

4,005,863

3,836,973
      
Other Income:
        
     Service charges on deposit accounts

255,739

217,690

472,633

450,707

     Securities gains, net

4,357

0

4,357

0

     Other operating income

285,003

283,598

 695,326

553,259
 
            Total other income

545,099

501,288

1,172,316

1,003,966
    
 

Other Expense:
    
     Salaries and other personnel expense

1,063,838

975,954

2,115,299

1,932,071

     Net occupancy and equipment expense

229,310

213,699

455,772

401,767

     Other operating expense

420,723

461,500

840,465

882,285
 
            Total other expense

1,713,871

1,651,153

3,411,536

3,216,123
      
            Earnings before income taxes

911,707

729,169

1,766,643

1,624,816
     
Income taxes

273,163

203,000

531,446

479,532
    
            Net earnings

$     638,544

$     526,169

$  1,235,197

 $  1,145,284
      
Earnings per common share based on average
   
     outstanding shares of 899,885 in 2002 and 2001:

 $           0.71

 $            0.58

$         1.37

$           1.27
 
See accompanying notes to financial statements.

4
   
**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated Statements of Comprehensive Income

For the Six Months Ended June 30, 2002 and 2001(Unaudited)
** **
**2002**
** **
**2001**
   
Net earnings

$
 1,235,197 

$
1,146,490 
       
Other comprehensive income, net of tax:
     
     Unrealized gains on securities available for sale:
    
          Holding gains arising during period, net of tax
    
             of $198,719 and $185,640
 
322,776 
 
303,402 

          Reclassification adjustments for gains included in net earnings,
    
             net of tax of $1,654
 
(2,703)
 
 0 
        
         Total other comprehensive income
 
322,073 
 
  303,402 
         
         Comprehensive income

$
1,557,270 

$
1,449,892 
   
See accompanying notes to financialstatements.

5
   
**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2002 and 2001(Unaudited)
 ** **
**2002**
** **
**  2001**

Cash flows from operating activities:

     Net earnings

$
1,235,197 

$
1,145,284

         Adjustments to reconcile net earnings to net
  
             cash provided by operating activities:
  
                Provision for loan losses
 
210,000 
 
150,000

                Depreciation, amortization andaccretion
 
220,163 
 
154,380

                Gain on sale of investmentsecurities
 
(4,357)
 
0

                 Change in assets andliabilities:
    
                    Interestreceivable and other assets
 
692,280 
 
(591,164)

                    Interestpayable and other liabilities
 
(277,517)
 
25,476

                   Mortgageloans held for sale
  
2,948,135 
  
(762,528)
        
                          Net cash provided by operating activities
 
4,973,901 
 
121,448
        
Cash flows from investing activities:
    
     Proceeds from sale of investment securities
 
995,331 
 
0

     Proceeds from calls, maturities, and paydowns of
    
         investment securities available for sale
 
2,597,458 
 
5,190,357

     Purchases of investment securities available for sale
 
0 
 
(8,421,835)

     Net change in loans
 
(19,560,027)
 
(15,009,535)

     Purchases of premises and equipment
 
(1,478,844)
 
(235,690)
         
                          Net cash used by investing activities
  
(17,446,082)
 
(18,476,703)
        
Cash flows from financing activities:
     
     Net change in deposits
 
11,244,971 
 
15,066,484 

     Net change in securities sold under repurchase agreements
 
264,522 
 
494,879 

     Dividends paid
 
 (899,885)
 
(989,873)
        
                           Net cash provided by financing activities
 
10,609,608 
 
14,571,490 
        
Net decrease in cash and cash equivalents
 
(1,862,573)
 
(3,783,765)
    
Cash and cash equivalents at beginning of period
 
13,938,077 
 
22,082,978 
     
 
  
Cash and cash equivalents at end of period

$
12,075,504 

$
 18,299,213 
   
6
   
**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated Statements of Cash Flows, continued

For the Six Months Ended June 30, 2002 and 2001(Unaudited)

