# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-Q

(Mark One)

| | QUARTERLY REPORT PUSUSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ---------------------------------------------------------------------------------------

| | For the Quarterly Period ended March 31, 2008
| | ---------------------------------------------

| | OR
| | --

| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ----------------------------------------------------------------------------------------

| | For the Transition Period from ___________ to _____________
| | -----------------------------------------------------------

Commission file number
333-127242

Atlantic Bancshares, Inc.(Exact name of registrant as specified in its charter)

|South Carolina               |  | 20-3047433         
|---------------------------- |  | -------------------
|(State or other jurisdiction |  | (I.R.S. Employer   
|of incorporation)            |  | Identification No.)

1 Sherington Drive, Suite J (Sheridan Park)Bluffton, South Carolina 29910
(Address of principal executive offices)

(843) 815-7111(Registrants telephone number, including area code)

______________________________

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.      Yes         
No

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See the definitions of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes         No

Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest
practicable date: 1,251,577 shares of common stock, no par value per share, were issued
and outstanding as of May 12, 2008.

---

# ATLANTIC BANCSHARES,
INC.

# INDEX

|                                                                                                 | 
|------------------------------------------------------------------------------------------------ | 
|PART I - FINANCIAL INFORMATION                                                                   | 
|                                                                                                 | 
|Item 1.    Financial Statements (Unaudited)                                                      | 
|                                                                                                 | 
|Condensed Balance Sheets - March 31, 2008 and December 31, 2007                                  | 
|                                                                                                 | 
|Condensed Statement of Operations - Three months ended March 31, 2008 and 2007                   | 
|                                                                                                 | 
|Condensed Statement of Shareholders' Equity -                                                    | 
|Three months ended March 31, 2008 and 2007                                                       | 
|                                                                                                 | 
|Condensed Statement of Cash Flows - Three months ended March 31, 2008 and 2007                   | 
|                                                                                                 | 
|Notes to Condensed Financial Statements                                                          | 
|                                                                                                 | 
|Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations | 
|                                                                                                 | 
|Item 3.    Quantitative and Qualitative Disclosures About Market Risk                            | 
|                                                                                                 | 
|Item 4.    Controls and Procedures                                                               | 
|                                                                                                 | 
|PART II - OTHER INFORMATION                                                                      | 
|                                                                                                 | 
|Item 1.    Legal Proceedings                                                                     | 
|                                                                                                 | 
|Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                           | 
|                                                                                                 | 
|Item 3.    Defaults Upon Senior Securities                                                       | 
|                                                                                                 | 
|Item 4.    Submission of Matters to a Vote of Security Holders                                   | 
|                                                                                                 | 
|Item 5.    Other Information                                                                     | 
|                                                                                                 | 
|Item 6.    Exhibits                                                                              | 

-2-

---

# ATLANTIC BANCSHARES, INC.

# Consolidated Balance
Sheets

# PART I  FINANCIAL
INFORMATION Item 1  Financial Statements.

|                                                             | March 31, | December 31,
|------------------------------------------------------------ | --------- | ------------
|
|
|Assets:                                                      |           |             
|Cash and cash equivalents:                                   |           |             
|Cash and due from banks                                      |           |             
|                                                             |           |             
|Total cash and cash equivalents                              |           |             
|                                                             |           |             
|Securities available for sale                                |           |             
|Nonmarketable equity securities                              |           |             
|                                                             |           |             
|Loans receivable                                             |           |             
|Less allowance for loan losses                               |           |             
|                                                             |           |             
|Loans, net                                                   |           |             
|                                                             |           |             
|Accrued interest receivable                                  |           |             
|Premises, furniture and equipment, net                       |           |             
|Deferred tax asset                                           |           |             
|Other assets                                                 |           |             
|                                                             |           |             
|Total assets                                                 |           |             
|                                                             |           |             
|Liabilities:                                                 |           |             
|Deposits:                                                    |           |             
|Noninterest bearing transaction accounts                     |           |             
|Interest-bearing transaction accounts                        |           |             
|Savings and money market                                     |           |             
|Time deposits $100,000 and over                              |           |             
|Other time deposits                                          |           |             
|                                                             |           |             
|Total deposits                                               |           |             
|                                                             |           |             
|Advances from Federal Home Loan Bank                         |           |             
|Federal funds purchased                                      |           |             
|Accrued interest payable                                     |           |             
|Other liabilities                                            |           |             
|                                                             |           |             
|Total liabilities                                            |           |             
|                                                             |           |             
|Commitments and contingencies                                |           |             
|                                                             |           |             
|Shareholders equity:                                        |           |             
|Preferred stock, no par value; 10,000,000 shares authorized; |           |             
|No shares issued and outstanding                             |           |             
|Common stock, no par value; 10,000,000 shares authorized;    |           |             
|1,251,577 shares issued and outstanding                      |           |             
|Capital surplus                                              |           |             
|Accumulated other comprehensive income                       |           |             
|Deficit                                                      |           |             
|                                                             |           |             
|Total shareholders' equity                                   |           |             
|                                                             |           |             
|Total liabilities and shareholders equity                   |           |             
|                                                             |           |             

See notes to condensed consolidated financial statements.

