SECURITIES AND
  EXCHANGE COMMISSION
  Washington, D.C.
  20549

FORM 10-KSB

ANNUAL REPORT PURSUANT
  TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934.

For the fiscal year
  ended December 31, 2001

Commission File No.
  2-94292

FNB Banking Company(Exact name of Small
  Business Issuer as specified in its charter)

|Georgia                                                                        | 58-1479370                                     
|------------------------------------------------------------------------------ | -----------------------------------------------
|                                                                               |                                                
|(State or other
        jurisdiction
        of incorporation or organization) | (I.R.S. Employer
        Identification Number)



|318 South Hill
        Street
        Post Office Drawer F
         Griffin, Georgia | 30224     
|------------------------------------------------------------------------------------ | ----------
|                                                                                     |           
|(Address of
        principal executive offices)                                     | (Zip Code)

Issuers telephone
  number:         (770) 227-2251

Securities registered pursuant to
  Section 12(b) of the Act:        None.
  Securities registered pursuant to
  Section 12(g) of the Act:        None.

Check whether the Issuer (1) has
  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.                              
  YesxNo ̈

Check if there is no disclosure of
  delinquent filers in response to Item 405 of Regulation S-B not contained in
  this form, and no disclosure will be contained, to the best of registrants
  knowledge, in definitive proxy or information statements incorporated by
  reference in Part III of this Form 10-KSB or any amendment to this Form
  10-KSB. Not Applicable.

Registrant is not required to be
  registered under the Securities Exchange Act of 1934.

State the issuers revenue for its
  most recent fiscal year:21,559,920.

State the aggregate market value of
  the voting stock held by non-affiliates:  as of March 12, 2002, 565,236
  shares of common stock, $1.00 par value (the Common Stock), with an
  aggregate value of 25,435,620 (based upon approximate market value of $45
  /share) (the last sale price known to the Registrant for the Common Stock, for
  which there is no established trading market).

State the number of shares
  outstanding of each of the issuers classes of Common Stock as of the latest
  practicable date:  As of March 12,2002, there were 733,909 shares
  outstanding of the Registrants Common Stock.

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INDEX



PAGEPART I
        
        1Item
          1.
        Description Of Business
        8Item 2.
        Description Of Property
        9Item 3.
        Legal Proceedings
        9Item 4.
        Submission of Matters to a
          Vote of Security Holders
        9PART II
        
        10Item 5.
        Market for Common Equity and
          Related Stockholder Matters
        10Item 6.
        Managements Discussion and
          Analysis or Plan of Operation
        10Item 7.
        Financial Statements
        23Item 8.
        Changes in and Disagreements
          with Accountants on Accounting and Financial Disclosure
        24PART III
        
        25Item 9.
        Directors, Executive
          Officers, Promoters and Control Persons; Compliance with Section 16(a)
          of the Exchange Act
        25Item 10.
        Executive Compensation
        26Item 11.
        Security Ownership of Certain
          Beneficial Owners and Management
        27Item 12.
        Certain Relationships and
          Related Transactions
        28Item 13.
        Exhibits and Reports on Form
          8-K
        29












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PART I

Item
  1.  Description of
  Business

General

FNB Banking Company, a Georgia
  corporation (the Company or FNB), was organized on July 13,
  1982.  On March 1, 1983, the Company acquired all of the 200,000 issued
  and outstanding shares of  common stock of First National Bank of Griffin
  (the Bank).  As a result of this transaction, the former
  shareholders of the Bank became the shareholders of the Company, and the Bank
  became the wholly-owned subsidiary of the Company.

On September 20, 2001, the Company entered into an agreement, as amended, to
  acquire American Community Bank of Georgia (ACB), a Georgia banking
  corporation based in Stockbridge (Henry County), Georgia with approximately
  $56 million in assets. The agreement calls for the Company to pay cash of
  approximately $13.25 per share for each outstanding share of ACB.  The
  transaction, which is expected to close in May 2002, is subject to the
  approval of various Bank regulatory authorities.  Upon approval, ACB will
  be merged with and into the Bank.  Following the merger, the articles of
  incorporation, bylaws, corporate identity, and existence of the Company and
  the Bank will not be changed, and American will cease to exist as a corporate
  entity.

At December 31, 2001, the Banks
  total assets were $246,448,895, compared to $227,664,390 at year-end
  2000.  Over the past 5 years, total assets of the Bank have grown by
  $75,673,000 representing an increase of 44%.

Certain statements included or
  incorporated by reference in this Form 10-KSB are forward-looking (as such
  term is defined in the Securities Exchange Act of 1934 and the Private
  Securities Litigation Reform Act of 1995, each as amended).  Such
  statements may relate to the Companys or the Banks operations,
  performance, and financial condition.  These statements are based upon a
  number of assumptions and estimates that are inherently subject to significant
  uncertainties, many of which are beyond the control of the Company and the
  Bank.  Actual results may differ materially from those expressed or
  implied by such forward-looking statements.

All percentages and dollar amounts
  contained in this Form 10-KSB are approximated and may have been rounded to
  the nearest whole number to provide a more easily understandable format.

Market and Services

The primary markets for the Bank are Spaulding and Henry Counties,
  Georgia.

The Company operates a full-service
  commercial banking business based in Griffin, Georgia, providing such
  customary banking services as checking and savings accounts, various types of
  time deposits, safe deposit facilities, money transfers, and individual
  retirement accounts.  The Company also finances commercial transactions,
  makes secured and unsecured loans, and provides other financial services,
  including corporate, pension, and personal trust services, to its customers
  through the Bank.  Through its subsidiary, Griffin Loans, Inc. (Griffin
  Loans), a consumer finance company, the Company engages in the business of
  making small loans to individuals under the trade name First Credit. 
  The Bank is community oriented, with an emphasis on retail banking, and offers
  such customary banking

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services as consumer and commercial checking accounts,
  NOW accounts, savings accounts, certificates of deposit, lines of credit,
  MasterCard and Visa accounts, and money transfers.  The Bank finances
  commercial and consumer transactions, makes secured and unsecured loans, and
  provides a variety of other banking services.

Deposits

The Bank offers a full range of
  depository accounts and services to both consumers and businesses.  At
  December 31, 2001, the Banks deposit base, totaling approximately $203
  million, consisted of $33 million in non-interest bearing demand deposits (16%
  of total deposits), $48 million in interest bearing demand deposits (including
  money market accounts) (24% of total deposits), $21 million in savings
  deposits (10% of total deposits), $70 million in time deposits in amounts less
  than $100,000 (34% of total deposits), and $31 million in time deposits of
  $100,000 or more (16% of total deposits).  Management of the Bank is of
  the opinion that its time deposits of $100,000 or more are customer
  relationship-oriented and represent a reasonably stable source of funds.

Loans

The Bank makes both secured and
  unsecured loans to individuals, firms, and corporations, and both its consumer
  and commercial lending operations include various types of credit for the Banks
  customers.  Secured loans include first and second real estate mortgage
  loans.  The Bank also makes direct installment loans to consumers on both
  a secured and unsecured basis.  At December 31, 2001, consumer, real
  estate (including mortgage and construction loans), and commercial loans
  represented  16%, 31%, and 53%, respectively, of the Banks total loan
  portfolio.  Most loans made by Griffin Loans are for less than $1,000,
  but Griffin Loans also makes real estate loans for larger amounts.

Lending Policy

The current lending strategy of the
  Bank is to make loans only to persons who reside, work, or own property in its
  primary trade area consisting of Spalding and Henry Counties, Georgia. 
  Unsecured loans normally are made only to persons who maintain depository
  relationships with the Bank.  Secured loans are made to persons who are
  well-established and have net worth, collateral, and cash flow to support the
  loan.  Real estate loans are normally made when such loans are secured by
  real property located in the Banks primary trade area.

The Bank provides each lending
  officer with written guidelines for lending activities.  Lending
  authority is delegated by the Board of Directors of the Bank to loan officers,
  each of whom is limited in the amount of secured and unsecured loans which
  they can make to a single borrower or related group of borrowers.  All
  unsecured loans in excess of $50,000 must have the approval of the loan
  committee.

Making loans to businesses to fund
  working capital is a traditional function of commercial banks.  Such
  loans are expected to be repaid out of the cash flow of the commercial entity,
  and the ability of the borrower to service its debt is dependent upon the
  success of the commercial enterprise.  It is the Banks policy to
  secure these loans with collateral.  Many of the Banks commercial
  loans are secured by real estate collateral because such collateral is
  superior to other types of collateral available to small businesses. 
  Loans secured by commercial real estate, however, particularly if collateral
  dependent, are subject to certain inherent risks.  Commercial real estate
  may be substantially illiquid, and commercial real estate values are difficult
  to ascertain and subject to wide fluctuation depending upon economic
  conditions.

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Inter-agency guidelines adopted by federal bank regulators, including the
  Office of the Comptroller of the Currency (the OCC), mandate that 
  financial institutions establish real estate lending policies and establish
  certain minimum real estate loan-to-value standards.  The Bank has
  adopted these federal standards as its minimum standards.  These
  standards require maximum loan-to-value ratios for various types of real
  estate loans as set forth below.  The Bank may, however, make exceptions
  to the minimum standards, which exceptions must be accounted for and tracked.

Loan category
      Loan to
         Value Limit
           (percent)Raw landLand development
      
      65Construction:
      
      75Commercial, multifamily (1)
        and
            other nonresidential
      
      801- to 4-family residential
      
      85Improved PropertyOwner-occupied 1- to 4-family
        and
            home equity(2)
      
      85


_______________________
  (1)          Multifamily construction includes condominiums and cooperatives.

(2)         
  A loan-to-value limit has not been established for permanent mortgage or home
  equity loans on owner-occupied, 1-to 4-family residential property.  For
  any such loan with a loan-to-value ratio that equals or exceeds 90 percent at
  origination, appropriate credit enhancement in the form of either mortgage
  insurance or readily marketable collateral is required.

Loan Review and Non-Performing
  Assets

The loan review officer of the
  Company reviews the Banks loan portfolio to determine deficiencies and
  corrective action to be taken.  The results of the reviews by the loan
  review officer are presented to the President and the Executive Committee of
  the Bank.  On at least an annual basis, reviews are conducted for all
  loans over $50,000.  Past due loans are reviewed at least weekly by
  lending officers and by the chief credit officer, and a summary report is
  reviewed monthly by the Board of Directors.  The Board of Directors
  reviews all new loans over $25,000 whether current or past due each
  month.  The Bank charges off loans with past-due amounts when they are
  believed to be uncollectible.

Asset/Liability Management

A committee composed of the Banks
  officers is charged with managing the Banks assets and liabilities. 
  The committee attempts to manage asset growth, liquidity, and capital to
  maximize income and reduce interest rate risk.  The committee directs the
  Banks overall acquisition and allocation of funds.  At monthly
  meetings, the committee reviews and discusses the monthly asset and liability
  funds budget in relation to the actual flow of funds, as well as peer group
  comparisons; the ratio of the amount of rate-sensitive assets to the amount of
  rate-sensitive liabilities; the ratio of the allowance for loan losses to
  outstanding and non-performing loans; and other variables, such as expected
  loan demand, investment opportunities, core deposit growth within specified
  categories, regulatory changes, monetary policy adjustments, and the overall
  state of the economy.  The Banks Investment Policy is set to maximize
  income with safety of principal an overriding concern.  The investment
  portfolio is a source of liquidity and it is reviewed annually.

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Competition

The banking business is highly
  competitive.  The Companys primary market area consists of Spalding
  and Henry Counties, Georgia.  The Company competes in Spalding County
  with five other commercial banks and in Henry County with 12 commercial banks.
  The Bank is the largest bank in Spalding County in terms of deposits located
  in the County, with deposits at December 31, 2001 of approximately $178
  million, and the second smallest in Henry County in terms of deposits located
  in that county.

In addition to the Companys
  competitors in Spalding and Henry Counties, the Company competes with
  commercial banks, thrifts, and various other financial institutions and
  brokerage houses located outside the market area.  To a lesser extent,
  the Company also competes for loans with insurance companies, regulated small
  loan companies, credit unions, and certain governmental agencies.  In
  addition, the Company and any non-banking subsidiaries it may establish in the
  future compete and will compete with numerous other companies and financial
  institutions engaged in similar lines of business, such as other bank holding
  companies, leasing companies, and insurance companies.

The business of the Bank is not materially seasonal.  Construction and
  development lending are strongest in the spring and summer.  Building
  slows somewhat in the fall and winter, but not to the degree that there is an
  appreciable impact upon the Banks balance sheet or statement of earnings.

Employees

As of December 31, 2001, the Company
  and the Bank had 106 full-time and 27 part-time employees.  The Company
  is not a party to any collective bargaining agreement.  Management
  believes that the Company has satisfactory relations with its employees.

Supervision and Regulation

General

The Company is a registered bank holding company subject to regulation by the
  Board of Governors of the Federal Reserve (the Federal Reserve) under
  the Bank Holding Company Act of 1956, as amended (the Act).  The
  Company is required to file financial information with, and is subject to
  periodic examination by, the Federal Reserve.

The Act requires every bank holding
  company to obtain the Federal Reserves prior approval before (1) it may
  acquire direct or indirect ownership or control of more than 5% of the voting
  shares of any bank that it does not already control; (2) it or any of its
  non-bank subsidiaries may acquire all or substantially all of the assets of a
  bank; and (3) it may merge or consolidate with any other bank holding
  company.  In addition, a bank holding company is generally prohibited
  from engaging in, or acquiring, direct or indirect control of the voting
  shares of any company engaged in non-banking activities.  This
  prohibition does not apply to activities listed in the Act or found by the
  Federal Reserve, by order or regulation, to be closely related to banking or
  managing or controlling banks as to be a proper incident thereto.  Some
  of the activities that the Federal Reserve has determined by regulation or
  order to be closely related to banking are:

- making or servicing loans and certain types of leases;
- performing certain data processing services;
- acting as fiduciary or investment or financial advisor;



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- providing brokerage services;
- underwriting bank eligible securities;
- underwriting debt and equity securities on a limited
  basis through separately capitalized subsidiaries; and
- making investments in corporations or projects designed
  primarily to promote community welfare.

In addition, bank holding companies
  whose banking subsidiaries are all well-capitalized and well-managed may apply
  to become a financial holding company.  Financial holding companies have
  the authority to engage in activities that are financial in nature that
  are not permitted for other bank holding companies.  Some of the
  activities that the Act provides are financial in nature are:

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

We have no immediate plans to
  register as a financial holding company.

The laws of Georgia require annual
  registration with the Department of Banking and Finance (the DBF) by all
  Georgia bank holding companies.  Such registration includes information
  with respect to the financial condition, operations, management, and
  intercompany relationships of a bank holding company and its subsidiaries and
  related matters.  The DBF may also require such other information as is
  necessary to keep itself informed as to whether the provisions of Georgia law
  and the regulations and orders issued thereunder by the DBF have been complied
  with. The DBF may make examinations of each bank holding company and each bank
  subsidiary thereof, other than a national bank.

The Bank is a national bank chartered
  under the National Bank Act and is subject to the supervision of, and is
  regularly examined by, the OCC.  The OCC regulates or monitors all areas
  of the Banks operations and activities, including reserves, loans, mergers,
  issuance of securities, payments of dividends, interest rates, and
  establishment of branches.  Interest and certain other charges collected
  or contracted for by the Bank are also subject to state usury laws or certain
  federal laws concerning interest rates.

The Bank is insured by the Federal
  Deposit Insurance Corporation (the FDIC).  The major functions of
  the FDIC with respect to insured banks include paying depositors to the extent
  provided by law if an insured bank is closed without adequate provisions
  having been made to pay claims of depositors, acting as a receiver of state
  banks placed in receivership when appointed receiver by state authorities, and
  preventing the development or continuance of unsound and unsafe banking
  practices.