**2002   **

**2001   **

Supplemental cash flow information:

     Cash paid for interest

   $  2,571,702

$   3,198,356

     Cash paid for taxes

$    523,060

$      564,366

Noncash investing and financing activities:

     Transfer from loans to other real estate owned

$       91,831

$        73,164

     Financed sale of other real estate owned

$           ---   

$        73,164

     Change in dividends payable

$     899,885

$      989,873

     Change in net unrealized gain on investment securities

        available for sale, net of tax

$     322,073

$      303,402

 

 

 

See accompanying notes tofinancial statements.

7
   
**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Notes to Consolidated Financial Statements(Unaudited)

(1)          Basis of Presentation

The financial statements include the accounts of Oconee Financial Corporation (the “Corporation”) and itswholly-owned subsidiary, Oconee State Bank (the “Bank”).  All significant intercompany accounts and transactionshave been eliminated in consolidation.

The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of resultsof operations and financial condition.  Some of the Company’s accounting policies require significant judgment regardingvaluation of assets and liabilities and/or significant interpretation of the specific accounting guidance.  A description ofthe Company’s significant accounting policies can be found in Note 1 of the Notes to Consolidated Financial Statements in theCompany’s 2001 Annual Report to Shareholders. 

Many of the Company’s assets and liabilities are recorded using various valuation techniques that require significantjudgment as to recoverability.  The collectibility of loans is reflected through the Company’s estimate of the allowancefor loan losses.  The Company performs periodic detailed reviews of its loan portfolio in order to assess the adequacy of theallowance for loan losses in light of anticipated risks and loan losses.  In addition, investment securities and mortgageloans held for sale are reflected at their estimated fair value in the consolidated financial statements.  Such amounts arebased on either quoted market prices or estimated values derived by the Company using dealer quotes or marketcomparisons.       

The consolidated financial information furnished herein reflects all adjustments which are, in the opinion of management,necessary to present a fair statement of the results of operations and financial position for the periods covered herein.  Allsuch adjustments are of a normal recurring nature.

(2)          Cash and Cash Equivalents

For presentation in the financial statements, cash and cash equivalents include, cash on hand and amounts due from banks, andFederal Funds sold.

(3)          Net Earnings Per Common Share

Net earnings per common share are based on the weighted average number of common shares outstanding during the period while theeffects of potential common shares outstanding during the period are included in diluted earnings per share.  The Corporationhad no potential common shares outstanding during 2002 and 2001.

 

8
   
Item 2.

**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS**
Forward-Looking Statement
 This discussion containsforward-looking statements under the private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. Although the Corporation believes that the assumptions underlying the forward-looking statements contained in the discussion arereasonable, any of the assumptions could be inaccurate, and therefore, no assurance can be made that any of the forward-lookingstatements included in this discussion will be accurate.  Factors that could cause actual results to differ from resultsdiscussed in forward-looking statements include, but are not limited to: economic conditions (both generally and in the marketswhere the Corporation operates); competition from other providers of financial services offered by the Corporation; governmentregulations and legislation; changes in interest rates; material unforeseen changes in the financial stability and liquidity of theCorporation’s credit customers, all of which are difficult to predict and which may be beyond the control of theCorporation.  The Corporation undertakes no obligation to revise forward-looking statements to reflect events or changes afterthe date of this discussion or to reflect the occurrence of unanticipated events.

**Financial Condition**

Total assets at June 30, 2002 were $224,610,429, representing a $12,086,425 (5.69%) increase from December 31, 2001. Deposits increased $11,244,971 (6.26%) from December 31, 2001.  Loans increased $19,451,881 (12.86%).  The increase inloan volume is due primarily to an increase in loans to finance commercial real estate.  Investment securities decreased$3,087,266 (8.53%) from December 31, 2001 due primarily to paydowns of mortgage-backed securities along with calls of U.S.Government Agency securities.  The related proceeds from these investment securities were used to fund loan growth.  Theallowance for loan losses at June 30, 2002 was $2,005,726, compared to the December 31, 2001 balance of $1,812,041, representing1.17% of total loans at June 30, 2002, compared to 1.20% of total loans at December 31, 2001. Cash and cash equivalents decreased$1,862,573 from December 31, 2001.