-3-

---

# ATLANTIC BANCSHARES, INC.

# Condensed Statements
of Operations(Unaudited)

|                                                    | Three months ended
|--------------------------------------------------- | ------------------
|
|
|Interest income:                                    |                   
|Loans, including fees                               |                   
|Securities, available for sale, taxable             |                   
|Nonmarketable equity securities                     |                   
|Federal funds sold                                  |                   
|Interest bearing deposits with other banks          |                   
|                                                    |                   
|Total                                               |                   
|                                                    |                   
|Interest expense:                                   |                   
|Time deposits $100,000 and over                     |                   
|Other deposits                                      |                   
|Other borrowings                                    |                   
|                                                    |                   
|Total                                               |                   
|                                                    |                   
|Net interest income                                 |                   
|                                                    |                   
|Provision for loan losses                           |                   
|                                                    |                   
|Net interest income after provision for loan losses |                   
|                                                    |                   
|Other operating income:                             |                   
|Service fees on deposit accounts                    |                   
|Residential  mortgage origination fees              |                   
|Other income                                        |                   
|                                                    |                   
|Total                                               |                   
|                                                    |                   
|Other operating expenses:                           |                   
|Salaries and employee benefits                      |                   
|Net occupancy                                       |                   
|Professional fees                                   |                   
|Marketing                                           |                   
|Furniture and equipment                             |                   
|Data processing and related costs                   |                   
|Other operating                                     |                   
|                                                    |                   
|Total                                               |                   
|                                                    |                   
|Loss before income tax benefit                      |                   
|                                                    |                   
|Income tax benefit                                  |                   
|                                                    |                   
|Net loss                                            |                   
|                                                    |                   
|Losses per share                                    |                   
|Basic loss per share                                |                   
|                                                    |                   

See notes to condensed consolidated financial statements.

-4-

---

# ATLANTIC BANCSHARES, INC.

# Consolidated
Statements of Changes in Shareholders Equity and Comprehensive Income For the three months
ended March 31, 2008 and 2007(Unaudited)

|                         |  |  |  | Accumulated |  |  
|------------------------ |  |  |  | ----------- |  | -
|
|
|
|
|December 31, 2006        |  |  |  | 1,251,577   |  | $
|                         |  |  |  |             |  |  
|Net loss                 |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|Other comprehensive      |  |  |  |             |  |  
|income, net of tax       |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|Total comprehensive loss |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|Stock based compensation |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|March 31, 2007           |  |  |  | 1,251,577   |  | $
|                         |  |  |  |             |  |  
|                         |  |  |  |             |  |  
|December 31, 2007        |  |  |  | 1,251,577   |  | $
|                         |  |  |  |             |  |  
|Net loss                 |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|Other comprehensive      |  |  |  |             |  |  
|income, net of tax       |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|Total comprehensive      |  |  |  |             |  |  
|loss                     |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|Stock based compensation |  |  |  | -           |  |  
|                         |  |  |  |             |  |  
|March 31, 2008           |  |  |  | 1,251,577   |  | $
|                         |  |  |  |             |  |  

See notes to condensed consolidated financial statements.

-5-

---

# ATLANTIC BANCSHARES, INC.

# Consolidated
Statements of Cash Flows (Unaudited)

|                                                                  | Three months ended
|----------------------------------------------------------------- | ------------------
|
|Cash flows from operating activities:                             |                   
|Net loss                                                          |                   
|Adjustments to reconcile net loss to net cash                     |                   
|used by operating activities:                                     |                   
|Provision for loan losses                                         |                   
|Depreciation and amortization expense                             |                   
|Discount (accretion) on securities available for sale             |                   
|Stock-based compensation expense                                  |                   
|Deferred income tax benefit                                       |                   
|Decrease (increase) in interest receivable                        |                   
|Increase in interest payable                                      |                   
|(Increase) decrease in other assets                               |                   
|Decrease in other liabilities                                     |                   
|                                                                  |                   
|Net cash used by operating activities                             |                   
|                                                                  |                   
|Cash flows from investing activities:                             |                   
|Net increase in loans receivable, net                             |                   
|Purchase of premises, furniture and equipment                     |                   
|Purchase of securities available for sale                         |                   
|Purchase of nonmarketable equity securities                       |                   
|Repayments, maturities and calls of securities available for sale |                   
|                                                                  |                   
|Net cash used by investing activities                             |                   
|                                                                  |                   
|Cash flows from financing activities:                             |                   
|Net increase (decrease) in demand deposits, interest-bearing      |                   
|transaction accounts and savings accounts                         |                   
|Net increase in certificate of deposit and other time deposits    |                   
|Net decrease in federal funds purchased                           |                   
|Net increase in FHLB advances                                     |                   
|                                                                  |                   
|Net cash provided by financing activities                         |                   
|                                                                  |                   
|Net decrease in cash and cash equivalents                         |                   
|                                                                  |                   
|Cash and cash equivalents, beginning of  the period               |                   
|                                                                  |                   
|Cash and cash equivalents, end of the period                      |                   
|                                                                  |                   
|Cash paid for:                                                    |                   
|Interest                                                          |                   
|                                                                  |                   
|Income taxes                                                      |                   
|                                                                  |                   

See notes to condensed consolidated financial statements.

-6-

---

# ATLANTIC BANCSHARES,
INC.

# Note 1  Basis of
Presentation

The accompanying unaudited
consolidated condensed financial statements for Atlantic Bancshares, Inc.
(Company) were prepared in accordance with instructions for Form 10-Q and,
therefore, do not include all disclosures necessary for a complete presentation of
financial condition, results of operations, and cash flows in conformity with generally
accepted accounting principles. All adjustments, consisting only of normal recurring
accruals, which are, in the opinion of management, necessary for fair presentation of the
interim consolidated financial statements have been included. The results of operations
for the three month period ended March 31, 2008 are not necessarily indicative of the
results that may be expected for the entire year. These consolidated financial statements
do not include all disclosures required by generally accepted accounting principles and
should be read in conjunction with the Companys audited consolidated financial
statements and related notes for the year ended December 31, 2007.

# Note 2  Recently
Issued Accounting Pronouncements

The following is a summary of recent
authoritative pronouncements that could impact the accounting, reporting, and / or
disclosure of financial information by the Company.

In December 2007, the FASB issued
SFAS No. 141(R), Business Combinations, (SFAS 141(R)) which
replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how an acquirer
in a business combination recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any controlling interest;
recognizes and measures goodwill acquired in the business combination or a gain from a
bargain purchase; and determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the business
combination. FAS 141(R) is effective for acquisitions by the Company taking place on or
after January 1, 2009. Early adoption is prohibited. Accordingly, a calendar year-end
company is required to record and disclose business combinations following existing
accounting guidance until January 1, 2009. The Company will assess the impact of SFAS
141(R) if and when a future acquisition occurs.