The Company is an affiliate of
  the Bank under the Federal Reserve Act, which imposes certain restrictions on
  (i) loans by the Bank to the Company, (ii) investments in the stock or
  securities of the Company by the Bank, (iii) the Banks taking the stock or
  securities of an affiliate as collateral for loans by the Bank to a
  borrower and (iv) the purchase of assets from the Company by the Bank.  Further,

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a bank holding company and its subsidiaries are prohibited from
  engaging in certain tie-in arrangements in connection with any extension of
  credit, lease or sale of property or furnishing of services.

Payment of Dividends

The Company is a legal entity separate and distinct from the Bank.  Most
  of the revenues of the Company result from dividends paid to it by the
  Bank.  There are statutory and regulatory requirements applicable to the
  payment of dividends by the Bank, as well as by the Company to its
  shareholders.

As a national bank, the Bank is
  required by federal law to obtain the prior approval of the OCC for payments
  of dividends if the total of all dividends declared by the Board of Directors
  in any year will exceed (i) the total of the Banks net profits (as defined
  and interpreted by regulation) for that year, plus (ii) the Banks retained
  net profits (as defined and interpreted by regulation) of the preceding two
  years, less any required transfers to surplus.

The payment of dividends by the
  Company and the Bank may also be affected or limited by other factors, such as
  the requirement to maintain adequate capital above regulatory
  guidelines.  In addition, if in the opinion of the applicable regulatory
  authority, a bank under its jurisdiction is engaged in or is about to engage
  in an unsafe or unsound practice (which, depending upon the financial
  condition of a bank, could include the payment of dividends), such authority
  may require, after notice and hearing, that such bank cease and desist from
  such practice.  The FDIC and the OCC have issued policy statements
  providing that insured banks should generally only pay dividends out of
  current operating earnings.  At December 31, 2001, the Banks retained
  earnings from which dividends could be paid totaled $3.8 million.  For
  2001, the Companys cash dividend payout to stockholders was 38 percent of
  net income.

Monetary Policy

The results of operations of the Bank, and therefore the Company, are affected
  by credit policies of monetary authorities, particularly the Federal
  Reserve.  The instruments of monetary policy employed by the Federal
  Reserve include open market operations in U.S. government securities, changes
  in the discount rate on bank borrowings and changes in reserve requirements
  against bank deposits.  In view of changing conditions in the national
  economy and in the money markets, as well as the effect of actions by monetary
  and fiscal authorities, including the Federal Reserve, no prediction can be
  made as to possible future changes in interest rates, deposit levels, loan
  demand, or the business and earnings of the Bank.

Capital Adequacy

The Federal Reserve and the OCC have implemented
  substantially identical risk-based rules for assessing bank and bank holding
  company capital adequacy.  These regulations establish minimum capital
  standards in relation to assets and off-balance sheet exposures as adjusted
  for credit risk.  Banks and bank holding companies are required to have
  (1) a minimum level of total capital (as defined) to risk-weighted assets of
  eight percent; (2) a minimum Tier One Capital (as defined) to risk-weighted
  assets of four percent; and (3) a minimum stockholders equity to risk weighted
  assets of four percent.  In addition, the Federal Reserve and the OCC
  have established a minimum three percent leverage ratio of Tier One Capital to
  total assets (four percent for all but the most highly-rated banks and bank
  holding companies).  Tier One Capital generally consists of common
  equity not including unrecognized gains and losses on securities, minority
  interests in equity accounts of consolidated subsidiaries, and certain
  perpetual preferred stock less certain intangibles.  The Federal Reserve
  and the OCC use the  leverage ratio in tandem with the risk-based ratio
  to assess the capital adequacy of banks and bank holding
  companies.  The capital adequacy standards also provide for the
  consideration of interest rate risk in the overall



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determination of a banks
  capital ratio, requiring banks with greater interest rate risk to maintain
  adequate capital for the risk.

In addition, Section 38 of the
  Federal Deposit Insurance Corporation Acts prompt corrective action
  provisions set forth five regulatory zones in which all banks are placed
  largely based on their capital positions.  Regulators are permitted to
  take increasingly harsh action as a banks financial condition
  declines.  Regulators are also empowered to place in receivership or
  require the sale of a bank to another depository institution when a banks
  tangible equity to total assets ratio reaches two percent.  Better
  capitalized institutions are generally subject to less onerous regulation and
  supervision than banks with lesser amounts of capital.

The OCC has adopted regulations
  concerning the prompt corrective action provisions that place financial
  institutions in the following five categories based upon capitalization
  ratios: (1) a well capitalized institution has a total risk-based
  capital ratio of at least ten percent, a Tier One risk-based ratio of at least
  six percent and a leverage ratio of at least five percent; (2) an adequately
  capitalized institution has a total risk-based capital ratio of at least
  eight percent, a Tier One risk-based ratio of at least four percent and a
  leverage ratio of at least four percent; (3) an undercapitalized
  institution has a total risk-based capital ratio of under eight percent, a
  Tier One risk-based ratio of under four percent or a leverage ratio of under
  four percent; (4) a significantly undercapitalized institution has a
  total risk-based capital ratio of under six percent, a Tier One risk-based
  ratio of under three percent or a leverage ratio of under three percent; and
  (5) a critically undercapitalized institution has a leverage ratio of
  two percent or less.  Institutions in any of the three undercapitalized
  categories would be prohibited from declaring dividends or making capital
  distributions.  The OCC regulations also establish procedures for downgrading
  an institution to a lower capital category based on supervisory factors other
  than capital.  Under the OCCs regulations, the Bank was a well
  capitalized institution at December 31, 2001.

Set forth below are pertinent capital
  ratios for the Company and the Bank as of December 31, 2001.

|                                                             | Company | Bank  
|------------------------------------------------------------ | ------- | ------
|                                                             |         |       
|Tier 1 Capital to Risk-basedAssets                           | 13.31%  | 12.92%
|Total Capital to Risk-baseAssets                             | 14.27%  | 13.86%
|Leverage Ratio (Tier 1 Capital
           to Average Assets) | 10.90%  | 10.57%

Recent Legislative and Regulatory
  Action

On November 12, 1999, President
  Clinton signed the Gramm-Leach-Bliley Act, a significant piece of legislation
  intended to modernize the financial services industry.  The bill repeals
  the anti-affiliation provisions of the 1933 Glass-Steagall Act to allow for
  the merger of banking and securities organizations and permits banking
  organizations to engage in insurance activities including insurance
  underwriting.  The bill also allows bank holding companies to engage in
  financial activities that are financial in nature or complementary to a
  financial activity.  The act lists the expanded areas that are

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financial in nature and includes insurance and securities underwriting and
  merchant banking among others.  The bill also:

- prohibits non-financial entities from acquiring or
  establishing a thrift while grandfathering existing thrifts owned by
  non-financial entities.
- establishes state regulators as the appropriate
  functional regulators for insurance activities but provides that state
  regulators cannot prevent or significantly interfere with affiliations
  between banks and insurance firms.
- contains provisions designed to protect consumer
  privacy.  The bill requires financial institutions to disclose their
  policy for collecting and protecting confidential information and allows
  consumers to opt out of information sharing except with unaffiliated
  third parties who market the institutions own products and services or
  pursuant to joint agreements between two or more financial institutions.
- provides for functional regulation of a banks
  securities activities by the Securities and Exchange Commission.

Item
  2.  Description of
  Property

The Companys main office is
  located at 318 South Hill Street, Griffin, Georgia, 30224, and its telephone
  number at that office is (770) 227-2251.

The Company distributes its services
  through four full-service banking offices and one limited-service banking
  office as follows:

Main Office

318 South Hill Street
  Griffin, Georgia 30224

Northside Bank Branch

1475 West McIntosh Road
  Griffin, Georgia  30223

Southside Bank Branch

1103 Zebulon Road
  Griffin, Georgia  30224

Kroger Griffin Branch(Limited Service
  Office)

100 Spalding Village
  Griffin, Georgia  30223



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Henry County Branch

996 Bear Creek Boulevard
  Hampton, Georgia 30228

The executive offices of the Company and the main office of the Bank are
  located in a 33,000 square-foot facility, 318 South Hill Street, Griffin,
  Georgia.  None of the owned properties of the Company is subject to
  encumbrances.  The Company owns a building adjacent to its main office in
  Griffin which is used for storage of bulk supplies and to house the offices of
  Griffin Loans, Inc.  The Company or the Bank owns all of the properties,
  except the Kroger Griffin Branch Limited Office.  The Kroger Griffin
  Branch Limited Office is leased for $3,800.00 per month for a term of 15
  years, which term began on May 11, 1989.

Management
  of the Company and the Bank believe that all of its properties are adequately
  covered by insurance.

Item
  3.  Legal Proceedings

The Company is not aware of any
  material pending legal proceedings to which the Company or the Bank is a party
  or to which any of their property is subject.

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

No matters were submitted to a vote
  of security holders of the Company during the fourth quarter of the 2001
  fiscal year.



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PART II

Item
  5.    Market for Common
  Equity and Related Stockholder Matters

Stock

There is no established public trading market for
  the Common Stock.  As of March 12, 2002 the Company had 395 shareholders
  of record.  At December 31, 2001, there were 400 shareholders of
  record.  Management is aware of 14 sales of the Companys stock in
  2001, aggregating 22,917 shares in blocks ranging from 77 shares to 14,615
  shares at a price ranging from $40 per share to $52.50 per share. 
  Management is aware of 14 sales of the Companys stock in 2000, aggregating
  9,565 shares, in blocks ranging from 16 shares to 1,591 shares at a price of
  $40 per share.

Dividends

In 2000 and 2001, the Company declared cash
  dividends of $1,059,898 ($1.35 per share) and $1,042,993 ($1.35 per share),
  respectively.  The Company intends to continue paying cash dividends on a
  semi-annual basis.  The amount and frequency of dividends, however, will
  be determined by the Companys Board of Directors in light of earnings,
  capital requirements and the financial condition of the Company, and no
  assurances can be given that dividends will be paid in the future.  Information on restrictions on the amount of dividends payable by the Company
  appears in Note 10 to the Companys consolidated financial statements set
  forth in Item 7 hereof.

Item
  6.     Managements Discussion and Analysis of Financial Condition and Results of
  Operations

This analysis of the Company has been
  prepared to provide insight into the financial condition of the Company, and
  address the factors that affected the Companys results of operations. 
  The Companys financial statements and accompanying notes which follow are
  an integral part of this review and should be read in conjunction with it.

Forward-Looking Statements

This discussion contains forward-looking statements under the private
  Securities Litigation Reform Act of 1995 that involve risks and
  uncertainties.  Although the Company believes that the assumptions
  underlying the forward-looking statements contained in the discussion are
  reasonable, any of the assumptions could be inaccurate, and therefore, no
  assurance can be made that any of the forward-looking statements included in
  this discussion will be accurate. Factors that could cause actual results to
  differ from results discussed in forward-looking statements include, but are
  not limited to:  economic conditions (both generally and in the markets
  where the Company operates); competition from other providers of financial
  services offered by the Company; government regulation and legislation;
  changes in interest rates; material unforeseen changes in the financial
  stability and liquidity of the Companys credit customers; all of which are
  difficult to predict and which may be beyond the control of the Company. 
  The Company undertakes no obligation to revise forward-looking statements to
  reflect events or changes after the date of this discussion or to reflect the
  occurrence of unanticipated events.

# General

FNB Banking Company (the Company) is a one-bank holding company
  registered under the Bank Holding Company Act of 1956 and was incorporated
  under the laws of the state of Georgia in 1983. All of the Companys
  activities are currently conducted by its wholly owned subsidiary, First
  National

-10-

---



Bank of Griffin, Georgia (the Bank). The Bank owns a consumer
  finance company, Griffin Loans, Inc. (d/b/a First Credit), which engages in
  the business of making small loans to individuals.

The Companys subsidiary bank was most recently examined by its primary
  regulatory authority in January of 2001. There were no recommendations by the
  regulatory authority that, in managements opinion, will have material
  effects on the Companys liquidity, capital resources or operations.

The following discussion is intended to provide insight into the financial
  condition and results of operations of the Company and should be read in
  conjunction with the consolidated financial statements and accompanying notes.

# Pending Business Combination

The Company entered into an agreement on October 31, 2001, to acquire American
  Community Bank of Georgia (ACB), a Georgia banking corporation based in
  Stockbridge (Henry County), Georgia with approximately $59 million in total
  assets, $40 million in loans, $48 million in deposits, and $6.4 million in
  stockholders equity. The agreement calls for the Company to pay cash of
  approximately $9.8 million or $13.25 per share for each outstanding share of
  ACB. To finance the transaction, the Company anticipates obtaining $2 million
  in cash from dividends from its subsidiary, First National Bank of Griffin,
  and $7.8 million of borrowed funds from an upstream correspondent bank. The
  transaction, which is expected to close in May 2002, and is subject to
  approval by various bank regulatory agencies, was approved by ACB stockholders
  on January 17, 2002.

# Statements of Earnings Review

Net earnings were $2.8 million in 2001, a decrease of 12.7% from the $3.2
  million earned in 2000. Net earnings per share were $3.61 million for 2001,
  compared with $4.07 million reported in 2000, a decrease of 11.3%. Return on
  average assets and return on average stockholders equity for 2001 was 1.16%
  and 10.48%, respectively, compared with 1.45% and 13.82%, respectively, for
  2000. Net earnings were $3.2 million in 2000, an increase of 52% from the $2.1
  million earned by the Company in 1999. Net earnings per share were $4.07 in
  2000, compared with the $2.64 reported in 1999, an increase of 54%.

Net interest income decreased by $748,000 or 6% in 2001. Net interest income
  at December 31, 2001, was $11.6 million compared to $12.4 million in
  2000.  This decrease was a direct result of the series of interest rate
  cuts by the Federal Reserve.  This was the main factor in our decreased
  income.  We expect to see this reverse in 2002. Net yield (tax
  equivalent) on interest earning assets (5.34% in 2001 and 6.16% in 2000)
  decreased by 82 basis points in 2001 from 2000.  Net interest income
  increased by $1.1 million or 9% in 2000 over 1999.  Net yield (tax
  equivalent) on interest earning assets (6.16% in 2000 and 5.99% in 1999)
  increased by 17 basis points in 2000 over 1999.

The Companys operational results depend primarily on the earnings of the
  Bank. Its earnings depend to a large degree on net interest income, which is
  the difference between the interest income received from its investments (such
  as loans, investment securities, federal funds sold, etc.) and the interest
  expense which is paid on deposits and other liabilities.

The banking industry uses two key ratios to measure relative profitability of
  net interest income. The net interest rate spread measures the difference
  between the average yield on interest earning assets and the average rate paid
  on interest bearing liabilities. The interest rate spread eliminates the
  impact of non-interest bearing deposits and gives a direct perspective on the
  effect of market interest rate movements. The net interest margin is defined
  as net interest income as a percent of average total interest earning assets
  and takes into account the positive impact of investing noninterest-bearing
  deposits.



-11-

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The net interest spread was 4.60% in 2001, 5.39% in 2000, and 5.13% in 1999,
  while the net interest margin (on a tax-equivalent basis) was 5.34% in 2001,
  6.16% in 2000, and 5.99% in 1999.

The following table shows, for the past three years, the relationship between
  interest income and interest expense and the average balances of interest
  earning assets and interest bearing liabilities on a tax equivalent basis.