The total of nonperforming assets, which includes nonaccruing loans, other real estate owned, repossessed collateral and loansfor which payments are more than 90 days past due were $980,322 at June 30, 2002, representing a decrease of $7,865 (0.80%) fromDecember 31, 2001.  This decrease is primarily attributable to a $91,831 increase in other real estate owned, offset bydecreases of $67,370 in nonaccrual loans and $30,953 in loans more than 90 days past due.  Nonaccrual loans represented 0.49%of total loans outstanding at June 30, 2002, compared to 0.60% of total loans outstanding at December 31, 2001.  There were norelated party loans which were considered nonperforming at June 30, 2002.

At June 30, 2002, the Company had loan concentrations in the housing industry and in the hotel and motel industry.  TheCompany monitors these concentrations on a monthly basis to ensure that they do not exceed established internal guidelines. The primary risk relating to the concentration in the housing industry is a downturn in the economy which would adversely effectconstruction of new homes and developments of new housing communities.  Although the overall economy slowed somewhat duringthe past twelve months, the Company’s housing lending was not materially impacted.  This is primarily due to a stronglocal economy, which is attributable to the Company’s proximity to the University of Georgia, which provides significanteconomic stimuli to the area.  The Company’s primary risk relating to the hotel and motel industry is a slowdown in thetravel and tourism industry.  This industry slowed significantly during the fourth quarter of 2001 as a result of theSeptember 11 terrorist attacks.  The Company has established a maximum dollar amount of hotel and motel loans that it iswilling to fund as a result of this slowdown.  Management of the Company is confident that all of the Company’s hoteland motel loans are adequately collateralized in the unforeseen event that cash flows from operations of the hotels and motels arenot sufficient to meet the terms of repayment outlined in the loan agreements.

The Corporation’s subsidiary bank was most recently examined by its primary regulatory authority in May of 2001. Therewere no recommendations by the regulatory authority that in management’s opinion will have material effects on theCompany’s liquidity, capital resources or operations.

9
   
Item 2.

**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS, continued**

 

**Results of Operations**

Net interest income increased $227,684 (5.71%) in the first six months of 2002 compared to the same period for 2001. Interest income for the first six months of 2002 was $7,346,685, representing a decrease of $664,807 (8.30%) as compared to thesame period in 2001.  Interest expense for the first six months of 2002 decreased $893,697 (22.21%) compared to the sameperiod in 2001.  The decrease in interest income during the first six months of 2002 compared to the same period in 2001 isprimarily attributable to an increase in the volume of loans offset by the effects of a substantial decrease in the Bank’sprime lending rate during 2001.  The decrease in interest expense is primarily attributable to a substantially lower interestrate environment during the first six months of 2002 as compared to the same period in 2001.

The Bank’s net interest margin for the first six months of 2002 was 4.35%, compared to 4.88% for the same time periodduring 2001.  This decrease is primarily attributable to a 475 basis point decrease in the prime rate during 2001. Although net interest income increased, the Bank’s net interest margin decreased due to a $23,004,331 (12.70%) increase inaverage interest earning assets from June 30, 2001 to June 30, 2002.

The Bank analyzes its allowance for loan losses on a monthly basis.  As of June 30, 2002, the provision for loan losses was$210,000, compared to $150,000 for the same period in 2001.  The increase in the provision for loan losses is primarilyattributable to additional provisions made in 2002 due to loan growth and the current economic environment.  It ismanagement’s belief that the allowance for loan losses is adequate to absorb possible losses in the portfolio.