In December 2007, the FASB issued
SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements 
an amendment of ARB No. 51 (SFAS 160). SFAS 160 establishes new
accounting and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. Before this statement, limited guidance existed for
reporting noncontrolling interests (minority interest). As a result, diversity in practice
exists. In some cases minority interest is reported as a liability and in others it is
reported in the mezzanine section between liabilities and equity. Specifically, SFAS 160
requires the recognition of a noncontrolling interest (minority interest) as equity in the
consolidated financials statements and separate from the parents equity. The amount
of net income attributable to the noncontrolling interest will be included in consolidated
net income on the face of the income statement. SFAS 160 clarifies that changes in a
parents ownership interest in a subsidiary that do not result in deconsolidation are
equity transactions if the parent retains its controlling financial interest. In addition,
this statement requires that a parent recognize gain or loss in net income when a
subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of
the noncontrolling equity investment on the deconsolidation date. SFAS 160 also includes
expanded disclosure requirements regarding the interests of the parent and its
noncontrolling interests. SFAS 160 is effective for the Company on January 1, 2009.
Earlier adoption is prohibited. The Company is currently evaluating the impact, if any,
the adoption of SFAS 160 will have on its financial position, results of operations and
cash flows.

In March 2008, the FASB issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities
(SFAS 161). SFAS 161 requires enhanced disclosures about an entitys
derivative and hedging activities and thereby improving the transparency of financial
reporting. It is intended to enhance the current disclosure framework in SFAS 133 by
requiring that objectives for using derivative instruments be disclosed in terms of
underlying risk and accounting designation. This disclosure better conveys the purpose of
derivative use in terms of the risks that the entity is intending to manage. SFAS 161 is
effective for the Company on January 1, 2009. This pronouncement does not impact
accounting measurements but will result in additional disclosures if the Company is
involved in material derivative and hedging activities at that time.

In February 2008, the FASB issued
FASB Staff Position No. 140-3, Accounting for Transfers of Financial Assets and
Repurchase Financing Transactions (FSP 140-3).  This FSP provides
guidance on accounting for a transfer of a financial asset and the transferors
repurchase financing of the asset.  This FSP presumes that an initial transfer of a
financial asset and a repurchase financing are considered part of the same arrangement
(linked transaction) under SFAS No. 140. However, if certain criteria are met, the initial
transfer and repurchase financing are not evaluated as a linked transaction and are
evaluated separately under Statement 140.  FSP 140-3 will be effective for financial
statements issued for fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years and earlier application is not permitted.

-7-

---

# ATLANTIC BANCSHARES,
INC.

Note 2  Recently Issued Accounting Pronouncements  continued

Accordingly, this FSP is effective
for the Company on January 1, 2009.  The Company is currently evaluating the impact,
if any, the adoption of FSP 140-3 will have on its financial position, results of
operations and cash flows.

In April 2008, the FASB issued FASB
Staff Position No. 142-3, Determination of the Useful Life of Intangible
Assets (FSP 142-3). This FSP amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under SFAS No. 142, Goodwill and Other
Intangible Assets. The intent of this FSP is to improve the consistency between the
useful life of a recognized intangible asset under SFAS No. 142 and the period of expected
cash flows used to measure the fair value of the asset under SFAS No. 141(R),
Business Combinations,and other U.S. generally accepted accounting
principles. This FSP is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal years and early
adoption is prohibited. Accordingly, this FSP is effective for the Company on January 1,
2009. The Company does not believe the adoption of FSP 142-3 will have a material impact
on its financial position, results of operations or cash flows.

Effective January 1, 2008, the
Company adopted SFAS No. 157, Fair Value Measurements (SFAS 157)
which provides a framework for measuring and disclosing fair value under generally
accepted accounting principles. SFAS 157 requires disclosures about the fair value of
assets and liabilities recognized in the balance sheet in periods subsequent to initial
recognition, whether the measurements are made on a recurring basis (for example,
available-for-sale investment securities) or on a nonrecurring basis (for example,
impaired loans).

SFAS 157 defines fair value as the
exchange price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date. SFAS 157 also
establishes a fair value hierarchy which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value.
The standard describes three levels of inputs that may be used to measure fair value:

|Level 1 | Quoted prices in active markets for identical assets or liabilities. Level 1 assets
and liabilities include debt and equity securities and derivative contracts that are
traded in an active exchange market, as well as U.S. Treasury, other U.S. Government and
agency mortgage-backed debt securities that are highly liquid and are actively traded in
over-the-counter markets.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Level 2 | Observable inputs other than Level 1 prices such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full
term of the assets or liabilities. Level 2 assets and liabilities include debt securities
with quoted prices that are traded less frequently than exchange-traded instruments and
derivative contracts whose value is determined using a pricing model with inputs that are
observable in the market or can be derived principally from or corroborated by observable
market data. This category generally includes certain derivative contracts and impaired
loans.
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Level 3 | Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. Level 3 assets and liabilities
include financial instruments whose value is determined using pricing models, discounted
cash flow methodologies, or similar techniques, as well as instruments for which the
determination of fair value requires significant management judgment or estimation. For
example, this category generally includes certain private equity investments, retained
residual interests in securitizations, residential mortgage servicing rights, and
highly-structured or long-term derivative contracts.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Available-for-sale investment
securities ($19,313,402 at March 31, 2008) are the only assets whose fair values are
measured on a recurring basis using Level 1 inputs (active market quotes).

The Company has no liabilities
carried at fair value or measured at fair value on a nonrecurring basis.

-8-

---

# ATLANTIC BANCSHARES, INC.

Note 2  Recently
Issued Accounting Pronouncements  continued

The Company is predominantly an asset
based lender with real estate serving as collateral on a substantial majority of loans.
Loans which are deemed to be impaired are primarily valued at the fair values of the
underlying real estate collateral. Such fair values are obtained using independent
appraisals, which the Company considers to be level 2 inputs. The aggregate carrying
amount of impaired loans at March 31, 2008 was $1,209,296.