Table 1
  Average Consolidated Balance
  Sheets and Net Interest Analysis on a Tax Equivalent Basis(in thousands)

|                                                                                              |   | For the Years
        Ended December 31,
|--------------------------------------------------------------------------------------------- | - | ----------------------------------------
|                                                                                              |   | 2001                                    
|                                                                                              |   |                                         
|                                                                                              |   | Average
        Balance                 
|                                                                                              |  
|Assets:                                                                                       |   |                                         
|Interest earnings assets:                                                                     |   |                                         
|Loans (including loan fees)                                                                   | $ | 165,492                                 
|Investment securities:                                                                        |   |                                         
|Taxable                                                                                       |   | 29,891                                  
|Tax exempt                                                                                    |   | 10,246                                  
|Federal funds sold                                                                            |   | 16,548                                  
|                                                                                              |   |                                         
|Total interest earning assets                                                                 |   | 222,177                                 
|                                                                                              |   |                                         
|Other non-interest earnings
        assets                                                    |   | 18,268                                  
|                                                                                              |   |                                         
|Total assets                                                                                  |   | 240,445                                 
|                                                                                              |   |                                         
|                                                                                              |   |                                         
|Liabilities and stockholders
        equity:                                                 |   |                                         
|Interest-bearing liabilities:                                                                 |   |                                         
|Deposits:                                                                                     |   |                                         
|Interest-bearing demand
                 and
        savings                                  | $ | 66,251                                  
|Time                                                                                          |   | 100,312                                 
|FHLB advances                                                                                 |   | 952                                     
|Long-term debt                                                                                |   | 42                                      
|Federal funds purchased and
           securities sold under repurchase
           agreements |   | 13,887                                  
|                                                                                              |   |                                         
|Total interest-bearing
                    
        liabilities                               |   | 181,444                                 
|                                                                                              |   |                                         
|Non-interest bearing deposits                                                                 |   | 30,784                                  
|Other liabilities                                                                             |   | 1,506                                   
|Stockholders equity                                                                          |   | 26,711                                  
|                                                                                              |   |                                         
|Total liabilities and
                    
        stockholders equity                       | $ | 240,445                                 
|                                                                                              |   |                                         
|Excess of interest-earning 
            assets over interest-bearing
            liabilities  | $ | 40,733                                  
|                                                                                              |   |                                         
|Ratio of interest-earning
        assets
            to interest-bearing liabilities          |   | 122.45%                                 
|Net interest income                                                                           |   |                                         
|                                                                                              |   |                                         
|Net interest spread                                                                           |   |                                         
|                                                                                              |   |                                         
|Net interest yield on interest
            earning assets                                     |   |                                         
|                                                                                              |   |                                         



-12-

---



Non-accrual loans and the interest income that was recorded on these loans, if
  any, are included in the yield calculation for loans in all periods
  reported.  Loan fees for 2001, 2000 and 1999 were $2.2 million, $2.6
  million and $2.2 million, respectively.

Tax exempt interest income is calculated on a tax equivalent basis.

The following table shows the relative impact on net interest income of
  changes in the average outstanding balances (volume) of interest earning
  assets and interest bearing liabilities and the rates earned and paid by the
  Company on such assets and liabilities. Variances resulting from a combination
  of changes in rate and volume are allocated in proportion to the absolute
  dollar amounts of the change in each category.

# Table 2
  Changes in Interest Income and
  Expense on a Tax Equivalent Basis(in thousands)

|                                                                                                                            |   | Increase
        (decrease) due to changes in:
|--------------------------------------------------------------------------------------------------------------------------- | - | ----------------------------------------------
|                                                                                                                            |   | 2001 over 2000                                
|                                                                                                                            |   |                                               
|                                                                                                                            |   | Volume                                        
|Interest income on:                                                                                                         |   |                                               
|Loans (including loan fees)                                                                                                 | $ | 198                                           
|Investment securities:                                                                                                      |   |                                               
|Taxable                                                                                                                     |   | 195                                           
|Tax exempt                                                                                                                  |   | 111                                           
|Federal funds sold                                                                                                          |   | 417                                           
|                                                                                                                            |   |                                               
|Total interest earning assets                                                                                               |   | 921                                           
|                                                                                                                            |   |                                               
|Interest expense on:                                                                                                        |   |                                               
|Deposits:                                                                                                                   |   |                                               
|Interestbearing demand
        and savings                                                                                 |   | 121                                           
|Time                                                                                                                        |   | 587                                           
|FHLB advances                                                                                                               |   | (93)                                          
|Longterm debt                                                                                                              |   | (11)                                          
|Federal funds purchased and
        securities sold
                                   
        under repurchase agreements |   | (10)                                          
|                                                                                                                            |   |                                               
|Total interestbearing
        liabilities                                                                                  |   | 594                                           
|                                                                                                                            |   |                                               
|Increase (decrease) in net
        interest income                                                                          | $ | 327                                           
|                                                                                                                            |   |                                               

Other operating income in 2001 of $2.75 million increased from 2000 by
  $116,500 or 4.4% primarily due to net gains on sales of securities and an
  increase in service charges associated with an increase in insufficient fund
  charges.

Other operating expenses increased by $109,000 (1.2%) in 2001 over 2000. 
  Salary and employee benefits increased $343,000 as a result of customary
  raises for the existing work force and additional training.  This
  increase was offset by decreases in professional fees, credit card fees,
  insurance and business development costs totaling $235,000.  Management
  expects to keep other operating expenses low in 2002 while salary expense will
  increase due to base pay adjustments and additional personnel  due to the
  merger.

Income tax expense expressed as a percentage of 2001 pre-tax earnings was 32%
  versus 33% in 2000 due to tax-exempt interest income increasing relative to
  total pre-tax earnings.

-13-



---



Other operating income in 2000 of $2.6 million increased from 1999 by $347,000
  or 15% primarily due to an increase of $275,000 in service charges on deposit
  accounts associated with an increase in the number of corporate deposit
  accounts that are subject to analysis charges and an increase in insufficient
  fund charges.  Additionally, trust service fees increased $122,500 in
  2000 due to the settlement of three large estates.  Finally, 1999
  included an $88,000 gain on the sale of foreclosed property and $40,000 of
  investment security write-downs that were not part of the 2000 balances.

Other operating expenses increased by $372,000 (4.1%) in 2000 over 1999. 
  Salary increases for the existing workforce accounted for $220,000 of the
  overall increase, while the balance of the increase was spread among many
  items including an increase of utilities expense, general media advertising
  and a bank customer club which was implemented in 2000.

Balance Sheet Review

During 2001, average total assets increased $20.1 million (9.1%) over 2000.
  Average deposits increased $17.8 million (9.9%) in 2001 over 2000. Average
  loans increased $1.9 million (1.1%) in 2001 over 2000. During 2000, average
  total assets increased $10.4 million (5%) over 1999. Average deposits
  increased $3.3 million (1.9%) in 2000 over 1999. Average loans increased $11.3
  million (7.4%) in 2000 over 1999.

Total assets at December 31, 2001, were $246.4 million, representing a $18.8
  million (8.3%) increase from December 31, 2000. Total deposits increased $14.3
  million (7.6%) from 2000 to 2001 while total gross loans increased $9.9
  million (6.0%) during 2001. Time deposits increased $7.6 million from 2000 to
  2001 while all other deposit accounts increased $6.7 million in 2001. Despite
  national downturns, the local economy remains strong, loan demand increased
  and the Bank showed increases in the commercial and financial lending areas.
  These loan increases were funded principally with increases in deposit
  accounts.

Total assets at December 31, 2000, were $227.7 million, representing a $7.95
  million (3.6%) increase from December 31, 1999. Total deposits increased $10.5
  million (5.9%) from 1999 to 2000 while total gross loans increased $8.6
  million (6%) during 2000. Time deposits increased $7.1 million from 1999 to
  2000 while all other deposit accounts increased $3.4 million in 2000.  These loan increases were funded principally with increases in deposit
  accounts.

Investments

The investment portfolio consists of debt securities and to a lesser extent
  equity securities, which provide the Company with a source of liquidity and a
  longterm, relatively stable source of income. Additionally, the
  investment portfolio provides a balance to interest rate and credit risk in
  other categories of the balance sheet while providing a vehicle for the
  investment of available funds, furnishing liquidity, and supplying securities
  to pledge as required collateral for certain deposits.

Table 3
  Investment Portfolio(in thousands)

The following table shows the
  carrying value of the Companys securities, by security type, as of December
  31, 2001, 2000 and
  1999:



-14-

---





|Available for Sale                            |   | 2001   | 2000   | 1999  
|--------------------------------------------- | - | ------ | ------ | ------
|United States treasuries and
        agencies | $ | 7,121  | 15,403 | 13,345
|State, county and municipal                   |   | 12,491 | 9,408  | 8,332 
|Mortgage-backed securities                    |   | 18,918 | 11,306 | 8,136 
|Equity securities                             |   | 1,543  | 1,264  | 1,367 
|                                              |   |        |        |       
|                                              |   |        |        |       
|                                              | $ | 40,073 | 37,381 | 31,180
|                                              |   |        |        |       
|Other Investments                             | $ | 848    | 848    | 722   

Other investments include Federal Reserve Bank stock and Federal Home Loan
  Bank stock.  During 1999, in connection with the implementation of
  Statement of Financial Accounting Standards No. 133, Accounting for
  Derivatives and Hedging Activities, all held to maturity investment
  securities were transferred to available for sale.  This transfer
  increased stockholders equity by a total of  $4,000.

The following table presents the expected maturity of the total securities by
  maturity date and average yields based on amortized cost (for all obligations
  on a fully taxable basis, assuming a 34% tax rate) at December 31, 2001. The
  composition and maturity/repricing distribution of the securities portfolio is
  subject to change depending on rate sensitivity, capital and liquidity
  needs.  While the investment portfolio is available for sale and is a
  potential source of liquidity the Bank has other sources and would use this as
  a last resort.

Table 4
  Expected Maturity of Securities(in thousands)

|Maturities at December 31, 2001 |   | United
            States
         Treasuries
             and
          Agencies | Mortgage-
           Backed
         Securities | State, 
        County
        and
         Municipal | Weighted
          Average
            Yields
|------------------------------- | - | --------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------------------- | ---------------------------------------------
|                                |   |                                                                                  
|Within 1 year                   | $ |                                                                                  | 884                                             |                                                      | 6.44%                                        
|After 1 through 5 years         |   | 1,496                                                                             | 14,451                                          | 3,780                                                 | 6.67%                                        
|After 5 through 10 years        |   | 5,486                                                                             | 3,345                                           | 5,728                                                 | 6.13%                                        
|After 10 years                  |   |                                                                                  |                                                | 2,871                                                 | 6.75%                                        
|                                |   |                                                                                   |                                                 |                                                       |                                              
|Totals                          | $ | 6,982                                                                             | 18,680                                          | 12,379                                                |                                              

| |  |  |  |  | 
| |  |  |  |  | 

Mortgage backed securities are included in the maturities categories in which
  they are anticipated to be repaid based on scheduled maturities and yields on
  tax exempt securities are calculated on a tax equivalent basis.

Table 5
  Loan Portfolio(in thousands)

The following table presents loans by type at the end of each of the last five
  years.

|                                               |   | December 31,
|---------------------------------------------- | - | ------------
|                                               |   | 2001        
|                                               |   |             
|Commercial, financial and
        agricultural | $ | 93,756      
|Real estate 
        construction             |   | 10,616      
|Real estate  mortgage                         |   | 42,995      
|Installment loans to
        individuals       |   | 27,535      
|                                               |   |             



-15-

---



|                                             |   |         |         |         |         |        
|-------------------------------------------- | - | ------- | ------- | ------- | ------- | -------
|                                             |   | 174,902 | 165,026 | 156,397 | 148,933 | 140,789
|Less:    
        Unearned interest and fees |   | (371)   | (374)   | (321)   | (361)   | (304)  
|Allowance for loan losses                    |   | (1,880) | (2,137) | (2,589) | (1,708) | (2,013)
|                                             |   |         |         |         |         |        
|Loans,
        net                           | $ | 172,651 | 162,515 | 153,487 | 146,864 | 138,472
|                                             |   |         |         |         |         |        

The following table sets forth the maturity distribution of real estate 
  construction and commercial, financial and agricultural loans, including the
  interest rate sensitivity for loans maturing in greater than one year, as of
  December 31, 2001.

##### Table 6
  Loan Portfolio Maturity(in thousands)

|Maturity                                        |   | Commercial,
        Financial andAgricultural | Real   
         
        Estate   Construction | Total  
|----------------------------------------------- | - | --------------------------------------------- | ------------------------------------------------ | -------
|                                                |   |                                               |                                                  |        
|Within 1 year                                   | $ | 54,361                                        | 10,048                                           | 64,409 
|1 to 5 years                                    |   | 36,784                                        | 568                                              | 37,352 
|After 5 years                                   |   | 2,611                                         |                                                 | 2,611  
|                                                |   |                                               |                                                  |        
|Totals                                          | $ | 93,756                                        | 10,616                                           | 104,372
|                                                |   |                                               |                                                  |        
|                                                |   |                                               |                                                  |        
|                                                |   | Fixed  
        InterestRates                 | Variable
        Interest
          Rates        | Total  
|Commercial, financial and
        agricultural: |   |                                               |                                                  |        
|1 to 5 years                                    | $ | 28,339                                        | 8,445                                            | 36,784 
|After 5 years                                   |   | 670                                           | 1,941                                            | 2,611  
|                                                |   |                                               |                                                  |        
|                                                |   |                                               |                                                  |        
|                                                | $ | 29,009                                        | 10,386                                           | 39,395 
|                                                |   |                                               |                                                  |        
|Real estate  construction                      |   |                                               |                                                  |        
|1 to 5 years                                    | $ | 568                                           |                                                 | 568    
|                                                |   |                                               |                                                  |        

The provision for loan losses in 2001 was $672,000 compared to $734,000 in
  2000.  The provision for loan losses continues to reflect managements
  estimate of potential loan losses inherent in the portfolio and the creation
  of an allowance for loan losses adequate to absorb such losses. The allowance
  for loan losses represented approximately 1.1% and 1.3% of total loans
  outstanding at December 31, 2001 and 2000, respectively. Net charge-offs
  were $930,000 and $1.2 million during 2001 and 2000, respectively. Management
  believes that these levels of allowance are appropriate based upon the Companys
  loan portfolio and the current economic conditions.  The Bank has
  maintained the ability to grow during the economic turndown.

The provision for loan losses in 2000 was $734,000 compared to $1.5 million in
  1999. The allowance for loan losses represented approximately 1.3% and 1.7% of
  total loans outstanding at



-16-

---



December 31, 2000 and 1999, respectively. Net
  charge-offs were $1.2 million and $579,000 during 2000 and 1999,
  respectively.

The Company has a dedicated loan review function. All loans of $50,000 or more
  are reviewed annually and placed in various loan grading categories which
  assist in developing lists of potential problem loans. These loans are
  constantly monitored by the loan review function to ensure early
  identification of repayment problems so that adequate allowances can be made
  through the provision for loan losses. The formal allowance for loss adequacy
  test is performed at month end before each calendar quarter end. Specific
  amounts of loss are estimated on problem loans and historical loss percentages
  are applied to the balance of the portfolio using certain portfolio
  stratifications. Additionally, the evaluation takes into consideration such
  factors as changes in the nature and volume of the loan portfolio, current
  economic conditions, regulatory examination results, and the existence of loan
  concentrations.

Managements judgment in determining the adequacy of the allowance is based
  on evaluations of the collectibility of loans. These evaluations take into
  consideration such factors as changes in the nature and volume of the loan
  portfolio, current economic conditions that may affect the borrowers
  ability to pay, overall portfolio quality, and review of specific problem
  loans.  In determining the adequacy of the allowance for loan losses,
  management uses a loan grading system that rates loans in six different
  categories.  Grades four though six are assigned allocations of loss
  based on managements estimate of potential loss which is generally based on
  discounted collateral deficiencies.  Loans graded one through three are
  stratified by type and allocated loss ranges based on historical loss
  experience for the strata.  The combination of these results are compared
  quarterly to the recorded allowance for loan losses and material differences
  are adjusted by increasing or decreasing the provision for loan losses. 
  Management uses a devoted internal loan reviewer who is independent of the
  lending function to challenge and corroborate the loan grading system and
  provide additional analysis in determining the adequacy of the allowance for
  loan losses and the future provisions for estimated loan losses.

Management believes that the allowance for loan losses is adequate. While
  management uses available information to recognize losses on loans, future
  additions to the allowance may be necessary based on changes in economic
  conditions. In addition, regulators, as an integral part of their examination
  process, periodically review the Companys allowance for loan losses. 
  Such regulators may require the Company to recognize additions to the
  allowance based on their judgements of information available to them at the
  time of their examination.  In the most recent regulatory examination
  completed in February 2001, no additions to the allowance were deemed
  necessary.