Other income for the first six months of 2002 increased $168,350 (16.77%) compared to the first six months of 2001.  Thisincrease is primarily attributable to a $97,088 increase in fee income on mortgage loans held for sale, along with a $29,499increase in commissions on investment sales.  The increase in fee income on mortgage loans held for sale is due to an increasein the volume of mortgage loans that the Bank originated during the first six months of 2002 as a result of the continued lowmortgage interest rates and strong housing market.  The increase in commissions on investment sales is due to an increase insales volume in 2002 caused by the addition of an additional sales employee.

Other expenses for the first six months of 2002 increased $195,413 (6.08%) compared to the first six months in 2001. Thenet increase is primarily attributable to an $183,228 (9.48%) increase in salaries and benefits expense primarily due to the tomerit increases based on employee performance.

**Interest rate sensitivity**

Interest rate sensitivity is afunction of the repricing characteristics of the Bank’s portfolio of assets and liabilities.  These repricingcharacteristics are the time frames within which the interest earning assets and liabilities are subject to change in interestrates either at replacement, repricing or maturity during the life of the instruments.  One method to measure interest ratesensitivity is through a repricing gap.  The gap is calculated by taking all assets that reprice or mature within a given timeframe and subtracting all liabilities that reprice or mature during that time frame.  A negative gap (more liabilitiesrepricing than assets) generally indicates that the Bank’s net interest income will decrease if interest rates rise and willincrease if interest rates fall.  A positive gap generally indicates that the Bank’s net interest income will decreaseif rates fall and will increase if rates rise.  At June 30, 2002, the difference between the Bank’s assets andliabilities repricing or maturing within one year was $154, 034.  This indicates that a rise in interest rates would cause theBank’s net interest income to increase slightly.
Liquidity
The Corporation must maintain, on adaily basis, sufficient funds to cover the withdrawals from depositors’ accounts and to supply new borrowers withfunds.  To meet these obligations, the Corporation keeps cash on hand, maintains account balances with its correspondentbanks, and purchases and sells federal funds and other short-term investments.  Asset and liability maturities are monitoredin an attempt to match these to meet liquidity needs.  It is the policy of the Corporation to monitor its liquidity to meetregulatory requirements and their local funding requirements.

10
   
Item 2.

**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS, continued**

The Corporation monitors its liquidity position on a monthly basis.  The primary tool used in this analysis is an internalcalculation of a liquidity ratio.  This ratio is arrived at by dividing the Corporation’s short-term and marketableassets, including cash, federal funds sold, and unpledged investment securities, by the sum of the Corporation’s depositliabilities and securities sold under agreement to repurchase.  At June 30, 2002, the Corporation’s liquidity ratio was15.3%.

The Corporation maintains relationships with correspondent banks that can provide funds to it on short notice, if needed. Presently, the Corporation has arrangements with a commercial bank for short term unsecured advances up to $5,600,000. Additional liquidity is provided to the Corporation through available Federal Home Loan Bank advances up to $18,522,000, of which$13,300,000 was outstanding at June 30, 2002.

During the first six months of 2002, cash and cash equivalents decreased $1,862,573 to a total of $12,075,504 at June 30, 2002as cash used by investing activities outpaced amounts provided by operating and financing activities. Cash inflows fromoperations totaled $4,973,901 during the first six months of 2002, while inflows from financing activities totaled $10,609,608,most of which were net deposit increases during the first six months of $11,244,971 and increases in securities sold underrepurchase agreements of $264,522, offset by cash dividends paid during the first six months of 2002 of $899,885.

Investing activities used $17,446,082 of cash and cash equivalents, composed of net advances of loans to customers of$19,560,027, offset by proceeds from the sales, calls, maturities and paydowns of investment securities totaling $3,529,789 and thepurchase of premises and equipment totaling $1,487,844.

**Contractual Obligations and Commitments**

The Corporation has contractual obligations to make future payments pursuant to its agreement with the Federal Home Loan Bank(“FHLB”) and is party to certain off-balance sheet arrangements.