FASB Staff Position No. FAS 157-2
delays the implementation of SFAS 157 until the first quarter of 2009 with respect to
goodwill, other intangible assets, real estate and other assets acquired through
foreclosure and other non-financial assets measured at fair value on a nonrecurring basis.

The Company has no assets or
liabilities whose fair values are measured using level 3 inputs.

Other accounting standards that have
been issued or proposed by the FASB or other standards-setting bodies are not expected to
have a material impact on the Companys financial position, results of operations or
cash flows.

# Note 3  Stock
Compensation Plan

The Company granted a total of 23,500
stock options to its employees during the quarter ended March 31, 2008. No stock options
were granted for the quarter ended March 31, 2007. These options vest over a five year
period. Years will be measured from the grant dates. The options have an exercise price of
$8.85 per share and terminate ten years after the date of grant.

The following table depicts the
activity in the Companys stock options for the period ended March 31, 2008 and 2007:

|                          | 2008 | 2007
|------------------------- | ---- | ----
|
|
|
|Outstanding at January 1, |      |     
|Granted                   |      |     
|Exercised                 |      |     
|Forfeited                 |      |     
|Expired                   |      |     
|                          |      |     
|Outstanding at March 31,  |      |     
|                          |      |     

At March 31, 2008, 24,825 of these
options were exercisable. No options have been exercised.

In calculating the compensation
expense for stock options, the fair value of options granted is estimated as of the date
granted using the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2008: dividend yield of 0 percent; expected volatility of
20.57 percent based on forecasted future volatility because there is no historical dataavailable; risk-free interest rates that range from 3.17% to 3.20%based on a
risk free rate of return corresponding to the estimated life of the option; and expected
life of 7.50 years using the simplified method described in SAB Topic 14.D
because there is no historical data available. For purposes of this calculation,
compensation expense is recognized on a straight-line basis over the vesting period.

In calculating the compensation
expense for stock options, the fair value of options granted is estimated as of the date
granted using the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2007: dividend yield of 0 percent; expected volatility of
15 percent based on forecasted future volatility because there is no historical dataavailable; risk-free interest rates that range from 4.66% to 4.94%based on a
risk free rate of return corresponding to the estimated life of the option; and expected
life of 7.50 years using the simplified method described in SAB Topic 14.D
because there is no historical data available. For purposes of this calculation,
compensation expense is recognized on a straight-line basis over the vesting period.

-9-

---

# ATLANTIC BANCSHARES,
INC.

Note 3  Stock
Compensation Plan  continued

The following table summarizes
information about the stock options outstanding under the Companys plan at March 31,
2008:

|                                | Outstanding | Exercisable
|------------------------------- | ----------- | -----------
|Number of options               |             |            
|Weighted average remaining life |             |            
|Weighted average exercise price |             |            
|High exercise price             |             |            
|Low exercise price              |             |            
|Aggregate intrinsic value       |             |            

|                             |  | Weighted
|---------------------------- |  | --------
|
|
|
|Nonvested at January 1, 2008 |  |         
|Granted                      |  |         
|Vested                       |  |         
|Forfeited                    |  |         
|                             |  |         
|Nonvested at March 31, 2008  |  |         
|                             |  |         

# Note 4  Loss Per
Share

Basic loss per share is computed by
dividing net loss by the weighted-average number of common shares outstanding. Diluted
loss per share is computed by dividing net loss by the weighted-average number of common
shares outstanding and dilutive common share equivalents using the treasury stock method.
There were no dilutive common share equivalents outstanding during the first three months
of 2008 or 2007 due to the net losses, therefore, basic and dilutive loss per share and
diluted earnings per share were the same.

|                                          | Three months ended
|----------------------------------------- | ------------------
|
|Net loss per share-basic computation:     |                   
|                                          |                   
|Net loss to common shareholders           |                   
|                                          |                   
|Average common shares outstanding - basic |                   
|                                          |                   
|Basic loss per share                      |                   
|                                          |                   

-10-

---

# ATLANTIC BANCSHARES,
INC.

# Item 2 
Managements Discussion and Analysis of Financial Condition and Results of Operations

The following is our discussion and analysis
of certain significant factors that have affected our financial position and operating
results and those of our subsidiary, Atlantic Community Bank, during the periods included
in the accompanying financial statements. This commentary should be read in conjunction
with the financial statements and the related notes and the other statistical information
included in this report.

This report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements relating to, without limitation, future economic performance, plans and
objectives of management for future operations, and projections of revenues and other
financial items that are based on the beliefs of management, as well as assumptions made
by and information currently available to management. The words may,
will, anticipate, should, would,
believe, contemplate, expect, estimate,
continue, may, and intend, as well as other similar
words and expressions of the future, are intended to identify forward-looking statements.
Our actual results may differ materially from the results discussed in the forward-looking
statements, and our operating performance each quarter is subject to various risks and
uncertainties that are discussed in detail in our filings with the Securities and Exchange
Commission, including, without limitation:

| |  | significant increases in competitive pressure in the banking and financial services
industries;
| | - | -----------------------------------------------------------------------------------------------

| |  | changes in the interest rate environment which could reduce anticipated or
actual margins;
| | - | ------------------------------------------------------------------------------------------

| |  | changes in political conditions or the legislative or regulatory
environment;
| | - | -----------------------------------------------------------------------------

| |  | general economic conditions, either nationally or regionally and especially
in our primary service area, becoming less favorable than expected resulting in, among other things, a deterioration in credit
quality;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | changes occurring in business conditions and inflation;
| | - | -------------------------------------------------------

| |  | changes in technology;
| | - | ----------------------

| |  | the level of allowance for loan loss;
| | - | -------------------------------------

| |  | the rate of delinquencies and amounts of charge-offs;
| | - | -----------------------------------------------------

| |  | the rates of loan growth;
| | - | -------------------------

| |  | adverse changes in asset quality and resulting credit risk-related losses and expenses;
| | - | ---------------------------------------------------------------------------------------

| |  | changes in monetary and tax policies;
| | - | -------------------------------------

| |  | loss of consumer confidence and economic disruptions resulting from terrorist activities;
| | - | -----------------------------------------------------------------------------------------

| |  | changes in the securities markets; and
| | - | --------------------------------------

| |  | other risks and uncertainties detailed from time to time in our filings with the
Securities and Exchange Commission.
| | - | --------------------------------------------------------------------------------------------------------------------