The Company does not allocate the allowance for loan losses to various loan
  categories.  The entire allowance is available to absorb losses from any
  and all loans.  Management anticipates gross charge-offs for 2002 to
  approximate $600,000.  Anticipated charge-offs are an estimate based on
  historical experience and other judgmental factors and may be more or less
  than those that ultimately occur.

The following table presents a summary of changes in the allowance for loan
  losses for each of the past five years.



-17-

---



### Table 7
  Allowance for Loan Losses(in thousands)

|                                                                                                                               |   | December 31,
|------------------------------------------------------------------------------------------------------------------------------ | - | ------------
|                                                                                                                               |   |             
|                                                                                                                               |   | 2001        
|                                                                                                                               |   |             
|Balance at beginning of year                                                                                                   | $ | 2,137       
|Chargeoffs:                                                                                                                   |   |             
|Commercial, financial and 
            agricultural                                                                            |   | 829         
|Real estatemortgage                                                                                                           |   | 14          
|Installment loans to
        individuals                                                                                       |   | 413         
|                                                                                                                               |   |             
|                                                                                                                               |   | 1,256       
|Recoveries:                                                                                                                    |   |             
|Commercial, financial and
        agricultural                                                                                 |   | 136         
|Real estatemortgage                                                                                                           |   | 15          
|Installment loans to
        individuals                                                                                       |   | 176         
|                                                                                                                               |   |             
|                                                                                                                               |   | 327         
|                                                                                                                               |   |             
|Net chargeoffs                                                                                                                |   | 929         
|                                                                                                                               |   |             
|Additions charged to operations                                                                                                |   | 672         
|                                                                                                                               |   |             
|Balance at end of year                                                                                                         | $ | 1,880       
|                                                                                                                               |   |             
|Ratio of net charge-offs
        during the
           period to average
        loans outstanding
          during the period |   | .56%        

The following table summarizes past
  due and non-accrual loans, other real estate and repossessions, and
  income that would have been reported on non-accrual loans for each of
  the past five years:

Table 8Non-Performing Assets(in thousands)

|                                                                                   |   | December 31,
|---------------------------------------------------------------------------------- | - | ------------
|                                                                                   |   |             
|                                                                                   |   | 2001        
|                                                                                   |   |             
|Other real estate and
        repossessions                                        | $ |            
|Accruing loans 90 days or 
          more
        past due                         |   | 186         
|Non-accrual loans                                                                  |   | 1,177       
|Interest on non-accrual
           loans which would have
           been reported |   | 375         

Non-accrual loans in 2001 decreased $5.5 million from 2000 primarily due to
  one large commercial loan to a medical facility in the amount of $3.2 million
  and a large accounts receivable

-18-

---



financing customer with a balance of $1.1
  million being taken off non-accrual status during 2001 as a result of
  foreclosures. The Bank has imposed specific allocations of $105,000, which are
  maintained in the allowance for loan losses, for impaired loans.  See
  note 3 to the consolidated financial statements for more discussion on
  impaired loans. There were no related party loans that were considered
  non-performing at December 31, 2001.

While there may be additional loans in the portfolio that may become
  classified as conditions indicate, management is not aware of any potential
  problem or restructured loans that are not disclosed in the table above.

A loan is placed on non-accrual status when, in managements judgment,
  the collection of interest appears doubtful. As a result of managements
  ongoing review of the loan portfolio, loans are classified as non-accrual
  generally when they are past due in principal or interest payments for more
  than 90 days or it is otherwise not reasonable to expect collection of
  principal and interest under the original terms. Exceptions are allowed for 90
  day past due loans when such loans are well secured and in process of
  collection. Generally, payments received on non-accrual loans are
  applied directly to principal.

Deposits

Time deposits of $100 thousand and greater totaled $31.2 million at December
  31, 2001, compared with $26.4 million at year-end 2000. The Bank had no
  brokered CDs outstanding during 2001, 2000 or 1999.  The following
  table sets forth the scheduled maturities of time deposits of $100 thousand
  and greater at December 31, 2001.

Table 9
  Deposits(in thousands)

Within 3 months
      $
      8,417After 3 through 6 months
      
      9,578After 6 through 12 months
      
      7,539After 12 months
      
      5,680Total
      $
      31,214


The Bank also utilizes retail repurchase agreements for short-term
  borrowings.  The retail repurchase agreements are agreements with Bank
  customers to sweep excess demand deposit funds to an overnight account that
  bears interest at the Banks 91-day time deposit rate.  The following
  table sets forth certain information regarding Federal funds purchased and
  securities sold under repurchase agreements for the periods indicated.



-19-

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Table 10
  Short-term Borrowings(in thousands)

|                                                                    |   | December 31,
|------------------------------------------------------------------- | - | ------------
|                                                                    |   |             
|                                                                    |   | 2001        
|Average balance outstanding                                         | $ | 13,887      
|Maximum amount outstanding at
        any month-end during the year | $ | 15,351      
|Balance outstanding at end of
        year                          | $ | 14,144      
|Weighted average interest rate
        during the year              |   | 3.47%       
|Weighted average interest rate
        at end of year               |   | 1.50%       

Liquidity

The Bank must maintain, on a daily basis, sufficient funds to cover the
  withdrawals from depositors accounts and to supply new borrowers with
  funds. To meet these obligations, the Bank keeps cash on hand, maintains
  account balances with its correspondent banks, and purchases and sells federal
  funds and other short-term investments. Asset and liability maturities are
  monitored in an attempt to match these to meet liquidity needs. It is the
  policy of the Bank to monitor its liquidity to meet regulatory requirements
  and their local funding requirements.

The Bank maintains relationships with correspondent banks that can provide
  funds to it on short notice, if needed. Presently, the Bank has arrangements
  with a commercial bank for short term unsecured advances up to $5.0
  million.  Cash and cash equivalents increased $4.7 million to a total
  $20.2 million at December 31, 2001, as cash flows provided by financing and
  operating activities out-paced amounts used by investing activities. Cash
  inflows from operations totaled $2.5 million in 2001, while inflows from
  financing activities totaled $15.4 million, most of which were net deposit
  increases during 2001 of $14.3 million and $2.7 million increases in
  repurchase agreements. Included in financing activities were note payable
  repayments of $111,000, FHLB advance repayments of $125,000, $1.1 million of
  dividends paid to stockholders and $320,000 for the repurchase and retirement
  of common stock.

Investing activities used $13.1 million of cash and cash equivalents,
  principally composed of net advances of loans to customers of $10.8 million
  during 2001 and net investment security increases of $2 million.

See the consolidated statements of cash flows in the consolidated financial
  statements for a more complete analysis of cash flows.

Capital Resources

The Company continues to maintain adequate capital ratios. The following
  tables present the Companys regulatory capital position at December 31,
  2001.



-20-

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## Table 11
  Capital Ratios

|                                                | Actual as of
        December 31, 2001
|----------------------------------------------- | --------------------------------------
|                                                |                                       
|Tier 1 Capital                                  |                                       
|Tier 1 Capital
        minimum requirement      |                                       
|                                                |                                       
|                                                |                                       
|Excess                                          |                                       
|                                                |                                       
|                                                |                                       
|Total Capital                                   |                                       
|Total Capital
        minimum requirement       |                                       
|                                                |                                       
|                                                |                                       
|Excess                                          |                                       
|                                                |                                       
|                                                |                                       
|Tier 1 Capital to
        adjusted total assets |                                       
|(Leverage
        Ratio)                      |                                       
|Minimum leverage
        requirement            |                                       
|                                                |                                       
|                                                |                                       
|Excess                                          |                                       
|                                                |                                       

During 2001, 2000, and 1999 the Company redeemed and retired 7,150, 9,770, and
  18,876 shares, respectively, of its $1 par value common stock for a total
  purchase price of $320,250, $390,800, and $755,041, respectively.  On
  January 25, 2002, the Company repurchased and retired 38,095 shares for $2
  million.

For a more complete discussion of the actual and required ratios of the
  Company and its Bank subsidiary, see Note 15 to the consolidated financial
  statements.

Average equity to average assets was 11.11% in 2001, 10.52% in 2000, and
  10.36% in 1999. The ratio of dividends declared to net earnings was 37.26%
  during 2001, compared with 33.07% and 47.08% in 2000 and 1999, respectively.

Asset/Liability
  Management

It is the Companys objective to manage assets and liabilities to provide a
  satisfactory, consistent level of profitability within the framework of
  established cash, loan, investment, borrowing and capital policies. Certain
  officers are charged with the responsibility for monitoring policies and
  procedures that are designed to ensure acceptable composition of the
  asset/liability mix. It is the overall philosophy of management to support
  asset growth primarily through growth of core deposits, which include deposits
  of all categories made by local individuals, partnerships and corporations.
  The objective of the policy is to control interest sensitive assets and
  liabilities so as to minimize the impact of substantial movements in interest
  rates on earnings.

The asset/liability mix is monitored on a regular basis. A report reflecting
  the interest sensitive assets and interest sensitive liabilities is prepared
  and presented to the Board of Directors on a monthly basis.  One method
  to measure a banks interest rate exposure is through its 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 within that
  timeframe. The difference between these two amounts is called the gap,
  the amount of either liabilities or assets that will reprice without a
  corresponding asset or liability repricing.



-21-

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A negative gap (more liabilities repricing than assets) generally indicates
  that the banks net interest income will decrease if interest rates rise and
  will increase if interest rates fall. A positive gap generally indicates that
  the banks net interest income will decrease if rates fall and will increase
  if rates rise.  The interest rate fluctuation is caused by the Federal
  Reserve Banks actions and the market.  There is a risk in having
  mismatches in repricing periods on maturities of assets and liabilities. 
  Sudden rate movements tend to have more impact on this risk.

The following table summarizes the amounts of interestearning assets
  and interestbearing liabilities outstanding at December 31, 2001 that
  are expected to mature, prepay or reprice in each of the future time periods
  shown. Except as stated below, the amount of assets or liabilities that mature
  or reprice during a particular period was determined in accordance with the
  contractual terms of the asset or liability.  Adjustable rate loans are
  included in the period in which interest rates are next scheduled to adjust
  rather than in the period in which they are due, and fixed rate loans and
  mortgage-backed securities are included in the periods in which they are
  anticipated to be repaid based on scheduled maturities. The Companys
  savings accounts and interest-bearing demand accounts (NOW and money
  market deposit accounts), which are generally subject to immediate withdrawal,
  are included in the Three Months or Less category, although historical
  experience has proven these deposits to be more stable over the course of a
  year.

## Table 12Interest Rate Gap
  Sensitivity(in thousands)

|                                                                      |   | At
        December 31, 2001
        Maturing
        or Repricing in
|--------------------------------------------------------------------- | - | ---------------------------------------------------------------------
|                                                                      |   |                                                                      
|                                                                      |   | Three  
        Months or
        Less                               
|                                                                      |   |                                                                      
|Interest-earning
        assets:                                      |   |                                                                      
|Interest-bearing
        deposits
            with other banks        | $ | 500                                                                  
|Federal funds
        sold                                            |   | 10,017                                                               
|Investment
        securities                                         |   | 88                                                                   
|Mortgage loans
        held for
            sale                      |   | 2,766                                                                
|Loans                                                                 |   | 72,183                                                               
|Other investments                                                     |   |                                                                     
|                                                                      |   |                                                                      
|Total interest-bearing
        assets                                 |   | 85,554                                                               
|                                                                      |   |                                                                      
|                                                                      |   |                                                                      
|Interest-bearing
        liabilities:                                 |   |                                                                      
|Deposits:                                                             |   |                                                                      
|Demand and
        savings                                            |   | 69,213                                                               
|Time deposits                                                         |   | 33,607                                                               
|Securities sold
        under 
                 repurchase agreements |   | 14,144                                                               
|FHLB advances                                                         |   | 31                                                                   
|                                                                      |   |                                                                      
|Total interest-bearing
             liabilities                       | $ | 116,995                                                              
|                                                                      |   |                                                                      
|Interest
        sensitive difference
           per period           |   | (31,441)                                                             



-22-

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|Cumulative
        interest 
             sensitivity difference |  | (31,441) | (60,876) | 13,786 | 42,316 |  | 
|---------------------------------------------------------------- |  | -------- | -------- | ------ | ------ |  | 
|Cumulative
        difference 
             to total assets      |  | (12.76%) | (24.70%) | 5.59%  | 17.17% |  | 

At December 31, 2001, the difference between the Companys liabilities and
  assets repricing or maturing within one year was $60.8 million. Due to an
  excess of liabilities repricing or maturing within one year, a rise in
  interest rates would cause the Companys net interest income to decline.

Certain shortcomings are inherent in the method of analysis presented in the
  foregoing table. For example, although certain assets and liabilities may have
  similar maturities or periods to repricing, they may react in different
  degrees or at different points in time to changes in market interest rates.
  Additionally, certain assets, such as adjustable-rate mortgages, have
  features that restrict changes in interest rates, both on a short-term
  basis and over the life of the asset. Changes in interest rates, prepayment
  rates, early withdrawal levels and the ability of borrowers to service their
  debt, among other factors, may change significantly from the assumptions made
  in the table.

Inflation

Inflation impacts the growth in total assets in the banking industry and
  causes a need to increase equity capital at higher than normal rates to meet
  capital adequacy requirements. The Company copes with the effects of inflation
  through the management of its interest rate sensitivity gap position by
  periodically reviewing and adjusting its pricing of services to consider
  current costs, and through managing its level of net income relative to its
  dividend payout policy.

## Recent Accounting Pronouncements

In September 2000, the FASB issued Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities  a Replacement of FASB Statement No. 125 (SFAS 140). SFAS 140 revises the criteria for accounting for securitizations and other transfers of financial assets and collateral. In addition, SFAS 140 requires certain additional disclosures. Except for the new disclosure provisions, which were effective for the year ended December 31, 2000, SFAS 140 was effective for the transfer of financial assets occurring after March 31, 2001. The provisions of SFAS 140 did not have a significant effect on the consolidated financial statements.

In July 2001, the FASB issued Statements of Financial Accounting Standards No. 141, Business Combinations and No. 142, Goodwill and Other Intangible Assets. These standards change the accounting for business combinations by, among other things, prohibiting the prospective use of pooling-of-interests accounting and requiring companies to stop amortizing goodwill and certain intangible assets with an indefinite useful life created by business combinations accounted for using the purchase method of accounting. Instead, goodwill and intangible assets deemed to have an indefinite useful life will be subject to an annual review for impairment. The new standards generally will be effective in the first quarter of 2002. The provisions of these statements did not have an effect on the consolidated financial statements.

Item
  7.   
  Financial Statements

The financial statements and the report of independent public accountants are
  included in this report beginning at page F-1.



-23-

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Item
  8.    
  Changes in and
  Disagreements with Accountants on Accounting and Financial Disclosure

For the year ended December 31, 2001, the accounting firm of Porter Keadle
  Moore, LLP was the principal accountant for the Company.  The Company had
  no disagreements with its accountants on any matters of accounting principle
  or practices or financial statement disclosure.





-24-

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# PART III



|Item
        9. | Directors,
        Executive Officers, Promoters and Control Persons; Compliance with
        Section 16(a) of the Exchange Act
|--------------- | -------------------------------------------------------------------------------------------------------------------------------

The Board of
  Directors

The
  following table sets forth for each director of the Company as of March 12,
  2002, (a) the persons name, (b) his age at December 31, 2001, (c) the year
  he was first elected as a director of the Company and (d) his positions with
  the Company and the Bank, other than as a director, and his principal
  occupation and business experience for the past five years.

|Name                   | Age | Year FirstElected | Position with Company;
        Principal
        Occupation; Business Experience;
        Directorships                               
|---------------------- | --- | ----------------- | --------------------------------------------------------------------------------------------------------------------------------------
|                       |     |                   |                                                                                                                                       
|J. Henry Cheatham, III | 51  | 1994              | Vice President of Textiles,
        Inc.                                                                                              
|                       |     |                   |                                                                                                                                       
|James G. Cheatham      | 49  | 1988              | President of the 1888 Group, a
        textile company                                                                                
|                       |     |                   |                                                                                                                                       
|C. A. Knowles          | 69  | 1982              | President, Chief Executive
        Officer, Treasurer of the Company and President of the Bank, and
        Director of the 1888 Group
|                       |     |                   |                                                                                                                                       
|James A. Mankin        | 75  | 1982              | Retired; Merchant, Real Estate
        Developer, and Director of the 1888 Group                                                      
|                       |     |                   |                                                                                                                                       
|David G. Newton        | 54  | 1990              | Real Estate Developer                                                                                                                 
|                       |     |                   |                                                                                                                                       
|John T. Newton, Jr.    | 55  | 1993              | Chairman of the Board of the
        Company, Chairman of the Board of the Bank, Attorney, Newton &
        Howell, P.C.              