At June 30, 2002, the Corporation had one advance from the FHLB outstanding in the amount of $13,300,000 which matures in August2003 and calls for interest to be paid quarterly at a fixed rate of 6.34%.

The Corporation is party to financial instruments with off-balance sheet risk in the normal course of business to meet thefinancing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of creditand financial guarantees.  These instruments involve, to varying degrees, elements of credit risk in excess of the amountrecognized on the balance sheet.  The contract amounts of these instruments reflect the extent of involvement the Corporationhas in particular classes of financial instruments.  At June 30, 2002, the contractual amounts of the Corporation’scommitments to extend credit and standby letters of credit were $27,910,021 and $744,322, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition establishedin the contract.  Commitments generally have fixed expiration dates and because they may expire without being drawn upon, thetotal commitment amount of $27,910,021 does not necessarily represent future cash requirements. Standby letters of credit andfinancial guarantees written are conditional commitments issued by the Corporation to guarantee the performance of a customer to athird party.

11
   
Item 2.

**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS, continued**

**Capital**

The following tables present Oconee State Bank’s regulatory capital position at June 30, 2002, based on the regulatorycapital requirements of federal banking agencies.  The capital ratios of the Corporation are essentially the same as those ofthe Bank at June 30, 2002 and therefore only the Bank’s ratios are presented.

Risk-Based Capital Ratios

Tier 1 Capital, Actual 

 10.2%

Tier 1 Capital minimum requirement

 4.0%
  
Excess

 6.2%
  
Total Capital, Actual

 11.4%

Total Capital minimum requirement

 8.0%
  
Excess

 3.4%
 
Leverage Ratio

Tier 1 Capital to adjusted total assets   (Leverage Ratio)

 8.3%
 
Minimum leverage requirement

 3.0%
  
Excess

 5.3%

12
   
**PART II.  OTHER INFORMATION**

**OCONEE FINANCIAL CORPORATION AND SUBSIDIARY**

Item 1.    Legal Proceedings

None

Item 2.    Changes in Securities and Use of Proceeds

None

Item 3.    Defaults Upon Senior Securities

None

Item 4.    Submission of Matters to aVote of Security Holders

(a)      Oconee Financial Corporation’s annual meeting of stockholders was held on May 6, 2002.

(b)      The following is a summary of matters submitted to a vote of security holders:

1.  The election * of the following directors to serve the current year term:

        G. Robert Bishop                       Henry C. Maxey        Jimmy L. Christopher                Carl R. Nichols        Douglas D. Dickens                 Ann B. Powers        Walter T. Evans, Sr.                 Jerry K. Wages        John A. Hale                            Virginia S. Wells        B. Amrey Harden

        A tabulation of votes concerning the above issue is as follows:

        Shares voted by proxy in favor                       629,629        Shares voted in person in favor                        53,945        Shares voted in person against                                 0        Shares abstained from voting                                    0

        Total shares represented                               683,574        Total shares outstanding                              899,885

        *  Directors were elected by slate, not individually.  Vote tabulation istherefore by slate.

Item 5.  Other Information

                              None

13
   
Item 6.  Exhibits and Reportson Form 8-K

                             (a)     Exhibits

                                       99   CertificationPursuant to 18 U.S.C. Section 1350

                             (b)     Reportson Form 8-K

                                       There were no 8-Kfilings during the quarter.

13
   
**OCONEE FINANCIALCORPORATION AND SUBSIDIARY**

**SIGNATURES**

 

          Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this Report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
 
          OCONEE        FINANCIAL CORPORATION

    
By:        */s/        B. Amrey Harden*  
                B. Amrey Harden, President and C.E.O.                  (Principal        Executive Officer)
   
Date:            August 14, 2002         
By         */s/        Jerry K. Wages*  
                Jerry K. Wages 
                Executive Vice-President and C.F.O.                 (Principal Accounting        Officer)
   
Date:            August 14, 2002