Real estate markets have showed signs
of weakening and property values have been impacted negatively by the current economic
operating environment. Our primary service area, southern Beaufort County and a portion of
Jasper County, are not immune to these pressures. If prevailing economic conditions
locally and nationally continue to decline, our business may be affected adversely. A
sustained economic downturn would likely contribute to reduced deposits, the deterioration
of the quality of the loan portfolio and increased nonperforming loans which could result
in a net loss of earnings, an increase in the provision for loan losses and an increase in
loan charge offs, all of which could have a material adverse effect on our financial
condition and results of operations.

# Overview

The following discussion describes
our results of operations for the three months ended March 31, 2008 compared to March 31,
2007, and also analyzes our financial condition as of March 31, 2008 as compared to
December 31, 2007.

Like most community banks, we derive
most of our income from interest we receive on our loans and investments. Our primary
source of funds for making these loans and investments is our deposits, on which we pay
interest. Consequently, one of the key measures of our success is our amount of net
interest income, or the difference between the income on our interest-earning assets, such
as loans and investments, and the expense on our interest-bearing liabilities, such as
deposits. Another key measure is the spread between the yield we earn on these
interest-earning assets and the rate we pay on our interest-bearing liabilities.

-11-

---

# ATLANTIC BANCSHARES,
INC.

Item 2 
Managements Discussion and Analysis of Financial Condition and Results of Operations
continued

There are risks inherent in all
loans, so we maintain an allowance for loan losses to absorb probable losses on existing
loans that may become uncollectible. We establish and maintain this allowance by charging
a provision for loan losses against our operating earnings. In the following section we
have included a detailed discussion of this process. In addition to earning interest on
our loans and investments, we earn income through fees and other expenses we charge to our
customers. We describe the various components of this non-interest income, as well as our
non-interest expense, in the following discussion.

# Results of Operations

# Net Interest Income

For the three months ended March 31,
2008, net interest income, the major component of our net income, was $702,989 as compared
to $524,488 for the same period in 2007. The increase in net interest income for the first
three months of 2008 was primarily due to the growth in our loan portfolio. The average
rate paid on interest-bearing liabilities for the three months ended March 31, 2008 and
2007 was 4.40% and 4.87%, respectively, while the average rate realized on
interest-earning assets was 7.05% and 7.83%, respectively for the same period. The net
interest spread was 2.65% and 2.96%, respectively, for the three month period ended March
31, 2008 and 2007. The decrease in net interest spread for the first three months of 2008
is a result of the recent decreases in the Federal Reserve short-term rates and the
resulting decrease in the yields we generated on our earning assets (from variable rate
loan repricing and new loans at lower rates), which more than offset the benefit we
received from the repricing of our rate sensitive liabilities. The net result was a
decrease in net interest spread of 31 basis points during the three-month period ended
March 31, 2008, as compared to the three-month period ended March 31, 2007.

# Provision and Allowance
for Loan Losses

We have established an allowance for loan losses through a provision for loan losses charged to expense on our
consolidated statement of operations.  The allowance for loan losses was $862,727 and $465,500, or 1.26% and
1.00% of total loans, as of March 31, 2008 and 2007, respectively.  For the three months ended March 31, 2008 and
2007, the provision was $225,550 and $79,928, respectively.  Nonperforming loans at March 31, 2008 totaled
$1,513,476.  In addition, five loans totaling $1,524,402 were impaired as of March 31, 2008 and loans totaling
$2,437,010 were considered criticized loans.   The impaired loans include a $917,966 participation we hold on a
commercial real estate development on the South Carolina coast.  The amount of the impairment on this loan is not
readily determinable.  Based upon our internal calculations of the present value of the collateral supporting
this loan, we believe our loan on this development is impaired by approximately $175,000, and we have increased
our reserves to reflect this impairment.  However, the actual impairment on this loan may be greater or less than
this amount.  An updated appraisal has been ordered on the underlying collateral, and once this appraisal is
finalized, we will adjust our estimate of the impairment on this loan, if necessary.   In contrast, we did not
have any nonperforming or classified loans at March 31, 2007, and loans totaling $788,380 were criticized as of
March 31, 2007.

The allowance for loan losses
represents an amount which we believe will be adequate to absorb probable losses on
existing loans that may become uncollectible. Our judgment as to the adequacy of the
allowance for loan losses is based on a number of assumptions about future events, which
we believe to be reasonable, but which may or may not prove to be accurate. Our
determination of the allowance for loan losses is based on evaluations of the
collectibility of loans, including consideration of factors such as the balance of
impaired loans, the quality, mix, and size of our overall loan portfolio, economic
conditions that may affect the borrowers ability to repay, the amount and quality of
collateral securing the loans, our historical loan loss experience, and a review of
specific problem loans. We also consider subjective issues such as changes in the lending
policies and procedures, changes in the local/national economy, changes in volume or type
of credits, changes in volume/severity of problem loans, quality of loan review and board
of director oversight, concentrations of credit, and peer group comparisons. Due to our
limited operating history, to date the provision for loan losses has been made primarily
as a result of our assessment of general loan loss risk compared to banks of similar size
and maturity. Due to our short operating history, the loans in our loan portfolio and our
lending relationships are of very recent origin. In general, loans do not begin to show
signs of credit deterioration or default until they have been outstanding for some period
of time, a process known as seasoning. As a result, a portfolio of older loans will
usually behave more predictably than a newer portfolio. Because our loan portfolio is new,
the current level of delinquencies and defaults may not be representative of the level
that will prevail when the portfolio becomes more seasoned, which may be higher than
current levels. If delinquencies and defaults increase,

-12-

---

# ATLANTIC BANCSHARES,
INC.

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
continued

we may be required to increase our
provision for loan losses, which would adversely affect our results of operations and
financial condition. Periodically, we will adjust the amount of the allowance based on
changing circumstances. We will charge recognized losses to the allowance and add
subsequent recoveries back to the allowance for loan losses. There can be no assurance
that charge-offs of loans in future periods will not exceed the allowance for loan losses
as estimated at any point in time or that provisions for loan losses will not be
significant to a particular accounting period.