Directors
  are elected at each annual meeting of shareholders and hold office until the
  next annual meeting and until their successors are elected and
  qualified.  John T. Newton, Jr. and David G. Newton are brothers and are
  first cousins of J. Henry Cheatham, III and James G. Cheatham, who are also
  brothers.  There are no other family relationships among directors and
  executive officers of the Company.

Executive Officers

The
  following table sets forth for each executive officer of the Company (a) the
  persons name, (b) his age at December 31, 2001, (c) the year he was first
  elected as an executive officer of the Company and (d) his positions with the
  Company and the Bank.

|Name         | Age | Year First Elected | Principal Occupation; Business
        Experience                                                 
|------------ | --- | ------------------ | --------------------------------------------------------------------------------------------------
|             |     |                    |                                                                                                   
|C.A. Knowles | 69  | 1982               | President, Chief Executive
        Officer and Treasurer of the Company and President of the Bank.



-25-

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|                |    |      |                                                                                                                                          
|--------------- | -- | ---- | -----------------------------------------------------------------------------------------------------------------------------------------
|Mark A. Flowers | 46 | 2001 | Assistant Treasurer since 2001,
        Senior Vice President of the Bank since 2001, Principal Accounting and
        Financial Officer.

Item
  10.  
  Executive Compensation

The
  following table sets forth the annual compensation paid by the Company and its
  subsidiary to certain of the Companys executive officers whose cash
  compensation, including salary and bonus, exceeded $100,000.

SUMMARY COMPENSATION
  TABLE

|                                                                                |          | Annual
        Compensation |         | Long-Term
        Compensation
|------------------------------------------------------------------------------- | -------- | --------------------------- | ------- | ------------------------------
|Name and Principal Position                                                     | Year     | Salary(1)                   | Bonus   | Other(2)                      
|C. A. Knowles
        President, Chief Executive
        Officer, and Treasurer | 2001     | $205,940                    | $55,995 | $1,080                        
|2000                                                                            | $201,640 | $78,338                     |         | $17,535                       
|1999                                                                            | $203,680 | $29,367                     |         | $16,700                       
|Christopher L. Hill
        Executive Vice President,
        Commercial Loans  | 2001     | $112,223                    | $12,028 | $1,080                        
|2000                                                                            | $97,262  | $21,702                     |         | $11,735                       
|1999                                                                            | $86,800  | $6,840                      |         | $  9,202                      
|J. Charles Copeland
        Executive Vice President,
        General Banking   | 2001     | $121,850                    | $7,500  | $1,080                        
|2000                                                                            | $105,962 | $10,050                     |         | $10,572                       
|1999                                                                            | $96,100  | $100                        |         | $  8,527                      
|James H. Smallwood
        Senior Vice President
        Management Loans       | 2001     | $77,337                     | $33,548 | $1,080                        
|2000                                                                            | $70,692  | $31,859                     |         | $10,276                       
|1999                                                                            | $70,000  | $36,357                     |         | $10,657                       

_____________________

(1)    Includes
  Directors fees
  (2)    Reflects life insurance premiums paid.  This
  insurance benefit is offered to all employees.
  (3)    Represents Company matching of 401(k) contributions.

Director Compensation

Each
  director of the Company receives a $1,600 annual retainer plus $300 per
  meeting attended for their service as a director of the Company.  Each
  director of the Bank receives an annual retainer of $3,000 plus $300 per
  meeting attended for their service as a director of the Bank and $150 for each
  Board committee meeting they attend.



-26-

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Item 11.  Security Ownership
  of Certain Beneficial Owners and Management

Principal Holders of Stock

The
  following table provides for each person who, to the best information and
  knowledge of the Company, beneficially owned 5% or more of the outstanding
  shares of Common Stock on March 12, 2002, the following information: (a) the
  owners name and address, (b) the number of shares of Common Stock owned,
  and (c) the  percentage such number represents of the outstanding shares
  of Company Stock.  Unless otherwise indicated, the listed owners are the
  record owners of, and have sole voting and investment powers over, their
  shares.

|Name and Address                                                                               | Number of
        Shares
        Beneficially Owned | Percentage of Total
|---------------------------------------------------------------------------------------------- | --------------------------------------------------- | -------------------
|Newton Family Partnership
        Post Office Drawer F, Griffin, Georgia  30224                | 171,904(1)                                          | 23.42%             
|John T. Newton, Sr.
        1076 Maple Drive, Griffin, Georgia  30223                          | 195,990(2)                                          | 26.70%             
|John Henry Cheatham, III
        1106 2nd St. PMB #327, Encinitas, California
        92024    | 40,776(3)                                           | 5.55%              
|James G. Cheatham
        Post Office Box 506, Griffin, Georgia  30224                         | 49,968(4)                                           | 6.81%              
|Lelia Cheatham Von Stein
        445 Rich Mountain Road, Brevard,North
        Carolina  28712 | 49,368(5)                                           | 6.73%              



|(1) | John T. Newton,
        Sr. has sole voting and investment power over the shares owned of record
        by the partnership under the terms of the partnership agreement.                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Of the
        indicated shares, 171,904 shares are owned of record by the Newton
        Family Partnership, and Mr. Newton has sole voting and investment
        power with respect to these shares.  Includes 2808 shares owned by
        the Trust Under Will of Virginia Cheatham Newton.
|(3) | Of the
        indicated shares, Mr. Cheatham owns 35,152 shares and 5,624 shares are
        owned by his children.                                                                                                                                                                            
|(4) | Of the
        indicated shares, Mr. Cheatham owns 35,152 shares and 14,816 shares are
        owned by his children.                                                                                                                                                                           
|(5) | Of the
        indicated shares, Ms. Von Stein owns 35,452 shares and 14,216 shares are
        owned by her children.                                                                                                                                                                          

Stock
  Owned By Management

The
  following table provides for each director of the Company, each named
  executive officer, and for all directors and officers of the Company as a
  group, as of March 12, 2002, the following information: (a) the name of the
  named executive officer, director, or the number of persons in the group; (b)
  the number of shares of Common Stock beneficially owned by the named executive
  officer, director, or



-27-

---



the group; and (c)
  the percentage such number represents of the outstanding shares of Common
  Stock.  Unless otherwise indicated, the listed person is the record owner
  of, and has sole voting and investment powers over, his shares.

|                                                                            | Number of Shares           |                            
|--------------------------------------------------------------------------- | -------------------------- | ---------------------------
|Name and
        Address                                                    | Beneficially
        Owned | Percentage of
        Total
|                                                                            |                            |                            
|J. Henry Cheatham, III                                                      | 40,776(1)                  | 5.55%                      
|                                                                            |                            |                            
|C. A. Knowles                                                               | 920                        | *                          
|                                                                            |                            |                            
|James A. Mankin                                                             | 100(2)                     | *                          
|                                                                            |                            |                            
|David G. Newton                                                             | 40,675(3)                  | 5.54%                      
|                                                                            |                            |                            
|James G. Cheatham                                                           | 49,968(4)                  | 6.81%                      
|                                                                            |                            |                            
|John T. Newton, Jr.                                                         | 35,529(5)                  | 4.84%                      
|                                                                            |                            |                            
|All directors and
        executive officers
        as a group (9 persons) | 168,673                    | 22.98%                     

________________________

|*   | Indicates
        less than one percent.                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                      
|(1) | Includes
        5,624 shares held by Mr. Cheatham as custodian for his children.                                                                                                                                                    
|(2) | Does not
        include 796 shares owned by Mr. Mankins wife.  Does not include
        294 shares held in trust for his daughter and 4222 shares held in trust
        for his grandchildren for which Mr. Mankin is a Co-Trustee.
|(3) | Includes
        10,429 shares are held by Mr. Newton as trustee for his niece and
        nephew.                                                                                                                                   
|(4) | Includes
        14,816 shares held by his children.                                                                                                                                                                                 
|(5) | Includes
        8,618 shares held by Mr. Newton as trustee for his niece and
        nephew.  Does not include 250 shares owned by Mr. Newtons wife.                                                                               

Item
  12.  Certain Relationships and Related Transactions

The
  Companys directors and officers and certain companies and individuals
  associated with them have been customers of, and have had banking transactions
  with, the Bank and are expected to continue such relationships in the
  future.  Pursuant to such transactions, the Companys directors and
  officers from time to time have borrowed funds from the Bank for various
  business and personal reasons.  In the opinion of the management of the
  Company, the extensions of credit made by the Bank to its directors and
  officers since January 1, 2002 (a) were made in the ordinary course of
  business, (b) were made on substantially the same terms, including interest
  rates and collateral, as those prevailing at the time for comparable
  transactions with other persons and (c) did not involve more than a normal
  risk of collectibility or present other unfavorable features.  See Note
  12 under Notes to Consolidated Financial Statements in Item 7 hereof.



-28-

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Item
  13.      Exhibits and Reports on Form 8-K

(a)      Exhibits:

The
  Company submits herewith as exhibits to this report on Form 10-KSB the
  exhibits required by Item 601 of Regulation S-B, subject to Rule 12b-32 under
  the Securities Exchange Act of 1934.

|Exhibit
        No. | Document                                                                                                                                                                                     
|------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   
|                    |                                                                                                                                                                                              
|2.0                 | Agreement and Plan of
        Reorganization, dated as of September 20, 2001, by and between American
        Community Bank of Georgia and FNB Banking Company, as amended.                 
|                    |                                                                                                                                                                                              
|3.1                 | Amended and Restated Articles
        of Incorporation of FNB Banking Company, dated as of October 12, 1982,
        as amended on April 16, 1987.                                           
|                    |                                                                                                                                                                                              
|3.2                 | Bylaws of FNB Banking Company,
        as amended.                                                                                                                                           
|                    |                                                                                                                                                                                              
|4.1                 | See Exhibits 3.1 and 3.2 for
        provisions of Articles of Incorporation and Bylaws, as amended, which
        define the rights of the holders of Common Stock of FNB Banking Company.  
|                    |                                                                                                                                                                                              
|21.0                | Subsidiary of FNB Banking
        Company.  (Incorporated by reference from Exhibit 21.0 to the
        Companys annual report on Form 10-KSB for the year ended December 31,
        1999.)
|                    |                                                                                                                                                                                              
|24.0                | A Power of Attorney is set
        forth on the signature page to this Form 10-KSB.                                                                                                          



(b)     Reports
  on Form 8-K:

None.



-29-

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FNB BANKING COMPANY
AND SUBSIDIARY



Consolidated
Financial Statements

December 31, 2001,
2000 and 1999

(with Independent
Accountants Report thereon)

















---



FNB BANKING COMPANY
AND SUBSIDIARY



Consolidated
Financial Statements
December 31, 2001, 2000 and 1999
(with Independent Accountants Report thereon)



Index to Financial
Statements

PageReport of Independent Certified
        Public Accountants
      F-2Consolidated Balance Sheets as
        of December 31, 2001 and 2000
      F-3Consolidated Statements of
        Earnings For the Years EndedDecember 31, 2001, 2000 and
        1999
      F-4Consolidated Statements of
        Changes in Stockholders Equityfor the Years Ended December
        31, 2001, 2000 and 1999
      F-5Consolidated 
        Statements  of Cash  Flows for the Years EndedDecember 31, 2001, 2000 and
        1999
      F-6Notes to Consolidated Financial
        Statements
      F-9






-i-

---







REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS





To the Board of Directors and
Stockholders
FNB Banking Company and Subsidiary



We have audited the
accompanying consolidated balance sheets of FNB Banking Company and subsidiary
as of December 31, 2001 and 2000, and the related statements of earnings,
changes in stockholders equity, comprehensive income and cash flows for each
of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of FNB Banking Company and subsidiary
as of December 31, 2001 and 2000, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.



/s/ Porter Keadle & Moore

Atlanta, Georgia
February 1, 2002



F-1

---



FNB BANKING COMPANY
AND SUBSIDIARY

Consolidated Balance
Sheets

December 31, 2001 and
2000

Assets

|                                                                                                                                             |   | 2001        | 2000       
|-------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | -----------
|                                                                                                                                             |   |             |            
|Cash and due from banks,
      including reserve requirements of 
             $3,349,000 and $2,712,000                                     | $ | 10,198,044  | 9,492,910  
|Federal funds sold                                                                                                                           |   | 10,016,836  | 5,995,834  
|                                                                                                                                             |   |             |            
|Cash and
      cash equivalents                                                                                                              |   | 20,214,880  | 15,488,744 
|Interest-bearing deposits with
      other banks                                                                                             |   | 500,000     | 500,000    
|Investment securities available
      for sale                                                                                               |   | 40,072,932  | 37,380,658 
|Other investments                                                                                                                            |   | 848,200     | 848,200    
|Mortgage loans held for sale                                                                                                                 |   | 2,765,505   | 1,087,041  
|Loans, net                                                                                                                                   |   | 172,650,626 | 162,514,560
|Premises and equipment, net                                                                                                                  |   | 7,473,190   | 7,700,782  
|Accrued interest receivable and
      other assets                                                                                           |   | 1,923,562   | 2,144,405  
|                                                                                                                                             |   |             |            
|                                                                                                                                             | $ | 246,448,895 | 227,664,390
|                                                                                                                                             |   |             |            
|Liabilities and
      Stockholders Equity                                                                                                  
|                                                                                                                                             |   |             |            
|Demand                                                                                                                                       | $ | 33,046,444  | 30,064,548 
|Interest-bearing
      demand                                                                                                                |   | 47,992,254  | 46,583,275 
|Savings                                                                                                                                      |   | 21,220,093  | 18,920,294 
|Time                                                                                                                                         |   | 100,306,617 | 92,733,695 
|                                                                                                                                             |   |             |            
|                                                                                                                                             |   |             |            
|Total
      deposits                                                                                                                         |   | 202,565,408 | 188,301,812
|                                                                                                                                             |   |             |            
|Securities sold under retail
      repurchase agreements                                                                                     |   | 14,143,548  | 11,442,400 
|FHLB advances                                                                                                                                |   | 875,000     | 1,000,000  
|Note payable                                                                                                                                 |   |            | 111,113    
|Accrued interest payable and
      accrued liabilities                                                                                       |   | 1,822,749   | 1,595,706  
|                                                                                                                                             |   |             |            
|                                                                                                                                             |   |             |            
|Total
      liabilities                                                                                                                      |   | 219,406,705 | 202,451,031
|                                                                                                                                             |   |             |            
|                                                                                                                                             |   |             |            
|Commitments                                                                                                                                  |   |             |            
|                                                                                                                                             |   |             |            
|Stockholders equity:                                                                                                                        |   |             |            
|Common
      stock, $1 par value; 5,000,000 shares authorized; 
                    
      772,004 and 779,154 shares issued and outstanding |   | 772,004     | 779,154    
|Retained
      earnings                                                                                                                      |   | 25,336,219  | 23,893,439 
|Accumulated
      other comprehensive income (loss)                                                                                          |   | 933,967     | 540,766    
|                                                                                                                                             |   |             |            
|                                                                                                                                             |   |             |            
|Total
      stockholders equity                                                                                                             |   | 27,042,190  | 25,213,359 
|                                                                                                                                             |   |             |            
|                                                                                                                                             |   |             |            
|                                                                                                                                             | $ | 246,448,895 | 227,664,390
|                                                                                                                                             |   |             |            

See accompanying notes to
consolidated financial statements.