# Noninterest Income

Total noninterest income for the
three months ended March 31, 2008 and 2007 was $66,227 and $85,419, respectively.
Decreased mortgage loan sale volume caused mortgage origination fee income to decrease
$37,155 to $22,139 for the three months ended March 31, 2008 as compared the three months
ended March 31, 2007. An increased number of deposit accounts produced service charges on
deposit accounts totaling $21,087 for the quarter ended March 31, 2008 as compared to
$12,578 for the three months ended March 31, 2007.

# Noninterest Expense

Total noninterest expense for the
three months ended March 31, 2008 and 2007 was $774,992 and $755,918, respectively. The
primary component of noninterest expense was salaries and benefits, which were $418,698
and $399,416 for the three months ended March 31, 2008 and 2007, respectively. The number
of employees for the quarter ended March 31, 2008 remained flat compared to the quarter
ended March 31, 2007. The increase in salaries and benefits is mainly related to annual
merit increases. There were no significant changes in the other categories of other
operating expenses.

# Net Loss

The combination of the above factors resulted in a net loss for the three months ended March 31, 2008 of
$152,675, or $.12 per share, after the recognition of an income tax benefit of $78,651 for the period.
For the period ended March 31, 2007, the net loss was $170,337, or $0.14 per share, after the
recognition of an income tax benefit of $55,602 for the period.

# Assets and Liabilities

During the first three months of 2008, total assets increased $8,645,471, or 10.46%, to $91,278,211 at
March 31, 2008 when compared to December 31, 2007.  The primary growth in assets was an increase in
securities available for sale of $5,714,286.  Securities available for sale were $19,313,402 as of March
31, 2008.  Loans receivable increased $2,598,227 to $68,362,686 as of March 31, 2008 when compared to
December 31, 2007.  We also entered into an arbitrage agreement where a $5,000,000 in Federal Home Loan
Bank advance was obtained to purchase the same amount of securities available for sale.  Loan growth was
funded mainly from deposit growth of $2,186,886.

-13-

---

# ATLANTIC BANCSHARES,
INC.

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
continued

# Loans

We experienced moderate loan growth during the first three months of 2008.  Net loans increased by
$2,413,350 to $67,499,959 during the period.  As shown below, the largest category of loans was real
estate mortgage loans which increased $1,786,061 to $44,476,303 from December 31, 2007 to March 31,
2008.  Balances within the major loans receivable categories as of March 31, 2008 and December 31, 2007
are as follows:

|                                        | March 31, 2008 | December 31, 2007
|--------------------------------------- | -------------- | -----------------
|Real estate:                            |                |                  
|Mortgage                                |                |                  
|Construction, land and land development |                |                  
|                                        |                |                  
|Total real estate loans                 |                |                  
|                                        |                |                  
|Commercial and industrial               |                |                  
|Consumer and other                      |                |                  
|Deferred origination fees, net          |                |                  
|                                        |                |                  
|Gross loans                             |                |                  
|Less allowance for loan losses          |                |                  
|                                        |                |                  
|Loans, net                              |                |                  
|                                        |                |                  

# Risk Elements in the
Loan Portfolio

Criticized loans are loans that have potential weaknesses that deserve close attention and which could,
if uncorrected, result in deterioration of the prospects for repayment or our credit position at a
future date.  Classified loans are loans that are inadequately protected by the sound worth and paying
capacity of the borrower or any collateral and as to which there is a distinct possibility or
probability that we will sustain a loss if the deficiencies are not corrected.  At March 31, 2008, we
had five loans that were impaired totaling $1,524,402.  Four of these loans totaling $1,513,476 are
secured by real estate and one loan totaling $10,926 is secured by an automobile.   Included in the
allowance for loan losses at March 31, 2008 was $315,106 related to impaired loans.

Nonaccrual loans totaled $1,513,476 at March 31, 2008.  There were no nonaccrual loans at March 31,
2007.  Additionally, as of March 31, 2008 and 2007, we had no loans 90 days or more past due and still
accruing interest.

The following table depicts the
activity in the allowance for loan losses for the period ended March 31, 2008 and 2007:

|                                                    | March 31,
|--------------------------------------------------- | ---------
|
|Balance, January 1,                                 |          
|Provision for loan losses for the period            |          
|Net loans (charged-off) recovered during the period |          
|                                                    |          
|Balance, end of period                              |          
|                                                    |          
|Gross loans outstanding, end of period              |          
|                                                    |          
|Allowance for loan losses to loans outstanding      |          
|                                                    |          

-14-

---

# ATLANTIC BANCSHARES,
INC.

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
continued

# Deposits

Total deposits were $65,655,988 at
March 31, 2008, as compared to $63,469,102 at December 31, 2007. The largest category of
deposits was other time deposits which totaled $26,894,822 at March 31, 2008, as compared
to $27,311,987 at December 31, 2007. Brokered certificates of deposits represent
$18,396,000 of these other time deposits. Savings and money market accounts totaled
$17,975,676 at March 31, 2008, as compared to $17,712,595 at December 31, 2007. Time
deposits $100,000 and over accounts increased 2,270,875 to $12,227,257 at March 31, 2008.
Existing competition and new entrants to our market have created increased competition for
local core deposits which has slowed our deposit growth rate.