F-2

---



FNB BANKING COMPANY
AND SUBSIDIARY

Consolidated
Statements of Earnings

For the Years Ended
December 31, 2001, 2000 and 1999

|                                                          |   | 2001       | 2000       | 1999      
|--------------------------------------------------------- | - | ---------- | ---------- | ----------
|Interest and dividend income:                             |   |            |            |           
|Interest
      and fees on loans                          | $ | 16,015,271 | 17,098,182 | 15,481,198
|Interest
      on federal funds sold                      |   | 619,868    | 256,297    | 421,559   
|Interest-bearing
      deposits in other banks            |   | 31,157     | 106,546    | 78,421    
|Interest
      on investment securities:                  |   |            |            |           
|Tax-exempt                                                |   | 501,521    | 448,255    | 411,914   
|Taxable                                                   |   | 1,734,799  | 1,750,043  | 1,324,593 
|Dividends
      on other investments                      |   | 98,351     | 115,372    | 113,083   
|                                                          |   |            |            |           
|Total
      interest income                               |   | 19,000,967 | 19,774,695 | 17,830,768
|                                                          |   |            |            |           
|Interest expense:                                         |   |            |            |           
|Deposits                                                  |   | 6,849,672  | 6,594,320  | 6,092,923 
|Note
      payable                                        |   | 3,008      | 15,643     | 24,854    
|Retail
      repurchase agreements and other              |   | 534,940    | 803,702    | 373,971   
|                                                          |   |            |            |           
|Total
      interest expense                              |   | 7,387,620  | 7,413,665  | 6,491,748 
|                                                          |   |            |            |           
|Net
      interest income                                 |   | 11,613,347 | 12,361,030 | 11,339,020
|Provision for loan losses                                 |   | 672,136    | 733,618    | 1,460,332 
|                                                          |   |            |            |           
|Net
      interest income after provision for loan losses |   | 10,941,211 | 11,627,412 | 9,878,688 
|                                                          |   |            |            |           
|Other operating income:                                   |   |            |            |           
|Service
      charges                                     |   | 1,872,156  | 1,803,962  | 1,529,482 
|Fees for
      trust services                             |   | 170,000    | 242,500    | 120,000   
|Securities
      gains (losses), net                      |   | 54,228     | (2,644)    | (42,720)  
|Other                                                     |   | 654,648    | 590,634    | 680,652   
|                                                          |   |            |            |           
|Total
      other operating income                        |   | 2,751,032  | 2,634,452  | 2,287,414 
|                                                          |   |            |            |           
|Other operating expenses:                                 |   |            |            |           
|Salaries
      and employee benefits                      |   | 5,773,295  | 5,429,916  | 5,210,827 
|Occupancy
      and equipment                             |   | 1,616,880  | 1,668,697  | 1,633,812 
|Miscellaneous                                             |   | 2,203,087  | 2,385,253  | 2,266,995 
|                                                          |   |            |            |           
|Total
      other operating expenses                      |   | 9,593,262  | 9,483,866  | 9,111,634 
|                                                          |   |            |            |           
|                                                          |   |            |            |           
|Earnings
      before income taxes                        |   | 4,098,981  | 4,777,998  | 3,054,468 
|                                                          |   |            |            |           
|Income taxes                                              |   | 1,300,108  | 1,573,443  | 950,830   
|                                                          |   |            |            |           
|Net
      earnings                                        | $ | 2,798,873  | 3,204,555  | 2,103,638 
|                                                          |   |            |            |           
|                                                          |   |            |            |           
|Net
      earnings per share                              | $ | 3.61       | 4.07       | 2.64      
|                                                          |   |            |            |           

See accompanying notes to
consolidated financial statements.

F-3

---



FNB BANKING COMPANY
AND SUBSIDIARY

Consolidated
Statements of Changes in Stockholders Equity

For the Years Ended
December 31, 2001, 2000 and 1999

|                                                                           |                                                                           |         | Common
       Stock | Retained Earnings | Accumulated Other
      Comprehensive
      Income (Loss) | Total      
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------- | ------------------- | ----------------- | --------------------------------------------------------- | -----------
|                                                                           |                                                                           |         |                     |                   |                                                           |            
|                                                                           | Balance, December 31, 1998                                                | $       | 807,800             | 21,752,798        | 997,532                                                   | 23,558,130 
|                                                                           | Net earnings                                                              |         |                    | 2,103,638         |                                                          | 2,103,638  
|                                                                           | Cash dividends declared of $1.25
      per share                          |         |                    | (990,459)         |                                                          | (990,459)  
|                                                                           | Shares repurchased and retired                                            |         | (18,876)            | (736,165)         |                                                          | (755,041)  
|                                                                           | Change in accumulated other
      comprehensive income
            (loss) |         |                    |                  | (1,070,880)                                               | (1,070,880)
|                                                                           |                                                                           |         |                     |                   |                                                          
|Balance, December 31, 1999                                                 |                                                                           | 788,924 | 22,129,812          | (73,348)          | 22,845,388                                               
|Net earnings                                                               |                                                                           |        | 3,204,555           |                  | 3,204,555                                                
|Cash dividends declared of $1.35
      per share                           |                                                                           |        | (1,059,898)         |                  | (1,059,898)                                              
|Shares repurchased and retired                                             |                                                                           | (9,770) | (381,030)           |                  | (390,800)                                                
|Change in accumulated other
      comprehensive income
             (loss) |                                                                           |        |                    | 614,114           | 614,114                                                  
|                                                                           |                                                                           |         |                     |                   |                                                          
|Balance, December 31, 2000                                                 |                                                                           | 779,154 | 23,893,439          | 540,766           | 25,213,359                                               
|Net earnings                                                               |                                                                           |        | 2,798,873           |                  | 2,798,873                                                
|Cash dividends declared of $1.35
      per share                           |                                                                           |        | (1,042,993)         |                  | (1,042,993)                                              
|Shares repurchased and retired                                             |                                                                           | (7,150) | (313,100)           |                  | (320,250)                                                
|Change in accumulated other
      comprehensive income
             (loss) |                                                                           |        |                    | 393,201           | 393,201                                                  
|                                                                           |                                                                           |         |                     |                   |                                                          
|Balance, December 31, 2001                                                 | $                                                                         | 772,004 | 25,336,219          | 933,967           | 27,042,190                                               
|                                                                           |                                                                           |         |                     |                   |                                                           |            



See accompanying notes to consolidated
financial statements.



F-4

---



FNB BANKING COMPANY
AND SUBSIDIARY

Consolidated
Statements of Comprehensive Income

For the Years Ended
December 31, 2001, 2000 and 1999

|@@@                                                                                                                                                                                         |   | 2001      | 2000      | 1999       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- | --------- | -----------
|                                                                                                                                                                                            |   |           |           |            
|                                                                                                                                                                                            |   |           |           |            
|Net earnings                                                                                                                                                                                | $ | 2,798,873 | 3,204,555 | 2,103,638  
|                                                                                                                                                                                            |   |           |           |            
|Other comprehensive income, net
      of tax:                                                                                                                                               |   |           |           |            
|Unrealized
      gains (losses) on securities available for sale:                                                                                                                           |   |           |           |            
|Holding
      gains (losses) arising during period, net of tax of
                        
      $261,601, $375,386 and $672,579                                                            |   | 426,822   | 612,475   | (1,097,366)
|Reclassification
      adjustment for (gains) losses included in
                        
      net earnings, net of tax of $20,607, $(1,005) and 
                        
      $(16,234) |   | (33,621)  | 1,639     | 26,486     
|                                                                                                                                                                                            |   |           |           |            
|                                                                                                                                                                                            |   |           |           |            
|Total
      other comprehensive income (loss)                                                                                                                                               |   | 393,201   | 614,114   | (1,070,880)
|                                                                                                                                                                                            |   |           |           |            
|                                                                                                                                                                                            |   |           |           |            
|Comprehensive
      income                                                                                                                                                                  | $ | 3,192,074 | 3,818,669 | 1,032,758  
|                                                                                                                                                                                            |   |           |           |            



See accompanying notes to
consolidated financial statements.



F-5

---



FNB BANKING COMPANY
AND SUBSIDIARY

Consolidated
Statements of Cash Flows

For the Years Ended
December 31, 2001, 2000 and 1999

|                                                                            |   | 2001         | 2000         | 1999        
|--------------------------------------------------------------------------- | - | ------------ | ------------ | ------------
|                                                                            |   |              |              |             
|Cash flows from operating
      activities:                                 |   |              |              |             
|Net
      earnings                                                          | $ | 2,798,873    | 3,204,555    | 2,103,638   
|Adjustments
      to reconcile net earnings                                 |   |              |              |             
|to net
      cash provided by operating activities:                         |   |              |              |             
|Depreciation,
      amortization and accretion                              |   | 496,255      | 573,406      | 637,710     
|Provision
      for loan losses                                             |   | 672,136      | 733,618      | 1,460,332   
|Provision
      for deferred income taxes                                   |   | 165,116      | 242,554      | (230,552)   
|Provision
      for writedown of investment security                        |   |             |   &Inbsp;   | 40,000      
|(Gains)
      losses on sales of investment securities                      |   | (54,228)     | 2,644        | 2,720       
|Losses on
      disposals of premises and equipment                         |   | 48,822       | 2,746        |            
|Gain on
      sale of other real estate and repossessed collateral          |   |             |             | (87,596)    
|Change
      in:                                                            |   |              |              |             
|Mortgage
      loans held for sale                                          |   | (1,678,464)  | (393,062)    | 1,855,446   
|Interest
      receivable                                                   |   | 275,647      | (204,543)    | (116,235)   
|Interest
      payable                                                      |   | (181,429)    | 174,192      | (28,806)    
|Other,
      net                                                            |   | (26,512)     | (163,527)    | 88,233      
|                                                                            |   |              |              |             
|                                                                            |   |              |              |             
|Net cash
      provided by operating activities                             |   | 2,516,216    | 4,172,583    | 5,724,890   
|                                                                            |   |              |              |             
|Cash flows from investing
      activities:                                 |   |              |              |             
|Proceeds from sales of investment
      securities available for sale       |   | 3,044,600    | 509,437      | 620,974     
|Proceeds from calls and
      maturities of investment securities held to   |   |              |              |             
|maturity                                                                    |   |             |             | 483,671     
|Proceeds from calls and
      maturities of investment securities available |   |              |              |             
|for
      sale                                                              |   | 18,511,592   | 2,679,628    | 7,348,800   
|Purchase of investment securities
      available for sale                  |   | (23,537,222) | (8,377,451)  | (12,764,523)
|Purchase of other investments                                               |   |             | (126,600)    |            
|Proceeds from calls of other
      investments                              |   |             |             | 104,100     
|Net change in loans                                                         |   | (10,808,202) | (9,761,548)  | (7,986,794) 
|Proceeds from disposals of
      premises and equipment                     |   | 5,460        | 8,300        | 14,815      
|Additions to premises and
      equipment                                   |   | (363,366)    | (301,549)    | (377,708)   
|                                                                            |   |              |              |             
|                                                                            |   |              |              |             
|Net cash
      used by investing activities                                 | $ | (13,147,138) | (15,369,783) | (12,556,665)
|                                                                            |   |              |              |             



See accompanying notes to
consolidated financial statements.



F-6

---



FNB BANKING COMPANY
AND SUBSIDIARY

Consolidated
Statements of Cash Flows, continued

For the Years
Ended December 31, 2001, 2000 and 1999

|                                                                       |   | 2001        | 2000         | 1999       
|---------------------------------------------------------------------- | - | ----------- | ------------ | -----------
|Cash flows from financing
      activities:                            |   |             |              |            
|Net change in demand and savings
      deposits                        | $ | 6,690,674   | 3,423,987    | 7,587,090  
|Net change in time deposits                                            |   | 7,572,922   | 7,091,978    | 596,137    
|Net change in securities sold
      under retail repurchase agreements |   | 2,701,148   | 2,051,324    | 4,449,295  
|Proceeds from FHLB advances                                            |   |            | 32,125,000   | 7,500,000  
|Repayments of FHLB advances                                            |   | (125,000)   | (39,750,000) | (1,267,857)
|Repayments of note payable                                             |   | (111,113)   | (166,666)    | (166,667)  
|Payment of cash dividends                                              |   | (1,051,323) | (1,023,966)  | (1,002,729)
|Repurchase and retirement of
      common stock                        |   | (320,250)   | (390,800)    | (755,041)  
|                                                                       |   |             |              |            
|                                                                       |   |             |              |            
|Net cash
      provided by financing activities                        |   | 15,357,058  | 3,360,857    | 16,940,228 
|                                                                       |   |             |              |            
|                                                                       |   |             |              |            
|Net change in cash and cash
      equivalents                          |   | 4,726,136   | (7,836,343)  | 10,108,453 
|                                                                       |   |             |              |            
|Cash and cash equivalents at
      beginning of year                   |   | 15,488,744  | 23,325,087   | 13,216,634 
|                                                                       |   |             |              |            
|                                                                       |   |             |              |            
|Cash and cash equivalents at end
      of year                         | $ | 20,214,880  | 15,488,744   | 23,325,087 
|                                                                       |   |             |              |            
|                                                                       |   |             |              |            
|Supplemental disclosures of cash
      flow information:               |   |             |              |            
|Cash paid during the year for:                                         |   |             |              |            
|Interest                                                               | $ | 7,569,049   | 7,239,473    | 6,520,554  
|Income
      taxes                                                     | $ | 1,143,100   | 1,518,000    | 993,000    
|                                                                       |   |             |              |            
|Noncash investing and financing
      activities:                      |   |             |              |            
|Transfer
      of investment securities held to maturity               |   |             |              |            
|to
      available for sale                                            | $ |            |             | 6,595,694  
|Change in
      net unrealized gains/losses on                         |   |             |              |            
|investment
      securities available for sale,                        |   |             |              |            
|net of
      tax                                                       | $ | 393,201     | 614,114      | (1,070,880)
|Transfers
      of loans to other real estate                          | $ |            |             | 236,583    
|Financed
      sales of other real estate                              | $ |            |             | 332,552    
|Change in
      dividends payable                                      | $ | (8,330)     | 35,932       | (12,270)   



See accompanying notes to
consolidated financial statements.



F-7

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements



(1)        
Summary of Significant Accounting Policies

The
accounting and reporting policies of FNB Banking Company (the Company) and
subsidiary, and the methods of applying those principles, conform with auditing
standards and accounting principles generally accepted in the United States of
America (GAAP) and with general practice within the banking industry. The
following is a summary of the significant policies and procedures.

Basis
of PresentationThe consolidated financial
statements include the accounts of the Company and its wholly owned subsidiary,
First National Bank of Griffin (the Bank). All significant intercompany
accounts and transactions have been eliminated in consolidation.

The
Bank commenced business in 1933 upon receipt of its charter from the Georgia
Department of Banking and Finance. This state charter was converted to a
national charter in 1965. The Bank is primarily regulated by the Office of the
Comptroller of the Currency (OCC) and the Company is regulated by the
Federal Reserve Bank and both undergo periodic examinations by these regulatory
authorities. The Bank provides a full range of customary banking services
throughout Spalding and other surrounding counties in Georgia.

In
preparing financial statements in conformity with GAAP, management is required
to make estimates and assumptions that affect the reported amounts in the
financial statements. Actual results could differ significantly from these
estimates. Material estimates common to the banking industry that are
particularly susceptible to significant change in the near term include, but are
not limited to, the determination of the allowance for loan losses, the
valuation of real estate acquired in connection with or in lieu of foreclosure
on loans, and valuation allowances associated with the realization of deferred
tax assets which are based on future taxable income.

Investment
SecuritiesThe Company classifies its
securities in one of three categories: trading, available for sale, or held to
maturity. Trading securities are bought and held principally for the purpose of
selling them in the near term. Held to maturity securities are those securities
for which the Company has the ability and intent to hold the security until
maturity. All other securities not included in trading or held to maturity are
classified as available for sale. At December 31, 2001 and 2000 the Company had
no trading or held to maturity securities.

Available
for sale securities are recorded at fair value. Held to maturity securities are
recorded at cost, adjusted for the amortization or accretion of premiums or
discounts. Unrealized holding gains and losses, net of the related tax effect,
on securities available for sale are excluded from earnings and are reported as
a separate component of stockholders equity until realized. Transfers of
securities between categories are recorded at fair value at the date of
transfer. Unrealized holding gains or losses associated with transfers of
securities from held to maturity to available for sale are recorded as a
separate component of stockholders equity. The unrealized holding gains or
losses included in the separate component of stockholders equity for
securities transferred from available for sale to held to maturity are
maintained and amortized into earnings over the remaining life of the security
as an adjustment to yield in a manner consistent with the amortization or
accretion of premium or discount on the associated security.

A
decline in the market value of any available for sale or held to maturity
investment below cost that is deemed other than temporary is charged to earnings
and establishes a new cost basis for the security.

Premiums
and discounts are amortized or accreted over the life of the related security as
an adjustment to the yield. Realized gains and losses for securities classified
as available for sale and held to maturity are included in earnings and are
derived using the specific identification method for determining the cost of
securities sold.

Other
InvestmentsOther investments include
equity securities with no readily determinable fair value. These investment
securities are carried at cost.



F-8

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(1)      
Summary of Significant Accounting Policies, continued

Mortgage
Loans Held for SaleMortgage loans held for sale
are carried at the lower of aggregate cost or market value. The amount by which
cost exceeds market value is accounted for as a valuation allowance. Changes in
the valuation allowance are included in the determination of net earnings of the
period in which the change occurs.

Loans,
Loan Fees and Interest IncomeLoans are stated at principal amount outstanding, net of the allowance for loan
losses. Interest on loans is calculated by using the simple interest method on
daily balances of the principal amount outstanding.

Accrual
of interest is discontinued on a loan when management believes, after
considering economic and business conditions and collection efforts, that the
borrowers financial condition is such that collection of interest is
doubtful. When a loan is placed on nonaccrual status, previously accrued and
uncollected interest is charged to interest income on loans. Generally, payments
on nonaccrual loans are applied to principal.

Loan
fees, net of certain origination costs, have been deferred and are being
amortized over the lives of the respective loans.

Allowance
For Loan LossesThe allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is unlikely. The
allowance represents an amount which, in managements judgment, will be
adequate to absorb probable losses on existing loans that may become
uncollectible.

Managements
judgment in determining the adequacy of the allowance is based on evaluations of
the collectibility of loans. These evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, current
economic conditions that may affect the borrowers ability to pay, overall
portfolio quality, and review of specific problem loans.  In determining
the adequacy of the allowance for loan losses, management uses a loan grading
system that rates loans in six different categories.  Grades four though
six are assigned allocations of loss based on managements estimate of
potential loss which is generally based on discounted, collateral
deficiencies.  Loans graded one through three are stratified by type and
allocated loss ranges based on historical loss experience for the strata. 
The combination of these results are compared quarterly to the recorded
allowance for loan losses and material differences are adjusted by increasing or
decreasing the provision for loan losses.  Management uses a devoted
internal loan reviewer who is independent of the lending function to challenge
and corroborate the loan grading system and provide additional analysis in
determining the adequacy of the allowance for loan losses and the future
provisions for estimated loan losses.

Management
believes the allowance for loan losses is adequate. While management uses
available information to recognize losses on loans, future additions to the
allowance may be necessary based on changes in economic conditions. In addition,
regulators, as an integral part of their examination process, periodically
review the Banks allowance for loan losses. Such regulators may require the
Bank to recognize additions to the allowance based on their judgments of
information available to them at the time of their examination.

Impaired
loans are measured based on the present value of expected future cash flows
discounted at the loans effective interest rate, or at the loans
observable market price, or at the fair value of the collateral of the loan if
the loan is collateral dependent. A loan is impaired when, based on current
information and events, it is probable that all amounts due according to the
contractual terms of the loan agreement will not be collected.



F-9

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(1)      
Summary of Significant Accounting Policies, continued

Premises
and EquipmentPremises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. When assets are retired or otherwise disposed, the
cost and related accumulated depreciation are removed from the accounts, and any
gain or loss is reflected in income for the period. Costs incurred for
maintenance and repairs are expensed currently. The range of estimated useful
lives for premises and equipment are:

Buildings and
improvements                                                                                         
10    40 Years
                                
Furniture and
equipment                                                                                                  
3    10 Years

Securities
Sold Under Retail Repurchase AgreementsSecurities sold under retail repurchase agreements are secured borrowings and
are treated as financing activities and are carried at the amounts at which the
securities will be subsequently reacquired as specified in the respective
agreements.

Income
TaxesThe Company accounts for income taxes using the liability method and
recognizes deferred tax assets and liabilities for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which the assets and liabilities are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income tax expense in the period that
includes the enactment date.

In
the event the future tax consequences of differences between the financial
reporting bases and the tax bases of the Companys assets and liabilities
results in deferred tax assets, an evaluation of the probability of being able
to realize the future benefits indicated by such asset is required. A valuation
allowance is provided for the portion of the deferred tax asset when it is more
likely than not that some portion or all of the deferred tax asset will not be
realized. In assessing the realizability of the deferred tax assets, management
considers the scheduled reversals of deferred tax liabilities, projected future
taxable income, and tax planning strategies.

Net
Earnings Per Common ShareBasic net earnings per common
share are based on the weighted average number of common shares outstanding
during the period while the effects of potential common shares outstanding
during the period such as options, convertible securities and warrants are
included in diluted earnings per share. The Company has no potential common
shares and correspondingly, earnings per share amounts for 2001, 2000 and 1999,
respectively, are based on 774,757, 786,451 and 796,074 shares, the weighted
average number of common shares outstanding.

Comprehensive
IncomeThe Company has elected to present comprehensive income in a separate
consolidated statement of comprehensive income. Accumulated other comprehensive
income is solely related to the net of tax effect of unrealized gains (losses)
on securities available for sale.

OtherProperty (other than cash deposits) held by the Bank in a fiduciary or agency
capacity for customers is not included in the balance sheets since such items
are not assets of the Bank.

F-10

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to Consolidated
Financial Statements, continued

(2)      
Investment Securities

Investment
securities available for sale at December 31, 2001 and 2000 are as follows:

December 31,
        2001Amortized
        Cost
      Gross
        Unrealized
        Gains
      Gross
        Unrealized
        Losses
      Estimated 
        Fair
        ValueU.S. Government agencies
      $
      6,981,819
      139,151
      
      7,120,970State, county and municipal
      
      12,378,817
      254,422
      142,320
      12,490,919Mortgage-backed securities
      
      18,679,889
      298,314
      60,644
      18,917,559Equity securities
      
      526,010
      1,017,474
      
      1,543,484Total
      $
      38,566,535
      1,709,361
      202,964
      40,072,932December 31,
        2000Amortized
        Cost
      Gross
        Unrealized
        Gains
      Gross
        Unrealized
        Losses
      Estimated 
        Fair
        ValueU.S. Government agencies
      $
      15,456,589
      45,401
      99,109
      15,402,881State, county and municipal
      
      9,296,071
      172,365
      60,983
      9,407,453Mortgage-backed securities
      
      11,229,785
      127,441
      51,039
      11,306,187Equity securities
      
      526,010
      738,127
      
      1,264,137Total
      $
      36,508,455
      1,083,334
      211,131
      37,380,658


The
amortized cost and fair value of investment securities available for sale at
December 31, 2001, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers have the right to call
or prepay obligations with or without call or prepayment penalties.

Amortized
        Cost
      Estimated
        Fair ValueU.S. Government agencies:Within
        1 year
      $
      
      1 to 5
        years
      
      1,495,524
      1,531,1305 to 10
        years
      
      5,486,295
      5,589,840$
      6,981,819
      7,120,970State, county and municipal:Within
        1 year
      $
      
      1 to 5
        years
      
      3,779,764
      3,976,1895 to 10
        years
      
      5,727,612
      5,685,597More
        than 10 years
      
      2,871,441
      2,829,133$
      12,378,817
      12,490,919Total securities other than
        mortgage-
            backed securities:Within
        1 year
      $
      
      1 to 5
        years
      
      5,275,288
      5,507,3195 to 10
        years
      
      11,213,907
      11,275,437More
        than 10 years
      
      2,871,441
      2,829,133Mortgage-backed securities
      
      18,679,889
      18,917,559Equity securities
      
      526,010
      1,543,484$
      38,566,535
      40,072,932


F-11

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to Consolidated
Financial Statements, continued

(2)      
Investment Securities, continued

Proceeds
from sales of securities available for sale during 2001, 2000 and 1999 were
$3,044,600, $509,437 and $620,974, respectively. Gross losses of $5,400, $2,644
and $2,720 for 2001, 2000 and 1999, respectively, were realized on those
sales.  Gross gains of $59,628 were realized on the sales and calls of
securities for 2001.

Certain
investment securities were written down to their estimated realizable values
because, in the opinion of management, the decline in value was considered other
than temporary. In late 1999 an investment security was considered in default
and written down $40,000.

Securities
with a carrying value of approximately $29,050,000 and $26,688,000 at December
31, 2001 and 2000, respectively, were pledged to secure public deposits and for
other purposes.

In
1999, the Bank transferred all held to maturity investment securities to
available for sale in connection with the adoption of SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities.  The held to maturity
securities had amortized cost of $6,600,000 and net unrealized gains of $6,100.

(3)      
Loans

Major
classifications of loans at December 31, 2001 and 2000 are summarized as
follows:

2001
      2000Commercial, financial and
        agricultural
      $
      93,755,706
      87,884,217Real estate    construction
      
      10,615,967
      8,358,119Real estate    mortgage
      
      42,994,865
      40,468,650Consumer
      
      27,534,914
      28,315,243Total
        loans
      
      174,901,452
      165,026,229Less:  
        Allowance for loan losses
      
      1,879,656
      2,137,165Unearned
        interest and fees
      
      371,170
      374,504Net
        loans
      $
      172,650,626
      162,514,560


The
Bank grants loans and extensions of credit to individuals and a variety of firms
and corporations located in its trade area, primarily Spalding County, Georgia
and surrounding counties. Although the Bank has a diversified loan portfolio, a
substantial portion of the loan portfolio is collateralized by improved and
unimproved real estate and is dependent upon the real estate market in this
geographical area.

Changes
in the allowance for loan losses are summarized as follows:

2001
      2000
      1999Balance at beginning of year
      $
      2,137,165
      2,588,697
      1,707,913Amounts charged off
      
      (1,257,176)
      (1,436,467)
      (839,010)Recoveries on amounts
        previously charged off
      
      327,531
      251,317
      259,462Provision charged to operating
        expenses
      
      672,136
      733,618
      1,460,332Balance at end of year
      $
      1,879,656
      2,137,165
      2,588,697


The
Bank was servicing approximately $9,071,000 and $13,198,000 of mortgage loans
for the Federal Home Loan Mortgage Corporation at December 31, 2001 and 2000,
respectively.

F-12

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(3)      
Loans, continued

A
summary of information pertaining to impaired loans for December 31, 2001 and
2000 is presented below.  Impaired loans at December 31, 1999 were not
considered material.

2001
    2000Impaired loans with a valuation
      allowance
    $
    1,176,900
    6,686,000Valuation allowances related to
      impaired loans
    $
    105,000
    1,077,000Average investment in impaired
      loans during the year
    $
    5,312,000
    1,400,000


There
were no impaired loans without a valuation allowance at December 31, 2001 and
2000.  Additionally, no interest income was recognized on impaired loans
during the year ended December 31, 2001 and 2000.

(4)      
Premises and Equipment

Premises
and equipment at December 31, 2001 and 2000, are summarized as follows:

2001
      2000Land and improvements
      $
      1,385,125
      1,385,125Buildings and improvements
      
      7,377,489
      7,377,489Furniture and equipment
      
      4,493,233
      4,199,47113,255,847
      12,962,085Less accumulated depreciation
      
      5,782,657
      5,261,303$
      7,473,190
      7,700,782


Depreciation
expense was $536,676, $597,439 and $626,726 for the years ended December 31,
2001, 2000, and 1999, respectively.

(5)       
Deposits

The
aggregate amount of time deposit accounts with a minimum denomination of
$100,000 was approximately $31,214,000 and $26,418,000 at December 31, 2001 and
2000, respectively. Deposits from related parties totaled approximately
$3,920,000 and $4,449,000 at December 31, 2001 and 2000, respectively.

At
December 31, 2001, the scheduled maturities of time deposits were as follows:

2002
      $
      82,838,4982003
      
      11,218,7942004
      
      3,769,8712005
      
      1,435,0872006
      
      1,044,367$
      100,306,617


(6)       
Note Payable

The
note payable at December 31, 2000, was due in monthly installments of $13,889
plus interest at 70% of the prime interest rate through August 2001.



F-13

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(7)       
Federal Home Loan Bank Advances

The
Bank has an agreement with the Federal Home Loan Bank (FHLB) whereby the
FHLB agreed to provide the Bank credit facilities under the Agreement for
Advances and Security Agreement. Any amounts advanced by the FHLB are
collateralized under a Blanket Floating Lien covering all of the Banks 1  4
family first mortgage loans. The Bank may draw advances up to 75% of the
outstanding balance of these loans based on the agreement with the FHLB.

At
December 31, 2001, the Bank has an advance payable of $875,000 with a fixed
interest rate of 5.50% payable monthly and with equal principal payments of
$31,250 due quarterly until maturity in 2008.

(8)       
Employee Benefit Plan

The
Company has a profit sharing plan covering substantially all employees, subject
to minimum service requirements. The plan complies with the requirements of
Section 401(k) of the Internal Revenue Code. The Company will match up to 6% of
the participants before tax contributions. The Companys matching
contributions amounted to $332,000, $326,000 and $307,000 in 2001, 2000 and
1999, respectively.

(9)       
Commitments

The
Bank is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, standby letters of
credit and financial guarantees. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the balance sheet.
The contract amounts of those instruments reflect the extent of involvement the
Bank has in particular classes of financial instruments.

The
Banks exposure to credit loss in the event of nonperformance by the other
party for commitments to extend credit, standby letters of credit and financial
guarantees written is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.

In
some cases, the Company generally requires collateral or other security to
support financial instruments with credit risk.

Approximate
        Contractual
        Amount2001
      2000Financial instruments whose
        contract
            amounts represent credit risk:Commitments
        to extend credit
      $
      40,918,000
      47,157,000Standby
        letters of credit and financial guarantees written
      $
      1,790,000
      837,000


Commitments
to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. Since many of the commitments may expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements.
The Bank evaluates each customers credit worthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Bank, upon
extension of credit is based on managements credit evaluation. Collateral
held varies but may include unimproved and improved real estate, certificates of
deposit, or personal property.

Standby
letters of credit and financial guarantees written are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
The credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Letters of credit at
December 31, 2001, are fully collateralized.

F-14

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to Consolidated
Financial Statements, continued

(10)      Stockholders
Equity

The
Company redeemed and retired common stock of 7,150 shares for $320,250, 9,770
shares for $390,800 and 18,876 shares for $755,041 in 2001, 2000 and 1999,
respectively.  Additionally, on January 25, 2002, the Company repurchased
and retired 38,095 shares for $2,000,000.

Dividends
paid by the Bank are the primary source of funds available to the Company.
Banking regulations limit the amount of dividends that may be paid without prior
approval of the regulatory authorities. The amount of dividends the Bank may pay
in 2002 without prior approval is approximately $3,841,000 plus 2002 earnings of
the Bank.