Balances within the major deposit
categories as of March 31, 2008 and December 31, 2007 are as follows:

|                                          | March 31, 2008 | December 31, 2007
|----------------------------------------- | -------------- | -----------------
|Non-interest bearing transaction accounts |                |                  
|Interest-bearing transaction accounts     |                |                  
|Savings and money market                  |                |                  
|Time deposit $100,000 and over            |                |                  
|Other time deposits                       |                |                  
|                                          |                |                  
|Total deposits                            |                |                  
|                                          |                |                  

# Other Borrowings

Other borrowings are comprised of
Federal Home Loan Bank of Atlanta (FHLB) advances. FHLB advances are
collateralized by a portion of our investment portfolio and by our investment in Federal
Home Loan Bank stock. FHLB advances increased $7,775,000 to $12,775,000 at March 31, 2008, as compared to
December 31, 2007. During the quarter ended March 31, 2008, we entered into an arbitrage agreement where a $5,000,000 FHLB
advance was obtained to purchase the same amount of securities available for sale.

FHLB advances as of March 31, 2008
and December 31, 2007 are as follows:

| |                        | March 31, 2008 | December 31, 2007
| | ---------------------- | -------------- | -----------------
|
| | Daily                  |                |                  
| | 11/29/2017             |                |                  
| | 03/12/2010             |                |                  
| |                        |                |                  
| | Total other borrowings |                |                  
| |                        |                |                  

# Liquidity

Liquidity represents the ability of a
company to convert assets into cash or cash equivalents without significant loss, and the
ability to raise additional funds by increasing liabilities. Liquidity management involves
monitoring our sources and uses of funds in order to meet our day-to-day cash flow
requirements while maximizing profits. Liquidity management is made more complicated
because different balance sheet components are subject to varying degrees of management
control. For example, the timing of maturities of our investment portfolio is fairly
predictable and subject to a high degree of control at the time investment decisions are
made. However, net deposit inflows and outflows are far less predictable and are not
subject to the same degree of control.

Our primary sources of liquidity are
deposits, scheduled repayments on our loans, and interest on and maturities of our
investments. We plan to meet our future cash needs through the liquidation of temporary
investments and the generation of deposits. Occasionally, we might sell investment
securities in connection with the management of our interest sensitivity gap

-15-

---

# ATLANTIC BANCSHARES,
INC.

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations continued

or to manage cash availability. We may also utilize our cash and due from banks, security repurchase
agreements, federal funds sold, and other borrowings to meet liquidity requirements as
needed. In addition, we have the ability, on a short-term basis, to purchase federal funds
from other financial institutions. As of March 31, 2008, we had lines of credit to
purchase federal funds from unrelated banks totaling $7,400,000, consisting of a
$2,800,000 line secured by investment securities, and $4,600,000 of unsecured lines. As of
March 31, 2008, $2,481,000 was outstanding on the secured line of credit and $4,919,000
remained unused on lines of credit. The lenders have reserved the right to withdraw the
unsecured lines at their option. These lines of credit are available on various structures
for general corporate purposes.

# Capital Resources

Total shareholders' equity decreased $15,592 during the first three months of 2008 to $9,966,666.  The
decrease is primarily attributable to the net loss for the period of $152,675 offset by $110,100 related
to unrealized gains on securities and $26,983 for stock-based compensation expense.

The Federal Reserve and bank
regulatory agencies require bank holding companies and financial institutions to maintain
capital at adequate levels based on a percentage of assets and off-balance sheet
exposures, adjusted for risk weights ranging from 0% to 100%. The Federal Reserve
guidelines contain an exemption from the capital requirements for small bank holding
companies, which in 2006 were amended to cover most bank holding companies with less
than $500 million in total assets that do not have a material amount of debt or equity
securities outstanding registered with the SEC. Although our class of common stock is
registered under Section 12 of the Securities Exchange Act, we believe that because our
stock is not listed on any exchange or otherwise actively traded, the Federal Reserve
Board will interpret its new guidelines to mean that we qualify as a small bank holding
company. Nevertheless, our bank remains subject to these capital requirements. Failure to
meet minimum capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could
have a direct material effect on the banks financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action, the bank
must meet specific capital guidelines that involve quantitative measures of the
banks assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. The banks capital amounts and classifications are
also subject to qualitative judgments by the regulators about components, risk weightings,
and other factors. Regardless, our bank is well capitalized under these
minimum capital requirements as set per bank regulatory agencies.

Under the capital adequacy
guidelines, regulatory capital is classified into two tiers. These guidelines require an
institution to maintain a certain level of Tier 1 and Tier 2 capital to risk-weighted
assets. Tier 1 capital consists of common shareholders equity, excluding the
unrealized gain or loss on securities available for sale, minus certain intangible assets.
In determining the amount of risk-weighted assets, all assets, including certain
off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100% based on
the risks believed to be inherent in the type of asset. Tier 2 capital consists of Tier 1
capital plus the general reserve for loan losses, subject to certain limitations. We are
also required to maintain capital at a minimum level based on total average assets, which
is known as the Tier 1 leverage ratio. To be considered adequately capitalized
under these capital guidelines, we must maintain a minimum total risk-based capital of 8%,
with at least 4% being Tier 1 capital. In addition, we must maintain a minimum Tier 1
leverage ratio of at least 4%. To be considered well-capitalized, we must
maintain total risk-based capital of at least 10%, Tier 1 capital of at least 6%, and a
leverage ratio of at least 5%.

The bank is also required to maintain
capital at a minimum level based on quarterly average assets, which is known as the
leverage ratio. Only the strongest banks are allowed to maintain capital at the minimum
requirement of 3%. All others are subject to maintaining ratios 1% to 2% above the
minimum. The bank exceeded its minimum regulatory capital ratios as of March 31, 2008, as
well as the ratios to be considered well capitalized.

-16-

---

# ATLANTIC BANCSHARES,
INC.

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations continued

The following table summarizes the
banks risk-based capital at March 31, 2008:

|                                                          | 
|--------------------------------------------------------- | 
|Shareholders equity                                      | 
|Less-unrealized net gain on available-for-sale securities | 
|Less-disallowed deferred tax assets                       | 
|                                                          | 
|Tier 1 capital                                            | 
|                                                          | 
|Plus - allowance for loan losses (1)                      | 
|                                                          | 
|Total capital                                             | 
|                                                          | 
|Risk-weighted assets                                      | 
|                                                          | 
|Risk-based capital ratios:                                | 
|                                                          | 
|Tier 1 capital (to risk-weighted assets)                  | 
|Total capital (to risk-weighted assets)                   | 
|Tier 1 capital (to total average assets)                  | 

__________________________      (1)
Limited to 1.25% of risk-weighted assets

# Off-Balance Sheet Risk

Through the operations of our bank,
we make contractual commitments to extend credit in the ordinary course of our business
activities. These commitments are legally binding agreements to lend money to our
customers at predetermined interest rates for a specified period of time. At March 31,
2008, we had issued commitments to extend credit of $12,208,579 through various types of
lending arrangements. We had $254,422 of unused credit under pre-arranged overdraft plans
and overdraft protection plans offered on deposit accounts. There were also $245,073
outstanding commercial letters of credit at March 31, 2008.

The following table sets forth the
length of time until maturity for unused commitments to extend credit and standby letters
of credit at March 31, 2008.

|                                     | Within | After Three | One | Greater   | 
|------------------------------------ | ------ | ----------- | --- | --------- | 
|
|
|Unused commitments to extend credit  |        |             | $   | 1,782,682 | 
|                                     |        |             |     |           | 
|Standby commercial letters of credit |        |             |     | 180,073   | 
|                                     |        |            
|Totals                               |        |             | $   | 1,962,755 | 
|                                     |        |            

Based on historical experience, many
of the commitments and letters of credit will expire unfunded. Accordingly, the amounts
shown in the table above do not necessarily reflect our need for funds in the periods
shown.

We evaluate each customers
credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by us upon extension of credit, is based on our credit evaluation of the
borrower. Collateral varies but may include accounts receivable, inventory, property,
plant and equipment, commercial and residential real estate.

-17-

---

# ATLANTIC BANCSHARES,
INC.

Item 2 
Managements Discussion and Analysis of Financial Condition and Results of Operations continued

# Critical Accounting
Policies

We have adopted various accounting
policies which govern the application of accounting principles generally accepted in the
United States in the preparation of our financial statements. Our significant accounting
policies are described in the notes to the financial statements at December 31, 2007, as
filed on our annual report on Form 10-KSB. Certain accounting policies involve significant
judgments and assumptions by us which have a material impact on the carrying value of
certain assets and liabilities. We consider these accounting policies to be critical
accounting policies. The judgments and assumptions we use are based on historical
experience and other factors, which we believe to be reasonable under the circumstances.
Because of the nature of the judgments and assumptions we make, actual results could
differ from these judgments and estimates which could have a material impact on our
carrying values of assets and liabilities and our results of operations.

We believe the allowance for loan
losses is a critical accounting policy that requires the most significant judgments and
estimates used in preparation of our financial statements. Refer to the portions of the
discussion in this report on Form 10-Q and in our Form 10-KSB that address our allowance
for loan losses for a description of our processes and methodology for determining our
allowance for loan losses.

# Item 3.   Quantitative and
Qualitative Disclosures About Market Risk.

Not applicable.

# Item 4.   Controls and
Procedures

As of the end of the period covered
by this report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures as defined in
Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that our current disclosure controls and procedures
are effective as of March 31, 2008. There have been no significant changes in our internal
controls over financial reporting during the fiscal quarter ended March 31, 2008 that have
materially affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.

The design of any system of controls
and procedures is based in part upon certain assumptions about the likelihood of future
events. There can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how remote.

-18-

---

# ATLANTIC BANCSHARES,
INC.

# PART II  OTHER
INFORMATION

# Item 1.   Legal Proceedings

There are no pending legal proceedings to which we are a party or of which any of our property is the subject.

# Item 2.   Unregistered
Sales of Equity Securities and Use of Proceeds

Not applicable

# Item 3.   Default Upon Senior
Securities

Not applicable

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

Not applicable

# Item 5.   Other Information

Not applicable

# Item 6.   Exhibits

|     | 
|---- | 
|10.1 | 
|     | 
|     | 
|     | 
|10.2 | 
|     | 
|     | 
|10.3 | 
|     | 
|     | 
|10.4 | 
|     | 
|     | 
|10.5 | 
|     | 
|     | 
|31.1 | 
|     | 
|31.2 | 
|     | 
|32   | 

-19-

---

# ATLANTIC BANCSHARES,
INC.

# SIGNATURES

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

|Date:  May 14, 2008 |  | By:   /s/  Robert P. Trask           
|------------------- |  | -------------------------------------
|                    |  | Robert P. Trask                      
|                    |  | President and Chief Executive Officer

|Date:  May 14, 2008 |  | By:   /s/  Michelle M. Pennell
|------------------- |  | ------------------------------
|                    |  | Michelle M. Pennell           
|                    |  | Principal Financial Officer   

-20-

---

# ATLANTIC BANCSHARES,
INC.

# EXHIBIT INDEX

|        | 
|------- | 
|Exhibit | 
|Number  | 
|        | 
|10.1    | 
|        | 
|        | 
|        | 
|10.2    | 
|        | 
|        | 
|10.3    | 
|        | 
|        | 
|10.4    | 
|        | 
|        | 
|10.5    | 
|        | 
|        | 
|31.1    | 
|        | 
|31.2    | 
|        | 
|32      | 

-21-