(11)     Income
Taxes

The
components of income tax expense (benefit) for the years ended December 31,
2001, 2000 and 1999 are as follows:

2001
      2000
      1999Current
      $
      1,134,992
      1,330,889
      1,181,382Deferred
      
      165,116
      242,554
      (230,552)$
      1,300,108
      1,573,443
      950,830


The
differences between the provision for income taxes and the amount computed by
applying the statutory federal income tax rate to earnings before taxes are as
follows:

2001
      2000
      1999Pretax income at statutory
        rates
      $
      1,393,654
      1,624,519
      1,038,519Add (deduct):Tax-exempt
        interest income
      
      (177,670)
      (151,185)
      (140,051)Nondeductible
        interest expense
      
      21,841
      20,179
      16,104State
        income taxes and other
      
      62,283
      79,930
      36,258$
      1,300,108
      1,573,443
      950,830


The
following summarizes the sources and expected tax consequences of future taxable
deductions (income) which comprise the net deferred tax asset (liability).

2001
      2000Deferred income tax assets:Allowance
        for loan losses
      $
      450,285
      610,957Other
      
      93,407
      49,232Total
        gross deferred income tax assets
      
      543,692
      660,189Deferred income tax
        liabilities:Net
        unrealized gains on investment securities
      
      (572,431)
      (331,436)Premises
        and equipment
      
      (764,845)
      (716,226)Total
        gross deferred income tax liabilities
      
      (1,337,276)
      (1,047,662)Net deferred income tax asset
        (liability)
      $
      (793,584)
      (387,473)




F-15

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to Consolidated
Financial Statements, continued

(12)   Related Party
Transactions

The
Company conducts transactions with its directors and officers, including
companies in which they have beneficial interest, in the normal course of
business. It is the policy of the Company that loan transactions with directors
and officers be made on substantially the same terms as those prevailing at the
time for comparable loans to other persons. The following is a summary of
activity for related party loans for 2001:

Beginning balance
      $
      9,469,870Loans advanced
      
      5,628,360Repayments
      
      (5,735,788)Ending balance
      $
      9,362,442


(13)   Miscellaneous
Operating Expenses

Components
of other operating expenses which are greater than 1% of interest income and
other operating income are as follows:

2001
    2000
    1999Stationery and supplies
    $265,994
    221,094
    244,249Data processing
    $269,718
    268,401
    236,970


(14)      
Fair Value of Financial Instruments

The
assumptions used in the estimation of the fair value of the Companys
financial instruments are detailed below. Where quoted prices are not available,
fair values are based on estimates using discounted cash flows and other
valuation techniques. The use of discounted cash flows can be significantly
affected by the assumptions used, including the discount rate and estimates of
future cash flows. The following disclosures should not be considered a
surrogate of the liquidation value of the Company, but rather a good-faith
estimate of the increase or decrease in value of financial instruments held by
the Company since purchase, origination or issuance.

Cash
and Cash EquivalentsFor cash, due from banks and federal funds sold, the carrying amount is a
reasonable estimate of fair value.

Interest-bearing
Deposits with Other BanksThe carrying value of interest-bearing deposits with other banks is a
reasonable estimate of fair value.

Investment
SecuritiesFair values for investment securities are based on quoted market prices.

Other
InvestmentsThe carrying value of other investments approximates fair value.

Loans
and Mortgage Loans Held for SaleThe fair value of fixed rate loans is estimated by discounting the future
cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings. For variable rate loans, the carrying
amount is a reasonable estimate of fair value.

DepositsThe fair value of demand deposits, savings accounts, NOW accounts and money
market deposits is the amount payable on demand at the reporting date. The fair
value of fixed maturity certificates of deposit is estimated by discounting the
future cash flows using current rates at which comparable certificates would be
issued.

F-16

---



Securities
Sold Under Retail Repurchase AgreementsThe carrying value of securities sold under retail repurchase agreements
approximates fair value.

FHLB
AdvancesThe fair value of the FHLB
fixed rate borrowings are estimated using discounted cash flows, based on the
current incremental borrowing rates for similar types of borrowing arrangements.





F-17

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(14)    
Fair Value of Financial Instruments, continued

Note
PayableThe Companys note payable
bears interest based on a percentage of the prime rate and as such, the carrying
amount approximates the fair value.

Commitments
to Extend Credit and Standby Letters of CreditBecause commitments to extend
credit and standby letters of credit are made using variable rates, or were
recently executed, the contract value is a reasonable estimate of fair value.

LimitationsFair value estimates are made
at a specific point in time, based on relevant market information and
information about the financial instrument. These estimates do not reflect any
premium or discount that could result from offering for sale at one time the
Companys entire holdings of a particular financial instrument. Because no
market exists for a significant portion of the Companys financial
instruments, fair value estimates are based on many judgments. These estimates
are subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

Fair
value estimates are based on existing on and off-balance-sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. Significant assets and liabilities that are not
considered financial instruments include the mortgage banking operation,
deferred income taxes and premises and equipment. In addition, the tax
ramifications related to the realization of the unrealized gains and losses can
have a significant effect on fair value estimates and have not been considered
in the estimates.

The
carrying amount and estimated fair values of the Companys financial
instruments at December 31, 2001 and 2000 are as follows (in thousands):

2001
      2000Carrying
        Amount
      Estimated
        Fair Value
      Carrying
        Amount
      Estimated
        Fair ValueAssets:Cash and cash equivalents
      $
      20,215
      20,215
      15,489
      15,489Interest-bearing deposits with
        other banks
      $
      500
      500
      500
      500Investment securities
      $
      40,073
      40,073
      37,381
      37,381Other investments
      $
      848
      848
      848
      848Loans and mortgage loans held
        for sale
      $
      175,416
      176,024
      163,602
      161,309Liabilities:Deposits
      $
      202,565
      204,599
      188,302
      188,499Securities sold under retail
        repurchase agreements
      $
      14,144
      14,144
      11,442
      11,442FHLB advances
      $
      875
      882
      1,000
      928Note payable
      $
      
      
      111
      111Unrecognized financial
        instruments:Commitments to extend credit
      $
      40,918
      40,918
      47,157
      47,157Standby letters of credit
      $
      1,790
      1,790
      837
      837


F-18

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(15)     
Regulatory Matters

The
Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies.  Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional
discretionary action by regulators that, if undertaken, could have a direct
material effect on the Companys financial statements.  Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and the Bank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.

Quantitative
measures established by regulation to ensure capital adequacy require the
Company and the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined) to risk-weighted assets
(as defined) and of Tier I capital (as defined) to average assets (as defined).
Management believes, as of December 31, 2001, the Company and the Bank meets all
capital adequacy requirements to which they are subject.

As
of December 31, 2001 and 2000, the most recent notification from the OCC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized the Bank must
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios
as set forth in the table. There are no conditions or events since that
notification that management believes have changed the Banks category.

The
consolidated and bank only actual capital amounts and ratios for 2001 and 2000
are also presented in the table (in thousands).

|                                                                     |   | Actual | For Capital
      Adequacy Purposes | To Be Well
      Capitalized Under
      Prompt Corrective
      Action Provisions
|-------------------------------------------------------------------- | - | ------ | ----------------------------------- | ----------------------------------------------------------------------------------
|                                                                     |   |        |                                     |                                                                                   
|                                                                     |   | Amount | Ratio                               | Amount                                                                            
|                                                                     |   |        |                                     |                                                                                   
|As of December 31, 2001                                              |   |        |                                     |                                                                                   
|Total Risk-Based Capital (to
      Risk-
          Weighted Assets): |   |        |                                     |                                                                                   
|Consolidated                                                         | $ | 27,988 | 14.27%                              | 15,694                                                                            
|Bank                                                                 | $ | 27,718 | 13.86%                              | 16,004                                                                            
|Tier I Capital (to Risk-Weighted
      Assets):                      |   |        |                                     |                                                                                   
|Consolidated                                                         | $ | 26,108 | 13.31%                              | 7,847                                                                             
|Bank                                                                 | $ | 25,837 | 12.92%                              | 8,002                                                                             
|Tier I Capital (to Average
      Assets):                            |   |        |                                     |                                                                                   
|Consolidated                                                         | $ | 26,108 | 10.90%                              | 9,583                                                                             
|Bank                                                                 | $ | 25,837 | 10.57%                              | 9,774                                                                             
|                                                                     |   |        |                                     |                                                                                   
|As of December 31, 2000                                              |   |        |                                     |                                                                                   
|Total Risk-Based Capital (to
      Risk-
          Weighted Assets): |   |        |                                     |                                                                                   
|Consolidated                                                         | $ | 26,810 | 14.95%                              | 14,346                                                                            
|Bank                                                                 | $ | 26,537 | 14.78%                              | 14,361                                                                            
|Tier I Capital (to Risk-Weighted
      Assets):                      |   |        |                                     |                                                                                   
|Consolidated                                                         | $ | 24,673 | 13.76%                              | 7,173                                                                             
|Bank                                                                 | $ | 24,400 | 13.59%                              | 7,181                                                                             
|Tier I Capital (to Average
      Assets):                            |   |        |                                     |                                                                                   
|Consolidated                                                         | $ | 24,673 | 11.03%                              | 8,947                                                                             
|Bank                                                                 | $ | 24,400 | 10.97%                              | 8,896                                                                             

F-19

---



FNB BANKING
COMPANY AND SUBSIDIARY

Notes to Consolidated
Financial Statements, continued

(16)     
Pending Business Combination

The
Company entered into an agreement on October 31, 2001, to acquire American
Community Bank of Georgia (ACB), a Georgia banking corporation based in
Stockbridge (Henry County), Georgia with approximately $59 million in total
assets, $40 million in loans, $48 million in deposits, and $ 6.4 million in
stockholders equity.  The agreement calls for the Company to pay cash of
approximately $9.8 million or $13.25 per share for each outstanding share of ACB. 
To finance the transaction, the Company anticipates obtaining $2 million in cash
from dividends for its subsidiary, First National Bank of Griffin, and $7.8
million of borrowed funds from an upstream correspondent bank.  The
transaction, which is expected to close in May 2002, and is subject to approval
by various bank regulatory agencies, was approved by ACB stockholders on January
17, 2002.  The financial statements for December 31, 2001, 2000 and 1999 do
not include any amounts for ACB.  Amounts for ACB will be included in the
financial statements of the Company upon closing.

(17)    
FNB Banking Company (Parent Company Only) Financial Information

Balance Sheets

December 31, 2001 and
2000

2001
      2000AssetsCash
      $
      22,461
      36,320Investment in First National
        Bank of Griffin
      
      26,142,478
      24,483,103Investment securities available
        for sale
      
      1,543,484
      1,264,137Other assets
      
      540,403
      548,733$
      28,248,826
      26,332,293Liabilities
        and Stockholders EquityOther liabilities
      $
      666,233
      570,201Dividends payable
      
      540,403
      548,733Stockholders equity
      
      27,042,190
      25,213,359#$
      28,248,826
      26,332,293




F-20

---



FNB BANKING COMPANY
AND SUBSIDIARY

Notes to
Consolidated Financial Statements, continued

(17)     FNB
Banking Company (Parent Company Only) Financial Information

Statements of Earnings

For the Years Ended
December 31, 2001, 2000 and 1999

2001
      2000
      1999Income:Interest
        and dividends
      $
      39,303
      58,995
      58,311Other
      
      1,000
      
      Dividends
        from subsidiary
      
      1,367,993
      798,573
      1,865,4601,408,296
      857,568
      1,923,771Other operating expenses
      
      72,794
      78,973
      93,863Earnings
        before income taxes and equity in undistributed
                  earnings of bank
        subsidiary
      
      1,335,502
      778,595
      1,829,908Income tax benefit
      
      24,001
      24,509
      Earnings before equity in
        undistributed earnings of bank
                  subsidiary
      
      1,359,503
      803,104
      1,829,908Equity in undistributed
        earnings of bank subsidiary
      
      1,439,370
      2,401,451
      273,730Net earnings
      $
      2,798,873
      3,204,555
      2,103,638


Statements of Cash
Flows

For the Years
Ended December 31, 2001, 2000 and 1999

2001
      2000
      1999Cash flows from operating
        activities:Net earnings
      $
      2,798,873
      3,204,555
      2,103,638Adjustments to reconcile net
        earnings to net cash provided by operating activities:Equity in undistributed
        earnings of bank subsidiary
      
      (1,439,370)
      (2,401,451)
      (273,730)Change in other assets and
        liabilities, net
      
      (1,789)
      486,779
      (279,663)Net cash provided by operating
        activities
      
      1,357,714
      1,289,883
      1,550,245Cash flows from financing
        activities:Dividends paid
      
      (1,051,323)
      (1,023,966)
      (1,002,729)Purchase and retirement of
        stock
      
      (320,250)
      (390,800)
      (755,041)Net cash used by financing
        activities
      
      (1,371,573)
      (1,414,766)
      (1,757,770)Net change in cash
      
      (13,859)
      (124,883)
      (207,525)Cash at beginning of the period
      
      36,320
      161,203
      368,728Cash at end of the period
      $
      22,461
      36,320
      161,203


F-21

---





SIGNATURES

Pursuant
  to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
  1934, the Registrant has duly caused this report to be signed on its behalf by
  the undersigned, thereunto duly authorized.



|                               | FNB BANKING COMPANY             
|------------------------------ | --------------------------------
|                               | (Registrant)                    
|                               |                                 
|                               | By:     /s/
        C.A. Knowles
|                               |                                 
|                               | C. A. Knowles                   
|                               | President                       
|                               |                                 
|Dated:  March 22,
        2002 |                                 



POWER OF ATTORNEY
  AND SIGNATURES



KNOW
  ALL MEN BY THESE PRESENTS, that each person whose signature appears below
  constitutes and appoints C. A. Knowles and John T. Newton, Jr., or each of
  them, his attorney-in-fact, each with full power of substitution, for him in
  his name, place and stead, in any and all capacities, to sign any amendments
  to this Report on Form 10-KSB, and to file the same, with exhibits thereto,
  and other documents in connection therewith, with the Securities and Exchange
  Commission, and hereby ratifies and confirms all that each of said
  attorneys-in-fact, or his substitute or substitutes, may do or cause to be
  done by virtue hereof.  Pursuant to the requirements of the Securities
  Exchange Act of 1934, this Report has been signed by the following persons on
  behalf of the Registrant in the capacities and on the dates indicated.



|Signature                          | Title                                          | Date   
|---------------------------------- | ---------------------------------------------- | -------
|                                   |                                                |        
|/s/ John T. Newton,
        Jr.    |                                                |        
|                                   | Chairman of the Board of
        Directors     | 3/28/02
|John T. Newton, Jr.                |                                                |        
|                                   |                                                |        
|/s/ C.A. Knowles                   |                                                |        
|                                   | President, Treasurer, and                      | 3/28/02
|C.A. Knowles                       | Director (principal executive
        officer) |        
|                                   |                                                |        
|/s/ Mark A. Flowers                |                                                |        
|                                   | Assistant Treasurer (principal                 | 3/28/02
|Mark A. Flowers                    | accounting and financial
        officer)      |        
|                                   |                                                |        
|/s/ James A. Mankin                |                                                |        
|                                   | Director and Secretary                         | 3/28/02
|James A. Mankin                    |                                                |        
|                                   |                                                |        
|/s/ J. Henry
        Cheatham, III |                                                |        
|                                   | Director                                       | 3/28/02
|J. Henry Cheatham, III             |                                                |        
|                                   |                                                |        
|/s/ James G. Cheatham              |                                                |        
|                                   | Director                                       | 3/28/02
|James G. Cheatham                  |                                                |        
|                                   |                                                |        
|/s/ David G. Newton                |                                                |        
|                                   | Director                                       | 3/28/02
|David G. Newton                    |                                                |        





---





# EXHIBIT INDEX



|Exhibit No. | Description of Exhibit                                                                                                                                                      
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.0         | Agreement and Plan of
        Reorganization, dated as of September 20, 2001, by and between American
        Community Bank of Georgia and FNB Banking Company, as amended.
|3.1         | Amended and Restated Articles
        of Incorporation of FNB Banking Company, dated as of October 12, 1982,
        as amended on April 16, 1987.                          
|3.2         | Bylaws of FNB Banking Company,
        as amended.                                                                                                                          
|24.0        | A Power of Attorney is set
        forth on the signature page to this Form 10-KSB.                                                                                         





---